Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: SAS Trustee Corporation v Schmidtke [2012] NSWCA 269
• Hearing dates: 27 August 2012
• Decision date: 27 August 2012
• Before: Bathurst CJ at [1] and [25]; Basten JA at [2]; Tobias AJA at [24]

Decision

(1) Appeal dismissed.

(2) Appellant to pay the respondent's costs in this Court.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: ADMINISTRATIVE LAW - failure to take into account relevant considerations - whether evidence of witness a mandatory consideration - whether failure to take into account evidence expressly addressed in judgment; APPEAL - subject-matter limited to determination in point of law - passage in reasons indicating legal error - whether error material where assessment of loss accorded with principle; POLICE - officer hurt on duty - psychological injury - certification of date of injury by Commissioner - whether pre-existing injury - whether causes of impairment properly apportioned; WORDS & PHRASES - "in point of law" - District Court Act 1973 (NSW), s 142N; WORKERS COMPENSATION - lump sum compensation for psychiatric injury - transitional provisions require reduction in compensation for events occurring before amendment - whether events occurring before amendment reduce whole person impairment - whether plaintiff suffered previous injury - Workers Compensation Act 1987 (NSW), Sch 6, Pt 18C, cl 3(1); Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 323
• Legislation Cited: District Court Act 1973 (NSW), s 142N; Police Regulation (Superannuation) Act 1906 (NSW), ss 10D, 12D, 21; Workers Compensation Act 1987 (NSW), ss 15, 65A; Sch 6, Pt 18C, cl 3; Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 323
• Cases Cited: Maguire v SAS Trustee Corporation (District Court, unrep, 30 November 2009); SAS Trustee Corporation v Pearce [2009] NSWCA 302
• Category: Principal judgment
• Parties: SAS Trustee Corporation (Appellant); Glen Arno Schmidtke (Respondent)
• Representation: Counsel: Mr D E Baran (Appellant); Mr I D Roberts SC/Mr T Ower (Respondent); Solicitors: SMK Lawyers (Appellant); Harris Wheeler Lawyers (Respondent)
• File Number(s): CA 2011/325577

Decision under appeal

• Jurisdiction: 9101
• Date of Decision: 2011-09-14 00:00:00
• Before: Ashford DCJ
• File Number(s): DC RJ693/2010

Judgment

1 BATHURST CJ: I agree with Basten JA.

2 BASTEN JA: From the date he was attested (11 March 1983) until the date he ceased duties (30 August 2007) the respondent was an officer with the New South Wales Police Force. Following his retirement on medical grounds he sought payment of a lump sum gratuity in respect of psychological injury pursuant to s 12D of the Police Regulation (Superannuation) Act 1906 (NSW) ("Police Superannuation Act").

3 On 13 April 2010 a delegate of the Commissioner of Police determined that the respondent was suffering from the infirmity of post-traumatic stress disorder caused by the member being "hurt on duty" and assigned a notional date of injury as 30 August 2007.

4 On 19 October 2010 the appellant determined that the respondent was not entitled to a payment in respect of the psychological injury because he did not reach a relevant statutory threshold.

5 The respondent took proceedings in the District Court challenging the appellant's decision, pursuant to s 21 of the Police Superannuation Act. On 14 September 2011 Ashford DCJ set aside the decision of the appellant and granted a gratuity in the amount of $48,375. The appeal to this Court was limited to a determination of the District Court "in point of law": District Court Act 1973 (NSW), s 142N(1).

6 The important function performed by the appellant as a statutory corporation responsible for administering the superannuation funds available for retired police officers is not to be underestimated. No doubt an appeal is appropriate even in circumstances involving relatively small sums of money, if there be an issue of principle at stake requiring resolution by this Court. The statutory scheme within which this claim arose was discussed in some detail in SAS Trustee Corporation v Pearce [2009] NSWCA 302 and can, accordingly, be dealt with briefly for the purposes of this appeal.

