Comcare v Canute [2005] FCAFC 262 (16 December 2005)

Last Updated: 16 December 2005

FEDERAL COURT OF AUSTRALIA

Comcare v Canute [2005] FCAFC 262

ADMINISTRATIVE LAW – workers compensation – physical injury arising out of or in the course of employment – assessment of permanent impairment flowing from physical injury – final determination – subsequent mental disorder caused by physical injury – whether subsequent mental disorder to be treated as element of impairment flowing from initial injury – whether injury giving rise to a discrete head of liability – broad definition of impairment – legislative policy – capping of compensation entitlements – limited facility for additional compensation by reason of increased impairment after final determination – overlap between definition of ‘impairment’ and definition of ‘injury’ – where consequential injury also constitutes impairment caused by initial injury – assumption by Tribunal that consequential disorder must be impairment - whether error of law on the part of the Tribunal – failure to consider whether consequential disorder within the definition of ‘impairment’ – appeal allowed – primary decision of Administrative Appeals Tribunal restored



Safety Rehabilitation and Compensation Act 1988 (Cth) s 14, s 4, s 24, s 25, s 28

Canute v Comcare [2005] FCA 299 reversed
Comcare v Mihajlovic [2000] FCA 285; (2000) 97 FCR 304 cited
Comcare v Roser [2003] FCA 243; (2003) 127 FCR 155 cited
Re Laven v Comcare [2003] AATA 821; (2003) 76 ALD 253 cited
Comcare v Van Grinsven [2002] FCA 371; (2002) 68 ALD 87 cited
Brennan v Comcare (1994) 50 CLR 555 cited
Treloar v Australian Telecommunications Commission [1990] FCA 511; (1990) 26 FCR 316 cited
Australian Telecommunications Commission v Treloar (1989) 90 ALR 202 cited
Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 75 ALR 271 cited
Brayson Motors Pty Ltd (In Liq) v Federal Commissioner of Taxation [1985] HCA 20; (1985) 156 CLR 651 cited
Neill v Glacier Metal Co Ltd [1965] 1 QB 16 cited
Elazac v Commissioner of Patents (1994) 125 ALR 663 cited







COMCARE v KENNETH JOHN CANUTE
NSD 609 of 2005

FRENCH, GYLES AND STONE JJ
16 DECEMBER 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 609 OF 2005

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	COMCARE APPELLANT
AND:	KENNETH JOHN CANUTE RESPONDENT
JUDGES:	FRENCH, GYLES AND STONE JJ
DATE OF ORDER:	16 DECEMBER 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be allowed and the order of the learned primary judge be set aside.

2. There be no order on the costs of the appeal or on the appeal in the original jurisdiction.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 609 OF 2005

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	COMCARE APPELLANT
AND:	KENNETH JOHN CANUTE RESPONDENT

JUDGES:	FRENCH, GYLES AND STONE JJ
DATE:	16 DECEMBER 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

French and Stone JJ
Introduction

1 In September 1998 Kenneth John Canute, who was an employee of the Department of Defence, suffered severe back pain while lifting a bag of office rubbish. The pain was caused by displacement of a lumbar disc. As a result he suffered a chronic condition involving a degree of permanent impairment of his physical function. On 9 February 2000 Comcare awarded him compensation totalling $29,608.07 under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act) on account of that permanent impairment. Mr Canute resumed work at the Department of Defence doing light duties from October 2000 but took voluntary redundancy in October 2001.

2 From about August 2001 Mr Canute began to suffer symptoms of what he thought was depression. He was ultimately diagnosed with an adjustment disorder. In July 2002 he claimed further compensation on account of this mental condition. His claim was refused under s 25(4) of the SRC Act which sets a threshold requirement of a 10 per cent increase in impairment before further compensation will be paid following a final determination of compensation. His claim was refused on the basis that the disorder from which he suffered was an impairment flowing from his original injury and that it represented less than a 10 per cent increase over the impairment for which he had already been compensated.

3 Mr Canute applied to the Administrative Appeals Tribunal (the Tribunal) for review of the Comcare decision. The Tribunal, like Comcare, found that he suffered from an adjustment disorder caused by the 1998 injury and that this disorder represented an increased impairment, flowing from that injury, of less than 10 per cent over the impairment for which he had been finally compensated. The Tribunal refused his application, also applying s 25(4) of the SRC Act.

4 On Mr Canute’s appeal in the original jurisdiction of this Court, the Tribunal decision was set aside by Hill J on the basis that it had erred in law in failing to consider whether the adjustment disorder, although flowing from the 1998 injury, represented a distinct compensable injury rather than a mere increase in the level of impairment caused by the initial injury – Canute v Comare [2005] FCA 299.

5 Comcare appealed to the Full Court against the decision of the learned primary judge. For the reasons that follow the Tribunal erred in law. It erred not because it failed to consider the possibility that the adjustment disorder was an injury. It was plainly that. It erred because it assumed that an injury which is consequential upon a compensable injury is to be treated as an increase in the level of impairment attributable to that initial injury. That was an assumption it was not entitled to make. It should have considered whether the second injury was in truth also an ‘impairment’ within the definition of that term in the SRC Act.

6 In this case, however, a proper application of the law by the Tribunal would have led to the result which it reached. The adjustment disorder fell within the definition of impairment even though it was also an injury. It was an impairment caused by the initial injury and therefore an increase in the impairment attributable to that injury. On a proper construction of the SRC Act the constraints on additional compensation imposed by s 25(4) applied to it. The Tribunal decision should not have been set aside. The appeal should be allowed and the order of the learned primary judge set aside so that the Tribunal decision is reinstated. In the circumstances there should be no order on the costs of the appeal or on the appeal in the original jurisdiction.

Factual and Procedural Background

7 Kenneth John Canute was born on 6 May 1957. He finished his secondary education in 1974 and obtained a Parks and Garden Trade Certificate from the Wollongong TAFE College. Since that time he worked mainly as a labourer in gardening, maintenance and labouring. He was always an active sportsmen. He played rugby league, surfed and played golf. In 1995 he commenced employment with the Department of Defence. He was employed as a gardener and maintenance man in the Second Division Headquarters at the Randwick Barracks. His work included cleaning toilets and showers, vacuuming offices and hallways, emptying rubbish bins and completing other odd jobs as directed. He also worked on maintaining the grounds at the Barracks. He was part of a team of four employees.

8 On 19 February 1997 Mr Canute was vacuuming some stairs at the Barracks. He was using a backpack vacuum cleaner. The job involved a lot of bending. When he straightened up while on this job he suffered a severe and sharp pain in his lower back. He was unable to fully straighten. He took three weeks leave immediately following that event. He sought medical advice. He was given cortisone and underwent physiotherapy treatment. The initial pain and associated muscle spasm diminished with that treatment. At the end of the three weeks he felt that, despite the pain, he was strong enough to resume his duties. By the end of 1997 he felt he had not completely recovered. He reported residual recurrent lower back pain and continuing muscle spasms. However he felt stronger overall as a result of the physiotherapy.

9 Mr Canute suffered a second incident of severe back pain on 7 September 1998. On that day he was the only member of the maintenance team at work. Normally he would not clean downstairs offices at the Barracks but because there was no one else there he had to fill in. He picked up a large heavy bag of office rubbish and lifted it up to his shoulder with a view to taking it to a dumpster in the carpark. As he lifted it he felt a click and strong pain in his lower back.

