Toyota Motor Corporation Australia Limited v Jayatilake

[2009] HCATrans 118

[2009] HCATrans 118

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M73 of 2008

B e t w e e n -

TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED

Applicant

and

SARATH JAYATILAKE

Respondent

Application for special leave to appeal

GUMMOW J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 29 MAY 2009, AT 12.38 PM

Copyright in the High Court of Australia

MR N.J. YOUNG, QC:   May it please the Court, I appear with my learned friend, MR P.H. SOLOMON, for the applicant.  (instructed by Minter Ellison)

MR R.P. GORTON, QC:   If the Court pleases, I appear with MR J.R. MOORE, QC for the respondent.  (instructed by Zaparas Lawyers)

GUMMOW J:   Yes, Mr Gorton, we will hear from you first.

MR GORTON:   Thank you, your Honour.  In our submission, your Honours, this is not a case appropriate for special leave.  We say the grounds on which special leave are sought are fundamentally an alleged difference between the decision in Stamboulakis in the Court of Appeal and the decision in this case.  We say that such a difference does not exist and that the decision in Stamboulakis follows on from and is part of the line of decisions that started in Barwon Spinners v Podolak, then Shock Records v Jones.

GUMMOW J:   What is the relevant statutory provision which is causing all this difficulty?

MR GORTON:   Section 134AB(38) ‑ ‑ ‑

GUMMOW J:   It is 134AB.  Yes, it must be the only legislature in the country that produces 38 subsections.

MR GORTON:   Subsection (38), paragraph (h) in particular.

GUMMOW J:   Yes, and what is the point?  Just forget about all these cases and tell us what the construction point is.

MR GORTON:   The construction point, as best we understand it, and we do not see what the difference is – being for the respondent I do not really understand how the applicant has put this case together – it seems to be that in the case of Stamboulakis a judge said that in the application of section 134AB(38)(h) it was incumbent upon the court to identify the psychiatric or psychological consequences of a physical injury and then to exclude them from consideration when the court was charged with determining whether a physical injury had physical consequences sufficient to reach the definition of serious injury.

GUMMOW J:   This is a definition section.

MR GORTON:   I think the answer is “no” to that question, your Honour.  Subsection (37) has within it a definition of “serious injury”.

GUMMOW J:   Yes.

MR GORTON:   It separates serious injury in paragraph (a), relevantly paragraph (a), to permanent impairment or loss of a body function, and it has separately as a definition of “serious injury” paragraph (c), permanent mental or behavioural disturbance or disorder.  I am not reading now as precisely.  What happened in this case, Jayatilake, is that the respondent, then the plaintiff, sought leave to sue for damages for an injury satisfying paragraph (a) of that definition in subsection (37).

To be successful in that application it is necessary for that worker plaintiff to establish that he has consequences of the physical injury suffered which are very considerable.  That is required by subsection (38)(a), (b) and (c) that talks about the requirement for very considerable consequences and they have to be considered by the court if a claim is made for loss of earning capacity in respect of the degree in which earning capacity is impaired, and if leave is sought to sue for damages for pain and suffering, then the degree of pain and suffering has to reach the test of very considerable when compared with the whole range of potential consequences of physical injury.

Now, what happened is that Mr Jayatilake said, “I am entitled because of my back injury to have leave to sue for damages for pain and suffering and loss of earning capacity”.  The defendant, the employer, said at first instance and in the Court of Appeal that while there was an accepted physical injury, and it was accepted that Mr Jayatilake was an honest witness, but there was an argument that not only did he suffer from the physical impacts of a lumbar disc injury but he also suffered from emotional reactions or responses which were categorised as functional overlay, whatever that means and it means many different things in many different circumstances.

The judge at first instance in Stamboulakis, President Maxwell said, “I have to identify the psychiatric consequences precisely and I have to exclude them from my consideration and work out whether what is left satisfies the serious injury definition”.

BELL J:   Where one is unable to disentangle, then it is rather contrary to Watts v Rake.

MR GORTON:   Yes.  So the judge at first instance said, “I cannot work out how much is physical and how much is psychiatric and therefore the plaintiff loses”.  Mr Jayatilake then appealed as of right under section 134AC or 134AD to the Court of Appeal which was obliged to make its own decision as to whether Mr Jayatilake suffered a serious injury or not.  That requirement was recognised by this Court and so it was looking at the matter again as at the date of hearing before the County Court judge on the evidence that was presented before the County Court judge.

