NEW SOUTH WALES DEPARTMENT OF TECHNICAL AND FURTHER EDUCATION v PITT SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, MEAGHER and CRIPPS JJA 18 November 1992, 11 June 1993 [1993] NSWCA 193 Appeal — assessment of damages for permanent impairment, loss of efficient use of limb, lump sum for pain and suffering and interest — whether "a most extreme case". Respondent had earlier settled a compensation claim against Metal Manufacturers Ltd. Appellant claimed that any disability now suffered by the respondent is a result of that earlier injury. Held: The trial judge erred in concluding that the maximum sum referred to in s66(2) was fixed at the date of hearing and not the date of injury. In assessing "a most extreme case" the court is not required to assume that a claimant was a notionally healthy undamaged person before injury. In a s66 application the court (by virtue of CL6 of Pt6 of Sch 6) has regard to the actual impairment of a worker and not the impairment that would have resulted had the worker not previously been impaired - this construction is reinforced in the case of back, neck and pelvis injuries by s73(g) which requires compensation to be paid as if any impairment existing before that injury did not exist - comparison drawn with s71. Workers Compensation Act 1987, s66, s67, s60, s73, CL6 of Pt6 of Sch 6, s7l. Workers Compensation Act 1926, s15, s16 Supreme Court Act 1970 Bresmac Pty Ltd v Starr (New South Wales Court of Appeal, 24 December 1992, unreported) Jones Bros Bus Co Pty Ltd v Baker (1992) 26 NSWLR 322 Rodios v Trefle [1937] WCR 285 King v Hayward (1943) 67 CLR 488 Lexington Constructions Pty Ltd v Coyne (New South Wales Court of Appeal, 24 December 1992, unreported) Alvorac General Engineering Pty Ltd v Arlotta (New South Wales Court of Appeal, 30 March 1993, unreported) Government Supply Department v Abbott (New South Wales Court of Appeal, 17 May 1993, unreported) Tipper v Williams (New South Wales Court of Appeal, 12 May 1993, unreported) Priestley JA I agree generally with Cripps JA, subject to the following two observations. First, on my view of the materials in this case it is not necessary for me to choose between the view of Cripps JA that in an appeal of the present kind "the appellant must demonstrate that a material error of the trial judge resulted in an erroneous decision" or the view that because the appeal is by way of rehearing (see Mahoney JA in Government Supply Department v Abbot((CA 7/5/93) at 1) there is a wider obligation upon the Court of Appeal. On either approach I would reach the conclusion that Manser CCJ's findings should not be disturbed. 2 UNREPORTED JUDGMENTS Second, in regard to the submission that the interest rate should take account of tax liabilities on notionally invested money, while I fully agree with Cripps JA that the submission should be rejected, (see also what he said in Alvorac General Engineering Pty Ltd v Arlotta at 9 of his reasons (CA 3013193)) I think I should record that a different opinion was recently expressed by Clarke JA in Tipper v Williams (CA 12/5/93). However, I understand that Clarke JA's expression of opinion was not made a ground of decision in Tipper, so it is not an obstacle to the court acting, in the present case, on the view which in my opinion is to be preferred, namely that of Cripps JA. I agree with the orders proposed by Cripps JA. Meagher JA I agree with Cripps JA. Cripps JA On 11 December 1991, Judge Manser of the Compensation Court made anaward in favour of Mr Pitt for weekly payments of compensation from 16 April 1991 to the date of the award and continuing. He ordered that the New South Wales Department of Technical and Further Education (TAFE) pay him as a lump sum under s66 the sum of $51,120 in respect of the "permanent impairment" of (his) back and the sum of $19,170 "in respect of the 30% loss of efficient use of... [his right] leg at or above the knee". He also ordered that TAFE pay Mr Pitt the sum of $42,600 as lump sum compensation under s67 for his pain and suffering. Interest was ordered to be paid on the unpaid weekly compensation, the lump sum under s66 from 25 January 1989 and the lump sum under s67 from the same date. TAFE has appealed. It does not challenge the award for weekly compensation. Its grounds of appeal are that: "1. His Honour erred in finding that the Respondent suffered spinal canal stenosis which resulted from injuries on 25 January 1989 in the course of employment by the Appellant or was rendered symptomatic thereby. 