10 The second incident rendered Mr Canute unfit for work for about two years. He consulted a general practitioner, Dr Levy, and a rehabilitation physician Dr Lewington. He undertook three or four sessions of physiotherapy which did not help. Constant back pain disturbed his sleep pattern. He was unable to undertake many activities which he used to enjoy. He used to go for long walks but after the incident could only walk for about five minutes before experiencing right leg numbness. He had also enjoyed playing golf. He did play occasionally in 1998 and 1999 but had to sit down and rest frequently on the course. He suffered back pain on these occasions. He took Panadeine Forte but said it made him feel ‘docile, fuzzy and slow’. He used marijuana to assist him in sleeping. In some weeks the pain he experienced was severe. On 4 November 1998 Mr Canute lodged a claim for rehabilitation and compensation with Comcare. The claim was stated to be for ‘back injury’ and ‘muscle spasms’. In making that claim he cited the 1998 incident as the occasion of his injury.

11 On 8 March 1999 Mr Canute wrote to Comcare setting out in some more detail the circumstances in which he had suffered the back pain for which he was claiming. He complained about delay in the processing of his Work Cover Certificates. On 21 April 1999 Comcare wrote back to him referring to what it described as his ‘... claim relating to aggravation of displacement of intervertebral disc-lumbar sustained on 7/9/1998’. Comcare advised that it had decided to allow his claim. There was sufficient evidence to establish that his aggravation of displacement of intervertebral disc-lumbar occurred as he said and that it resulted from a trauma to the relevant disc. There was also sufficient evidence to establish that it was work-related. Liability to pay compensation under the SRC Act was accepted up to and including 7 June 1999. Mr Canute was told that if he needed to claim compensation beyond that date it would be necessary for him to provide further supporting medical evidence from his treating doctor or specialist.

12 On 14 September 1999 Mr Canute lodged a Compensation Claim for Permanent Injury. The injury in respect of which he made the claim was described thus:

‘Shooting Numbing Pain Down (R) Leg. Caused by Displacement of Intervertebral Disc-Lumbar. Muscle Spasm, Lower Back Pain, Ciattic (sic) Nerve Trauma.’

His doctor, Dr Levy, completed a part of the form in which he described Mr Canute’s ‘current condition’ as ‘L5/S1 spondylolisthesis’. The doctor described the relevant impairments suffered as a result of the condition as:

‘Chronic severe back pain radiates down (R) leg.’

13 On 8 December 1999 Mr Canute filled out a Non-Economic Loss questionnaire form provided by Comcare. Under the heading ‘Pain and Suffering’ he ticked a box which indicated that his pain occurred most of the time, that there were restrictions on his activity and that the pain was resistant to treatment. Under the heading ‘Suffering’ he ticked a box which indicated that he was constantly focussed on the condition, that he was ruled by emotions, that his symptoms predominated over his thinking, that he was unable to cope, that his activities were severely restricted and his treatment was of no real help. By way of additional comment he wrote, inter alia:

‘I have suffered a high degree of mental anguish with this condition. Constant stress which my treating doctor knows of. I can no longer do my normal duties ... I can no longer do any of my recreational activities because of pain and restrictions...’

14 On 9 February 2000 Comcare wrote to Mr Canute a letter which stated:

‘The assessment of your degree of permanent impairment by Dr Lewington indicates that you currently suffer a whole person impairment of at least 10%. I am therefore able to make an award under sections 24 and 27.’

Dr Lewington had assessed him as having a 15 per cent whole person impairment with respect to the back injury and a 10 per cent whole person impairment with respect to his right leg. He estimated that 50 per cent of the current back and right leg conditions were due to the work injuries suffered on 7 September 1998 and 19 February 1997. A residual 50 per cent was attributable to a pre-existing condition. On the Combined Values Chart from the Comcare ‘Guide to the Assessment of the Degree of Permanent Impairment’, which is made pursuant to the SRC Act, the whole person impairment percentage was said to be 24 per cent. On the basis that only half the impairment was related to his compensable condition, Comcare determined that he was entitled to an award of 12 per cent whole person impairment. This was represented by an award of $13,731.28. In addition he was entitled to an award for non-economic loss under s 27 of the Act of $15,876.80. His total assessment was therefore $29,608.07. He wrote to Comcare on 24 February 2000 informing it that he had decided to accept its offer of compensation made on 9 February 2000 and that he would not be going to court or taking the matter any further.

15 By October 2000 Mr Canute had recommenced light duties’ work at the Department of Defence. This involved mail sorting and assisting with government stores. He worked about four hours a day for the next few weeks and then increased his time to 6 1/2 hours a day. By the end of the working day he would start to limp and feel pain in his right leg. He worked for about 11 months under this regime.

16 In September 2001 Mr Canute was informed by the Department of Defence that redundancy packages were to be offered to some staff. Although such a package would be voluntary he was told that at some time in the future his job would cease to exist. He decided to take the package. He was approved for voluntary redundancy on 25 October 2001 and ceased work at the Department of Defence on that day. The reason for the termination of his employment as stated in a notice dated 4 October 2001 was that he was ‘... excess to the requirements of the Department of Defence’.

17 In the meantime Mr Canute had begun to suffer what he thought was depression. He was referred by his general practitioner to Dr J Menzies, a consultant psychiatrist. On 4 July 2002 he lodged a further Compensation Claim for Permanent Injury. The permanent injury was described thus:

‘Constant and severe lower back and (R) leg pain. Constant Stress.’

The medical certificate incorporated in the compensation claim, which was completed by his doctor, had the following entries under the heading ‘Diagnosis of current condition’:

‘1. L5/S1 spondylolisthesis
2. Adjustment disorder with depression’

In answer to the question ‘What impairments have resulted from the condition’, the doctor wrote:

‘1. chronic severe lower back pain.
2. ongoing depression.’

18 By a letter dated 29 November 2002 Comcare denied liability for any further lump sum compensation. The letter referred to medical reports provided by Dr Robert Gertler dated 2 May 2002, Dr Ronald Barr dated 1 October 2002 and Dr John Menzies dated 18 November 2002. Dr Gertler had said that according to the Guide Mr Canute’s degree of impairment was less than 10 per cent. Dr Barr said that from a psychiatric view point he thought Mr Canute had 15 per cent impairment from work-related factors. Dr Menzies had estimated the overall percentage whole person impairment ‘resulting from consequent psychological injury’ to be in the range of 5 per cent to 10 per cent.

19 The Comcare delegate applied s 25(4) of the SRC Act. She said that liability had previously been accepted at 12 per cent whole person impairment. She would need to be satisfied that Mr Canute was currently suffering from a combined total of 22 per cent whole person impairment under the Combined Values Chart in Table 14.1 of the Guide for a further lump sum payment to be awarded. Having regard to the medical evidence presented and the provisions of s 25(4) she was satisfied that there had been no increase in the degree of whole person impairment as a result of the lumbar spondylosis condition.

20 Mr Canute’s solicitors wrote to Comcare on 20 December 2002 seeking reconsideration of the decision. On 4 April 2003 an Independent Review Officer in Comcare affirmed the delegate’s determination. He did so, inter alia, on the basis that he too was not satisfied that Mr Canute had suffered an increase in whole person permanent impairment of 10 per cent or more. Following the rejection of that application for internal review, Mr Canute made application to the Tribunal for review of the Comcare decision.

