Supreme Court New South Wales Medium Neutral Citation: Mercy Connect Limited v Kiely [2018] NSWSC 1421 Hearing dates: 11 July 2018 Date of orders: 21 September 2018 Decision date: 21 September 2018 Jurisdiction: Common Law - Administrative Law Before: Harrison AsJ Decision: The Court orders that: (1) The decision of the Appeal Panel in matter number 3761/16 dated 27 February 2018 is set aside. (2) The decision of the Appeal Panel in matter number 3761/16 is remitted to the Workers Compensation Commission of New South Wales to be determined in accordance with law. (3) Costs are reserved. Catchwords: ADMINISTRATIVE LAW – Judicial Review – Appeal Panel Assessment – whether Appeal Panel failed to determine the appeal – whether Appeal Panel erred by directing a further medical examination without first finding an error in the Medical Assessment Certificate – whether the Appeal Panel mistook its jurisdiction – failure to consider secondary psychological injury – 65A of the Workers Compensation Act 1987 (NSW) – whether Appeal Panel erred in re-assessing the degree of Whole Person Impairment – failure of Appeal Panel to determine whether a deduction should be made for a pre-existing injury, condition or abnormality – s 323 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) – legal unreasonableness Legislation Cited: Supreme Court Act 1970 (NSW), s 69 Workers Compensation Act 1987 (NSW), ss 65A and 66 Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 74, 319, 323, 325, 327, 328 Cases Cited: Campbelltown City Council v Vegan (2006) 67 NSWLR 372; [2006] NSWCA 284 Cullen v Woodbrae Holdings Pty ltd [2015] NSWSC 1416 Ferguson v State of New South Wales & Ors [2017] NSWSC 887 Inghams Enterprises Pty Ltd v Lakovska [2014] NSWCA 194 McGinn v Ashfield Council [2012] NSWCA 238 Mercy Centre Lavington Ltd v Kiely & Ors [2017] NSWSC 1234 Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 Minister for Immigration and Border Protection v Singh & Anor (2014) 231 FCR 437 Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6; New South Wales Police Force v Registrar of the Workers Compensation Commission of New South Wales [2013] NSWSC 1792 Roads and Maritime Services v Rodger Wilson [2016] NSWSC 1499 Siddick v WorkCover Authority (NSW) [2008] NSWCA 116 Walsh v Parramatta City Council (2007) 161 LGERA 118; [2007] NSWLEC 255 Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; (2013) 88 ALJR 52; [2013] HCA 43 Category: Principal judgment Parties: Mercy Connect Limited (formerly known as Mercy Centre Lavington Limited) (Plaintiff) Rachelle Marcel Kiely (First Defendant) Appeal Panel of the Workers Compensation Commission; Deborah Moore, Dr Julian Parmegiani, Dr Patrick Norris (Second Defendant) Registrar of the Workers Compensation Commission (Third Defendant) Representation: Counsel: S Blount (Plaintiff) Submitting Appearances (First, Second and Third Defendants) Solicitors: Astridge and Murray (Plaintiff) Nevin Lenne Gross – Submitting Appearances (First Defendant) Crown Solicitor – Submitting Appearances (Second & Third Defendants) File Number(s): 2018/96656 Publication restriction: Nil Judgment 1. HER HONOUR: This is a judicial review of a decision made by a Medical Appeal Panel of the Workers Compensation Commission of NSW dated 27 February 2018 relating to s 328(1) of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("WIM Act"). The matter for this Court to determine is whether or not the Appeal Panel made a jurisdictional error or whether there is an error on the face of the record. 2. The plaintiff is Mercy Connect Limited (formerly known as Mercy Centre Lavington Limited) ("Mercy Connect"). The first defendant is Rachelle Marcel Kiely ("Ms Kiely"). The second defendant is the Appeal Panel of the Workers Compensation Commission constituted by Deborah Moore, Dr Julian Parmegiani, and Dr Patrick Norris ("the Appeal Panel"). The third defendant is the Registrar of the Workers Compensation Commission. The first, second, and third defendants have filed submitting appearances. Mercy Connect relied upon its court book filed 15 June 2018. 3. By summons filed 27 March 2018, Mercy Connect seeks firstly, an order in the nature of certiorari quashing the decision of the Appeal Panel; or secondly, in the alternative, a declaration that the decision of the Appeal Panel is invalid. It does not specifically seek that the matter be remitted to the Workers Compensation Commission to be determine according to law. There has been one decision by an Approved Medical Specialist, two decisions by Medical Appeal Panels, differently constituted, and one judicial review. This is the second judicial review. Background 1. Ms Kiely was born in 1974 and is currently 44 years of age. 2. In March 2009, Ms Kiely commenced employment with Mercy Connect. On 19 April 2011, Ms Kiely sustained an injury in the course of employment with Mercy Connect, including various physical injuries and a psychological injury. 3. On 19 November 2015, the solicitor for Ms Kiely wrote to Mercy Connect's insurer, Catholic Church Insurance Ltd, making a claim for lump sum compensation pursuant to s 66 of the Workers Compensation Act 1987 (NSW) for primary psychological injury. 4. On 13 January 2016, Mercy Connect's insurer issued a notice pursuant to s 74 of the WIM Act disputing liability of Ms Kiely's claim. Mercy Connect says that Ms Kiely's psychological injury is a secondary, as opposed to a primary, psychological injury. 5. On 20 July 2016, Ms Kiely commenced proceedings in the Workers Compensation Commission by way of an application to resolve a dispute, claiming compensation under s 66 of the Workers Compensation Act. 6. On 24 October 2016, a conciliation/arbitration was held before arbitrator Snell. The claim for lump sum compensation was referred to an Approved Medical Specialist, Dr White ("the AMS"), for assessment of the primary psychological injury. The order provided that the AMS was to exclude any impairment arising from a secondary condition. 7. On 29 November 2016, the AMS issued a Medical Assessment Certificate ("MAC") assessing Ms Kiely as suffering from a 12% whole person impairment ("WPI") as a result of the primary psychological injury. 8. On 20 December 2016, Ms Kiely lodged an application to appeal the decision of the AMS together with submissions in support. 9. On 23 January 2017, Mercy Connect lodged a notice of opposition and submissions in support. 10. On 15 March 2017, the Appeal Panel revoked the MAC and issued a new MAC, certifying Ms Kiely as suffering from a 15% WPI. 11. 18 April 2017, Mercy Connect filed a summons in this Court seeking judicial review of the decision of the Appeal Panel. 12. On 18 August 2017, the judicial review was heard by Wilson J. 13. On 14 September 2018, her Honour delivered judgment, quashing the decision of the Appeal Panel and remitting Ms Kiely's appeal to the Workers Compensation Commission for determination by a differently constituted Appeal Panel. 14. On 26 September 2017, Mercy Connect and Ms Kiely were advised of the members of the reconstituted Appeal Panel. 15. On 20 October 2017, the Appeal Panel wrote to the parties calling for further submissions. 16. On 27 February 2018, the Appeal Panel delivered its decision and statement of reasons. The Appeal Panel quashed the MAC and substituted an assessment of 19% WPI. 17. On 27 March 2018, Mercy Connect filed its summons seeking this current judicial review from the decision of the Appeal Panel dated 27 February 2018. 18. I will deal with these earlier proceedings in more detail later in this judgment. The statutory scheme 1. It is convenient that I briefly outline the relevant provisions of the statutory scheme. 