7 The availability of a gratuity for psychiatric injury was conditioned on the claimant establishing the relevant conditions for a payment under Pt 3 of the Workers Compensation Act 1987 (NSW): Police Superannuation Act, s 12D(1). Compensation was not available "unless the degree of permanent impairment resulting from the primary psychological injury is at least 15%": Workers Compensation Act, s 65A(3).

8 The primary judge accepted the evidence of the respondent's treating psychiatrist, Dr Wade, that the degree of permanent impairment was in the range of 22%-23%, attributable to the respondent's chronic post-traumatic stress disorder. However, the position adopted by the appellant in making its decision on the respondent's claim, being the position it maintained in the District Court, was that the bulk of the causative trauma arose before 1 January 2002 and, accordingly, the calculation of compensation was to be discounted. The proportional discount adopted was 75%, which, when applied to the figure for permanent impairment, reduced it below 15%, thereby disentitling the respondent from receipt of any payment.

9 The date adopted for the purposes of this calculation (1 January 2002) was the date upon which a lump sum compensation payment first became available under the Workers Compensation Act, in respect of psychological injury. That change to the legislative scheme was accompanied by transitional provisions to be found in the Workers Compensation Act, Sch 6, Pt 18C, cl 3(1).

"3 Lump sum compensation amendments

(1) The lump sum compensation amendments do not apply in respect of an injury received before the commencement of the amendments ....

(2) There is to be a reduction in the compensation payable under Division 4 of Part 3 (as amended by the lump sum compensation amendments) for any proportion of the permanent impairment concerned that is a previously non-compensable impairment. This subclause does not limit the operation of section 323 of the 1998 Act or section 68B of the 1987 Act.

(3) a previously non-compensable impairment is loss or impairment that is due to something that occurred before the commencement of the amendments to Division 4 of Part 3 made by the lump sum compensation amendments, being loss or impairment that is of a kind for which no compensation was payable under that Division before that commencement."

10 Thus the amendments did not apply "in respect of an injury received before the commencement of the amendments": cl 3(1). Under the Police Superannuation Act, the function of determining the date on which the injury arose was conferred on the Commissioner of Police: s 10B(1) and (3). In the case of an injury constituted by a "disease" the injury was deemed to have happened, relevantly for present purposes, at the time of the worker's incapacity: Workers Compensation Act, s 15(1). The specification of a "notional" date should be understood as reflecting the application by the Commissioner of Police of s 15 of the Workers Compensation Act (or possibly s 16): Pearce, at [94]. It is not in dispute in the present case that the Commissioner's certificate determined that the injury had been "received" after the commencement of the amendments in 2002 and, accordingly, they applied with respect to the respondent's claim. That was not, however, the only effect of the transitional provisions. Sub-clauses 3(2) and (3) contained the critical provisions set out above.

11 The operation of these provisions was not in dispute, in terms of principle. Thus it was accepted that a psychological injury, such as post-traumatic stress disorder, was a previously non-compensable impairment. It was accepted by the respondent that, if any part of the impairment could be said to be "due to something that occurred before" 1 January 2002, it was necessary for the Court to reduce the compensation payable for the "proportion" of the permanent impairment attributable to the earlier events.

12 It was also common ground that there were earlier traumatic events which could have given rise to psychiatric injury. Thus, the appellant noted some 19 distressing incidents attended by the respondent before 1 January 2002 and some 12 such incidents occurring thereafter before he suffered a breakdown in 2007. This material gave rise to a factual dispute. The trial judge resolved that factual dispute in the following passage:

"[52] It is urged upon me by the defendant that the decision of the Delegate made 19 October 2010 took into account the enormity of the trauma sustained by the plaintiff resulting in incontrovertible psychological injury prior to 1 January 2002 and on that ... basis the plaintiff is disentitled to a determination for compensation for WPI in respect of psychological injury that did not involve a deduction.