21 On 21 June 2004 the Tribunal affirmed the Comcare decision. Mr Canute then lodged a notice of appeal in the original jurisdiction of this Court against the decision of the Tribunal. The grounds of that appeal were as follows:

‘(a) The Tribunal erred in law in deciding that the 10% whole person impairment arising from the Applicant’s psychiatric injury was to be combined under Table 14.1 of the Comcare Guide with the 12% whole person impairment previously assessed for the Applicant’s back injury, when the correct approach was that each injury was entitled to individual assessment under section 24 of the SRC Act without combination under Table 14.1.
(b) The Tribunal erred in law in finding that the Applicant was not entitled to compensation under Sections 24 & 27 of the SRC Act in respect of 10% whole person impairment under Table 5.1 of the Comcare Guide.’

22 On 1 April 2005 Hill J found in favour of Mr Canute. He made orders in the following terms:

‘1. The decision of the Administrative Appeals Tribunal dated 21 June 2004 be set aside and the matter be remitted to the Tribunal for further hearing, with or without additional evidence being called.
2. The respondent is to pay the applicant’s costs of the present application.’

23 Comcare now appeals to the Full Court against the decision of the Tribunal.

Statutory Framework

24 The SRC Act is described in its long title as:

‘An Act relating to the rehabilitation of employees of the Commonwealth and certain corporations and to workers’ compensation for those employees and certain other persons, and for related purposes.’

25 Section 14 of the SRC Act establishes the liability of the Commonwealth to pay compensation under that Act in the following terms:

‘14. Compensation for injuries

(1) Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment.
(2) Compensation is not payable in respect of an injury that is intentionally self-inflicted.
(3) Compensation is not payable in respect of an injury that is caused by the serious and wilful misconduct of the employee but is not intentionally self-inflicted, unless the injury results in death or serious and permanent impairment.’

26 The term ‘injury’ and related terms are defined in s 4 of the SRC Act:

‘injury means:

(a) a disease suffered by an employee; or
(b) an injury (other than a disease) suffered by an employee, being a physical or mental injury arising out of, or in the course of, the employee’s employment; or
(c) an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee’s employment), being an aggravation that arose out of, or in the course of, that employment,

but does not include any such disease, injury or aggravation suffered by an employee as a result of reasonable disciplinary action taken against the employee or failure by the employee to obtain a promotion, transfer or benefit in connection with his or her employment.
...

27 disease means:

(a) any ailment suffered by an employee; or
(b) the aggravation of any such ailment;

being an ailment or an aggravation that was contributed to in a material degree by the employee’s employment by the Commonwealth or a licensed corporation.
...
ailment means any physical or mental ailment, disorder, defect or morbid condition (whether of sudden onset or gradual development).
...
impairment means the loss, the loss of the use, or the damage or malfunction, of any part of the body or of any bodily system or function or part of such system or function.
...
permanent means likely to continue indefinitely.’

28 Section 6 of the SRC Act provides, non-exhaustively, for circumstances in which an injury shall, for the purposes of the SRC Act, be treated as having arisen out of or in the course of employment. One such circumstance arises where the injury was sustained while the employee:

‘...was at his or her place of work, for the purposes of that employment, or was temporarily absent from that place during an ordinary recess in that employment;’ (s 6(1)(b)(i))

As appears from the preceding provision it is not necessary that the injuries falling within its terms have a causal connection to the person’s employment. It is sufficient, as in the present case, that Mr Canute was at his place of work when he sustained his back injury. This may be contrasted with the requirement for a disease that the employment shall have contributed in a material degree to the contraction of the disease. There are deeming provisions in s 7 which set out the conditions under which employment shall be taken to have contributed in a material degree to the contraction of a disease. It is not suggested that any of those is applicable in this case.

29 Division 4 of Part 2 of the SRC Act deals with injuries resulting in impairment. Section 24 of the SRC Act, which is the first section in Division 4, imposes liability on the Commonwealth in respect of compensation for such injuries:

‘24. Compensation for injuries resulting in permanent impairment

(1) Where an injury to an employee results in a permanent impairment Comcare is liable to pay compensation to the employee in respect of the injury.

...

(3) Subject to this section, the amount of compensation payable to the employee is such amount, as is assessed by Comcare under subsection (4) being an amount not exceeding the maximum amount at the date of the assessment.
(4) The amount assessed by Comcare shall be an amount that is the same percentage of the maximum amount as the percentage determined by Comcare under subsection (5).
(5) Comcare shall determine the degree of permanent impairment of the employee resulting from an injury under the provisions of the approved Guide.
(6) The degree of permanent impairment shall be expressed as a percentage.

(7) Subject to section 25, if:

(a) the employee has a permanent impairment other than a hearing loss; and
(b) Comcare determines that the degree of permanent impairment is less than 10%;

an amount of compensation is not payable to the employee under this section.
...
(9) For the purposes of this section, the maximum amount is $80,000.’

30 Section 25 is entitled ‘Interim payment of compensation’. However it also deals with payments after final assessment. It provides, inter alia, as follows:

‘25(1) Where Comcare:

(a) makes a determination that an employee is suffering from a permanent impairment as a result of an injury; and
(b) is satisfied that the degree of the impairment is equal to or more than 10% but has not made a final determination of the degree of impairment;

Comcare shall, on the written request of the employee made at any time before the final determination is made, make an interim determination of the degree of permanent impairment under section 24 and assess an amount of compensation payable to the employee.
...

(4) Where Comcare has made a final assessment of the degree of permanent impairment of an employee (other than a hearing loss) no further amounts of compensation shall be payable to the employee in respect of a subsequent increase in the degree of impairment, unless the increase is 10% or more.’

31 Section 28 of the SRC Act provides for Comcare to prepare a written document to be called ‘The Guide to the Assessment of the Assessment of Degree of Permanent Impairment’. The Guide is required by the SRC Act to set out:

‘1. ...

(a) criteria by reference to which the degree of the permanent impairment of an employee resulting from an injury shall be determined;
(b) criteria by reference to which the degree of non-economic loss suffered by an employee as a result of an injury or impairment shall be determined; and
(c) methods by which the degree of permanent impairment and the degree of non-economic loss, as determined under those criteria, shall be expressed as a percentage’

As appears from s 28(4) the Guide is a species of delegated legislation:

‘Where Comcare, a licensee or the Administrative Appeals Tribunal is required to assess or re-assess, or review the assessment or re-assessment of, the degree of permanent impairment of an employee resulting from an injury, or the degree of non-economic loss suffered by an employee, the provisions of the approved Guide are binding on Comcare, the licensed authority, the licensed corporation or the Administrative Appeals Tribunal, as the case may be, in the carrying out of that assessment, re-assessment or review, and the assessment, re-assessment or review shall be made under the relevant provisions of the approved Guide.’

The remaining subsections of s 28 are not material for present purposes.

The Guide to the Assessment of the Degree of Permanent Impairment

32 The Guide applicable for present purposes was first published in 1989 and most recently reprinted in 1998. Its Introduction provides an overview of the statutory framework and of its content. It explains that the Guide is divided into two parts, namely:

‘PART A – which is to be used to assess the degree of permanent impairment resulting from an injury; and

PART B – which is to be used to assess the degree of non-economic loss resulting from an injury or impairment.’

The Introduction then states:

‘The ‘Principles of Assessment’ and ‘Glossary’ segments which precede Parts A and B contain information relevant to the interpretation and application of those parts.’