2. Section 65A of the Workers Compensation Act contains special provisions for psychological and psychiatric injury. It relevantly reads: "65A Special Provisions for Psychological and Psychiatric Injury (1) No compensation is payable under this Division in respect of permanent impairment that results from a secondary psychological injury. (2) In assessing the degree of permanent impairment that results from a physical injury or primary psychological injury, no regard is to be had to any impairment or symptoms resulting from a secondary psychological injury. (3) No compensation is payable under this Division in respect of permanent impairment that results from a primary psychological injury unless the degree of permanent impairment resulting from the primary psychological injury is at least 15%. Note: If more than one psychological injury arises out of the same incident, section 322 of the 1998 Act requires the injuries to be assessed together as one injury to determine the degree of permanent impairment. (4) If a worker receives a primary psychological injury and a physical injury, arising out of the same incident, the worker is only entitled to receive compensation under this Division in respect of impairment resulting from one of those injuries, and for that purpose the following provisions apply: (a) the degree of permanent impairment that results from the primary psychological injury is to be assessed separately from the degree of permanent impairment that results from the physical injury (despite section 65 (2)), (b) the worker is entitled to receive compensation under this Division for impairment resulting from whichever injury results in the greater amount of compensation being payable to the worker under this Division (and is not entitled to receive compensation under this Division for impairment resulting from the other injury), (c) the question of which injury results in the greater amount of compensation is, in default of agreement, to be determined by the Commission. Note: If there is more than one physical injury those injuries will still be assessed together as one injury under section 322 of the 1998 Act, but separately from any psychological injury. Similarly, if there is more than one psychological injury those psychological injures will be assessed together as one injury, but separately from any physical injury. (5) In this section: "primary psychological injury" means a psychological injury that is not a secondary psychological injury. "psychological injury" includes psychiatric injury. "secondary psychological injury" means a psychological injury to the extent that it arises as a consequence of, or secondary to, a physical injury." 1. Section 66 of the Workers Compensation Act provides as follows: "66 Entitlement to Compensation for Permanent Impairment (1) A worker who receives an injury that results in a degree of permanent impairment greater than 10% is entitled to receive from the worker's employer compensation for that permanent impairment as provided by this section. Permanent impairment compensation is in addition to any other compensation under this Act. Note: No permanent impairment compensation is payable for a degree of permanent impairment of 10% or less. (1A) Only one claim can be made under this Act for permanent impairment compensation in respect of the permanent impairment that results from an injury. …" Relevant provisions of the WIM Act 1. Chapter 7, Part 7 of the WIM Act provides for medical assessment, including the assessment of the degree of WPI by an Approved Medical Specialist and, by way of review, appeal panels. The scheme was designed to take the function of assessment of injury out of the adversary court system: see Inghams Enterprises Pty Ltd v Lakovska [2014] NSWCA 194 at [1] per Basten JA. ("Lokovska"). 2. Approved Medical Specialists are appointed under the WIM Act to deal with medical disputes, which are defined in s 319 to mean: "319 Definitions In this Act: … "medical dispute" means a dispute between a claimant and the person on whom a claim is made about any of the following matters or a question about any of the following matters in connection with a claim: (a) the worker's condition (including the worker's prognosis, the aetiology of the condition, and the treatment proposed or provided), (b) the worker's fitness for employment, (c) the degree of permanent impairment of the worker as a result of an injury, (d) whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion, … (f) whether impairment is permanent, (g) whether the degree of permanent impairment of the injured worker is fully ascertainable." 1. Section 323 provides for the deduction for a previous injury or pre-existing condition or abnormality. It reads: "323 Deduction for previous injury or pre-existing condition or abnormality (1) In assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury (whether or not it is an injury for which compensation has been paid or is payable under Division 4 of Part 3 of the 1987 Act) or that is due to any pre-existing condition or abnormality. (2) If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence. Note. So if the degree of permanent impairment is assessed as 30% and subsection (2) operates to require a 10% reduction in that impairment to be assumed, the degree of permanent impairment is reduced from 30% to 27% (a reduction of 10%). (3) The reference in subsection (2) to medical evidence is a reference to medical evidence accepted or preferred by the approved medical specialist in connection with the medical assessment of the matter. (4) The Workers Compensation Guidelines may make provision for or with respect to the determination of the deduction required by this section. ..." 1. Section 325 relates to the medical assessment certificate. It reads: "(1) The approved medical specialist to whom a medical dispute is referred is to give a certificate (a medical assessment certificate) as to the matters referred for assessment. (2) A medical assessment certificate is to be in a form approved by the Registrar and is to: (a) set out details of the matters referred for assessment, and (b) certify as to the approved medical specialist's assessment with respect to those matters, and (c) set out the approved medical specialist's reasons for that assessment, and (d) set out the facts on which that assessment is based. …" 1. Appeals against medical assessments are governed by ss 327 and 328 of the WIM Act. 2. Section 327 relevantly reads: "327 Appeal against medical assessment … (3) The grounds for appeal under this section are any of the following grounds: … (c) the assessment was made on the basis of incorrect criteria, (d) the medical assessment certificate contains a demonstrable error. …" And s 328 relevantly reads: "328 Procedure on appeal (1) An appeal against a medical assessment is to be heard by an Appeal Panel constituted by 2 approved medical specialists and 1 Arbitrator, chosen by the Registrar. (2) The appeal is to be by way of review of the original medical assessment. The WorkCover Guidelines may provide for the procedure on an appeal. (3) Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the medical assessment appealed against may not be given on an appeal unless the evidence was not available to the appellant before that medical assessment or could not reasonably have been obtained by the appellant before that medical assessment. … (5) The Appeal Panel may confirm the certificate of assessment given in connection with the medical assessment appealed against, or may revoke that certificate and issue a new certificate as to the matters concerned. Section 326 applies to any such new certificate. …" 1. Section 328(2) confines the grounds of appeal which an appeal panel may consider to those pursued by the appellant: see Lakovska per Barrett JA at [40] (Gleeson JA agreeing); New South Wales Police Force v Registrar of the Workers Compensation Commission of New South Wales [2013] NSWSC 1792, Davies J at [45]-[46]; Cullen v Woodbrae Holdings Pty ltd [2015] NSWSC 1416, Beech-Jones J at [29]-[38]; and Ferguson v State of New South Wales & Ors [2017] NSWSC 887 per Campbell J at [12]. In this current judicial review, the Appeal Panel was confined to whether the assessment was made on the basis of incorrect criteria or there is a demonstrable error. The referral 1. On 24 October 2016, the Workers Compensation Commission issued a certificate of determination following a conciliation conference held by the parties with arbitrator Snell. (Aff, Murray 14 May 2018, Ex A). The referral was for the AMS, Dr White, to assess the degree of WPI arising out of the primary psychological injury sustained by Ms Kiely as a result of the incident. (My emphasis). 