2. His Honour erred in finding that the Respondent suffered permanent loss of use of the right leg as a result of injuries on 25 January 1989 in the course of his employment by the Appellant. 3. His Honour erred in assessing permanent loss of efficient use of the right leg at or above the knee at 30%. 4. His Honour misdirected himself concerning the principles to be applied in the assessment of permanent impairment of the back pursuant to s66 of the Workers Compensation Act 1987, as amended. 5. His Honour erred in finding with respect to the impairment of the Respondent's back that he was a most extreme case and therefore entitled to the maximum amount prescribed for impairment to the back pursuant to s66 of the Workers Compensation Act 1987. 6. His Honour erred in failing to take into account when determining the Respondent's entitlement with respect to impairment of the back the extent of pre-existing permanent impairment which he found to have existed at the time of the injuries on 25 January 1989. 7. His Honour erred in failing to determine the extent of pre-existing impairment of the back and taking such finding into account when assessing the Respondent's entitlement pursuant to s66 of the Workers Compensation Act 1987. 8. His Honour erred in finding the Respondent's case to be a most extreme case and the Respondent thereby entitled to the maximum amount prescribed for pain and suffering pursuant to s67 of the ' Workers Compensation Act 1987. WAEW SOUTH WALES DEPARTMENT OF TECHNICAL AND FURTHER EDUCATION 8 PITT (Cripps JA) (Cripps JA) 9. His Honour misdescribed himself concerning the principles to be applied when exercising his discretion with respect to the award of interest on monies payable pursuant to s66 and s67 of the Workers Compensation Act 1987. 10. His Honour erred in finding that the Respondent was entitled to interest from the date of his injuries on 25 January 1989 and in making orders accordingly." Mr Pitt had also claimed compensation from Metal Manufacturers Ltd alleging that he was injured at work on 16 May 1977 which resulted, first, in total and, later, partial incapacity for work up to and including the year 1983. He settled his action against Metal Manufacturers Ltd and Herkes CCJ made a determination under s15 of the Workers Compensation Act 1926 redeeming the liability of Metal Manufacturers Ltd to make payment of weekly compensation for the sum of $70,000. Herkes CCJ noted that Mr Pitt's agreement to accept the lump sum absolved Metal Manufacturers Ltd from any liability which it might have had to pay him compensation "under s60 and s66". The proceedings continued against TAFE before Manser CCJ. TAFE did not deny that Mr Pitt had suffered the injuries he alleged but it denied incapacity as alleged. It asserted that the effects of the injury, which it did not dispute, were spent well before the hearing of the claim and that if Mr Pitt had any disability it was a consequence of the injury he had in May 1977. The facts are dealt with by Manser CCJ in a thirty four page judgment. The appeal is not limited to questions of law. Nonetheless, in order to succeed on any factual issue, the appellant must demonstrate that a material error of the trial judge resulted in an erroneous decision. Manser CCJ reviewed the evidence presented. He pointed to the circumstance that Mr Pitt had no real problems with his back from the time he commenced employment with TAFE in early 1983 until he was injured at work in 1989. He found (and there was evidence to justify the finding) that Mr Pitt was able to discharge his duties with TAFE without difficulty or complaint until his accident in January 1989. It is clear that Manser CCJ was not much impressed with TAFE's submission that between 1983 and 1989 Mr Pitt continued to suffer from pain and was disabled as a result of the 1977 back injury. Manser CCJ accepted that he suffered a loss of efficient use of the left leg as a result of the 1977 episode. He found, however, that as a result of the 1989 injury, Mr Pitt developed significant symptoms in his right leg and back and as a result of that injury Mr Pitt was "very disabled". Because Mr Pitt suffered more than one of the losses mentioned in the Table to s73, his maximum entitlement was fixed by s66(2). Manser CCJ, while accepting that the compensation payable was to be calculated by reference to the percentage loss in force at the date of injury under s66(1) (in this case $85,200) concluded that s66(2) so operated that Mr Pitt could receive as a maximum amount the sum in s66(2) at the date of hearing (in this case, $120,100) and not as it was at the date of injury ($85,200). The correctness of Manser CCJ's approach has been the subject of a decision in this Court in Bresmac Pty Ltd v Starr (New South Wales Court of Appeal, 24 December 1992, unreported). Manser CCJ was wrong in concluding that the maximum sum referred to in s66(2) in the case of Mr Pitt was the sum as at the date of hearing. S66(2) has no retrospective operation. It fixes as the maximum sum recoverable the amount specified at the date of injury and not at the date of trial. In the present case, however, no error has resulted because the amount awarded was $70,290 which was less than the maximum sum ($85,200). 