Reported Decision : 51 NSWLR 466 New South Wales Court of Appeal CITATION : VICTIMS COMPENSATION FUND CORPORATION v AINSWORTH & ANOR [2001] NSWCA 92 FILE NUMBER(S) : CA 40498/00 HEARING DATE(S) : 15 March 2001 JUDGMENT DATE : 10 April 2001 PARTIES : VICTIMS COMPENSATION FUND CORPORATION v David John AINSWORTH & ANOR JUDGMENT OF : Mason P at 1; Priestley JA at 54; Giles JA at 55 LOWER COURT JURISDICTION : District Court LOWER COURT DC 447/99 FILE NUMBER(S) : LOWER COURT Phelan DCJ JUDICIAL OFFICER : Appellant: C Lonergan COUNSEL : 1st Respondent: S Longhurst 2nd Respondent: Submitting appearance SOLICITORS : Appellant: I V Knight Crown Solicitor 1st Respondent: J R Lough & Associates CATCHWORDS : Victims compensation - error of law on face of record - aggravation of existing condition - whether injury "as a direct result" of act of violence - limited powers of District Court when Tribunal determination set aside. (D) DECISION : See par 53 THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40498/2000 MASON P PRIESTLEY JA GILES JA Tuesday 10 April 2001 VICTIMS COMPENSATION FUND CORPORATION v David John AINSWORTH & ANOR JUDGMENT 1 MASON P: The claimant seeks orders that the record of proceedings before Judge JB Phelan in the District Court be removed into this Court and that the orders made by his Honour be quashed. Ancillary relief is claimed. The second opponent, the District Court of New South Wales, submits except as to costs. 2 The basis of relief is error of law on the face of the record. In this context, the record includes the reasons expressed by the District Court for its ultimate determination (see Supreme Court Act 1970, s69(4)). It is also legitimate to refer to the originating process in the District Court and the orders made by that court (see Craig v State of South Australia (1995) 184 CLR 163). It is unnecessary to determine whether the record would extend to the originating process before the Victims Compensation Tribunal or the reasons of that Tribunal. Background 3 On 11 November 1996 the first opponent, David Ainsworth, was involved in a violent incident at the Parramatta Central Motel. He was a serving Inspector of Police, although not on duty at the time. 4 On 19 August 1997, Mr Ainsworth lodged an application for compensation as a primary victim pursuant to the Victims Compensation Act 1996 ("the Act"). The Act applied in relation to the claim (see Schedule 3, cl 4). The relevant injury was "severe trauma" which was being treated with counselling by Mr Wenzel, a psychologist, and Dr Strum, a forensic psychiatrist. 5 The Act contained a Schedule of "compensable injuries" specifying a standard amount of compensation for a compensable injury (s10, Schedule 1). The compensable injury asserted by Mr Ainsworth was "shock", a term effectively defined in Schedule 1, cl 5(b) to comprise conditions attributed to post traumatic stress disorder, depression and similar conditions. Compensation was payable only if the symptoms and disability persisted for more than 6 weeks. The amount of compensation prescribed in the Table varied with the duration of the "shock". 6 The Act was substantially amended in 1998 (by the Victims Compensation Amendment Act 1998) and renamed the Victims Support and Rehabilitation Act in 2000 (by the Victims Compensation Amendment Act 2000). In view of a number of similar pending claims, the issues in this case have continuing relevance. However, references to the Act are to the Act as it stood between 1996 and 1998. 7 On 26 November 1998, Ms Humphreys, an assessor appointed under the Act, dismissed Mr Ainsworth's claim. She found that there was an act of violence, but dismissed the claim on the basis that Mr Ainsworth suffered no compensable injury within the meaning of the Act. 8 Mr Ainsworth then appealed to the Tribunal challenging the determination (cf s36) and seeking leave to adduce fresh evidence (cf s38(3)). On 23 August 1999, Mr R J Gabb, Magistrate and Tribunal member, rejected the application to adduce fresh evidence. He dismissed the appeal and affirmed the determination of the assessor. 9 Mr Ainsworth then appealed to the District Court (cf s39). The notice of appeal stated three questions of law as to the proper construction of "shock" in Schedule 1, cl 5; "aggravation or exacerbation" in Schedule 1, cl 4; and "injury" in the Dictionary. The notice asserted two grounds of appeal, namely: 1. The Learned Magistrate incorrectly declared the Law, in that he found that in applying the definition of "injury" or "shock", if it "existed prior to this act of violence and was aggravated by it, then clearly this act of violence does not cause, or could not have been one of the causes, of the psychiatric disorder for shock as required by Section 7(1)". 2. The Learned Magistrate incorrectly declared the Law to be that an aggravation of pre-existing shock or injury did not amount to shock or injury within the meaning of the "Victims Compensation Act 1996". 10 The Tribunal's rejection of the application to adduce fresh evidence was not challenged in the District Court. 11 In a judgment given on 25 February 2000, Judge Phelan upheld Mr Ainsworth's appeal. His Honour set aside the determination and remitted the matter to the Tribunal "to be considered and determined again". He directed that, having regard to the history of the matter, there should be a hearing with further evidence; and that due to the complexity of the psychological issues, the re-hearing should be conducted orally. Issues in this application 12 The written and oral submissions of counsel were helpful and concise. Oral debate refined the matters in issue. 