The Court of Appeal approached the matter by saying, what was the physical injury that was suffered by Mr Jayatilake and looking at not only the medical evidence but the whole of the available evidence, are we satisfied that that physical injury has physical consequences which are sufficient to satisfy the test for loss of earning capacity and for pain and suffering, and if we are satisfied as to the nature and extent of the physical injury and the likely physical consequences of that injury, then we say, without having to identify and put in a special pocket psychiatric consequences and if we can reach it on the evidence to say there is a physical cause for sufficient consequences, then we find in favour of Mr Jayatilake that he has serious injury and is entitled to sue for damages for pain and suffering.

As we understand it, the applicant says that is a wrong approach and it is a wrong approach not because the section says something that you have got to do to get there but because President Maxwell in Stamboulakis went on a little excursion of his own which went beyond the actual decision in Stamboulakis and told County Court judges what they were meant to do with what he described as functional overlay.

Now, as a matter of reasoning process by President Maxwell, he identified, through reference to TAC v Lincoln, functional overlay as being a psychiatric condition which existed long after any physical cause for the complaint of symptoms existed.  Now, that is really, I suppose, my just railing against that part of the decision that was of limited impact as he reasoned it and was not part of the ratio of Stamboulakis which said Justice Neave, in her judgment agreed to by the other judges in the court said, what you have got to do is identify the injury and identify the physical consequences that flow from the injury and evaluate those consequences to determine whether they satisfy the test.

There may be a lot of other consequences on top of it but you do not have to go through a process of taking the cake and dividing it up into portions and then looking at the portion.  You can say, “I am not sure whether the physical consequences are half the cake or three‑quarters of the cake or 90 per cent of the cake.  What I am satisfied is that the physical consequences are sufficient to reach the serious injury definition”.  Now, it seems that the applicant is saying that is wrong not directly because paragraph (h) of subsection (38) says it is wrong, but because the court did not follow the process in applying that section that was identified in obiter dicta by the President.

We say there is not an error in the judgment when you go to the section as the question that has to be answered because Justice Ashley, with whom the other two judges agreed, in Jayatilake applied the section and went through a process that said, what is the injury, what are the physical consequences of that injury and in determining what the physical consequences were, his reasons made it clear that he was aware of the presence of psychiatric or psychological consequences and was not including those in his evaluation.  It became a factual decision.

Now, there were a couple of other issues raised in the appeal which perhaps are indicative of our concern about it as well.  One is that they say Justice Ashley and the Court of Appeal failed to have regard to the requirements of paragraph (g) of subsection (38).  Subsection (38) says, as I have said before, you have to be satisfied that there is a 40 per cent loss of earning capacity before leave is given to sue for damages for loss of earning capacity.  In determining whether that 40 per cent exists, it has got to exist at the time of trial and has to be perceived as going to continue to exist, notwithstanding the possibilities of retraining or rehabilitation. 

In the decision in Jayatilake nothing is said by his Honour about rehabilitation or retraining and that is raised in the proposed notice of appeal.  The fact of the matter is that there was no submission put to the County Court by the employer or now the applicant, initially the defendant, that retraining or rehabilitation was something it had to concern itself with in this case.  The argument put was, you cannot work out whether it is physical or mental and if you cannot do that, you, the plaintiff, lose. 

`When it went to the Court of Appeal again there was no submission put to the Court of Appeal that in any way directed itself towards the need to do that sort of analysis of rehabilitation and retraining.  In other words, the case was presented by the employer wholly on the question of whether there was a physical injury which had physical consequences resulting in a then current degree of impairment sufficient to satisfy the loss of earning capacity test. 

Beyond that, as we perceive the case, it is purely a question of fact as to whether this man’s injuries and impairments are sufficiently serious to satisfy the test and that factual issue, we would have thought, was not something that would be of interest to this Court.

GUMMOW J:   Thank you, Mr Gorton.  Yes, Mr Young.