2. Relevantly, the certificate of determination provided as follows at [3] and [4]: "3. The parties request that the AMS referral is to draw the attention of the AMS to the admission of the applicant referred to below, and the AMS is to exclude from the assessment made in respect of the injury in Order 1, any impairment or symptoms arising from or attributable to, the secondary psychological condition suffered by the worker as required by Section 65A of the Workers Compensation Act 1987, in addition to any deduction required under Section 323 of the Workplace Injury Management and Workers Compensation Act 1998. (emphasis added) The following is not a determination of the Commission, however, I note that the parties have agreed the following: 4. The applicant admits and the parties agree that the applicant, in addition to the primary psychological injury noted in Order 1 above, suffers a secondary/consequential psychological condition as a result of physical injuries sustained on 19 April 2011 within the meaning of Section 65A of the Workers Compensation Act 1987. …" 1. On 31 October 2016, the referral was amended to include the following: "1. MEDICAL DSPUTE REFERRED FOR ASSESSMENT (s319 1998 Act) The degree of permanent impairment of the worker as a result of an injury (s319(c) Whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion (s319(d)) Whether impairment is permanent (s319(f)) Whether the degree of permanent impairment of the injured worker is fully ascertainable (s319(g))" The decision of the AMS 1. On 29 November 2016, the AMS issued a MAC. The MAC relevantly stated at 1: "1. DETAILS OF THE MATTERS REFERRED FOR ASSESSMENT The following matters have been referred for assessment (s 319 of the 1998 Act): • Date of injury: 19 April 2011 • Body parts/systems referred: Psychological Injury • Method of Assessment: Whole Person Impairment ..." 1. In his reasons, the AMS provided a detailed overview of the history relating to Ms Kiely's injury. (Aff, Murray 14 May 2018, Ex C, 2-5). Under the heading "Findings on mental state examination", he stated at 6: "…She appeared to have a good understanding about the distinction between primary psychiatric injury and secondary psychiatric injury as a consequence of chronic and physical disability. When this examiner explored this further, she said, "I'd say a third of my disability is from my pain". She said that if there was a 'magic wand' which could relieve her of pain, "I would absolutely be at least a third better … I've lost interest … but in that case, I would try to do more". 1. The AMS concluded at 8: "10. REASONS FOR ASSESSMENT a. My opinion and assessment of whole person impairment The Whole Person Impairment is 17%. With regard to apportionment between primary psychiatric injury and secondary injury related to chronic pain and physical symptoms, it is noted that there is no scientific method of accurately apportioning causation. However, this examiner has arrived at an approximation of apportionment, using clinical experience and taking into account: • The physical symptoms • The psychological symptoms • This examiner's experience of other individuals in similar situations, including their responses to various interventions, particularly those that relieve physical symptoms of chronic pain • Ms Kiely's own comments regarding apportionment • Comments by other independent medical examiners. Therefore, taking into account the above factors and rounding up to the final score to a whole number, it is this examiner's opinion that 12% of Ms Kiely's psychiatric disorder can be deemed a result of the primary psychiatric condition, whilst 5% can be deemed related to the secondary psychiatric condition. …" 1. The AMS found that 5% was the portion related to a secondary psychological injury, and should be deducted in accordance with s 65A of the Workers Compensation Act from Ms Kiely's 17% overall WPI. Accordingly, the AMS issued a MAC with a 12% WPI. The decision of the Registrar ("gatekeeper") dated 7 February 2017 1. On 20 December 2016, Ms Kiely filed an application to appeal against the AMS's decision. The grounds of this appeal were that the assessment was made on the basis of incorrect criteria and that the MAC contained a demonstrable error. Both parties relied upon written submissions and Mercy Connect lodged a notice of opposition. 2. On 7 February 2017, the delegate of the registrar at [5] stated: "Upon examination of the MAC and on the face of the application and submissions made, I am satisfied that a ground of appeal as specified in section 327(3)(c) is made out in relation to the assessment of whole person impairment of the appellant's psychological injury." 1. In her submissions to the Appeal Panel, Ms Kiely stated at [12]: "It is submitted that the Guides make no provision for the inclusion (as the AMS has stated) of "the examiners experience of other individuals in similar situations, including their responses to various interventions, particularly those that relieve physical symptoms of chronic." The decision of the first Appeal Panel 1. On 15 March 2017, the first Appeal Panel handed down its decision. It determined at [47] that there was a demonstrable error made by the AMS as to his approach to assessing the secondary condition. It stated at [44]-[46]: "44. The Panel notes the difficulty faced by the AMS in the circumstances of this matter. In attempting to quantify the extent of the assessed impairment to be excluded, the factors relied on by the AMS cannot provide a reliable outcome. The physical injuries are not relevant to considering the impairment due to the secondary condition; nor is the pain suffered by Ms Kiely; or the experience of other individuals suffering pain. The comments of Ms Kiely taken into account by Dr White compound the unreliability of the outcome arrived at. … 45. This focus on the pain and the other factors does not assist in quantifying the proportion of impairment due to the secondary condition the AMS is attempting to exclude. They bear no relation to the factors to be considered in the PIRS ratings for example, although the panel does consider that an attempt at an assessment using the PIRS categories for the secondary condition would also fail. There is mention of Ms Kiely having "lost interest" because of her pain, but this is not sufficient to quantify the secondary condition in terms of the PIRS Categories. The reliance on the irrelevant factors has led the AMS into a conclusion without a scientific rationale. 46. The outcome of 5 per cent WPI, or approximately one-third, as being the portion to be excluded does not have a sound basis. The factors considered by the AMS are not valid for the process. This constitutes a demonstrable error on the face of the Certificate." 1. The first Appeal Panel continued at [52]-[55]: "52. Nevertheless, some of the depressive symptomatology associated with the pain from the physical injuries does contribute to the overall impairment. In the Panel's opinion, the picture here is very similar to one in which section 323 of the 1998 Act is applicable, and the deductible proportion of the assessed impairment for a pre-existing injury, condition, or abnormality is difficult to ascertain. In those circumstances section 323(2) would be applicable and a 1/10 deduction would apply provided it was "not at odds with" the evidence. 