13 The claimant submits that Judge Phelan erred in law in deciding that any question of law arose in the Tribunal's determination; and in deciding that the Tribunal committed an error of law in finding that Mr Ainsworth suffered no compensable injury. I refer to these as the substantive challenges. 14 The claimant also submits that the judge erred in law in directing that there be a re-hearing with further evidence; and in directing that the re-hearing should be conducted orally, rather than on the documents. I refer to these as the procedural challenges. 15 The substantive challenges raise two issues of general principle and an ancillary matter specific to the reasoning of the Tribunal in the particular case. 16 The first substantive point of principle ("the causation issue") concerns the approach to be adopted in addressing claims for compensation in relation to compensable injuries where the putative injury involves the aggravation, acceleration, exacerbation or deterioration of an existing condition of the eligible victim. 17 The second substantive point ("the jurisdiction issue") involves the scope of s39(3) of the Act and the question whether the District Court may entertain an appeal from the Tribunal on a question of law if the point at issue is whether a compensable injury was "receive[d] … as a direct result of" an act of violence. 18 The substantive issue specific to the particular case ("the particular substantive issue") involves the interpretation of the Tribunal's reasons (at least so far as they are incorporated in the reasons of the District Court judge) and consideration whether those reasons disclose error of law. 19 The procedural challenges raised by the claimant relate to the limited scope of the District Court's powers when disposing of an appeal from the Tribunal (cf s39(5)). The claimant's submission that the learned judge exceeded his powers in directing that the rehearing should be conducted orally is not disputed by Mr Ainsworth, but he disputes the submission that the direction that the hearing be with further evidence was beyond power. The causation issue 20 The criterion of entitlement to compensation for a "compensable injury" suffered by a primary victim of an act of violence is that the injury was "received by the victim as a direct result of the act of violence" (see ss7(1), 14(1)(a)). (I leave aside situations where death results.) 21 Judge Phelan held that the Tribunal erred in law in its determination that Mr Ainsworth did not receive a compensable injury as a direct result of the act of violence undoubtedly inflicted upon him in the incident at Parramatta on 11 November 1996. His Honour referred to the legislative framework and cited clauses 4 and 5 of Schedule 1 of the Act. Schedule 1 was a Table of compensable injuries and it specified, as the standard amount of compensation for inter alia "shock", particular amounts depending on the duration of the injury, subject to a minimum duration of six weeks (see s10). Clauses 4 and 5 provided: 4 Reduction of standard amount because of existing condition If the act of violence results in a compensable injury because of the aggravation, acceleration, exacerbation or deterioration of an existing condition of the eligible victim, the standard amount of compensation for the injury is to be reduced by the proportionate amount that the Tribunal or compensation assessor considers is attributable to the existing condition. 5. Shock The following applies to the compensable injury of shock: (a) Compensation is payable only if the symptoms and disability persist for more than 6 weeks. (b) The injury comprises conditions attributed to post traumatic stress disorder, depression and similar conditions. (c) The psychological symptoms include anxiety, tension, insomnia, irritability, loss of confidence, agoraphobia and pre-occupation with thoughts of self-harm or guilt. (d) The physical symptoms include alopecia, asthma, eczema, enuresis and psoriasis. (e) Relevant disabilities include impaired work or school or other educational performance, significant adverse effects on social relationships and sexual dysfunction. 22 His Honour stated that the issue in the appeal was the interpretation of cl 4. 23 As to the facts, the judge noted that the claim arose from an assault on Mr Ainsworth when he went to the aid of police officers in attempting to arrest an armed offender. There was evidence that, prior to the event, Mr Ainsworth was suffering depression from a series of events in his career. However, Dr Strum "saw the subject incident as the last straw rendering Mr Ainsworth no longer fit for police service, whereas previously he had been coping". 