33 The Principles of Assessment discuss the concepts of impairment and non-economic loss. They state:

‘Evaluation of a whole person impairment is a medical appraisal of the nature and extent of the effect of an injury or disease on a person’s functional capacity and activities of daily living.’

As with the American Medical Association’s Guides, Part A of this guide is structured by assembling detailed descriptions of impairments into groups according to body system and expressing the extent of each impairment as a percentage value of the functional capacity of a normal healthy person. Thus a percentage value can be assigned to an employee’s impairment by reference to the relevant description in this guide.’

34 The Principles then discuss ‘Gradations of Impairment’ and ‘Combined Impairments’. Under the latter heading they state:

‘It is important to realise that impairment is system or function based and that a single injury or disease may give rise to multiple loss of function. When more than one table applies to a single injury separate scores should be allocated to each functional impairment. Where two or more injuries give rise to the same impairment a single rating only should be given.’

Under the heading ‘Double Assessment’ the following appears:

‘The possibility of double assessment for a single loss of function must be guarded against. For example, it would be inappropriate to assess a lower limb amputation by reference to both the amputation table (9.3) and the lower extremity table (9.2).

Where an employee suffers from more than one impairment the values are not added but are combined using the Combined Values Table. The purpose of this table is to give the total effect of all impairments, according to a formula, as a percentage value of the employee’s whole bodily system or function (see Table 14).’

35 The Guide also provides that where an employee’s impairment is of a kind that cannot be assessed in accordance with its provisions, Comcare may direct that assessment be made under the provisions of the current American Medical Association’s Guides.

36 The Guide includes Impairment Tables in Part A and criteria for assessment of non-economic loss in Part B. Table 5.1 in Part A deals with psychiatric conditions. A note at the commencement of the Table states that it:

‘Includes psychoses, neuroses, personality disorders and other diagnosable conditions.’

Table 5.1 sets out descriptions of increasing levels of impairment and assigns to each descriptive category a percentage impairment figure. A person who reacts to the stressors of daily living without loss of personal or social efficiency and is capable of performing activities of daily living without supervision or assistance has an impairment level of zero. A person who either reacts to the stressors of daily living with minor loss of personal or social efficiency or has a lack of conscience directed behaviour without harm to community or self or has minor distortions of thinking but is nevertheless capable of performing the activities of daily living without supervision or assistance, has an impairment level of 5 per cent. A person who has more than one of the preceding attributes but is incapable of performing activities of daily living without supervision or assistance has an impairment rating of 10 per cent. Mr Canute, as will be seen, was assessed by different medical examiners at 5 per cent and 10 per cent under Table 5.1 by reason of his adjustment disorder.

37 Table 9.2 deals with impairments of the musculo-skeletal system. Its first part deals with the lower extremities and loss of function of the hip, the knee or the ankle. Table 9.5 deals with limb function in the lower limb and Table 9.6 with impairment resulting from spinal lesions.

38 Table 14.1 comprises several pages of combined values charts. It is explained in the table that the calculated combined values there set out are derived from the formula A + B (1-A) where A and B are the decimal equivalents of the impairment ratings. To combine any two impairment values, the larger of the values is located on the vertical axis, the lower value on the horizontal axis and the combined value at the point of intersection of two lines drawn through them. The result is less than the sum of the parts.

The Tribunal’s Reasons for Decision

39 The Tribunal undertook a detailed review of the evidence before it including that of Mr Canute and four consultant psychiatrists, Dr PJ Morse, Dr JR Champion, Dr JD Menzies and Dr R Gertler. In commencing its reasons for decision the Tribunal defined its task thus (at [69]):

‘In this matter, we have to determine whether or not Mr Canute has a further entitlement to lump sum compensation for permanent impairment beyond that awarded on 9 February 2000. In order for any further lump sum compensation to be made where Comcare has made a final assessment of the degree of permanent impairment, pursuant to section 25 of the Act, any increase to the whole person impairment must be at least 10 per cent.’

40 There was an issue in the evidence before the Tribunal whether Mr Canute’s use of marijuana and alcohol had had any effect on his capacity for work. The Tribunal found this not to be the case.

41 One of the consulting psychiatrists, Dr Morse, had diagnosed major depression. However the Tribunal believed that while Mr Canute had some of the symptoms of major depression such as sleep disturbance, fatigue and lack of energy it did not consider that he had the requisite number of symptoms for such a diagnosis to be made. The Tribunal’s view was that on the balance of probability his psychiatric condition was that of a chronic adjustment disorder with anxious and depressed mood arising from his work-related back condition. That diagnosis was based on DSM IV diagnostic criteria and accorded with the majority of medical opinion.

42 The Tribunal then considered the impairment assessments made by the psychiatrists in relation to Mr Canute’s psychiatric condition. It noted a degree of consistency by the majority of the witnesses in assessing his impairment at between 5 per cent and 10 per cent under Table 5.1. Dr Morse assessed permanent impairment of 10 per cent. Dr Gertler assessed permanent impairment of 10 per cent and Dr Menzies assessed impairment of 5 per cent to 10 per cent. As to the latter, it may be noted that the Table only permits assessment at the values it defines. It does not allow for assessments at values between those defined. In the event the Tribunal was of the view, on all of the evidence, that a 10 per cent whole person impairment was appropriate to reflect the degree of impairment derived from Mr Canute’s adjustment disorder. It said (at [72]):

‘A level of 10 per cent impairment, in Mr Canute’s case, reflects his capability of performing activities of daily living without supervision or assistance but notes the presence of reaction to stresses of daily living with minor loss of personal or social efficiency, for example, in his social withdrawal ....’

It also found that he had minor distortions of thinking by way of reduction in concentration and feelings of low self worth.

43 Having made a finding of 10 per cent impairment arising from chronic adjustment disorder, the Tribunal then stated (at [73]):

‘The issue then becomes how is the impairment to be treated in terms of coming to a whole person impairment for the purposes of assessing any further lump sum compensation payable to Mr Canute. Mr Canute has already been provided with lump sum compensation as a result of his low back condition being assessed as having a 12 per cent whole person impairment (T9).’

The Tribunal referred to s 25(4) of the SRC Act. It then stated (at [75]):

‘In Mr Canute’s case, it is agreed and we find that he suffered a back injury on 7 September 1998, relating to an aggravation of displacement of an intervertebral disc-lumbar (T5). It is also the Tribunal’s finding that as a result of that physical injury, arising out of the same incident, Mr Canute has suffered an adjustment disorder. Thus, arising out of the same incident, but subsequent to it, one incident giving rise to the physical back injury subsequently gave rise to a psychological sequelae (sic) of adjustment disorder.’

44 The Tribunal referred to the decision of Finn J in Comcare v Mihajlovic [2000] FCA 285; (2000) 97 FCR 304. It quoted a passage from his Honour’s judgment dealing with multiple impairments arising from the same incident which, the Tribunal accepted, differed from the circumstance of multiple injuries giving rise to discrete entitlements. The latter case was considered in Comcare v Roser [2003] FCA 243; (2003) 127 FCR 155, a decision of Spender J. The Tribunal again cited s 25(4) in its discussion of an earlier Tribunal decision Re Laven v Comcare [2003] AATA 821; (2003) 76 ALD 253. The latter decision concerned a woman who suffered injury to her right arm and then claimed compensation in relation to ‘a sequelae’ (sic) from that injury to her left arm. Reference was also made to Comcare v Van Grinsven [2002] FCA 371; (2002) 68 ALD 87. That case, which was a Full Court decision, turned, in the Tribunal’s view, on the particular provisions of note 4 of Table 9.2 which provides that where more than one joint is affected the impairment deriving from each joint is to be combined using Table 14.1.