53. In this matter the excluded impairment for the secondary condition is similarly difficult to establish, and the proportion of 1/10 is not at odds with the evidence. Given that this approach is stipulated for assessments involving a pre-existing condition, the Panel has concluded that it is appropriate to "borrow" the method from section 323 of the 1998 Act. It is on the evidence the best means in this matter to identify the excluded proportion due to the secondary psychological/psychiatric condition. 54. Using this analogous method, the Panel finds that the primary injury comprises 9/10 of the impairment. 55. Applying this finding to the overall assessment by the AMS of 17 per cent WPI gives 15 per cent WPI for the primary psychiatric/psychological injury, as reflected in the Panel's new certificate." 1. Accordingly, the first Appeal Panel ordered that the AMS's MAC be revoked and issued a new certificate. It made a new WPI assessment of 15%, being the original 17% WPI found by the AMS (prior to his 5% deduction) with a 2% deduction for secondary psychological injury. The first Appeal Panel calculated this 2% by "borrowing" the 10% deduction approach for pre-existing injury, condition or abnormality in s 323(2) of the WIM Act. (At [53]). First judicial review in this Court before Wilson J 1. By summons filed 18 April 2017, Mercy Connect sought an order in the nature of certiorari or alternatively, a declaration setting aside or declaring invalid the decision made by the first Appeal Panel on 15 March 2017; and an order in the nature of prohibition. 2. The grounds of the review were firstly that the first Appeal Panel made a number of jurisdictional errors and/or error of law on the face of the record, or alternatively, the first Appeal Panel constructively failed to exercise its statutory power in making the decision. The AMS's quantification of the secondary psychological injury as 5% WPI was not in dispute. There were four errors identified by Mercy Connect. These were as follows. 3. The first error identified was that the first Appeal Panel was restricted in its review to the specific grounds of appeal on which the appeal was made in accordance with s 328(2) of the WIM Act. It therefore wrongly determined (at [43]-[46]) that the AMS's decision was afflicted with a "problem" that involved "irrelevant factors" and featured a conclusion which did not have a "scientific rational". The first Appeal Panel determined that the AMS's finding of 5% WPI did not have a sound basis and it constituted "demonstrable error". It did not have the jurisdiction or power to make this determination as they did not constitute the grounds of appeal on which the appeal was made. Further or alternatively, the conclusion of the first Appeal Panel that the factors listed by the AMS were irrelevant was wrong in law and misconstrued and misapplied the relevant law. The first Appeal Panel also failed to set out its reasons for its conclusions in that it failed to set out its actual path of reasons and/or failed to do so in sufficient detail so as to enable the Court to see whether the opinion did or did not involve any error of law. 4. The second error identified was that the first Appeal Panel incorrectly considered the appeal at large and continued to make its own determination as to Ms Kiely's WPI. 5. The third error was that the first Appeal Panel misconstrued and misapplied its powers, or that it constructively failed to exercise its power in determining reasons at [52] and [53] that it could "borrow" the calculation of impairment methodology from a different and otherwise inapplicable provision of the workers compensation legislation, being s 323(2) of the WIM Act. Such a borrowing of a statutory provision that did not apply to the appeal was impermissible and it thereby failed to make its own assessment of WPI as it was required to do according to law. 6. The fourth error was that the decision was afflicted by legal unreasonableness within the meaning of Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 and is thereby invalid. The first Appeal Panel wrongly determined that there was a dispute about a number of factors concerning the AMS's decision when there was not. It also acted irrationally or illogically in criticising the AMS when it stated at [44] that "physical injuries are not relevant to considering the impairment due to the secondary condition, nor is the pain suffered by Ms Kiely, or the experience of other individuals suffering pain", and then stated later at [52] that "some of the depressive symptomatology associated with the pain from the physical injuries does contribute to the overall impairment." Wilson J's decision 1. On 14 September 2017, Wilson J handed down her decision in Mercy Centre Lavington Ltd v Kiely & Ors [2017] NSWSC 1234. ("Mercy Centre"). 2. So far as the first and second errors are concerned, Wilson J stated at [49] and [52]-[55] that the first Appeal Panel had fallen into error by considering matters which were not raised by Ms Kiely on appeal and should not have been considered. Under s 328(2) of the WIM Act, an appeal panel is limited in its review to the grounds of appeal. Ms Kiely had not argued the quantification of the secondary psychological injury as a ground of appeal to the first Appeal Panel. Nor had Ms Kiely raised on appeal that the AMS had made an error in the factors taken into account, other than his reference to his experience of other individuals in similar situations. The first Appeal Panel had therefore fallen into error by revising the quantum of the secondary psychological injury, finding errors with factors taken into consideration by the AMS, and referring to the physical injuries as being irrelevant to the consideration of secondary impairment. 3. Her Honour went on to find at [56], [57] and [60]-[63] that the third error had been established because s 323 of the WIM Act had been incorrectly relied upon by the first Appeal Panel. In making its assessment over the proportion of impairment to be excluded as secondary injury, the first Appeal Panel had found there was difficulty in separating primary and secondary psychological injury and resolved this by relying upon s 323 of the Act. Wilson J held at [57] that "it was not open to the [Appeal Panel] to utilise s 323 as the methodology adopted by which to determine secondary psychological impairment pursuant to s 65A of the [Workers Compensation Act]". This was because s 65A of the Workers Compensation Act and s 323 of the WIM Act serve different purposes. Section 65A is directed towards compensation while s 323 concerns the assessment of impairment. (At [60]). The first Appeal Panel had relied upon s 323 to assess the quantum of impairment to be deducted and failed to take into account the available medical evidence. (At [61]). Her Honour also noted that even if s 323(2) was available to assess an appropriate deduction, it is "not open-ended" as the ten per cent deduction can only be made in circumstances where it would be too difficult or costly to make a more specific medical assessment. This was not the case here was there was a great deal of evidence the first Appeal Panel could have referred to. (At [62]). Accordingly, the use of s 323 for this purpose amounted to an error of law. 4. In relation to the fourth error concerning legal unreasonableness, Wilson J found at [64] that due to the first, second and third errors, the decision was unreasonable. 5. Her Honour ordered that the decision of the first Appeal Panel be set aside and that the matter be remitted to the Workers Compensation Commission for determination by a differently constituted appeal panel. The decision of the second Appeal Panel 1. At a preliminary review on 20 October 2017, the second Appeal Panel constituted by an arbitrator, Ms Deborah Moore, and two AMSs and psychiatrists, Dr Julian Parmegiani and Dr Patrick Morris, issued a number of directions to the parties. 