24 His Honour continued (emphasis in original): When the tribunal came to consider the matter it appears to have concluded that s7(1) requires that the act of violence must result in or cause a compensable injury. It went on to say and I quote: Mere exacerbation or aggravation of a pre-existing injury does not entitle the applicant to compensation. Clause 4 of Schedule 1 does not provide that mere exacerbation or aggravation of a pre-existing compensable injury is compensable; that clause merely provides that if an act of violence does result in or cause a compensable injury then if that compensable injury resulted not just from that act of violence but also resulted from aggravation or exacerbation of some existing condition of the victim, then the compensation to be awarded is to be reduced. However the requirement remains that it must be the act of violence which is a cause of the compensable injury itself. Now as I have said it must be established that the act of violence on 11 November 1996 resulted in or caused the applicant's "shock", see s7(1). It is not sufficient that the applicant may have been suffering a pre-existing psychiatric disorder from the prior stressful events and that this act of violence on 11 November 1996 exacerbated or aggravated the pre-existing psychiatric disorders. It has to be shown that this act of violence on 11 November 1996 was one of the causes of the applicant's psychiatric disorder or disorders and that means psychiatric disorder must be shown to have arisen after this act of violence. If the psychiatric disorder of "shock" existed prior to this act of violence and was aggravated by it then clearly this act of violence did not cause or could not have been one of the causes of the psychiatric disorder or "shock" required by s7(1). True it is as cl 4 sets out at its commencement, there must be an act of violence resulting in a compensable injury but it is clearly meant to provide for cases where an existing condition, whether it be a broken bone or shock, is the subject of aggravation, acceleration, exacerbation or deterioration. As I have spelled out from cl 5 there are many facets of shock and a number of ways in which old symptoms could worsen or new ones develop. It provides a mechanism whereby the pre-existing condition is assessed and a proportionate reduction in the amount in the schedule made. That proportion might or might not be significant. By way of example, a consideration of cl 5(e) may assist. Thus as is said here, if the appellant was still working though coping with difficulty before the incident he might have gone on until normal retirement. If that were the case the proportion attributable to this aggravation leading to his retirement could be highly significant in contrast to a situation where the evidence disclosed that sooner or later some small reversal would have brought about the same result. These are matters for the tribunal. Thus in the end result I reject the limiting interpretation of the tribunal which would mean that cl 4 would be mere surplusage. The determination is set aside and the matter remitted to the tribunal to be considered and determined again. (I have corrected obvious typographical errors.) 25 The claimant submits that this passage reveals error of law on the part of the judge. The nub of the error assigned is that the judge has treated cl 4 as necessarily providing that there is a compensable injury where an existing condition is aggravated, accelerated or exacerbated or where an existing condition deteriorates. 26 In my view, the passage from the judgment set out above does embody this reasoning (see especially the portion commencing "… but it is clearly meant to provide") and, in so doing, it imports an error of law. The reasoning treats cl 4 as a criterion of entitlement to compensation for a compensable injury, whereas the clause is a limitation or qualification to such entitlement. The statutory entitlement is to be found elsewhere, namely in the essentially causative criterion of showing that the nominated compensable injury was "received by the victim as a direct result of the act of violence". This basis of statutory entitlement stems from ss14 and 17, as confirmed in the definition of "primary victim" in s7(1). 27 Whether or not a primary victim has received a compensable injury "as a direct result" of a particular act of violence may involve a difficult issue of causation. The issue may be one upon which different tribunals of fact legitimately reach opposite conclusions. It is not necessarily a simple matter of common sense, notwithstanding frequently encountered judicial injunctions for robust fact-finding on such a basis. Policy issues and value judgments may be involved (March v E & MH Stramare Pty Ltd (1991) 171 CLR 506, Chappel v Hart (1998) 195 CLR 232 at 238). The particular statutory language must be kept in mind (here the requirement is proof of "a direct result"). A determination that the necessary causal link is present or absent will usually involve a question of fact, although the reasoning process may reveal an error of law in that the tribunal of fact misdirected itself as to the correct approach to the issue. 28 The primacy of the need to establish that the compensable injury was received "as a direct result" of the act of violence is manifest from ss7, 14 and 17. Nothing in s10 (which prescribes the schedule of compensable injuries) or Schedule 1 itself cuts across this. 29 Nor does cl 4 of Schedule 1. The opening words of that clause emphasise that the act of violence must result in a compensable injury. I read these words as a shorthand reference back to the statutory criterion found in ss7 and 14. What cl 4 does is to recognise that an act of violence may result in a compensable injury because of the aggravation, acceleration, exacerbation or deterioration of an existing condition of the eligible victim; and to provide that in such event the standard amount of compensation for the injury is to be reduced proportionately. It is fallacious to read cl 4 as stipulating that merely because there was aggravation etc, it follows that the causal criterion of "direct result" is satisfied. That is not the purpose of cl 4. Nor does its language bring about that result. Clause 4 is only enlivened when a finding has been made that a compensable injury has been received as a direct result of an act of violence. 