New South Wales Court of Appeal CITATION : Beecham (Australia) Pty Ltd v Alex Periera [2001] NSWCA 278 FILE NUMBER(S) : CA 41001/99 HEARING DATE(S) : 20 August 2001 JUDGMENT DATE : 27 August 2001 PARTIES : Beecham (Australia) Pty Limited - Appellant Alex Periera - Respondent JUDGMENT OF : Stein JA at 1; Brownie AJA at 2; Studdert AJA at 25 LOWER COURT JURISDICTION : District Court LOWER COURT 4386/97 FILE NUMBER(S) : LOWER COURT Mahoney DCJ JUDICIAL OFFICER : COUNSEL : C Hoeben SC - Appellant D Wheelahan QC - Respondent SOLICITORS : Nevill & Edwards - Appellant Taylor & Scott - Respondent CATCHWORDS : Estoppel - former adjudication - judgment inter partes - issue estoppel - identity of issues - findings of Compensation Court as to incapacity LEGISLATION CITED : Workers Compensation Act 1926 Suitors' Fund Act 1951 Blair v Curran (1939) 62 CLR 464 CASES CITED: Somodaj v Australian Iron and Steel Limited (1963) 109 CLR 285 Egri v DRG Australia Limited (1988) 19 NSWLR 600 DECISION : Appeal allowed THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 41001/99 STEIN JA BROWNIE AJA STUDDERT AJA 27 August 2001 BEECHAM (AUSTRALIA) PTY LTD v ALEX PERIERA 1 STEIN JA: I agree with Brownie AJA. 2 BROWNIE AJA: The respondent was injured in the course of his employment by the appellant on two occasions, 15 November 1985 and 18 February 1986. He lost no time from work after the first injury, but ceased work after the second injury, and has not worked since. Initially, the appellant disputed that the respondent had been injured at work, on either occasion, and the respondent brought proceedings against the appellant in the Compensation Court, claiming to have been incapacitated for work, as the result of the two injuries, from 18 February 1986 "to date and continuing". The case was heard by Davidson CCJ, who gave judgment on 10 October 1989. His Honour found that the respondent had been injured in the course of his employment on both of the alleged occasions, found that he had been incapacitated for work as the result of those injuries from 19 February 1986 to 19 March 1986, and found that he had not been incapacitated for work as the result of those injuries after the latter date. He made an award in favour of the respondent for weekly compensation for the period 19 February 1986 to 19 March 1986, together with medical expenses, limited to that period and excluding expenses incurred after the latter date. 3 The respondent sued the appellant for damages, and that case was heard by Mahoney DCJ, who on 2 December 1999 gave judgment for the respondent for $557,638.28. In the District Court case the appellant contended that the effect of the decision of Davidson CCJ was to give rise to an issue estoppel, preventing the respondent from asserting that he had been incapacitated for work as a result of the two employment injuries during the period 19 March 1986 to 10 October 1989 and, by inference, preventing the respondent from asserting that he was incapacitated for work as a result of the two employment injuries after 10 October 1989, unless there was evidence of some change in circumstances after that date. Mahoney DCJ rejected that contention, and held, in brief for the moment, that Davidson CCJ had been concerned only with the question whether the respondent was physically incapacitated, as distinct from being incapacitated by reason of some psychiatric or psychological state. There had been no evidence called before Davidson CCJ from a psychiatrist or psychologist. In contrast, Mahoney DCJ heard evidence from two psychiatrists, and determined the case before him on the basis that the respondent suffered from a somataform disorder, which had impaired his earning capacity from 19 February 1986 until the date of the trial, and which would impair his earning capacity thereafter. 4 The first and principal question argued on appeal was whether this ruling was correct. It is common ground that the law is as stated by Dixon J (as he then was) in Blair v Curran (1939) 62 CLR 464 at 532-533:- "Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue-estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established . Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J …the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous. In the phraseology of Lord Shaw , "a fact fundamental to the decision arrived at" in the former proceedings and "the legal quality of the fact" must be taken as finally and conclusively established…. But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal,, which concern only evidentiary facts and not ultimate facts forming the very title to rights given rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation. The difficulty in the actual application of these conceptions is to distinguish the matters fundamental or cardinal to the prior decision or judgment, decree or order or necessarily involved in it as its legal justification or foundation from matters which even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation or groundwork of the judgment, decree or order." 5 The parties also agree that the appeal should be resolved by looking at two questions: What was raised for decision before Davidson CCJ, and what it was that he decided. 6 In the Particulars, appended to the application for determination filed in the Compensation Court proceedings, the respondent was required to specify the nature and severity of his injury. Originally, he said "injury to the back, neck and left arm", but during the course of the hearing there were added the following words: "right leg, left and right arms and headaches". 7 The respondent tendered reports from eight medical practitioners, and the appellant reports from two medical practitioners. Six of the respondent's doctors confined themselves to physical or organic matters. Dr Cunningham, the treating orthopaedic surgeon, reported on orthopaedic matters, but in the course of his reports noted that the respondent had been "rather emotionally upset and….quite tearful" on one occasion; he said that he was unable to account for all of the respondent's complaints by reference to orthopaedic considerations; and he said: "I think however that there is a considerable psychological overlay developing". Dr Rasanayakam, another orthopaedic surgeon, who saw the respondent at the request of his solicitors, reported that the respondent was suffering from "some degree of post traumatic anxiety state", and recommended that a report be obtained from a psychologist or psychiatrist. 