2. The Appeal Panel made two directions in its preliminary review dated 20 October 2017. They are as follows: "DIRECTIONS The Panel has determined that the parties are to file written submissions addressing the issue of the Appellant's current level of function and how she has been affected, if at all, subsequent to the injury by reference to the criteria set out in the PIRS Scale. Submissions are to be lodged by 30 November 2017. The Panel has determined that the appellant worker should submit herself for a clinical examination…" 1. It later explained the basis of its direction for re-examination in its statement of reasons at [14] as follows: "As a result of that preliminary review, the Appeal Panel determined that the worker should undergo a further medical examination because of the nature of the injury and the comments made by Wilson J." 1. In accordance with the directions, both parties provided written submissions. Neither party agitated a deterioration in Ms Kiely's condition and both agreed that the AMS's initial assessments were correct. 2. On 23 January 2018, Dr Parmegiani re-examined Ms Kiely and made the following observations: "Ms Kiely's medical history was not in dispute. The purpose of the examination was to determine the psychiatric impairment arising from Ms Kiely's primary psychiatric injury. Ms Kiely reported a number of persistent psychiatric symptoms. She suffered daily panic attacks, which lasted up to 20 minutes. Symptoms included palpitations, shaking, shortness of breath and a fear of impending doom. Panic attacks occurred daily. Ms Kiely felt calmer at home, and she avoided going out when possible. She explained that her attacker lived locally, and over the past 12 months Ms Kiely saw her on four or five occasions. This rekindled Ms Kiely's anxiety. Ms Kiely slept poorly from 2 am to 5 am. She suffered nightmares about the assault every night, and she often woke up startled. Ms Kiely feared going to sleep because she feared nightmares. Ms Kiely lacked energy, motivation and concentration. She spent a significant part of her day ruminating about the incident of 18 April 2011, and management's reaction. Ms Kiely explained that she wanted to report the incident to police, but management threatened to terminate her position if she reported the incident. The perpetrator later threatened others with a knife and police eventually charged her. The CEO of the service was stood down. Ms Kiely felt that life was not worth living, but she did not formulate a suicide plan. Her mood was not reactive, and she could not identify enjoyable activities. Ms Kiely suffered cervical pain and pain in her right shoulder. She felt frustrated with her physical limitations. She was unable to perform physically demanding tasks, including lifting her grandchildren or exercise at a gym. Ms Kiely said, 'I've got used to the pain. It's been nearly seven years'. She however remained angry with management about her physical injury, because Ms Kiely believed it could have been prevented. Ms Kiely lacked appetite, and she only ate one meal per day. She gained 12 kg in weight, and she attributed the weight gain to side effects of medication. Ms Kiely was under the care of Dr Swift, a psychiatrist. Dr Swift prescribed diazepam 15mg per day and Mogadon 10mg at night. Ms Kiely was previously on 100mg Endep, a tricyclic antidepressant, for migraines. Dr Swift increased the dose to 200mg per day, with the aim of improving Ms Kiely's depression. Ms Kiely was also prescribed quetiapine two tablets at night. She did not know the dose. She managed pain with Panadeine Forte eight tablets per day and gabapentin 900mg at night. Ms Kiely was a well-groomed 43-year-old woman of above average weight. She wore jewellery and makeup. She was punctual for her appointment and cooperative with the interview process. Ms Kiely's emotional expression was reduced in range, and she rarely smiled. She acknowledged remaining angry about the circumstances surrounding the incident of 18 April 2011. She thought about it every day, and before going to sleep. Ms Kiely's psychiatric impairment was rated in accordance with the WorkCover Guidelines for the evaluation of personal impairment. Impairment arising from a physical injury was not taken into account when rating her psychiatric impairment." 1. Dr Parmegiani undertook a new PIRS assessment as follows: "Arranging the classes in ascending order: 2, 2, 2, 3, 3, 5. Median = 2.5 = 3. Aggregate = 17. This is equivalent to a whole person psychiatric impairment of 19%." 1. On 27 February 2018, the second Appeal Panel provided reasons. The second Appeal Panel agreed and adopted Dr Parmegiani's medical assessment and set out its reasons for accepting his assessment at [41]-[45]. It stated: "Dr Parmegiani has differed in his assessments only with respect to self-care and personal hygiene. Notwithstanding the Respondent's submissions as to any "deterioration" since the prior assessments of Dr Klug and the AMS, it must be remembered that an AMS is required to assess a worker on the day of examination. The Appellant made no suggestion that she had "deteriorated" since her previous assessments. Dr Parmegiani noted in the body of his report some difficulties the Appellant experienced in this regard such as a lack of appetite and that she showered "most days" on a background of a person who acknowledged her "obsessiveness with cleanliness". His assessment properly reflects those difficulties, and is consistent with his obligation to use his clinical judgement and expertise in making an assessment. For these reasons, the Appeal Panel has determined that the MAC issued on 29 November 2016 should be revoked, and a new MAC should be issued. The new certificate is attached to this statement of reasons." 1. The new MAC issued by the second Appeal Panel stated that the WPI was 19%. The present judicial review 1. On 27 March 2018, Mercy Connect filed a summons in this Court for judicial review of the second Appeal Panel's decision dated 27 February 2018. I have already set out the orders sought earlier in this judgment. 2. For ease of understanding, any reference to "Appeal Panel" is a reference to the second Appeal Panel, being the focus of the present judicial review. Grounds of appeal 1. There are seven grounds of judicial review. They are as follows: 1. The Appeal Panel failed to determine Ms Kiely's appeal; 2. The Appeal Panel made directions that Ms Kiely should have a further examination before determining whether there was an error in the MAC; 3. The Appeal Panel mistook its own jurisdiction on appeal with the Supreme Court's jurisdiction on judicial review; 4. The Appeal Panel failed to make a finding as to the percentage of Ms Kiely's psychological injury due to agreed secondary psychological injury under s 65A of the Workers Compensation Act. This included a failure to consider Ms Kiely's agreed secondary psychological injury, a failure to make a finding on Ms Kiely's secondary psychological injury, and a failure to give sufficient reasons for a court on review to understand whether the Appeal Panel had considered and made a finding for Ms Kiely's secondary psychological injury or not; 5. The Appeal Panel failed to consider making a deduction for pre-existing condition or abnormality under s 323 of the WIM Act; 6. The Appeal Panel failed to give reasons for its revision of Ms Kiely's WPI; and 7. The Appeal Panel's decision is legally unreasonable. 1. In the alternative, the plaintiff assets that grounds 1 to 6 above are errors on the face of the record pursuant to s 69 of the Supreme Court Act 1970 (NSW). 2. Ms Kiely has filed a submitting appearance. Hence, she has not filed any written submissions. 