Issue 3: March 2013

• the consent orders estopped Mr Bouchmouni from claiming lump sum compensation for back symptoms that had resulted from an accepted injury to his right knee.

Held: The Arbitrator’s determination was revoked in part: the applicant’s claim for lump sum compensation was remitted to the Registrar for referral to an AMS for assessment of the degree of WPI as a result of the condition of the lumbar spine, which resulted from injury to the right knee on 13 March 2003.  

General Principles

1. The following conclusions, regarding consent orders, were drawn having regard to various authorities:

(a) consent orders create res judicata estoppels, but only to the extent of what was “necessarily decided” (Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231);

(b) to determine what was “necessarily decided”, the Commission will closely examine the pleadings and particulars, the s 74 notice, and the legislation, because that material forms part of the mutually known facts and assists in objectively determining the “genesis” and “aim” of the orders (Isaacs v Ocean Accident & Guarantee Corporation Ltd & Winslette (1958) SR (NSW) 69; (1957) 75 WN (NSW) 48; The Doctrine of Res Judicata by Spencer Bower, Turner and Handley, 3^rd ed, 1996 at [39]; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423);

(c) consent orders should be construed by reference to what a reasonable person would understand by the language the parties have used in the orders, having regard to the context in which the words appear and the purpose and object of the transaction (Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 (Cordon Investments));

(d) where the words in the consent orders are ambiguous, or susceptible of more than one meaning, extrinsic evidence is admissible to show the facts which the negotiating parties had in their minds (Codelfa Construction Pty Limited v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 (Codelfa)), but such evidence is not admissible to contradict the language of the orders when it has a plain meaning and is not ambiguous or susceptible of more than one meaning (Codelfa);

(e) prior negotiations that tend to establish objective background facts which were known to both parties and the subject matter of the consent orders will be admissible (Codelfa);

(f) evidence of prior negotiations that are reflective of the parties’ actual (subjective) intentions is not receivable (Codelfa), and

(g) the interpretation of consent orders is not governed by the parties’ subjective beliefs or understandings about their rights and liabilities. It is an objective test of what a reasonable person would understand by the language in which the parties have expressed their agreement (Toll (FGCT) Pty Limited v Alphafarm Pty Limited [2004] HCA 52; (2004) 219 CLR 165; Cordon Investments) [47].

2. It was found that, the consent orders had a “plain meaning” and were not “ambiguous or susceptible of more than one meaning” [48]. The consent orders provided for an “[a]ward for the [r]espondent in respect of the claim for injury to the [a]pplicant’s back”. As the term “injury” is defined in s 4 of the 1987 Act to mean “personal injury arising out of or in the course of employment” and includes a disease injury, a reasonable person, viewing the matter objectively, would not have found the orders to mean anything else [49].

3. The Arbitrator could give no more meaning to the word “injury” than is defined in s 4 of the 1987 Act. The Arbitrator’s reference to the “back injury” having occurred “post-operative to the knee injury” demonstrated a misunderstanding of the meaning of the word “injury” and the difference between an “injury” and a condition that has resulted from an injury. In making that finding, the Arbitrator had erred [50].

4. In considering the difference between an “injury” and a condition that has resulted from an “injury”, the Commission has consistently applied the principles in Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452; 10 NSWCCR 796 (Kooragang) [53]. The fact that the worker in Kooragang died from a heart attack did not mean that the heart attack was an “injury”. It meant that, on the facts of that case, there was an unbroken chain of causation between the back injury and the death. In other words, the heart attack (and death) resulted from the original injury to the back [67].

5. It may be seen that if an “injury” sets in train a series of events then, if the chain is unbroken and provides the relevant causative explanation for the incapacity or impairment, compensation is payable (though, in the case of a claim for compensation for permanent impairment, the payment is dependent upon an assessment by an AMS). That does not mean that the condition that provides the relevant causative explanation for the incapacity or impairment is an “injury” [66].

