FEDERAL COURT OF AUSTRALIA

Lee v Military Rehabilitation and Compensation Commission [2006] FCA 1508

ADMINISTRATIVE LAW – application for extension of time to appeal from Administrative Appeals Tribunal – where Tribunal affirmed determination of respondent that applicant's impairment should be assessed according to Compensation (Commonwealth Government Employees) Act 1971 (Cth) rather than Safety Rehabilitation and Compensation Act 1988 (Cth)

WORKERS' COMPENSATION – where applicant suffered from cellulitis condition in right leg from injury occurring before commencement date of Safety Rehabilitation and Compensation Act 1988 – where applicant asymptomatic between 1984 and 1998 – whether impairment occurred before the commencement of the relevant provisions of the SRC Act – whether applicant entitled to compensation for permanent impairment under SRC Act 

Department of Defence v West (1998) 85 FCR 491 applied

JOHN LEE v MILITARY REHABILITATION AND COMPENSATION COMMISSION

NSD 1058 OF 2006

MOORE J

15 November 2006

SYDNEY

THE COURT ORDERS THAT:

1.                  Time for filing the notice of appeal is extended to 2 June 2006.

2.                  The appeal be allowed.

3.                  The decision of the Administrative Appeals Tribunal be set aside.

4.                  The matter be remitted to the Administrative Appeals Tribunal for hearing and determination according to law.

5.                  The respondent pay the applicant's costs of the appeal.

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

REASONS FOR JUDGMENT

1                     The applicant seeks an extension of time in which to appeal from a decision of the Administrative Appeals Tribunal which, on 13 December 2005, affirmed the decision of the respondent not to provide the applicant compensation for permanent impairment under s 24 of the Safety Rehabilitation and Compensation Act 1988 (Cth) ("SRC Act") as sought by the applicant.  The application for an extension of time was filed on 2 June 2006.  An appeal may be brought under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act").  The respondent opposes the application for extension of time.

2                     The applicant enlisted in the Royal Australian Navy in 1983.  In about February 1984, he suffered lacerations to his right shin which became infected and, in April of that year, he developed cellulitis.  He was discharged from the Navy on 9 July 1984.

3                     In 2002, the applicant lodged an application (dated 27 July 2002) seeking a benefit under the SRC Act.  He identified his injury or illness as "cellulitis - recurrent infection".  He did not specify the benefits he was claiming.  A further application was lodged on 4 April 2003 through the applicant's solicitors.  The injury or illness was identified as "cellulitis" and the benefits sought were permanent impairment lump sum and medical expenses.

4                     On 14 June 2003, a delegate of the respondent made a determination regarding liability but not benefits.  The determination was expressed in terms of the applicant having "suffered a contraction of disease which your military service was contributing factor, namely cellulitis in the right leg associated with septicaemia".  The delegate went on to determine "that for the purposes of the [SRC] Act the date of injury is 18 April 1984 as this is the date that you first sought medical treatment for the claimed condition".  On 8 December 2003, a delegate determined that the applicant suffered a 10 per cent loss of function of his right leg below the knee.  Compensation was awarded under the Compensation (Commonwealth Government Employees) Act 1971 (Cth), which was the Act in force at the time the applicant's leg was injured and he developed cellulitis.  That determination was affirmed on 16 March 2004 in response to a request for reconsideration received from the applicant.

5                     On 30 April 2004, the applicant sought review by the Tribunal.  The applicant contended that his degree of permanent impairment should have been assessed under the SRC Act and not the 1971 Act, either because the condition did not become permanent until after the 1988 Act came into force, or because the relevant impairment was a new impairment occurring after that date.  On 13 December 2005, the Tribunal gave ex tempore reasons for decision affirming the decision under review.  Briefly stated, it held that the applicant's condition was not compensable under the SRC Act since the relevant condition was still the 1984 impairment and there had been no change in the underlying patho physiology.  The Tribunal also held that even if it had accepted that the applicant had suffered a new impairment after the commencement date, the applicable table under the Guide to the Assessment of the Degree of Permanent Impairment ("the Guide") was Table 13.1 which deals with intermittent conditions, and not Table 1.3 (cardio-vascular system) or Table 4.1 (skin disorders).  The Guide is prepared by Comcare and approved by the Minister under s 28 of the SRC Act.