3. I shall deal with these judicial grounds of review in order. Ground 1 – Failure to consider Ms Kiely's appeal 1. This ground concerns the failure of the Appeal Panel to determine Ms Kiely's appeal. Mercy Connect submitted that the Appeal Panel was required to determine whether any ground in Ms Kiely's appeal filed 20 December 2016 had been made out. The grounds of appeal were that the AMS had impermissibly made an assessment of the secondary psychological error, and had impermissibly taken into account his experience of other individuals in a similar situation. These grounds were also been identified by Wilson J: see Mercy Centre at [53]. It says that the Appeal Panel has not addressed or determined these grounds of appeal and that consequently, there was a failure of the Appeal Panel to exercise its jurisdiction under s 328(2) of the WIM Act. Consideration 1. Section 328(2) of the WIM Act provides that the procedure is to review the original medical assessment of the AMS. 2. The referral to the AMS was made on the basis that the AMS excluded from his assessment "any impairment or symptoms arising from or attributable to, the secondary psychological condition." Ms Kiely's subsequent appeal to the first Appeal Panel was made on two grounds; firstly, that the AMS's assessment was made on the basis of incorrect criteria; and secondly, that the MAC contained a demonstrable error. These grounds were confirmed in judicial review before Wilson J in Mercy Centre at [53]. Her Honour summarised the submissions accompanying the two grounds of appeal as being that the AMS had impermissibly made an assessment of the secondary psychological injury, and had impermissibly taken into account his experience of other individuals in a similar situation. As her Honour remitted the decision back to be decided by a newly constituted appeal panel, the task of the second Appeal Panel was to review the original AMS's MAC on the same grounds of appeal. 3. In its decision dated 27 February 2018, the Appeal Panel adopted the WPI assessment of 19% made by Dr Parmegiani following his re-examination of Ms Kiely on 23 January 2018, and made orders to revoke the AMS's original MAC and issue a new MAC. The Appeal Panel's reasons for doing so are contained in [41]-[45] of its decision, which I have set out earlier in this judgment. However, nowhere in its reasons does the Appeal Panel address whether the AMS had impermissibly made an assessment of the secondary psychological error. Nor does the Appeal Panel consider whether the AMS's approach in taking into account his experience of other individuals in similar situations was permissible. These were the grounds upon which the original appeal was made and the Appeal Panel was obligated to determine them in accordance with s 328(2) of the WIM Act. 4. It is my view that the Appeal Panel has not addressed the grounds of appeal raised here. As it did not address the grounds of appeal, it failed to exercise its statutory task and misconstrued its statutory duty. Ground 2 – Seeking a further medical examination 1. Ground 2 is that the Appeal Panel's determination that Ms Kiely should undergo a further medical examination by Dr Parmegiani before determining whether there was an error in the MAC. 2. Mercy Connect submitted that the Appeal Panel fell into jurisdictional error by examining Ms Kiely before determining whether there was an error in the MAC. The Appeal Panel stated that it had issued a direction for Ms Kiely to be re-examined because of the nature of the injury and the comments made by Wilson J. According to Mercy Connect, these reasons are insufficient and do not indicate that the Appeal Panel had identified for itself an error to enliven its jurisdiction to re-examine Ms Kiely. In particular, Mercy Connect says that the decision of Wilson J cannot be construed as finding an error in the MAC for two reasons. Firstly, the Supreme Court on judicial review cannot enter into a consideration of the merits of an appeal; and secondly, Wilson J made no specific finding of error in the MAC, only of errors in the first Appeal Panel's decision. 3. Mercy Connect further submitted that even if the Appeal Panel determined that Ms Kiely's condition had deteriorated and re-examined Ms Kiely on this basis, the deterioration was not the basis of Ms Kiely's appeal. In addition, even if the Appeal Panel gave the parties an opportunity to be heard on the ground of deterioration: see Siddick v WorkCover Authority (NSW) [2008] NSWCA 116 at [104] (McColl JA with Mason P and Giles JA agreeing), its failure to identify an antecedent error as alleged by Ms Kiely in her appeal remains a jurisdictional error. Consideration 1. In Campbelltown City Council v Vegan (2006) 67 NSWLR 372; [2006] NSWCA 284 ("Vegan"), Basten JA considered the limited scope of the Appeal Panel's jurisdiction at [137] as follows: "Two factors suggest that such an approach [to deal only with the error found] would also be appropriate in relation to the powers of the Appeal Panel. First, if the Appeal Panel's powers were at large, the need to specify grounds of appeal limited to particular categories, would be rendered largely otiose. Secondly, the Appeal Panel is not a tribunal which has any powers other than those necessary to deal with the appeals in question. Thus, unlike this Court, it is not necessary to consider whether broad existing powers are exercisable in a particular case or not. On a tentative view, the approach adopted by the primary judge in the present case may have been in error and the powers of the Appeal Panel may be limited to addressing, and if thought necessary, correcting, errors identified in the certificate granted by the approved medical specialist, as specified by the appellant. …". 1. Vegan was upheld in Pitsonis v Registrar of the Workers Compensation Commission (2008) 73 NSWLR 366; [2008] NSWCA 88 [48]-[49]. 2. In New South Wales Police Force v Registrar of the Workers Compensation Commission of New South Wales, Davies J stated that it is necessary for an Appeal Panel to identify a demonstrable error in a MAC before it is permitted to order a re-examination. His Honour at [34] stated: "…if an assessment can be carried out in the course of an appeal that assessment cannot take place before the Appeal Panel has determined that there is an error in the certificate leading to the need for a further assessment. Such an assessment may be needed because the Panel, although in a position to revoke a certificate for error, is not in a position to issue a new one without such an assessment." 1. In summary, these authorities support the proposition that the Appeal Panel had a limited jurisdiction in conducting its appeal and was obliged to identify a demonstrable error in the MAC prior to directing any re-examination of Ms Kiely. 2. The Appeal Panel did not identify a demonstrable error arising from the MAC upon which to justify its direction for further re-examination of Ms Kiely. Nor can the Appeal Panel rely upon the "nature of the injury" and Wilson J's decision as being sufficient to identify such an error. 3. When the Appeal Panel sought submissions from the parties, both parties agreed that there had been no deterioration in Ms Kiely's medical condition. Further the parties agreed that the AMS's initial assessments were correct. What was in issue was the explanation of how the AMS arrived at the 5% WPI for the secondary psychological injury, and whether the AMS had impermissibly taken into account his experience of other individuals in a similar situation. In my view, the Appeal Panel has not identified a demonstrable error in the MAC so they were not entitled to conduct the re-examination. Accordingly, the Appeal Panel has misconstrued its statutory duty. Ground 3 – jurisdiction 1. Ground 3 of the judicial review concerns the Appeal Panel having erred by mistaking its jurisdiction. Mercy Connect submitted that the Appeal Panel confused its appellate jurisdiction with the review powers of the Supreme Court. In support of this submission, Mercy Connect drew this Court's attention to [19] of the Appeal Panel's statement of reasons dated 27 February 2018, in which it stated that "both parties had made written submissions…and were expanded upon at the hearing before Wilson J". It also referred to [22] of the Appeal Panel's decision, in which it stated that "this matter has been the subject of prior appeals." In other words, Mercy Connect says that the Appeal Panel had incorrectly mistaken its jurisdiction as being part of an appeal process that includes the Supreme Court and that it incorrectly concluded that it did not need to make findings already made by the Supreme Court. Consideration 1. As the Appeal Panel has misconstrued its statutory duty on other grounds, it is not necessary for me to address this ground of judicial review. However, in the event that I am wrong, my view would have been as follows. 