4 UNREPORTED JUDGMENTS Manser CCJ found that Mr Pitt was relevantly "a most extreme case". He awarded him the sum of $51,120, being 60% of the appropriate figure in s66(1) which, as at the date of injury, was $85,200. He also found that Mr Pitt had lost 30% of the efficient use of his leg at or above the knee and awarded him $19,170 being 30% of 75% of $85,200. He also awarded him under s67 the sum of $42,600 for pain and suffering, that being the maximum entitlement in force at the time of the injury. It is submitted that Mr Pitt was not "a most extreme case". He was 59 at the date of trial. He had resumed employment. Nonetheless, the accident had severe consequences for him. As was made clear in Jones Bros Bus Co Pty Ltd v Baker (1992) 26 NSWLR 322, the question of whether a person is "a most extreme case" or the proportion of that person's condition to "a most extreme case" is not necessarily determined by the percentage impairment of, for example, a person's back or loss of efficient use of a thing in the Table to s73. I do not think it has been established that Manser CCJ was not entitled to conclude that Mr Pitt was "a most extreme case" bearing in mind his severe losses and impairment. I am not overly impressed by the argument that Manser CCJ ought to have found he was less than "a most extreme case" because he was aged 59. The legislation required the Judge to make a notional comparison to determine whether Mr Pitt was "a most extreme case" and not whether he was "the most extreme case". Mr Pitt was not necessarily precluded from being in the category of "a most extreme case" because he had a disability with his left leg not attributable to the injury and/or because he was 59. I do not think it has been shown Manser CCJ erred. In Jones Bros the Court decided that Note (a) to the Table in s73 serves the same function with respect to permanent impairment of the back and severe disfigurement as s68 does to claims for compensation for "loss" of body parts. With respect to "loss" of a body part, the Table specifies fixed percentages of the maximum payable as the maximum sum in proportion to which the amount recoverable is to be scaled. With respect to claims for impairment of back or disfigurement, it provides for a range of percentages. Manser CCJ found Mr Pitt was "a most extreme case". On that finding he was entitled to 60% of the maximum payable under the Table. If Manser CCJ was entitled to find that Mr Pitt was "a most extreme case" and, as I have said, I think he was, he was entitled to award an amount of $51,120 that being 60% of the maximum payable under the Table. It is submitted, however, that because Mr Pitt was already disabled (to some extent at least) as a consequence of his injury in 1977, Manser CCJ erred in determining that he was "a most extreme case" consequent upon the injury the subject of the proceedings. Mr Pitt had a defective left leg as a result of his back injury in 1977. As I have said, I do not think this means he cannot be classified as "a most extreme case". That is to say, I do not think the Court is required to assume that a worker claiming compensation for injury was before the injury a notionally healthy and undamaged person for it to determine whether, by reason of injury, that person is "a most extreme case". I doubt, therefore, whether, on the facts of this case, the issues sought to be raised by the appellant clearly emerge. Manser CCJ found that although the plaintiff had a disability in his left leg, he was unable to work and function properly and that he was "'a most extreme case" because of the disabilities and pain and suffering consequent upon the second injury. The issue sought to be raised is whether, when considering an application under s66, the Court is required to have regard to the actual impairment of the worker or only the impairment that would have resulted had the worker not WAEW SOUTH WALES DEPARTMENT OF TECHNICAL