6                     In its decision the Tribunal recounted that the applicant suffered an injury in 1984 and the events that followed:

There is no dispute that as a result of an injury occasioned to the Applicant in 1984 when he was serving as a member of the Royal Australian Navy that he then got the condition of cellulitis in his right leg.  It would appear however that after a period at a naval medical establishment the cellulitis resolved and in the period from 1984 to 1998 the Applicant was not troubled at all by any cellulitis.  There are some photos as exhibits which simply show that there was a small residual scar on the Applicant's right leg but that is all.

However, in 1998 symptoms suddenly occurred.  As he said he woke up one morning at home, felt as if he had a fever and his leg was black.  He was taken to Tamworth Base Hospital and the diagnosis of cellulitis made.  There was also a high blood sugar reading noted but this was not followed up.

7                     The Tribunal noted that there were no problems again until 1999 when the applicant had a further attack of cellulitis and again was admitted to hospital.  He was then diagnosed as having non-insulin dependent diabetes.  It observed that the applicant has had attacks of cellulitis every six to eight weeks.  While antibiotics cure the condition, the applicant is immobilised for some three to four days.

8                     The Tribunal then said:

There is dispute in the evidence as to the interplay of the original injury and also the diabetes.  We accept the opinions of Professor Lord and Dr Butler that as a result of the injury in 1984 there were underlying lymphatic problems with the potential for infection.  Now this condition existed since 1984.  As a result of this diabetes the applicant is now more prone to infection and hence the cellulitis.  As put by Dr Butler, the current cellulitis is caused by a combination of diabetes and pre-existing cellulitis.  That cellulitis is not a new condition.  That is to say, the pathology of infection has remained unaltered since 1984.  Perhaps it was put rather strikingly in one way by Dr Butler that the original injury loaded the gun and diabetes pulled the trigger.  So that is to say, the current cellulitis was as stated a result of two factors, the existing cellulitis in the diabetes with the latter condition, according to both Professor Lord and Dr Butler, enlarging the likelihood of the infective process.

The underlying pathology of cellulitis has however not changed but just the patho-physiological environment in which the infective process is occurring.  That is to say cellulitis is the same condition as has existed since 1984 and in line with Comcare v Maida (2002) 36 AAR 69, there has been no change in the underlying patho physiology.  In any event even if we were to find that there had been a new impairment, we are satisfied that the applicable table under the guide to the assessment of the degree of permanent impairment is table 13.1 which refers to intermittent conditions …

The net result is however that as stated, it is still the 1984 condition and impairment and the decision under review is affirmed.

9                     An extension of time is required because the applicant did not file a notice of appeal from the Tribunal decision within 28 days of receiving the written reasons of the Tribunal: s 44(2A)(a) of the AAT Act. 

10                  The respondent resists the application for an extension of time on two bases only.  The first is that the appeal has no merit.  The second is that the proceedings are futile because even if the applicant were to succeed in the appeal, he would not be eligible to receive compensation under s 24 of the SRC Act.  This was said to be so for two reasons.  The first was that the applicant has not disputed the Tribunal's finding that the appropriate Table in Guide was Table 13.1.  The second was that on the evidence the applicant presented to the Tribunal, the applicant does not meet the requirements prescribed in Table 13.1 for the minimum permanent impairment of 10%.

11                  The explanation for the delay concerns the time it took for the applicant and the applicant's solicitors to become aware of the Tribunal's decision, obtain pro bono advice from counsel and to complete and file all necessary documentation.  It is unnecessary to detail the evidence as the respondent does not challenge the explanation or raise it as a basis for resisting the extension of time.  It is sufficient to move to the question of whether the appeal has merit or whether it is futile.