2. While the Appeal Panel did make some oblique statements at [19] and [22] of its reasons, these statements were made in the context of the Appeal Panel summarising the parties' submissions and the procedural history of the matter. Therefore, I would have found that to consider these statements as evidence of the Appeal Panel misconstruing its jurisdiction would involve this Court incorrectly adopting an overly zealous approach to language with an eye finely tuned for error: see McGinn v Ashfield Council [2012] NSWCA 238 per McColl JA at [17] (Sackville AJA and Gzell J agreeing); Walsh v Parramatta City Council (2007) 161 LGERA 118; [2007] NSWLEC 255 at [67] per Preston CJ citing Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6 at 291. 3. Accordingly, judicial review ground 3 has not been made out. Grounds 4 and 5 – Failure to consider secondary psychological injury and adoption of 19% WPI 1. Grounds 4 and 5 of the judicial review raise similar issues. While it is not necessary for me to decide these grounds of review, I will make some observations because they raise significant issues. 2. Ground 4 of this judicial review is perhaps the more significant one. It concerns the alleged failure of the Appeal Panel to consider secondary psychological injury. 3. Ground 5 concerns the Appeal Panel having erred by considering and revising the WPI of Ms Kiely. 4. In relation to ground 4, Mercy Connect submitted that the Appeal Panel failed to consider secondary psychological injury pursuant to s 65A of the Workers Compensation Act. The first Appeal Panel found at [41]-[42] of its decision that the AMS made no error in his general approach to excluding secondary psychological injury, although they did take issue with the factors taken into account by the AMS in assessing the 5% WPI to be excluded. (At [43]). This was not subject to appeal and Wilson J did not comment adversely upon it. However, the Appeal Panel adopted the finding of Dr Parmegiani from his re-examination of Ms Kiely, and found that Ms Kiely suffered from a 19% WPI. Mercy Connect submitted that there is no reason why Dr Parmegiani should not have expressly considered and applied a deduction for secondary psychological injury. Mercy Connect says that the Appeal Panel has either made a jurisdictional error by failing to consider whether a deduction for secondary psychological injury under s 65A of the Workers Compensation Act should be made; or has made a jurisdictional error by failing to calculate total WPI for psychological injury and then deducting the percentage of WPI due to secondary psychological injury. 5. In the alternative, Mercy Connect submitted that the Appeal Panel made a jurisdictional error by failing to give reasons sufficient for a court on review to understand whether a deduction for secondary psychological injury has been made or not, and the extent of any deduction. According to Mercy Connect, Dr Parmegiani was vague as to whether the 19% WPI included a reduction of secondary psychological injury or not. 6. In relation to ground 5, Mercy Connect submitted that the Appeal Panel misconstrued its statutory duty by reconsidering and revising Ms Kiely's WPI. Applying the reasoning of Wilson J, this constitutes an error. According to Mercy Connect, an issue before her Honour in the first judicial review concerned the first Appeal Panel's revision of the 5% deduction for secondary psychological injury. However, her Honour found that the 5% secondary psychological injury was not an issue on appeal before the first Appeal Panel. The second Appeal Panel has again revised the 5% secondary psychological injury in re-assessing Ms Kiely's WPI. 7. As best as I can understand them, Mercy Connect's submissions concerning grounds 4 and 5 appear to be contradictory. Where ground 4 is related to the Appeal Panel having failed to consider secondary psychological injury, ground 5 is framed as the Appeal Panel having revised the 5% secondary psychological injury by re-assessing Ms Kiely's WPI as 19%. During the hearing, counsel for Mercy Connect confirmed it was his position in relation to ground 5 that "the Appeal Panel has again revised the 5 per cent, which was the subject of the first review…". (T12.16-17). In any event, as I have already determined that the Appeal Panel misconstrued its statutory duty on an earlier ground, I do not consider it necessary to reconcile this inconsistency, subject to my following comments. Consideration 1. For convenience, s 65A of the Workers Compensation Act (which I have set out earlier in this judgment) requires a distinction to be drawn between primary psychological injury and secondary psychological injury. Under s 65A(1), no compensation is payable for permanent impairment that results from a secondary psychological injury. When an AMS (or Appeal Panel) assesses the degree of permanent impairment resulting from a primary psychological injury, no regard can be had to any impairment or symptoms resulting from a secondary psychological injury in accordance s 65A(2). 2. The statutory scheme comprising of the WIM Act and the Workers Compensation Act creates a two-step approach in assessing the degree of WPI for a psychological injury. The assessor must first calculate the entire degree of psychological injury in line with the PIRS categories. The secondary psychological injury must then be assessed and deducted in accordance with s 65A of the Workers Compensation Act, leaving the primary psychological injury remaining. 3. This two-step process accords with the referral of the Workers Compensation Commission on 24 October 2016. This referral provided for the AMS to assess the degree of WPI arising out of the primary psychological injury sustained by Ms Kiely as a result of the incident, excluding "any impairment or symptoms arising from or attributable to, the secondary psychological condition." 4. On 23 January 2018, Dr Parmigiani in his re-examination report stated: "Ms Kiely's psychiatric impairment was rated in accordance with the WorkCover Guidelines for the evaluation of permanent impairment. Impairment arising from a physical injury was not taken into account when rating her psychiatric impairment." 1. While Dr Parmigiani calculated the entire degree of psychological injury as required in step one above, he does not appear to have considered the degree of secondary psychological injury in step two as required under s 65A of the Workers Compensation Act. The Appeal Panel then accepted his assessment of 19% WPI without any qualification for secondary psychological assessment. However, as I have previously set out, Wilson J in Mercy Centre stated at [52] that an Appeal Panel is "confined to determining the grounds of appeal on which the appeal is made". Her Honour then concluded at [53] and [55] that the first Appeal Panel's decision was made outside of s 328(2) of the WIM Act because the AMS's quantification of secondary psychological injury was not raised on appeal. 