45 In [79] of its reasons the Tribunal set out, in the light of the cases which it had discussed, the proposition that:

‘... the degree of permanent impairment of the employee as a whole is assessed for the purpose of determining the compensation payable in respect of injuries, rather than impairment attributable to specific injuries individually.’

It stated on the basis of Roser that (at [79]):

‘... where more than one injury is occasioned by an incident, then there are separate and discreet (sic) liabilities in respect of each injury. The compensation for each injury should be then assessed by reference to the degree of impairment of the whole body flowing from each injury, which may require consideration of the combined effect of the separate impairments flowing from the same injury. If there are separate incidents leading to discreet (sic) injuries, each injury generates a separate liability and there is no obligation to have regard to the combined impairment but rather, to the person having several impairments to the whole person flowing from each injury.’

46 The critical conclusion in relation to Mr Canute’s case was expressed at [80] of the Tribunal’s decision:

‘In Mr Canute’s case, we conclude that Mr Canute has a permanent impairment of his back and subsequently permanent impairment arising out of the same physical injury but producing a psychological sequelae (sic). Hence multiple impairments arising from the same incident, a physical impairment and a psychological impairment. In such circumstances, we find that in order to assess the whole person impairment of Mr Canute, we must have recourse to the Combined Values Table of 14.1 and as referred to in subsection 28(1)(1) (sic) of the Act, in which the Guide sets out criteria by reference to which the degree of the permanent impairment of an employee resulting from an injury should be determined. Thus, a combination of 12 per cent for Canute’s physical back condition combined with 10 per cent for adjustment disorder provides a whole person permanent impairment of 21 per cent. This 21 per cent does not represent a 10 per cent or more increase in permanent impairment and accordingly, we find that no further lump sum compensation is payable to Mr Canute.’

47 The Tribunal went on to deal with a submission that the delegate’s original assessment of the physical impairment was incorrect. It rejected this argument noting that Mr Canute had not made any attempt to have the 12 per cent assessment on his original determination reconsidered.

48 For the preceding reasons the Tribunal affirmed the decision under review.

The Appeal in the Original Jurisdiction

49 In its appeal in the original jurisdiction of this Court pursuant to s 44 of the Administrative Appeals Tribunal Act the stated grounds for review were thus:

‘(a) The Tribunal erred in law in deciding that the 10% whole person impairment arising from the Applicant’s psychiatric injury was to be combined under Table 14.1 of the Comcare Guide with the 12% whole person impairment previously assessed for the Applicant’s back injury, when the correct approach was that each injury was entitled to individual assessment under section 24 of the SRC Act without combination under Table 14.1.

(b) The Tribunal erred in law in finding that the Applicant was not entitled to compensation under Sections 24 & 27 of the SRC Act in respect of 10% whole person impairment under Table 5.1 of the Comcare Guide.’

The Reasons for Judgment of the Primary Judge

50 After reviewing the background facts, the statutory framework, the Guide and the Tribunal’s reasons for decision the learned primary judge discussed the decisions in Roser, Mihajlovic and Laven which had been considered by the Tribunal. His Honour pointed out that in Roser the employee had injured both knees in 1986 and was awarded compensation for permanent impairment. In 1992 she had injured her back in work-related circumstances. The question for decision in that case was whether Table 14.1 was applicable where there were two separate compensable injuries both resulting in a degree of permanent impairment. His Honour evidently agreed with Spender J (at [20]):

‘As Spender J said, the case was one involving claims for compensation in respect of discrete injuries arising out of discrete events.’

And that (at [20]):

‘... each work related injury brought about a separate liability in the Commonwealth to pay compensation.’

51 His Honour also made the important observation following his discussion of Roser that (at [22]):

‘... it should be said that there is no reference in the legislation to "incidents" or, for that matter, any cognate expression referring to the set of circumstances or factual matrix that an "injury" can be said to arise from. The extract from para [75] of the Tribunal’s reasons here shows that the Tribunal thought it to be relevant that only one "incident" happened.’

52 As to Laven his Honour observed that neither party before him had sought to justify the reasoning of the Tribunal in that case. He explained that case more elaborately than the Tribunal had. The employee had received a lump sum compensation for an injury to her right arm and had later suffered an injury to her left shoulder, secondary to carpal tunnel syndrome in the right arm. That secondary condition arose because the employee had used her left arm to compensate for the restrictions to her right arm. The Tribunal had taken the view that Table 14.1 should be applied to combine the permanent impairment in respect of left and right arm and shoulder. His Honour said (at [26]):

‘It is obvious that the Tribunal in the present case was influenced by Lavin (sic). It saw Lavin (sic) as a case where the claim for further compensation in relation to the left arm involved what it regarded as "a sequelae of the same injury" that is to say, the injury originally caused to the employee’s right arm and shoulder. It adopted the same characterisation here describing Mr Canute’s chronic adjustment disorder as a "psychological sequelae".’

53 Although the application as filed in Court had characterised the Tribunal’s error of law as the application of Table 14.1 it was submitted in argument before his Honour that the error of law should probably be seen as an error of construction of the SRC Act. Alternatively, it could be regarded as a failure of the Tribunal to consider the relevant issue namely whether Mr Canute had suffered, in addition to his back injury, another injury, being the adjustment disorder and if so whether the percentage impairment should be calculated without the application of Table 14.1.

54 In turning to his own conclusions on the matter, the learned primary judge referred to the observations of Burchett J in Brennan v Comcare (1994) 50 FCR 555 at 556 that the SRC Act provides for compensation to be paid ‘in respect of the injury’. He also accepted Spender J’s characterisation of the reasoning of Burchett J as requiring that for a liability to arise there must be an injury with a clear cause and effect relationship between the injury and the permanent impairment claim.

55 His Honour held that the SRC Act required Comcare and the Tribunal, acting in its place on a review, to first determine whether there had been an injury suffered by the applicant. That inquiry was not restricted to physical injury. If there had been an injury, the next step was to determine what impairment or impairments, should there be more than one, would result from the injury. It was then necessary to calculate that impairment and determine the percentage value of the whole person impairment by applying the relevant table in the Guide. His Honour said (at [31]):

‘Where there is more than one injury, each injury is to be considered separately. The percentage impairment or impairments for each injury will be added together to calculate the percentage of whole person impairment. Multiple impairments arising from a single injury, by contrast do not require the addition of percentages but rather, the percentage whole person impairment will be determined by applying Table 14.1.’

56 His Honour then considered a number of examples and the approach to assessment required in each case. The simple case he cited was that of a single injury resulting in a single impairment. The more complex case involved a single injury with multiple impairments. So a back injury might affect the ability of the employee to use his or her back and affect motor functions as well. Table 14.1 would determine whole person impairment in such a case. His Honour then stated the important principle in relation to the Guide (at [32]):

‘It does not provide for compensation to be payable resulting from the cause of an incident. It does not segregate injuries into those that are "sequelae" and those which are not. Compensation is payable in respect of injuries.’