12                  The relevant provisions of the SRC Act, then known as the Commonwealth Employees' Rehabilitation and Compensation Act 1988 (Cth), commenced on 1 December 1988, when the 1971 Act was repealed.  Section 24 of the SRC Act provides for payment of compensation for injuries resulting in permanent impairment.  Section 4 of the SRC Act defines impairment as "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."  The term "permanent" is defined under s 4 as "likely to continue indefinitely".

13                  Under s 124(1) of the SRC Act, the Act applies to injuries, loss and damage suffered before it commenced and, subject to certain qualifications, compensation may be made under the SRC Act notwithstanding that the relevant injury occurred before its enactment.  One qualification is found in s 124(3) which concerns circumstances where either compensation of a lump sum was paid under earlier legislation or there was no entitlement to compensation of a lump sum under that legislation.  In other circumstances s 124(4) limits the amount of compensation payable under s 24, relevantly, to the amount that would have been payable under the 1971 Act if the permanent impairment occurred before the day Part X the SRC Act came into force.  Subsection 124(4) provides:

(4)   The amount of compensation (if any) that a person is, by virtue of this section, entitled to receive under section 24 or 25 in respect of a permanent impairment, or under section 17 in respect of the death of an employee, being an impairment or death that occurred before the commencing day, shall be the same as the amount of the compensation that would have been payable to that person, if this Act had not been enacted, under:

(a)          where the impairment or death occurred before the commencement of the 1930 Act—the 1912 Act;

(b)          where the impairment or death occurred after the commencement of the 1930 Act but before the commencement of the 1971 Act—the 1930 Act as in force when the impairment or death occurred; or

(c)          in any other case—the 1971 Act as in force when the impairment or death occurred.

14                  The first and second grounds in the applicant's notice of appeal relate to the Tribunal's construction of s 124 of the SRC Act and its determination that the applicant had not suffered a change in his patho physiological condition.  The applicant's submissions were as follows:

(i)            The Tribunal, having accepted that the applicant did not suffer any symptoms from 1984 to 1998, failed to determine whether he suffered an impairment under s 4 of the SRC Act during this time;

(ii)           The Tribunal, despite having accepted that he was asymptomatic from 1984 to 1988 and did not have a gradual worsening during that time, found that the applicant did not have a new impairment and was therefore not entitled to compensation under the SRC Act;

(iii)         The Tribunal erred in law by incorrectly applying the principles in Department of Defence v West (1998) 85 FCR 491 and Comcare Australia (Department of Defence) v Maida [2002] FCA 1284; (2002) 36 AAR 69 in determining whether there was a change in his patho physiological condition in about 1998 after becoming symptomatic.  The Tribunal accepted that the applicant had continuing attacks since 1998, that he now took antibiotics and was periodically immobilised.  The change in his patho physiological condition satisfied the definition in West and Maida of a new impairment and was compensable under the SRC Act.

(iv)         The Tribunal erred by not correctly applying the principles in West and Maida to consider and determine whether the applicant suffered a qualitative change to his condition in 1998 so as to constitute a new impairment which is compensable under the SRC Act.

(v)          The Tribunal erred in law by failing to consider whether the applicant suffered from a new impairment or impairments after becoming symptomatic in 1998, and whether the condition of cellulitis was the same or different from any new impairment that he may have suffered after 1998.

15                  The applicant's third ground involved a contention that the Tribunal failed to state its reasons as required by s 43(2) and (2B) of the AAT Act.  The applicant identifies four areas in relation to which the AAT allegedly failed to state its reasons.  The reasons which the applicant alleged that the Tribunal was required to and failed to state, in the context of its findings and the circumstances of the case, are as follows:

(i)             Whether the cellulitis condition satisfied the definition of impairment under s 4 of the SRC Act between 1984 and 1998;

(ii)           The nature of the patho physiological condition and what, if any, impairment or impairments the applicant suffered after 1998;

(iii)          What change occurred to his condition after 1998, including:

o              whether he suffered any new impairment,

o              whether after 1998 he suffered any significant worsening to an impairment,

o              whether there was a change in the applicant's symptoms so as to produce or cause any new impairment which was not present prior to 1998.