8 The appellant's insurer referred the respondent to a Dr Eggins, who saw him on 19 March 1986. The respondent described multiple symptoms, but the doctor reported that he could find no evidence of any organic disorder. He described the symptoms as "behavioural, and not the outcome of any work-related injury". He thought, however, that the respondent had perceptions that he was ill, and that these perceptions were such that he was not likely to return to work in the immediate future. 9 Dr Eggins saw the respondent again in January 1988. On that occasion the respondent gave a history that included statements that his general practitioner had offered to refer him to a psychiatrist, but he had declined the offer because he knew that there was nothing wrong with him mentally; and that he was sometimes depressed, and believed that he was surrounded by enemies. The doctor expressed the opinion that the respondent had "a mental complaint, loosely called hypochondriasis and [that] the underlying problem is his belief that he is ill". The doctor said that the respondent's symptoms were clearly not organic, and that he needed psychiatric intervention. He thought that the respondent's perceptions of illness were then so deeply ingrained that he was not likely to return to work in the near future. 10 Dr Millons, an orthopaedic surgeon qualified on behalf of the appellant, reported that he could find no orthopaedic reason why the respondent was unable to work, and suggested that the respondent be reviewed by a psychiatrist, commenting that the respondent "seems introspective in the extreme". 11 Davidson CCJ said that there was a considerable body of medical evidence, in report form, supporting the respondent's claim that he had some incapacity, but that the respondent's own complaints far outstripped the evidence given by his doctors. He referred to a passage in a report of Dr Eggins, that the respondent had presented as a physically fit young man, and said that that accorded with his impression of the respondent. He quoted further from the reports of Dr Eggins and said that the impression he had gained from the evidence of Dr Eggins and from the whole of the evidence was that the respondent was suffering from hypochondriasis, and that his perceptions of his illness were so deeply ingrained, that he was not likely to return to work in the near future. 12 His Honour then referred to other medical reports and said: "Sadly, it seems to me, as Dr Eggins has said, the applicant has adopted a sick role which may quite genuinely be affecting him from a mental point of view. If that be the case one would have sympathy for him, however I do not see that the evidence supports a finding that that nor indeed any physical injury extended as a result of either of the injuries beyond [19] March 1986. I am prepared to accept that he did have some minor musculo ligamentous strain either as a result of both the incidents or, more particularly, as a result of the second. So far as the first incident was concerned, obviously it did not require him to seek medical treatment nor cease work. It would appear that the second incident where he fell carrying a box of drinks onto his tail, may have given him some incapacity for a relatively short period which would accord with the one month between 18 February 1986 and when he was seen by Dr Eggins on 19 March 1986." 13 Mahoney DCJ considered various decisions of this Court, and considered that some judges had not been enthusiastic about the doctrine of estoppel. With all due respect, I do not share this view about those decisions, but the point leads nowhere: it is the plain duty of every court in this State to loyally apply the law, as expounded by the High Court. It is undoubtedly true, as Dixon J said in the last paragraph of his judgment quoted above, that it is sometimes difficult to distinguish between findings which give rise to an estoppel and findings which do not, and this difficulty is not uncommonly encountered in cases where, first, a decision is made by the Compensation Court (or its predecessor, the Workers Compensation Commission), and secondly, a claim for damages comes on for trial: the issues to be decided in the claim for compensation are different to the issues that arise in a claim for damages, but the issues sometimes overlap, so that an estoppel might arise. Thus, in Somodaj v Australian Iron and Steel Limited (1963) 109 CLR 285 the Workers Compensation Commission found that a worker had not sustained a back injury at work on a particular occasion, and it was held that the worker could not, in subsequent proceedings claiming damages, allege that he had injured his back on that occasion: the issue to which the member of the Commission had directed his mind was whether the worker had injured his back on the occasion in question, and that decision created an estoppel. 14 Mahoney DCJ held that Davidson CCJ had not directed his mind to any psychological or psychiatric sequelae consequent upon relatively minor orthopaedic injuries; he noted that there had been no psychiatrist or psychologist give evidence in the Compensation Court; and he said that "Such reference to the actual evidence as his Honour included in his reasons for judgment [make] it clear that what is really in issue in this case, the psychiatric illness of the plaintiff, was never a matter for determination before" Davidson CCJ. Later, Mahoney DCJ said, speaking of Davidson CCJ: "His Honour was concerned with incapacity allegedly due to orthopaedic causes. This case is concerned with pain and suffering, loss of the whole range of amenities of life, all of the above to date and into the future and all allegedly due to a combination of orthopaedic and psychological or psychiatric causes. Accordingly, it cannot be said that the award of the Compensation Court based upon the judgment of Davidson J creates an issue estoppel confining the ambit of the claim which is sought to be made by the plaintiff in this present case. It does, however, establish an estoppel with regard to the two incidents relied on in these proceedings." 