57 Where an employee suffers from more than one injury, each giving rise to one or more impairments, the compensation for each injury should be assessed by reference to the degree of impairment to the whole body flowing from it. In such a case, so his Honour held, Table 14.1 has no operation. In another circumstance, multiple injuries might result in a single impairment. He cited the example given by Spender J of the first injury suffered by Ms Roser in 1986 to both knees, a ‘bilateral knee condition’ resulting in a 20 per cent whole person impairment. His Honour then said (at [35]):

‘In my view it would be an error of law for the Tribunal to proceed in a case such as the present with its assessment of whole person impairment without first determining whether the employee suffered from one injury or more than one injury. I did not understand counsel for Comcare to disagree with this proposition. The question is whether in the present case the Tribunal so proceeded and thus erred in law.’

Counsel for Comcare, appearing on the appeal, did not accept that Comcare had agreed with his Honour’s proposition.

58 His Honour found it to be clear that the Tribunal had not considered the question whether the chronic adjustment disorder was itself an injury and to be considered as such under the Act. It failed to do so because it regarded it as relevant that the adjustment disorder was a ‘psychological sequelae’ that came about as a result of the physical injury which arose from the incident causing Mr Canute to suffer his back injury.

59 His Honour accepted that it might be possible to argue that a back condition and mental illness together constituted one injury. This was not an argument which had been advanced by Comcare. That argument would make the case analogous to the bilateral knee condition in Roser. However in that case, what might otherwise be thought to have involved two injuries resulted in only one impairment. His Honour accepted that in such a case it was appropriate as a matter of fact to treat what might otherwise be thought to be two injuries as one. He then said (at [39]):

‘However, it does not seem to me to be appropriate to treat two separate injuries, each having different levels of impairment, as one injury for the purposes of the Act. Ultimately, the policy of the Act is to compensate employees for injuries arising out of their employment. The measure of compensation is determined by reference to percentage impairment. However, the right to compensation is created by the occurrence of an injury.’

60 His Honour concluded that the Tribunal had erred in law in approaching the question of compensation without determining whether Mr Canute’s mental condition was an injury and, if so, whether it operated to create an impairment for which compensation was payable. He set aside the Tribunal’s decision and remitted the matter to the Tribunal to be decided again.

The Grounds of Appeal to the Full Court

61 The grounds of appeal to this Court were as follows:

‘2.1 The primary Judge erred in finding that the Tribunal did not consider the question whether the chronic adjustment disorder was itself an injury and to be considered as such under the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act).

2.2 The primary Judge erred in finding that the Tribunal erred in law in proceeding to approach the question of compensation without determining whether the mental condition from which the Respondent suffered was an injury and, if so, whether that injury operated to create an impairment for which compensation was payable.

3. His Honour should have held that:

(a) the Tribunal found, as a matter of fact, that the Respondent suffered from one injury for the purposes of the SRC Act, namely an aggravation of displacement of an intervertebral disc-lumbar, as a result of which injury the Respondent had multiple impairments, including psychological sequelae;
(b) as a consequence, the Tribunal was required, when assessing the degree of impairment that resulted from that injury, to apply Table 14.1 in the "Guide to the Assessment of the Degree of Permanent Impairment"; and
(c) the Tribunal therefore did not fall into any error of law.’

Defining the Assessment Task – When Injury is Impairment

62 The task of ascertaining liability for compensation under the SRC Act and the assessment of that compensation must be defined by reference first to the provisions of that Act. The Guide, being a species of delegated legislation, can only operate within the parameters for decision-making that are established by the SRC Act.

63 The SRC Act imposes liability to pay compensation on Comcare, in accordance with the SRC Act, and does so, ‘... in respect of an injury suffered by an employee if the injury results in death, incapacity for work or impairment’ (s 14). Compensation is therefore payable in respect of an impairment resulting from an injury. Liability flows from injuries not from incidents causing injuries, and relevantly, is assessed by reference to impairment.

64 The word ‘injury’ used in s 14 imports, through its definition in s 4 and the facultative provisions of ss 6, 6A and 7, the kinds of connections between injury and employment that are required to give rise to liability. In respect of injuries other than diseases the injury, whether it be physical or mental, must be one ‘arising out of, or in the course of the employee’s employment’. This does not always necessitate a causal connection between injury and employment. As appears from s 6(1)(b)(i), where an injury was sustained at work that connection suffices. In the case of an injury which is a disease, a causal connection is always necessary between the employment and the contraction of the disease. That causal connection is defined by the words ‘contributed to in a material degree by the employee’s employment by the Commonwealth ...’ (s 4). This definition differs from that considered by the Full Court in Treloar v Australian Telecommunications Commission [1990] FCA 511; (1990) 26 FCR 316. In Treloar, the Full Court was concerned with the antecedent legislation, the Compensation (Commonwealth Government Employees) Act 1971 (Cth) (the 1971 Act), which merely required the employment be ‘a contributing factor’ to the disease without any requirement that the contribution be ‘material’. The Full Court, at 323, said that under the test laid down in the 1971 Act:

‘... once it is established that an employee in the doing of his work was exposed to "a state of affairs to which he would otherwise not have been exposed" or to "some characteristic of or condition in which the work was to be performed" and that such exposure was in truth a "contributing" factor to the condition in respect of which he seeks compensation then it matters not whether the contribution was of any particular size or degree. ... All that is required is that the relevant aspects of the employment add their measure to the creation of the condition, its aggravation or acceleration. They must, in truth, be part of the cause. If they are not, then, they do not "contribute".’

65 The Full Court, however, went on to comment on the use of the word, ‘material’ in cases concerned with the exposition of the concept of ‘contributing factor’ in the 1971 Act. It did so because the trial judge in Treloar had made the following comment:

‘The test propounded by the 1971 Act, like the test propounded by the [SRC Act] requires that there be a contribution of a causal nature and therefore that the contribution be causally significant or, to use another term, material.’
(1989) 90 ALR 202 at 204.

Responding to this comment, the Full Court said (at 323):

‘The use of the word "material" in conjunction with the words "contributing factor" in the [1971 Act], where it has occurred in expositions of the section in other cases clearly is not intended to add to the section any significance which is not already to be found in the words used by the legislature. It has served only to emphasise that the section is not brought into play unless it be established by evidence that features of the employment did in fact and in truth contribute to the condition complained of. The causal connection must be established on the probabilities and not left in the area of possibility or conjecture. Once the link is established, however, it matters not that the contribution be large or small.’

66 In Suters v Australian Postal Corporation (1992) 28 ALD 320, Ryan J, while recognising that Treloar was concerned with legislation in which the word, ‘material’ did not appear, commented that ‘the case nonetheless contains a valuable exposition of the meaning of that word to which courts and tribunals are entitled to have regard when considering legislation containing it.’

67 Insofar as his Honour was of the view that Full Court’s comments in Treloar may be helpful in ascertaining the meaning of the term generally, we agree. This does not mean, however, that the comments of the Full Court apply to the use of the term in the definition of disease in s 4 of the SRC Act. Such an approach would fail to have sufficient regard to the legislative history that led to the enactment of the present legislation. The SRC Act, known as the Commonwealth Employees’ Rehabilitation and Compensation Act 1988 (Cth) when first enacted, repealed the 1971 Act and introduced a new scheme of compensation and rehabilitation. One of the changes from the 1971 Act was the introduction of a requirement that the employee show that their employment contributed ‘in a material degree’ to the contraction of the disease. In the Second Reading Speech to the Commonwealth Employees’ Rehabilitation and Compensation Bill 1988 (Cth), which (with immaterial amendments) became the SRC Act, the Minister for Social Security stated:

‘Under the existing Act an employee was required to establish only that his or her employment was a contributing factor in the contraction of a disease. This test does not adequately reflect the rights and obligations of the Commonwealth and its employees in relation to work-related disease and frequently results in the Commonwealth being liable to pay compensation for diseases which have little, if any, connection with employment. This Bill seeks to remedy that situation by requiring an employee to show that his or her employment contributed in a material degree to the contraction of the disease. The Government believes that this is a test which is firm but fair and which properly reflects the balance between the interests of the Commonwealth as employer and its employees. An employee will not be required to show that his or her employment caused the disease, or even that it was the most important factor in the contraction of the disease. It is intended that the test will require an employee to demonstrate that his or her employment was more than a mere contributing factor in the contraction of the disease. Accordingly, it will be necessary for an employee to show that there is a close connection between the disease and the employment in which he or she was engaged.