MR YOUNG:   Your Honours, our submission is that the Court of Appeal decision departs from the statutory task and from earlier settled Court of Appeal authority in Victoria.  Can I briefly explain the statutory task by reference to section 134AB and its various subsections?  Subsection (16) is in effect a gateway.  It describes three situations in which proceedings can be taken.  The first is inferential in the sense that if the assessment is that the impairment is greater than 30 per cent, leave it not required.  It is required if leave is less than 30 per cent.  The second pathway is a certificate from the authority that the injury is a serious injury.  The third pathway is dealt with in subsection (16)(b) with which this case is concerned, namely, leave is granted by a court to bring common law proceedings for damages.

The next subsection relevant is subsection (19).  It provides that the onus rests on the applicant, in effect.  Subsections (37) and (38) are, in our submission, definitional.  I will come back to them, if I may, your Honours.  Section 134AD provides that the Court of Appeal on an appeal as of right under the previous subsection, section 134AC, is required to decide for itself whether the injury is a serious injury on the evidence and other material before the judge who heard the application.  So the Court of Appeal task on this appeal was to decide for itself whether the injury was a serious injury.  That decision is to be made as at the time the application is heard by the court.  That is the effect of subsection (38)(j).

Can I then, against that background, go to the definition of “serious injury” in subsections (37) and (38)?  The relevant part of the definition of “serious injury” relevant in this case was paragraph (a), “Permanent serious impairment or loss of a body function” by reason of an injury to the plaintiff’s lower back.  Section 38 adds further layers to the definition.  Subsection (38)(b) is very important.  It provides – and I abbreviate its effect – it provides that “the assessment” as to whether there is a serious injury is to be made “by reference to the consequences to the worker . . . with respect to” either “pain and suffering or loss of earning capacity”.

If I may interpolate, the task of the court and the Court of Appeal is to focus on the consequences of the injury to the worker with respect to pain and suffering and/or loss of earning capacity as at the time of the hearing of the application.  The measure of seriousness is provided by subsection (38)(c), again abbreviating my reference to it, the consequences must be fairly described as “significant or marked” or “at least very considerable”.

Subsection (38)(c) focuses on the significance or substantiality of the consequences in respect of pain and suffering and loss of earning capacity flowing from the injury as at the date of the hearing of the application.  There is further elaboration of what is meant by serious consequences in terms of loss of earning capacity in paragraph (e).  Briefly, a loss of earning capacity is 40 per cent or more and continuing as under paragraph (ii) there as the date of the hearing of the application.

Under paragraph (g) of subsection (38) the assessment of loss of earning capacity is to take account of the prospects of rehabilitation or retraining.  The provisions particularly at issue here were then paragraphs (h) and (i).  They are opposite sides of the same coin.  The relevant paragraph here was paragraph (h).  It provides that:

the psychological or psychiatric consequences of a physical injury are to be taken into account only for the purposes of paragraph (c) of the definition of serious injury” –

which, going back to the end of subsection (37), is an injury consisting of “permanent severe mental or permanent severe behavioural disturbance”.  So the instruction of the legislature is this.  In assessing whether there is a serious physical injury constituted by a serious impairment or loss of a body function no regard is to be had to the psychological or psychiatric consequences of the physical injury as they appear at the time of the hearing of the application.  Now, those provisions obviously impose a very difficult task on the court.

GUMMOW J:   That assumes, does it not, the possibility of identification of psychological or psychiatric consequences?

MR YOUNG:   Yes, your Honour.  Before this case there was settled authority in Victoria under two Court of Appeal decisions as to the way in which that task was to be approached.  The first was Barwon Spinners.  The Court will have that in our list of authorities.  The second was Stamboulakis.

BELL J:   Before we go to those cases, it is just not clear to me the submissions put by your opponent that in the Court of Appeal in this case there is no failure to comply with the statutory scheme as you have outlined it.  Where do you identify the departure from the statutory scheme in the judgment of Justice Ashley?

MR YOUNG:   Your Honour, in the application book in the judgment of Justice Ashley at page 74 his Honour converts the statutory task which is to assess pain and suffering consequences and loss of earning capacity consequences at the date of the application to the court into a different set of questions.  In paragraph 141 his Honour says:

the first question which arises is whether, notwithstanding the presence of non‑organic symptoms and signs at the time when the s 134AB(16)(b) application was heard, the appellant was still suffering from compensable injury.