(iv)         The nature of any qualitative change to the applicant's cellulitis condition or impairment in accordance with the principles in Maida and West.

16                  The applicant does not press the parts of this ground of appeal relating to the Tribunal's alleged failure to state its reasons as to why cellulitis is not a skin condition and why it is not a condition affecting the lymphatic system.

17                  The respondent submitted that the applicant's contention that he did not suffer impairment between 1984 and 1998 because he did not suffer symptoms during that period could not be maintained.  It noted that the definition of "impairment" in s 4 of the SRC Act does not refer to symptoms and, relevantly, provides that impairment means damage of any bodily system or part.  On the evidence accepted by the Tribunal, there was ample support for the conclusion that the applicant suffered an impairment in 1984 and therefore the conclusion reached by the Tribunal was plainly open to it.

18                  The respondent also submitted that the applicant appeared to contend that if the Tribunal concluded that the applicant's condition did not gradually worsen, then the Tribunal was required to find that he suffered a new impairment.  The respondent submitted that this argument was misconceived and that West in fact established that a new impairment would only arise where a change in patho physiological condition had occurred.  In the present case, the Tribunal had clearly and correctly found on the evidence that the underlying patho physiology had not changed.

19                  The respondent also challenged the applicant's apparent contention that taking medication and suffering from periods of incapacity were indicia of a change of patho physiological condition.  The respondent submitted that such factors merely indicated an increase in the level of symptoms or an increase in the degree of impairment and not a new impairment.

20                  In relation to the applicant's claim that the Tribunal had failed to consider whether he suffered a new impairment, the respondent contended that this argument could not be maintained since the Tribunal clearly identified it as an issue which it had to determine and made a clear finding that there had been no change in the underlying patho physiology.

21                  As to the third ground, the respondent submitted that the Tribunal had complied with its duty under s 43(2B) by identifying evidence upon which to support its findings.  It contended that what the applicant really sought were reasons for the Tribunal's findings, whereas s 43(2B) required the Tribunal to give reasons for its decision.  The matters identified by the applicant were issues about which the Tribunal had made findings. 

22                  The application of s 24 of the SRC Act to individuals who developed permanent impairments before the relevant provisions of the SRC Act came into force has been considered in a number of Full Court decisions.  In large measure, the submissions of the parties focused on these decisions.  In West,Merkel J (with whom O'Connor J agreed) held that (at 512):

"… where a change in a permanent impairment occurring after the commencement date is such that, quantitatively and qualitatively, it is properly to be characterised as a further or new impairment occurring after the commencement date it is compensable date it is compensable by a lump sum payment under s 24 …"

23                  In Maida, Mansfield J accepted the following propositions as a correct summary of the law:

(i)            The gradual worsening of the degree of impairment does not constitute a new impairment;

(ii)           If there is no change in the patho physiological condition causing an impairment then any worsening of an existing impairment will not constitute a new impairment; and

(iii)         A significant worsening may constitute a new impairment if there has been a change in the underlying patho physiological condition, so that there has been a qualitative change to the impairment – that is, the development of a new impairment.

24                  In my opinion, these authorities are of limited relevance to the present matter insofar as they concern the gradual worsening of a pre-existing impairment.  However, West is relevant for other reasons.  It was necessary for the Tribunal to ask and answer a series of questions.  The first was whether the applicant suffered an injury as defined in s 4.  The report of Dr Roth proceeded on the basis that the injury was the laceration to his right leg and after suffering that injury he subsequently developed cellulitis.  Dr Butler appeared to proceed on the same basis, as did Professor Lord.  The Tribunal also appeared to accept that the injury was the laceration of the right leg which then led to the "condition of cellulitis in his right leg".  What that means is not clear.  It may have meant that the Tribunal viewed the original injury either as not simply the laceration but also be ensuing cellulitis or, perhaps, only the cellulitis.  The position of the parties before the Tribunal was that the injury was the cellulitis.  The medical evidence was to the effect that cellulitis is the inflammation and infection of the soft tissues of, in the applicant's case, the leg.  The evidence did not point to, nor did the Tribunal find, that the applicant suffered from a chronic swelling and infection of the right leg.  At its highest, the evidence was that once a person has had cellulitis, there was an increased likelihood of the person having it again.