30 In the case of "shock", it is not an automatic answer to a claim that the victim displayed symptoms and/or disability before the act of violence. There will be circumstances where a worsening of the symptoms and disability by virtue of an act of violence would lead to an affirmative finding. The Act speaks of "a" direct result, not "the" direct result. 31 In my view the learned judge erred in law in treating cl 4 as the operative provision and in concluding in effect that cl 4 would be reduced to "mere surplusage" by what he took to be the erroneous reasoning of the Tribunal. 32 The passage from the Tribunal's determination that is set out in the judgment in the District Court does not betray the error of law found by the judge. Non sequitur that it is free from the taint of some alternative error, but that is the particular substantive issue to be addressed below. 33 Mr Ainsworth submitted that the incident on 11 November 1996 aggravated his existing psychiatric condition. It may well have done. But this does not itself engage cl 4. The Tribunal was correct in perceiving a prior question, namely whether the condition as it manifested itself after 11 November 1996 was a "direct result" of the act of violence. 34 Mr Ainsworth also relied upon some remarks in the ex tempore judgment of Meagher JA in Victims Compensation Fund v Crowley [2000] NSWCA 378 at [3]-[4]. Those remarks relate to a particular decision of the District Court in relation to a particular determination of the Tribunal. They cannot be read as a general exposition of the scope of cl 4 and its relationship with the Act as a whole. The jurisdiction issue 35 So far as relevant, s39 of the Act provides: 39 Appeals to the District Court on questions of law (1) An applicant for statutory compensation may, with the leave of the District Court, appeal to the District Court on a question of law arising in any determination of the application by the Tribunal. … (3) For the purposes of this section, the following matters are not questions of law: (a) a determination of whether an injury for which compensation has been claimed is an injury specified in the schedule of compensable injuries or whether it is a compensable injury of a particular description specified in that schedule, (b) a determination of whether a series of acts are related and constitute a single act of violence. 36 It would appear that the claimant took the point before the District Court that the Court lacked jurisdiction to grant leave to appeal, because the questions of law assigned in the notice of appeal were effectively deemed not to be questions of law by reason of s39(3). 37 Judge Phelan brushed this objection aside, stating that he was "satisfied that the issue here is unaffected by that section and I grant leave to appeal". The reasoning is not entirely clear. 38 In this Court the claimant submitted that Mr Ainsworth's challenge to the Tribunal's determination fell within s39(3). It was submitted that the appeal to the District Court was necessarily an appeal based upon an asserted question of law touching a determination falling squarely within s39(3)(a). Leave to appeal should not have been given. 39 On the other hand, Mr Ainsworth submitted that s39(3)(a) does not address what I have termed "the causation issue" as to the direct linkage between a particular act of violence and an asserted compensable injury. 40 I accept the submission of Mr Ainsworth on this point. The notice of appeal formulated questions of law involving matters of statutory interpretation that raised the causation issue. This was sufficient to enliven the District Court's jurisdiction, subject to the grant of leave. 41 Section 39(3) is curiously expressed in its reference to "a determination" not being a "question of law". However, the intended effect is reasonably plain: the reasoning leading to a determination of either category referred to in s39(3) is deemed not to involve any question of law, even if its language would otherwise suggest or involve legal as distinct from factual analysis. Nevertheless, subsection (3) does not state that every aspect of a determination concerning a claim for statutory compensation is incapable of giving rise to a competent appeal. Par (a) deals with a specific issue, namely whether an injury for which compensation has been claimed is an injury specified in Schedule 1 or whether it is a compensable injury of a particular classification specified in Schedule 1. Section 39(3)(a) has plenty of work to do in dealing with disputes about which category in the table of injuries fits a particular fact situation. 42 Section 39(3) does not address the causation issue as to whether a compensable injury was a direct result of an act of violence. If the Tribunal's determination of that issue throws up a question of law, then it is open to the District Court to grant leave to appeal pursuant to s39(1). Was there a more specific error of law in the Tribunal's determination? (The particular substantive issue) 43 It follows that Judge Phelan fell into legal error in his approach to the statutory scheme in the manner in which he addressed cl 4 in the context of the causative issue. 