In determining whether employment contributed in a material degree to the contraction of a disease in a particular case, regard would be had to whether the employment in which the employee was engaged carried an inherent risk of the employee contracting the disease in question and whether some characteristic or feature of the employment tended to cause, aggravate or accelerate the disease. A disease which has been contributed to in a material degree by employment will be deemed to be an injury. Compensation will be payable if that injury results in the death, incapacity or impairment of the employee.’
(Emphasis added)
Second Reading Speech, House of Representatives, 27 April 1988, Hansard, p 2191.

68 On this basis, the observations of the Full Court in Treloar at 323 that the relevant causal connection must be established on the balance of probabilities and not left in the area of possibility of conjecture are not controversial. Equally, it is plain that the present legislation was not intended to require that an employee demonstrate that their employment caused the disease or that it was the most important factor. It would also appear that the imposition of a ‘but for’ test remains inappropriate. Having said this, the changes brought about by the enactment of the SRC Act were intended to require that the contribution be ‘more than a mere contributing factor’ and, as such, the comments of the Court in Treloar must be assessed in this light. Content must be given to the word ‘material’ contained in the definition of ‘disease’ in the legislation as it presently stands. The inclusion of this term imposes an evaluative threshold below which a causal connection may be disregarded. However, it is not necessary for present purposes to consider the proper meaning of ‘material’ and nothing more need to said about this issue.

69 The case of an injury which is not sustained at work but is caused by an injury which was sustained at work is not expressly addressed in the deeming provisions. Where, however, an injury is caused by the employee’s employment and can be shown to have caused a later discrete injury, then the latter, as a matter of construction, could be said to be an injury ‘arising out of ... the employee’s employment’. In this case it is clear on the facts that Mr Canute’s primary injury was causally connected to his employment.

70 Where the later injury is a disease, as defined in the Act, the question which must be asked and answered is whether it was ‘... contributed to in a material degree by the employee’s employment’. Here two possibilities arise. The first is that the initial injury happened at work and although not caused by the work is deemed, by operation of s 6(1)(b)(i), to have arisen out of or in the course of the employment. In that event the subsequent disease, although caused by the initial injury could not be said to be causally related to the employee’s employment. The second possibility is that the initial injury was, as in this case, directly caused by the employee’s work. If that injury causes the employee to contract a disease then it is open to conclude that the employment contributed in a material degree to the contraction of the disease. There may of course be questions of degree where, although the initial injury is a sine qua non for the contraction of the later disease, it is such a minor contributing cause that the employment could not, via that initial injury, be said to have materially contributed to the disease. There is a judgment here analogous to the kind of judgments which inform determinations of remoteness in relation to liability for damages in tort. It may be helpful to note the application of that analogy to the assessment of liability for loss under s 82 of the Trade Practices Act 1973 (Cth) – Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 75 ALR 271 at 279 per Gummow J:

‘... the courts, both in expounding the common law and in construing statutes which present issues of causation, have selected some one or more out of what is an infinite number of conditions to be treated as the cause: Thom v Sinclair ( [1972] UKHL 5; [1917] AC 127 at 135) per Lord Haldane ... National Insurance Co of New Zealand Ltd v Espagne [1961] HCA 15; (1961) 105 CLR 569 at 591-6, per Windeyer J. And, as those learned judges also explained, the cause or causes so selected vary with the purpose at hand. In making that selection the law is moved by considerations of policy, not simply of logic...’

71 So much having been said it is important generally to recognise the roles played by the concepts of injury and impairment in the SRC Act and the relationship to its legislative purpose. The broad definition of impairment must be read in the light of its application in s 14 as something which results from ‘injury suffered by an employee’. Nevertheless the question which arises in the context of the present case is whether a second injury, caused by an initial injury arising out of employment, could also be characterised as an element of the impairment arising from the initial injury. By way of example the definition of ‘ailment’ which informs the definition of disease is wide enough to overlap at least partly with the elements of ‘damage or malfunction of any part of the body or of any bodily system’ in the definition of impairment. On this basis an adjustment disorder of the kind suffered by Mr Canute would seem not only to be an ailment and therefore within the definition of disease and thereby injury, but also potentially an impairment.

72 Some and indeed perhaps many consequential injuries will be impairments. The critical question in such a case, and for this case, is whether they should be treated for such purposes as only an impairment and not as an injury giving rise to a discrete liability. This question must be answered by reference to the breadth of the definition of ‘impairment’ and the legislative purpose underlying the compensation scheme. In so saying it may be accepted that the Guide, as made at the time of the enactment of the SRC Act, forms part of a legislative scheme and may be referred to in order to ascertain the nature of that scheme – Pearce & Geddes, Statutory Interpretation in Australia, 5^th Edition, Butterworths (2001) at 337. As Mason J said in Brayson Motors Pty Ltd (In Liq) v Federal Commissioner of Taxation [1985] HCA 20; (1985) 156 CLR 651 at 652:

‘One looks at regulations, not to construe an overall scheme or to throw light on ambiguity in a statutory provision, but to ascertain what the scheme is.’

It has been suggested the delegated legislation prepared contemporaneously with an Act to establish a single legislative scheme may be referred to in aid of the construction of ambiguous provisions of the Act – Neill v Glacier Metal Co Ltd [1965] 1 QB 16 at 27; Elazac v Commissioner of Patents (1994) 125 ALR 663.

73 In the Second Reading Speech for the SRC Act, originally referred to as the Commonwealth Employees Rehabilitation and Compensation Act 1988 (Cth), the Minister for Social Security referred to the provisions relating to the payment of lump sums for permanent impairment and non-economic loss. He said (at 2193):

‘These payments will replace awards of damages at common law for losses of a non-economic nature. A maximum of $80,000 will be payable for injuries which result in a permanent impairment and up to $30,000 for non-economic loss.

Under the existing Act, lump sum payments are made on the basis of a table of maims, with the level of payment being determined having regard to the loss, or loss of the efficient use, of various parts of the body. That approach has been abandoned and the level of payments in future will be determined using a ‘whole person’ approach, similar to that used under the Veterans’ Entitlements Act 1986.

The whole person approach allows the degree of impairment to be assessed on a more accurate basis and expressed as a percentage loss of the use of the ability of the person to undertake normal living activities.’
(Hansard, Reps 27/4/88)

74 The SRC Act makes specific provision in Div 4 of Part II for the payment of compensation for injuries resulting in permanent impairment. The compensation is limited. The maximum amount specified in s 24(9) is $80,000. There is a constraint applied also, in the interests of finality and economy of process, which limits additional compensation for increased impairments after a final determination to cases in which the increased impairment is 10 per cent or more.