2. Putting aside the fact that the Appeal Panel incorrectly conducted a re-examination without first identifying an error, together with the parties having agreed that the AMS's initial assessments were correct in their written submissions, the Appeal Panel was not obliged to consider the quantification of secondary psychological injury as this issue was not raised on appeal. Nor was the Appeal Panel obliged to revise the WPI when this was not raised as a ground of appeal. Had it been necessary for me to express a view (which it is not), I would have determined that the Appeal Panel had misconstrued its statutory task on both these grounds. Ground 6 – Failure to consider deduction under s 323 1. Ground 6 concerns the failure of the Appeal Panel to consider whether it should make a deduction for Ms Kiely's previous pre-existing condition or injury under s 323 of the WIM Act. This issue was not raised on appeal. 2. Mercy Connect submitted that the amended referral states that the medical dispute referred for assessment includes, under s 319(d) of the WIM Act, whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality. Mercy Connect says that there is an abundance of medical evidence as to the psychological, primary psychological and secondary psychological injury on which the Appeal Panel could have formed an opinion as to pre-existing injury, condition or abnormality. The Appeal Panel failed to take into account considerations and evidence it was bound to take into account in relation to Ms Kiely's pre-existing condition: see Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24. 3. In its supplementary submissions, Mercy Connect also submitted that the Appeal Panel was obliged to consider a deduction under s 323 of the WIM Act in respect of the primary psychological injury. This is to be distinguished from the first Appeal Panel's incorrect use of s 323 to quantify secondary psychological injury. The fact that the initial AMS made no s 323 deduction from the primary psychological injury did not relieve the Appeal Panel of the requirement to consider that issue afresh in accordance with the referral. In support of this submission, Mercy Connect referred to Roads and Maritime Services v Rodger Wilson [2016] NSWSC 1499, where Fagan J stated at [26]: "Once the Appeal Panel had determined that Dr Anderson's Medical Assessment Certificate should be revoked it was incumbent upon them, as a matter of law, to apply the WorkCover Guides fully in arriving at a fresh assessment and issuing a new certificate. That necessitated, in the present case, consideration of any contribution to the assessed WPI of 15% (derived by application of par 3.18 of the WorkCover Guides) which should be attributed to the pre-existing injury. In Drosd v Workers Compensation Nominal Insurer [2016] NSWSC 1053 Garling J explained this as follows: "[59] Having found error in the MAC issued by the AMS, the Appeal Panel revoked the MAC and determined for itself that the plaintiff's whole person impairment relating to the left lower extremity was 10%. It did so in a shorthand way. That shorthand way was to adopt the assessment of the AMS because no party had challenged it. This shorthand way, whilst arguably permissible, did not relieve the Appeal Panel from its statutory obligation to conduct its assessment according to law." …" Consideration 1. This ground of judicial review seems to be more akin to a merits review. 2. The referral provides that the AMS was to consider in his assessment "any deduction required under section 323 of the [WIM Act]". In addition, the amended referral dated 31 October 2016 required the AMS to consider "whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion…". The AMS in his assessment noted that Ms Kiely had two previous accidents, injuries or conditions, being repeated incidents of sexual assault between the ages of 8 and 14. (At 3). Despite this, the AMS found that there was no relevant previous injury, pre-existing condition or abnormality. Accordingly, there was "no deducible proportion". (At 9). However, no reasons were given by the AMS as to why this finding was made. 3. Importantly, the issue of whether a 323 deduction should have been made by the AMS was not raised by Ms Kiely as a ground of appeal before the Appeal Panel. Had this been raised as a ground of appeal and had the Appeal Panel found the requisite error to conduct its re-examination, then the Appeal Panel in conducting a fresh assessment would have been obliged to consider whether any deduction was required for impairment due to a previous injury, or pre-existing condition or abnormality. This is not the case here. 4. Accordingly, had it been necessary for me to consider this ground of judicial review, I do not consider that the Appeal Panel misconstrued its statutory duty by not considering the s 323 deduction. Ground 7 – unreasonableness 1. Ground 7 concerns the Appeal Panel's decision being unreasonable. 2. Mercy Connect submitted that the decision is unreasonable to the standard of legal unreasonableness. A decision that is legally unreasonable may give rise to jurisdictional error, either because the unreasonable outcome is indicative of underlying procedural error, or because there is no evidence and intelligible justification for the outcome: see Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at [76] ("Li"), Minister for Immigration and Border Protection v Singh & Anor (2014) 231 FCR 437, and Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1. Mercy Connect submitted that the Appeal Panel's decision was an unintelligible outcome due to the 19% WPI being adopted with no apparent explanation of the way secondary psychological injury was dealt with, as well as the failure of the Appeal Panel to understand and exercise its jurisdiction. Consideration 1. In Li, the High Court stated at [75]-[76]: "In Peko-Wallsend, Mason J, having observed that there was considerable diversity in the application by the courts of the test of manifest unreasonableness, suggested that "guidance may be found in the close analogy between judicial review of administrative action and appellate review of a judicial discretion". House v R holds that it is not enough that an appellate court would have taken a different course. What must be evident is that some error has been made in exercising the discretion, such as where a judge acts on a wrong principle or takes irrelevant matters into consideration. The analogy with the approach taken in an administrative law context is apparent. As to the inferences that may be drawn by an appellate court, it was said in House v R that an appellate court may infer that in some way there has been a failure properly to exercise the discretion "if upon the facts [the result] is unreasonable or plainly unjust". The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification." 1. In order to find that an error on the basis of legal unreasonableness, this Court must be satisfied that the decision is unreasonable or plainly unjust, or that the decision lacks an evident and intelligible justification. 2. While I accept that several errors arose in the Appeal Panel's decision, I do not consider that these meet the threshold of being either unreasonable or plainly unjust, or lacking an evident and intelligible conclusion. The Appeal Panel reached their conclusion on WPI by accepting Dr Parmegiani's findings. The mere fact that the Appeal Panel made errors in doing so does not automatically result in the decision being unreasonable in the relevant sense. 3. Accordingly, judicial review ground 7 fails. Conclusion 1. The result is that grounds 1, 2, 4 and 5 of the judicial review have been made out. The decision of the Appeal Panel in matter number 3761/16 dated 27 February 2018 is set aside. The decision of the Appeal Panel in matter number 3761/16 is remitted to the Workers Compensation Commission of New South Wales to be determined in accordance with law. 2. Costs are reserved. The Court orders that: 1. The decision of the Appeal Panel in matter number 3761/16 dated 27 February 2018 is set aside. 2. The decision of the Appeal Panel in matter number 3761/16 is remitted to the Workers Compensation Commission of New South Wales to be determined in accordance with law. 3. Costs are reserved. ******** 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. Decision last updated: 21 September 2018