AND FURTHER EDUCATION & PITT (Cripps JA) (Cripps JA) previously been impaired. I will assume, for present purposes, that the worker has previously suffered an impairment, in percentage terms, of 50% of his back. I will also assume that an accident further impairs his back so that, measured objectively, his back impairment becomes 90%. The question arises whether under s66 the worker is entitled to have his loss assessed as though the second accident caused a 40% loss or is he entitled to receive compensation for an impairment of 90%. The argument, in effect, is whether the principle in Rodios v Trefle [1937] WCR 285 has application to back impairment cases. Rodios v Trefle was concerned with a claim under s16 of the 1926 Act relating to partial loss of sight. The worker had further damaged a previously damaged eye. It was held that he could claim a percentage of the full amount equal to the percentage of the diminution in what already existed. In King v Hayward (1943) 67 CLR 488, the principle was applied to a case where a worker lost the sight of an eye which was functioning at only 5%. He had already received compensation for loss of 95% of the sight of the eye. The High Court held that the second accident, which deprived him of the remaining 5%, resulted in a loss to him of 100% of the loss of sight of the eye and he was entitled to compensation accordingly. CL6 of Pt6 in Schedule 6 to the Workers Compensation Act relevantly provides: "INTERPRETATION 6 If a loss mentioned in the Table to Division 4 of Pt3 of this Act resulted both from an injury received before the commencement of that Division and an injury received after that commencement, the loss shall, for the purposes of determining the amount of compensation payable in accordance with this Part and this Schedule, be treated as having resulted from the injury received after that commencement." Schedule 6 is concerned with savings transitional and other provisions. Pt6 to Schedule 6 is concerned with "Provisions Relating to Compensation for Non-Economic Loss (Table of Maims)". Claims under s67 for pain and suffering resulting from injuries prior to the commencement of the 1987 Act are excluded from its operation (CL2). Also excluded are claims for losses with respect to occupational diseases-if compensation has already been received for those losses under the former Act (CL3). CL4 provides also that if losses resulting from an injury are received before the commencement of the 1987 legislation, the amount of compensation is to be determined in accordance with s16 of the 1926 Act. Pt6 further provides that compensation is not payable to a worker suffering a loss or impairment of a thing mentioned in the Table if it resulted from an injury before the commencement of the Division and is not a loss or impairment for which compensation was payable under s16 of the former Act (CLS). It was submitted by Mr Sharpe, on behalf of the appellant, that CL6 of Pt6 of Schedule 6 is no more than a guide to interpretation and that it has relevance for the purpose of determining the amount of compensation payable only. He submits that to interpret it otherwise would be to contradict CLS which, as I have said, provides that compensation is not payable to a worker who has suffered a loss or impairment if that loss or impairment resulted from an injury received before the commencement of the 1987 Act or is not a loss or impairment for which compensation was payable under s16 of the 1926 Act. I do not think Mr Sharpe's argument can be accepted. CL4 provides that the amount of compensation payable to a worker who has suffered a loss shall be determined in accordance with s16 of the former Act "if the loss resulted from an injury received before the commencement of that Division". Under the 1987 Act, 6 UNREPORTED JUDGMENTS injured workers were to lose common law rights. However, it was also intended to increase benefits under the workers compensation legislation. In the present case, as Manser CCJ correctly observed, the provisions in question preclude any liability in the first employer for permanent impairment of Mr Pitt's back. This is because the injury with Metal Manufacturers Limited occurred ten years before the passing of the Workers Compensation Act 1987 and under the 1926 Act he was not entitled to a lump sum for impairment. In my opinion, in the assumed case CL6 would require, for the purpose of determining the compensation payable, the loss suffered by the worker be treated as having resulted from the injury received after the commencement of the 1987 