[53] That submission ignores Dr Synotts [sic] firm opinion that none of the degree of WPI could be attributable to events before 1 January 2002 based upon the fact that although the plaintiff described experiencing psychological distress in dealing with traumatic events prior to 1 January 2002 he did not consult anybody about his psychological difficulties before 2007 and thus he was of the opinion none of the current degree of impairment could be attributable to [events which occurred?] before January 2002 given that he continued working on a full-time basis and required no time off work due to psychological symptoms prior to 2007. He repeated that opinion on 26 August 2010 having been provided with additional information and [given it?] careful consideration.

[54] I formed the view that the plaintiff was straightforward in his evidence and clearly while he had understandable distress at many of the tragic scenes in which he was involved prior to 2002, his clear evidence was that he did not display outward signs of an inability to continue in his employment until 2005 when he broke down at the scene of an accident and at sometime around 2005 began having difficulty sleeping, problems in concentration and other symptoms which ultimately led to his ceasing employment in 2007 which was the time when he first sought psychological assistance. It seems clear that he had been functioning at a high level of responsibility without difficulty until at least the last two years of his duty. I accept the plaintiff as a witness of truth."

13 Her Honour's conclusion, reflected in the calculation of the gratuity, which derived directly from the written submissions filed by the respondent in the District Court, was in the following terms, at [55]:

"The plaintiff's submission was that it would be open on the evidence of Dr Synott to make no reduction at all in respect of the transitional provisions, but made the concession that on the whole of the evidence it is likely that events prior to 2002 had a role to pay in the causation of the condition, albeit minor when compared to events post 2002. On that basis the submission was made by counsel for the plaintiff that an appropriate reduction to compensation payable would be 10%."

14 The basis for the appeal did not arise from this material: rather, the appellant relied upon the conclusion set out at [56], which not only accepted the respondent's case, but went further, in a manner which was arguably erroneous:

"That seems to me to be an eminently sensible concession to make given the medical material and other evidence before me. I am prepared to make a finding that the plaintiff suffers 22% WPI as a result of the condition of PTSD, being a disease process sustained in the employ of the defendant, notional date of injury being 30 August 2007. I find any deduction to be 10% in accordance with s 323(2)."

15 The error relied upon arises from the last sentence of that paragraph. In order to understand the error, it is necessary to refer to the terms of s 323 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW), which relevantly provides:

"323 Deduction for previous injury or pre-existing condition or abnormality

(1) In assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury (whether or not it is an injury for which compensation has been paid or is payable under Division 4 of Part 3 of the 1987 Act) or that is due to any pre-existing condition or abnormality.

(2) If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence.

Note. So if the degree of permanent impairment is assessed as 30% and subsection (2) operates to require a 10% reduction in that impairment to be assumed, the degree of permanent impairment is reduced from 30% to 27% (a reduction of 10%)."

16 The appellant asserted that the primary judge erroneously identified the issue to be determined at [4] in terms which appeared to adopt language reflective of s 323, and not the transitional provision. If it did, that might have revealed error, but in fact it did not. It referred to the amount by which the compensation payable for permanent impairment was to be reduced; it did not refer to the possibility of reduction of the percentage of permanent impairment.

17 As this Court noted in Pearce, consideration of s 323, which may be relevant in some cases, derives from the last sentence in cl 3(2) of the transitional provisions to the Workers Compensation Act which notes that the subclause does not limit the operation of s 323 of the 1998 Act. However, as held in Pearce, s 323 only operates where there was a "previous injury", in which case it required a reduction, not in the amount of the payment (as required by the transitional provisions) but in the proportion of the impairment due to the previous injury. In this case, the Commissioner's certificate demonstrated that there was no previous injury and accordingly s 323 had no operation: see Pearce at [106]. The reference by the primary judge at [56] was therefore erroneous. The error might have resulted in part from the adoption by the respondent in his written submissions of the figure of 10%, which was the "default" reduction provided in s 323(2). However, that percentage was not identified by the respondent as referable to s 323(2), but rather as the proportion of the impairment which was due to events which had occurred before 1 January 2002, in the language of cl 3 of the transitional provisions.

