Secretary, Department of Communities and Justice v Virtue (NSWSC 2024)

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Key Takeaways

This is as a compelling authority for the proposition that when a deduction for pre-existing impairment is applied to an injury, any body parts that are impaired as a consequence of that injury are also subject to the same deduction. It also suggests that a further deduction can be assessed to those consequentially impaired body parts for any pre-existing condition or injury affecting those individual body parts.

The case also supports the notion that the deduction for pre-existing impairment for injuries assessed by virtue of the treatment undertaken (e.g. a spinal fusion) are to be based on the contribution that the pre-existing injury had to the need for that treatment.

Brief Facts

The worker sustained an injury to the right knee in the course of his employment on 22 September 2013.

These proceedings involved the worker’s lump sum compensation claim under s66 of the Workers Compensation Act 1987 (WC Act). By this stage, liability for the worker’s right knee injury was not in issue, nor was liability for conditions of the left knee and ankle that arose as a consequence of the original right knee injury. Prior to assessment by a Medical Assessor (MA), a Member of the Personal Injury Commission had found that the worker had also sustained a consequential condition of the right ankle.

The matter proceeded to an assessment of impairment by a MA in relation to each of the claimed body parts. The MA assessed 41% WPI. The impairment was considerable due to the fact that the worker had undergone bilateral knee replacements, which warrant a minimum level of impairment based on that treatment having been undertaken. The 41% WPI assessment included a 50% deduction for the right knee impairment due to the existence of considerable pre-existing impairment, but only a one-tenth deduction was applied to the left knee and right ankle.

The employer appealed the MA’s assessment. A number of grounds were raised, including the assertion that when an impairment assessment is determined by specific treatment undertaken by the worker, the relevant deduction for pre-existing impairment should be considered by reference to the contribution the pre-existing injury or condition had the need for that treatment. That is, even though the employer may be liable for the treatment, when the pre-existing injury or condition significantly contributes to the need for that treatment, the deduction for pre-existing impairment should be considerable.

It was also asserted that the MA’s reliance on the statutory one-tenth assumption for the left knee and right ankle was at odds with the available evidence and that he had not taken into account relevant evidence relating to the state of the worker’s right ankle prior to the injury on 22 September 2013.

The Appeal Panel (AP) dismissed the employer’s appeal, simply stating that the evidence of pre-existing issues with the left knee was not as extensive as that available for the right knee, and that the MA had not failed to consider relevant evidence.

The employer sought judicial review of that decision pursuant to s.69 of the Supreme Court Act 1970.

Supreme Court proceedings

The employer’s summons seeking judicial review included a number of grounds in which it sought to establish legal and jurisdictional error by the AP. Justice Basten found that the AP had failed to address arguments made by the employer and had also failed to give proper reasons. However, his Honour’s judgement included two other critical elements:

1. It was noted by his Honour that the worker did not disagree with the employer’s assertion that the deduction to apply to impairment assessed by reference to treatment undertaken should be determined by assessing the contribution the pre-existing injury or condition had to the need for that treatment.
2. His Honour proposed that in circumstances where an injury leads to conditions that are a consequence of that injury, any deduction for pre-existing impairment assessed for the original injury should also apply to the impairments of the consequential conditions. In the present case, as the right knee injury was assessed with a 50% deduction for pre-existing impairment, his Honour indicated that a 50% deduction also had to apply to each impairment consequential of the right knee injury. His Honour also stated that further deductions could then be made if a pre-existing injury or condition also affected the body part in question.

Implications

This decision drastically changes the landscape of permanent impairment claims and the way deductions for pre-existing impairment are to be assessed.

There are many cases in which an employer is liable for an aggravation of a pre-existing condition. There are also many cases in which an employer is liable for a particular treatment despite a pre-existing condition having a significant contribution to the need for that treatment. The impairment that flows from that treatment can often be considerable.

Arguably, this decision can be applied to support a significant deduction for pre-existing impairment in cases where the evidence supports that the pre-existing condition had a significant impact on the need for the worker to undergo that treatment, notwithstanding that the employer was liable to pay for the treatment.

Another critical element of the decision is the proposition that the deduction assessed for a primary injury is also to apply to consequential conditions. While the commentary relating to that proposition is not strictly binding as precedent, his Honour’s reasons certainly provide strong support for the proposition being adopted in future cases. If accepted, this will likely have the effect of reducing the overall impairment assessed in a number of cases.