The second is whether, assuming that to be so, that “injury was, at that time” – that is historically – “serious in its pain and suffering or loss of earning capacity consequences”.  His Honour notices that the burden is on the applicant, the plaintiff, in both respects.  What his Honour does by the first question is to go back to the injury originally suffered.  His Honour in paragraph 143 then categorises that injury by assessing its nature as falling into one of three broad categories. 

His Honour then said, if the original injury was in one or other category, different assessments could be made about its likely continuance.  In the third situation – this is at the top of page 75 of the application book - his Honour says, if I categorise the injury originally suffered as a third situation injury “it could most readily be concluded that physical symptoms continued”.

Now, that categorisation of the injury originally suffered as falling into one of three categories was undertaken not by reference to the medical evidence of the consequences being suffered at the time of the application, it was his Honour’s own categorisation of the nature of the original injury, and, in our submission, that is a wrong turning at the outset.  That categorisation is not rationally probative of the question of whether there are pain and suffering or loss of earning capacity consequences of a very considerable nature being experienced at the date of the application.

His Honour then turns to the second question, and this demonstrates the vice of departing from the statutory task, at page 79.  His Honour reposes the second question.  Then in paragraph 161 his Honour says this:

Once accept that the appellant sustained compensable injury which was, more probably than not, injury to an intervertebral disc in an already degenerate lumbar spine, there is reason to accept the probability of a continuance of symptoms at the level and with the impairment which was present before the picture became clouded by a non‑organic overlay.

Then his Honour says, “It must be accepted” that there was a functional element at the time of the application “which was greater than could be explained by physical injury”.  At the end of paragraph 162 his Honour says:

But none of that is to deny the likely continuance of previous levels of disability and pain which had an organic basis.

Based on that prediction of likely continuance based on a categorisation of the class of injury, his Honour arrives at his conclusion at paragraph 164.  His Honour concludes, reading from the third line:

as a matter of fact and degree, value judgment and impression, satisfies the serious injury test; and does so both as to its pain and suffering and loss of earning capacity consequences.

His Honour gets there without addressing the medical evidence or, indeed, any of the evidence as to the consequences in terms of pain and suffering and loss of earning capacity being suffered or experienced at the time of the hearing of the application.  Now, in our respectful submission ‑ ‑ ‑

GUMMOW J:   And in so doing falls into what statutory error?

MR YOUNG:   Well, his Honour does not undertake the statutory task at all, your Honour.  His Honour does not by that means assess whether there is an injury which is serious or which has been proven to be serious in terms of its consequences to the worker with respect to pain and suffering or loss of earning capacity as at the date of the hearing of the application.

GUMMOW J:   You are reading from?

MR YOUNG:   I was reading, your Honour, from a combination of the definition of “serious injury”, the end of subsection (37), and subsection (38)(b).  So even without going to subsection (38)(h), your Honour, his Honour does not address the statutory task of assessing the consequences by reference to all of the evidence as at the date of the application.  His Honour circles around that by making a prediction based on his assessment of the original nature of the injury.

BELL J:   Can I just take this up with you because I am not sure that I understand the point that you are making with respect to paragraph 141, application book 74?

MR YOUNG:   Yes, your Honour.

BELL J:   You place some emphasis on his Honour’s reference to “non‑organic symptoms and signs at the time”.  Are you suggesting that his Honour was failing at that point in his reasons to give consideration to the requirement of the statute to look at the position as at the date of the application?

MR YOUNG:   Yes, your Honour, in this respect.  His Honour divides a single statutory task of assessing consequences at the time of the application into two steps.  The first step is essentially, your Honour, to revert back to the nature of the original injury suffered because when his Honour addresses the first question, that is what his Honour does, he assesses the nature of the injury suffered.  That is, we would say, apparent as well not only from paragraph 143 that I read but from the outset of 144.

It is partly conveyed by the reference to “still suffering” in paragraph 141 as well.  But having categorised the nature of the original injury, then his Honour does not address the consequences as at the time of the hearing of the application.  His Honour makes a prediction of the likely continuance of pain and suffering consequences based on his categorisation of the original injury and that circles around, in our submission, the statutory task.