18 The fact that the primary judge erroneously referred to s 323(2) was relied on as indicating confusion as to the correct test. If confusion arose, it was probably induced in part by the appellant's submission, but it was not a material error. That is demonstrated by the fact that the primary judge did not use the 10% figure to reduce the level of permanent impairment (which was the exercise required by s 323) but to reduce the compensation payable (which was the exercise required by cl 3). In other words, despite the erroneous reference to s 323(2), the exercise in fact carried out was the correct exercise. There was, therefore no erroneous decision in point of law which materially affected the award and the appeal on this ground must be rejected.

19 For a limited purpose it is desirable to note the possible source of the error, which is not difficult to discern. The appellant's decision the subject of the appeal relied upon an exercise to be undertaken pursuant to s 323 for the express forensic purpose of reducing the calculation of permanent impairment below the threshold of 15%. That approach was erroneous. It was repeated in written submissions in the District Court at paragraphs 24-26. It was an exercise affirmed in oral submissions: Tcpt, 26/07/11, pp 12(35)-(50) and 13(35)-14(5). The exercise was sought to be justified before this Court by reference to a course adopted by Neilson DCJ in Maguire v SAS Trustee Corporation (District Court, unrep, 30 November 2009) at [56]. The issue in Maguire, as in this case, was whether and to what extent there should be a reduction in the compensation payable for any proportion of the permanent impairment due to something that occurred before 1 January 2002. In that context, Neilson DCJ reasoned as follows:

"Doing the best I can I would reduce the compensation payable for whole person impairment by fifty per cent for the proportion of the permanent impairment that occurred prior to 1 January 2002. That means the plaintiff's whole person impairment must be seen as 7.5 per cent which needs to be rounded up to eight per cent. The problem here, of course, is that to recover any compensation for whole person impairment for a psychiatric condition there must be at least fifteen percent WPI."

20 The first sentence of that passage is largely unexceptionable, although it was not the impairment that occurred prior to 1 January 2002, but the events to which it was partly due. However, to translate that calculation from a reduction in the compensation payable to a reduction in the whole person impairment was to shift from an exercise undertaken pursuant to cl 3 of the transitional provisions to an adjustment on account of pre-existing injury, pursuant to s 323. That exercise was not only not permitted by the statutory scheme but was inconsistent with it. To the extent that the appellant sought to rely upon the approach adopted in Maguire, that reliance must be rejected, as the approach was erroneous in point of law. It did not comply with the statutory scheme and should not be followed in future cases.

21 That conclusion is sufficient to dispose of grounds 1-4 in the notice of appeal. The fifth and final ground asserted that the primary judge failed to take into account a relevant consideration, namely the evidence of Ms Gillian Mee. This ground, which was pursued only on a limited basis at the hearing of the appeal, is factually and legally misconceived. Factually, the primary judge did not fail to take into account Ms Mee's evidence: she expressly referred to it and gave a reason for placing no weight upon it: at [44]. Ms Mee described herself as a "rehabilitation counsellor". The appellant apparently relied upon the report because the respondent had given Ms Mee a history (as he had the medical experts) which included reference to difficulties experienced by him in his employment prior to 1 January 2002. That may have been so, but her Honour placed no weight upon it because she did not know what qualifications Ms Mee had to assess such material. To the extent that Ms Mee did not assess the material, the question of causative effect depended upon the evidence of the respondent himself and the medical experts. The primary judge was quite entitled to take the course she did.

22 Further, as a matter of law, a relevant consideration is one which is described as mandatory and which it is therefore legally erroneous to disregard. The evidence of Ms Mee was not in any appropriate sense a consideration prescribed by statute or otherwise required by law to be taken into account. There may have been grounds for complaint if critical information supplied by Ms Mee was rejected as irrelevant, but that did not occur. The ground requires no further consideration; it should be rejected.

23 It follows that the appeal must be dismissed. The appellant must pay the respondent's costs in this Court.

24 TOBIAS AJA: I agree with Basten JA.

25 BATHURST CJ: The orders of the Court are as follows:

(1) Appeal dismissed.

(2) Appellant to pay the respondent's costs in this Court.

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Decision last updated: 30 August 2012