75 The ‘whole person’ approach foreshadowed in the Second Reading Speech and reflected in the provisions of the legislation and the limitation on liability for compensation militate against a reading of the SRC Act which would permit impairment that can also be characterised as consequential injury arising from a single initial compensable injury, to give rise to discrete heads of liability, each attracting its own award of compensation.

76 The definition of ‘impairment’ is broad. It encompasses damage or malfunction of any part of the body. It undoubtedly encompasses some injuries consequential upon the initial injury. That is to say some such injuries will constitute an element of, or an increase in, the impairment resulting from the initial injury. In that event the policy of the SRC Act seems to require such an injury to be treated as an aspect of the impairment created by the initial injury. The breadth of the definitions of ‘impairment’ and ‘injury’ are such that there is considerable room for overlap and therefore, theoretically, considerable room for the identification of elements of impairment which also qualify as injuries. For the reasons already stated, to allow such elements of impairment, all arising from the one initial injury, to stand as discrete heads of liability would run counter to the legislative scheme which imposes limits on recoverable compensation. When an injury which is an element of impairment from the initial injury occurs after a final determination has been made it will therefore be caught by the provisions of s 25(4).

77 Having regard to the preceding constructional considerations, the task imposed by the SRC Act upon Comcare, and upon the Tribunal on review, in ascertaining liability under the Act and assessing compensation in respect of permanent impairment caused by injury involves the following steps:

1. A determination whether at the time of the alleged injury the person applying for compensation was an employee within the meaning of the SRC Act (ss 4 and 5).
2. A determination whether or not the employee suffered an injury arising out of or in the course of the employee’s employment, an aggravation of a physical or mental injury where the aggravation arose out of or in the course of that employment or whether the employee contracted an ailment or aggravation of an ailment contributed to in a material degree by that employment (ss 4, 6 and 7).
3. A determination whether the injury resulted in a permanent impairment, that is to say, a permanent loss, loss of the use, or the damage or malfunction of any part of the body, or of any bodily system or function (ss 4 and 24).
4. As an element of the task imposed by the preceding paragraph, where the employee has suffered an injury consequential upon the initial injury said to give rise to liability, a determination whether the consequential injury is within the definition of an impairment.
5. If the consequential injury is an impairment occurring after a final determination, it will be necessary to ascertain whether the increased impairment to which it gives rise, after applying the Combined Value Tables in the Guide, meets the threshold established by s 25(4).

78 These steps maintain the distinction between discrete injuries which are not causally connected and generate discrete heads of liability because each arises out of or in the course of employment or, if a disease, is materially contributed by the person’s employment. They therefore maintain the authority of both Roser and Mihajlovic. The decision in Laven was open upon this analysis. Its correctness need not be questioned here.

Whether the Tribunal Erred

79 The Tribunal appears, in the present case, to have treated Mr Canute’s adjustment disorder as an increased impairment flowing from the initial injury because it was a consequential injury. In so doing it erred. The error was not that identified by the learned primary judge. In his Honour’s view the Tribunal erred because it did not determine whether the mental condition from which Mr Canute suffered was an injury. In truth, the question which the Tribunal failed to address was whether that mental condition was an impairment. It assumed that because it was a consequence of the first injury, it was necessarily an impairment flowing from it.

80 In our opinion, however, although the Tribunal erred in the logical steps which it took to its conclusion, the adjustment disorder was caught within the broad definition of ‘impairment’. As an impairment it resulted from the initial injury and did not give rise to a discrete head of liability. On a proper approach to its task the Tribunal was bound to arrive at the result which it did. For that reason the appeal should be allowed and the order made by his Honour set aside.

I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices French and Stone.

Associate:

Dated: 16 December 2005

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 609 OF 2005

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	COMCARE APPELLANT
AND:	KENNETH JOHN CANUTE RESPONDENT

JUDGES:	FRENCH, GYLES AND STONE JJ
DATE:	16 DECEMBER 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

GYLES J

81 This appeal concerns a short but significant issue concerning the operation of the lump sum provisions of the Commonwealth workers’ compensation scheme known as Comcare – namely the effect of a condition that is the result of another compensable injury, which is different in kind from that injury, and gives rise to a separate and distinct impairment. The particular question to be answered is the operation of s 25(4) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the Act) in circumstances where the second condition occurs or is recognised after permanent compensation has been awarded for the original injury.

82 The primary Judge took the view that compensation for the second condition would not be affected by s 25(4) of the Act if it answered the description of an ‘injury’ with a relevant connection to employment. I am not persuaded that this was an error and, indeed, am of the opinion that it is correct and would so dismiss the appeal. Rather than simply approving the reasons of the primary Judge, I will add some brief reasons of my own. The factual and statutory background is comprehensively set out in the reasons of French and Stone JJ, which I have had the advantage of reading in draft, and need not be repeated.

83 The most natural construction of s 25(4) is that the same kind of ‘impairment’ is referred to throughout that section. That conclusion is only strengthened by considering both the immediate and the wider context in which the section appears. The principal operative provision is s 24(1) of the Act:

‘Where an injury to an employee results in a permanent impairment, Comcare is liable to pay compensation to the employee in respect of the injury.’

‘Injury’ does not refer to the accident or event which occasioned the injury (s 4 of the Act). The definition of ‘impairment’ plainly envisages different kinds of impairment to different parts of the body, bodily system or function (s 4). Hence the phrase in s 24(1) ‘a permanent impairment’. In this case the permanent impairment, which rendered Comcare liable to pay compensation in respect of the injury, was the impairment caused by loss of use of, damage to or malfunction of the back. It had nothing to do with the subsequent psychological condition, which either did not exist or was not recognised at the time permanent compensation was paid pursuant to s 24. Section 25(4) is, in substance, a rider to s 24. The terms of s 25(5) support the view that the subsequent increase refers to the same kind of ‘impairment’ which triggered the compensation in the first place.

84 There is little doubt that the definitions of ‘injury’ and ‘disease’ are wide enough to permit of the conclusion that the psychological condition in question here might be regarded either as a mental injury or as an ailment and so an ‘injury’ as defined, which resulted in a permanent impairment quite separate from that resulting from the condition of the back. As the injury to the back was sustained in the course of the employment of the employee, it would be open to conclude that the psychological condition caused by it arose out of the employee’s employment or was contributed to in a material degree by the employee’s employment (cf Federal Broom Company Pty Limited v Semlitch [1964] HCA 34; (1964) 110 CLR 626; Lindeman Limited v Colvin [1946] HCA 35; (1946) 74 CLR 313; Migge v Wormald Bros Industries Limited (1973) 47 ALJR 236, approving the judgment of Mason JA (as he then was) in Migge v Wormald Bros Industries Ltd [1972] 2 NSWLR 29 at 41–44).

85 Indeed, it is difficult to see the scope for a contrary view on those issues. There is much to be said for the appellant’s contention that the primary Judge ought to have made the relevant finding rather than remit the matter to the Tribunal. There is no point in deciding that question as I am in dissent.

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Associate:

Dated: 16 December 2005

Counsel for the Appellant:	Mr P Hanks QC with Mr G Johnson
Solicitor for the Appellant:	Phillips Fox
Counsel for the Respondent:	Mr LT Grey
Solicitor for the Respondent:	Carroll & O'Dea
Date of Hearing:	14 November 2005
Date of Judgment:	16 December 2005