44 However, before it would be proper to quash the substantive order of the District Court setting aside the Tribunal's determination, it is necessary to consider whether that determination was not otherwise flawed in law, albeit for reasons different from those which moved the District Court. 45 In my view, there is a particular difficulty of a legal nature in the Tribunal's reasoning process and it is expressed in the passage incorporated into the District Court record (par 24 above). The Tribunal said: It has to be shown that this act of violence on 11 November 1996 was one of the causes of the applicant's psychiatric disorder or disorders and that means psychiatric disorder must be shown to have arisen after this act of violence. If the psychiatric disorder of "shock" existed prior to this act of violence and was aggravated by it then clearly this act of violence did not cause or could not have been one of the causes of the psychiatric disorder or "shock" required by s7(1). 46 This passage discloses a different fallacy from that exposed in the reasoning of the learned judge. The Tribunal is stating that pre-existence of a psychiatric disorder precludes a finding that the act of violence was a direct cause. This does not follow. Symptoms and disabilities may stem from an act of violence. If they do - to the degree that a finding of "a direct result" is made - then that similar symptoms and disabilities had manifested themselves before would not provide the knock-out blow suggested by the Tribunal. After all, cl 4 of Schedule 1 (as I have interpreted it) actually recognises that aggravation etc may result in a compensable injury. 47 A similar error of reasoning appears in a later passage of the Tribunal's determination, albeit one that is not set out in the District Court record. The Tribunal said (emphasis added): Dr Strum then goes on to discuss hypothetically whether the incident of 11th November 1996 would have been sufficient in its own right in any event to produce the Disorders and he concludes it would have. That is entirely irrelevant here to the requirements of the Act - the fact is that the applicant was suffering those pre-existing Disorders when this incident occurred which then aggravated his symptoms. 48 I reject the claimant's submission that these two passages in the Tribunal determination are confined to the particular facts of the instant case. 49 Relief in the nature of certiorari is discretionary and it may be partial. Accordingly, while the procedural orders made by the District Court should be quashed for reasons set out below, I would refrain from quashing the substantive order of the District Court. That Court's order setting aside the Tribunal's determination and remitting the matter to the Tribunal for re-determination should stand, albeit that the Tribunal will now be required to proceed in accordance with this Court's reasons, in lieu of the reasons of the District Court. Judge Phelan's orders did not specifically direct that the redetermination be in accordance with the decision of the District Court, and so far as s39(5)(b) of the Act (set out below) so states, the decision of the District Court will have been overtaken by the decision of this Court. The procedural challenges 50 Having decided that the Tribunal's determination contained an error of law, the learned judge set it aside and remitted the matter to the Tribunal to be considered and determined again by the Tribunal. This was in accordance with s39(5) of the Act which provides: On an appeal, the District Court may only: (a) affirm the determination of the Tribunal, or (b) set aside the determination and remit the matter to be considered and determined again by the Tribunal (either with or without the hearing of further evidence) in accordance with the decision of the District Court on the question of law concerned. 51 However, his Honour went further and directed the Tribunal as to the manner in which the further hearing would be conducted, namely that there would be further evidence and an oral hearing. In doing so, his Honour exceeded his powers under s39(5)(b). It is not open to the District Court to exercise afresh or in advance the discretion committed to the Tribunal by s38 as to the manner in which an appeal to the Tribunal is to be heard and determined. The words in parenthesis in s39(5)(b) do not amplify the District Court's powers: they merely preserve those of the Tribunal. It follows that the direction that there be further evidence was beyond power as well as the direction that there be an oral hearing, and that these procedural orders of the District Court should be quashed. Disposition 52 Because Mr Ainsworth has been partially successful and because this summons has addressed questions of general application I would order the claimant to pay Mr Ainsworth's costs. 53 I propose the following orders: 1. Remove into this Court the record of proceedings in the District Court in appeal proceedings 447 of 1999. 2. Quash the orders directing that the further hearing in the Tribunal is to be with further evidence and to be conducted orally. 3. The opponent's costs and the costs of the second opponent (on a submitting basis) to be paid by the claimant. 54 PRIESTLEY JA: I agree with Mason P. 55 GILES JA: I agree with Mason P. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.