25                  The Tribunal then said that in 1998 "the symptoms suddenly occurred".  It appears that the Tribunal was saying that the symptoms of cellulitis suddenly appeared because the applicant's leg became infected and swollen.  But that is no more than saying that the applicant had the symptoms of cellulitis because he was suffering, at that point, from cellulitis.  However, the difficulties arise, in my opinion, in the Tribunal's later analysis where it speaks of the "current cellulitis" being the result of two factors, the "existing cellulitis and the diabetes".  It is not clear what the Tribunal meant when it spoke of "existing" cellulitis.  It is as if the Tribunal viewed cellulitis as a condition which subsisted continuously but was symptomatic only periodically.

26                  The second question is whether that injury has resulted in impairment.  It is not clear what the Tribunal was considering as the possible impairment bearing in mind that, relevantly, it was addressing the question of whether the injury the applicant had suffered had resulted in permanent impairment.  Impairment is defined as meaning the loss or the loss of the use of or damage or malfunction in any part of the body of any bodily system or function or part of such system or function.  The applicant's claim, at least as it is now formulated, was that the impairment was (or at least included) the partial loss of the use of his right leg.  The Tribunal appears to have approached the matter on the basis that the impairment was damage to the lymphatic system caused by the original laceration and consequential infection and swelling, namely the cellulitis suffered by the applicant in 1984.  The Tribunal suggested, correctly, that the evidence of Professor Lord and Dr Butler pointed to damage to the lymphatic system having been caused by the original injury.  However, what the Tribunal did not address was whether there had been any loss of the use of the right leg which, itself, constituted an impairment as defined.

27                  As I understand the authorities, and in particular what was said in West by Heerey J at 498 and Merkel J at 512 (O'Connor J agreeing with Merkel J), it is possible for a person to suffer an injury which results in losses or malfunctions manifesting themselves in different parts of the body over time.  There is no reason, in principle, why some or all of those losses or malfunctions cannot each be treated as an impairment.  After the hearing, the High Court handed down its reasons in Canute v Comcare [2006] HCA 47 where the Court noted that "Textually, the Act assumes that "an injury" may result in more than one "impairment" (at [11]).  The parties declined an offer to make submissions about this decision.  In the present case, the Tribunal did not address the question of whether the loss of the use of the leg was an impairment caused by the original injury and, if so, whether that impairment occurred after the commencing day for the purposes of s 124(4).  While it is ultimately a matter of fact for the Tribunal, the evidence points to an affirmative answer to both questions.

28                  What the Tribunal did not do, in my opinion, was to approach the matter in the way contemplated by s 124.  I should add that many of the observations I have made about the approach of the Tribunal should not be taken to be a criticism of the Tribunal.  The case as developed on behalf of the applicant before the Tribunal was obscure and opaque, at least having regard to the material in the appeal book (the opening and final submissions but not the statements of facts and contentions).  The Tribunal was probably distracted by reliance by the applicant's counsel on West as it concerns the gradual worsening of a pre-existing impairment.  Section 124 requires the Tribunal, at least in a case such as the present where there is a serious issue about whether payment for any compensable impairment is to be made under the 1971 Actor the SRC Act, to consider whether the claimant suffered a permanent impairment, in the defined sense, after 1 December 1988.  If the answer to that question is in the affirmative, then compensation is to be assessed in accordance with s 24. 

29                  In my opinion the Tribunal erred in law and its decision should be set aside.  I do not think remitting the matter to the Tribunal can be said to be futile.  Further findings will need to be made by the Tribunal before a conclusion can be reached about the matter referred to at [27] and as to whether, for the purposes of s 24, the injury to the applicant has resulted in a permanent impairment and, if so, was it compensable and in what way.  I propose to extend time, make orders setting aside the Tribunal's decision and remitting the matter to the Tribunal for further consideration.  The respondent should pay the applicant's costs.

Associate:

Dated:         15 November 2006