GUMMOW J:   That does not raise any point of general importance, does it?  It may be a visitation case on that basis, but ‑ ‑ ‑

MR YOUNG:   Well, it does for this reason, your Honour, that when I say circling around the statutory task, his Honour accepts that at the time of the hearing there was medical evidence indicating that the impact on the plaintiff was more severe than could be explained by physical injury.  He described it as a functional element in paragraph 162 at court book page 80.  His Honour did not address what Barwon Spinners and Stamboulakis said is the task of the court in those circumstances.  His Honour went back to this proposition.  None of that evidence about psychiatric or psychological consequences as at the date of hearing has the effect of denying a likely continuance of previous levels of disability and pain.

So, far from doing the Barwon Spinners task, that is, the court is required to assess how much of the consequences are attributable to physical injury and how much to psychological or psychiatric conditions as at the date of hearing, his Honour does not undertake that task which the Court of Appeal had previously said in Barwon Spinners and Stamboulakis was mandatory.  Unless it could be discharged satisfactorily, the plaintiff would fail because the plaintiff would not prove relevant consequences as required by subsection (38).

BELL J:   I understand that one of your complaints is that his Honour may have had an insufficient basis in the expert evidence to arrive at the factual conclusion that he did, but I am having difficulty seeing that his Honour misapprehended the task.

MR YOUNG:   Well, your Honour, his Honour did not make any assessment of the consequences to determine the extent to which they were caused by psychological or psychiatric factors, which is a mandatory requirement of the subsection.  Moreover, that was the task the previous Court of Appeal decisions had said must be undertaken.  His Honour, in our respectful submission, has avoided doing that by this predictive approach.  What it means, your Honour, is that this recent decision does conflict with

the earlier decisions.  It means that a County Court judge looking at this decision would simply categorise the nature of the original injury and depending on its categorisation as category one, two or three, then make a predictive assessment of likely continuance of consequences and grant or withhold leave accordingly.

That poses this very real question.  That approach, in our submission, is in conflict Barwon Spinners and Stamboulakis.  There is no way in which, in our submission, that can be avoided.  Secondly, it does not represent an application of the statutory provisions.  It means that a County Court judge, your Honour, is hereafter faced with conflicting approaches sanctioned by different courts of appeal and for that reason, in our submission, it does raise a question of general importance.  Thank you, your Honours.

GUMMOW J:   Thank you.  Do you want to say anything, Mr Gorton?  You look as if you do.

MR GORTON:   Well, I do not really.  I do not if you are going to find in my favour.  I do want to say we do not accept the proposition put boldly that there is conflicting decisions of the Court of Appeal.  The words used by President Maxwell which are not the ratio of Stamboulakis, this decision is wholly on foot with Stamboulakis ‑ ‑ ‑

GUMMOW J:   To be perfectly frank, one is worried for the position of the judge at the coal face in the County Court faced with all this material.

MR GORTON:   One is worried with the position of the County Court doing the job that is required to be done but, in our submission, there is not a misconception of the law by Judge Ashley or the Court of Appeal in Jayatilake, and any issue that arises is an issue as to his application of facts.  We say it is not a fair categorisation of what he has done to say that he has made some prediction.  He has followed the proper test of saying what injury was suffered in the first place and then having regard to the likely consequences and continuity of that decision as a physical problem made findings of fact as to it continuing to have the impact as at the time of hearing that it had in the early stages and having physically caused the impairment which satisfies the tests.  I cannot stress far enough, there is no conflict between the decisions in the Court of Appeal, it is just a problem to apply the Act.

GUMMOW J:   There will be a grant of special leave in this matter.  It will be a one‑day case, I would have thought.  The Court will adjourn and take application No 9 at 2.00 pm.

MR GORTON:   In our submission we have asked if leave is granted that the applicant/appellant pay the costs in any event because it is something of significance to it as an institution.

GUMMOW J:   Yes.  Have you got instructions about that, Mr Young?

MR YOUNG:   Yes, we do, your Honour.  We have instructions to say this, your Honour.  We invite the Court to make that a condition of the grant of leave.

GUMMOW J:   Yes, thank you.  Yes, well, that condition as indicated in the book is imposed on the grant of special leave.  We will adjourn until 2.00 pm.

AT 1.19 PM THE MATTER WAS CONCLUDED