15 In my respectful view, Mahoney DCJ erred in coming to these views. The issue which Davidson CCJ had to decide was whether the respondent had proved an "incapacity" within the meaning of the Workers Compensation Act 1926, as the result of the two employment injuries, and not whether he was incapacitated for work by reason of some orthopaedic or organic condition, as distinct from some psychiatric or psychological condition. The statute draws no such distinction. Rather, it required Davidson CCJ to decide whether there was an "incapacity", no matter how that incapacity was described or diagnosed from the perspective of a medical practitioner. 16 Additionally, in my judgment Davidson CCJ did decide that the respondent suffered from a psychological condition, which on the evidence now before us cannot be distinguished from the somataform disorder that Mahoney DCJ found. Further, Davidson CCJ held, on the evidence then before him, that that condition did not result in an incapacity for work after 19 March 1986, that was the result of the two employment injuries. 17 There have been a series of decisions in this Court, applying the principles expounded in Blair and in Somodaj, in various contexts, where a problem has arisen as to whether there is some issue estoppel that binds the parties at the time when a court is asked to assess damages at common law. The leading case in this group is Egri v DRG Australia Limited (1988) 19 NSWLR 600. The respondent formally submitted that this case had been wrongly decided, but did not develop this submission, and I will assume that it was correctly decided. 18 In Egri, the plaintiff injured his back at work, and brought proceedings in the Workers Compensation Commission claiming compensation. An issue that was litigated on the hearing of that claim was whether the plaintiff was still suffering disability and incapacity because of low back trouble, and if so, to what extent. He adduced evidence to the effect that he had suffered a disc lesion, but the defendant's case was that he had no disc lesion, and merely a back strain. There was an express finding that he did not have a disc lesion. On the subsequent hearing of his claim for damages, it was held that he was estopped from alleging that there was a disc lesion: the finding that there was no such lesion formed an indispensable or fundamental step in determining the nature of the injury, and whether the plaintiff was still incapacitated. 19 In that case, as in this case, the employer did not contend that the estoppel continued, in respect of the period after the date of the award; but the finding there that there was no disc lesion and the finding here that there was no incapacity for work after 19 March 1986, resulting from the two employment injuries, prevented the respective plaintiffs from challenging the correctness of these conclusions. 20 Mahoney DCJ assessed damages in a way which has the practical effect of tending to obscure the fact that his conclusion conflicts with the conclusion of Davidson CCJ. He assessed damages for impairment of earning capacity in a rather unusual way (the circumstances were quite difficult). He found that the respondent's employment with the appellant would have ceased, shortly after the injury of 19 February 1986 even if the injury of that date had not occurred - the employment was casual and seasonal. He noted the respondent's lack of command of English, the general difficulties of obtaining employment in difficult economic times, and other matters. He then took an average adult male wage, averaged over a period of years, of $600 per week gross, and said that, having regard to his education and background, the respondent would probably have earned about $750 per week gross, or about $25,000 per year net. Then, for reasons not clearly articulated, he allowed a sum of $150,000 for past impairment of earning capacity, representing $25,000 per year for the six years preceding the judgment (but nothing for the preceding period), although he noted that the respondent had been out of Australia for some eight months, in the period of six years just mentioned, visiting his homeland, Chile. 21 However, when one reads the judgment as a whole, it is plain that the conclusion that grounded this award of damages for impairment of earning capacity was that the respondent was suffering from a somataform disorder, consequent upon the two employment injuries which had impaired his earning capacity from 19 February 1986 to the date of trial, to such an extent that he had not worked at all during that period, and was unlikely ever to work again. 22 I consider that the respondent was estopped from asserting this, that the appeal should be allowed, and that a new trial is necessary. 23 I note that the damages awarded appear to include a sum for medical and similar expenses, incurred during the period 19 March 1986 to 10 October 1989. This also appears to be inconsistent with the effect of the same issue estoppel. 24 The appellant challenged the judgment in other ways, but I do not think it is necessary to deal with them, since a new trial is necessary. I propose that the appeal be allowed, the judgment below set aside, and that there be a new trial, limited to the question of damages. The respondent should pay the appellant's costs of the appeal, but the costs of the first trial should abide the result of the new trial. The respondent should have a certificate under the Suitors' Fund Act 1951. 25 STUDDERT AJA: I agree with Brownie AJA. ********** 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. 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