Act. However, if there be doubt about the application of CL6 of Pt6 of Schedule 6 to the Act with respect to losses generally there can, I think, be no doubt as to what the legislation provides with respect to impairment of backs. Note (g) to the Table in s73 provides: "In the case of the impairment of the back, neck or pelvis, compensation is payable only in respect of the degree of permanent impairment suffered as a result of the injury concerned and as if any impairment existing before that injury did not exist." It deals exclusively with back, neck or pelvis impairment and provides that compensation in these cases is payable "as if any impairment existing before that injury did not exist". That would seem to me to make it clear that the Court is to deal with the matter upon the basis that there has been no previous impairment and that the Court is directed to the consequences of the injury the subject of the claim. My view in this regard is strengthened by s71 of the Act. S71 deals with occupational diseases and makes it clear that with respect to such injuries as boilermaker's deafness, compensation is payable only for the "further loss" - a clear statement that compensation is paid for the progressive losses. S71 is confined in its operation to "occupational diseases". It does not apply to the type of case considered by the High Court in Hayward. If the appellant's submission be accepted, the Compensation Court would be required to determine the impairment of back resulting from the injury after the commencement of the 1987 Act and the impairment of the back resulting from other causes (in the present case an injury before the commencement of 1987 Act) and deduct the second from the first. That is expressly what Note (g) forbids. To accede to the appellant's submission would be to oblige the Compensation Court to do what the legislation says it cannot do, viz treat the worker's previous impairment as if it did exist. Manser CCJ ordered that interest be paid on the lump sums under s66 and s67 at the rates prescribed by the Rules of Court. The Rules of Court refer to the rates under the Supreme Court Act 1970. Manser CCJ found that Mr Pitt would suffer pain and suffering in the future. However, he was not required to apportion the award under s67 because Mr Pitt was "a most extreme case" (Lexington Constructions Pty Ltd v Coyne 24 December 1992, New South Wales Court of Appeal, unreported. See also Alvorac General Engineering Pty Ltd v Arlotta 30 March 1993, New South Wales Court of Appeal, unreported). So far as the application of the prescribed rates to s66 is concerned, it was submitted that he waa also required to scale down the commercial rate to take account of the taxation on the notional investment and the elimination of the risk of loss of capital during the relevant period. It would seem to me, with respect, that upon the assumption that interest is being awarded to compensate Mr Pitt for being kept out of his money, it is irrelevant to consider what he might have done with WAEWW SOUTH WALES DEPARTMENT OF TECHNICAL AND FURTHER EDUCATION ¥ PITT (Cripps JA) (Cripps JA) that money had he had it. Manser CCJ awarded interest on part of the lump sum awarded under s67 referable to future pain and suffering. Further, he did not, apparently, take account of the circumstance that Mr Pitt's pain and suffering continued from the date of injury to the date of trial. My conclusions are, therefore, that the only error demonstrated has been with respect to the application of the rate of interest to the lump sum payment under s66 and s67 and to the failure by the trial judge to apportion the award under s67 so as to avoid awarding interest on so much of the lump sum as is referable to future pain and suffering. In all other respects, the appeal fails. Orders: 1. The appeal upheld in part. 2. So much of the award of Manser CCJ as requires the payment of interest at the prescribed rates on the lump sums awarded under s66 and s67 be set aside. 3. The respondent to pay 50% of the appellant's costs. The respondent to have a certificate under the Suitors' Fund Act 1951. 1. Appeal upheld in part. 2. So much of the award of Manser CCJ as requires the payment of interest at the prescribed rates on the lump sums awarded under s66 and s67 be set aside. 3. The respondent to pay 50% of the appellant's costs. The respondent to have a certificate under the Suitors' Fund Act 1951. Counsel for the Appellant: J Sharpe Instructed by: Moray and Agnew Counsel for the Respondent: CJ Armitage Instructed by: Maurice May and Co