6. Mr Bouchmouni’s “injury” was both the incident on 13 March 2003 in which he struck his right knee on a pipe and the pathology it caused to his right knee [68]. The injury to Mr Bouchmouni’s right knee caused him to seek treatment in the form of surgery and physiotherapy. The evidence suggested that it was in the course of receiving that treatment, and/or as a result of an altered gait because of his knee symptoms, that he developed back symptoms. If that was accepted, and no reason had been advanced why it should not be, it was clear beyond doubt that his back condition had resulted from the treatment he received for his accepted knee injury and his altered gait. That did not, however, make the back condition an “injury” [69].

7. It is accepted law that if an “injury” is aggravated by medical treatment, or if the treatment adopted to remedy the injury causes a secondary condition, the total condition is attributable to the original incident or event (Lindeman Ltd v Colvin [1946] HCA 35; 74 CLR 313 at 321; D & W Livestock Transport v Smith (No 2) [1994] NTSC 31; 4 NTLR at 172) [70].

8. It was no part of Mr Bouchmouni’s duties to have surgery on his knee or to walk with an altered gait. Those things arose because he suffered an injury to his knee in the course of his employment. If a further medical condition had resulted from the treatment of the knee injury (or from an altered gait because of knee symptoms), as happened in this case, that condition (the back condition) has resulted from the injury but is not itself an “injury” (see Hand v Alcan Gove Pty Ltd [2008] NTSC 25; 23 NTLR 42) [73].

9. The evidence established that Mr Bouchmouni did not suffer a “back injury” on or about 13 March 2003 and the consent orders were consistent with that evidence. The consent orders did not refer, either directly or indirectly, to anything other than a back “injury” and they did not create an estoppel that prevented Mr Bouchmouni from claiming lump sum compensation for any whole person impairment that resulted from the condition of his lumbar spine that developed as a result of his accepted knee injury [89].

(a) denying Mr Roche natural justice;

(b) failing to consider the whole of Mr Roche’s submissions;

(c) mischaracterising Mr Roche’s case;

(d) failing to consider the whole of the evidence;

(e) failing to consider whether the prior acts of the respondent constituted an admission;

(f) failing to consider the value or weight of all the evidence including admissions;

(g) failing to consider the whole of the circumstances;

(h) failing to consider that the legislation was to be construed beneficially, and

(i) failing to apply s 66A in accordance with law.

1. The doctrine of estoppel does not apply to a changing situation (The Doctrine of Res Judicata by Spencer Bower, Turner and Handley, 3^rd ed, 1996; Hamersley Iron Pty Ltd v The National Competition Council [2008] FCA 598; O’Donel v Commissioner for Road Transport & Tramways [1938] HCA 15; 59 CLR 744 (O’Donel); Rail Services Australia v Dimovski [2004] NSWCA 267; 1 DDCR 648 (Dimovski)), and an assessment of whole person impairment is such a situation [32].

2. As the assessment of permanent impairment involved a prediction for the future, and as a physical condition or impairment is a “state of things which is capable of subsequent alteration”, there could be no estoppel from the complying agreement. This is consistent with the fact that “permanent” does not mean “everlasting” (Henrikson v Grafton Hotel [1942] 2 KB 184 at 196) or “perpetual” (Rolfe v Metropolitan Meat Industry Board [1958] 32 WCR 135 at 138) [37].

3. The respondent’s position in the present case was much stronger than the hypothetical situations postulated by Evatt J in O’Donel and Hodgson JA in Dimovski. In the present case, the evidence was not that there had been no change since the complying agreement, but that there was now a nil impairment from the wrist injury [38].

4. In respect of Mr Roche’s claim for additional lump sum compensation, the respondent merely, with the worker’s consent, allowed the matter to be referred to an AMS for assessment under the legislation. Once that happened, and a valid MAC issued, the MAC was conclusively presumed to be correct as to the degree of impairment of the worker as a result of an injury (s 326(1)(a)) of the 1998 Act) [45].

5. It was not a matter of the respondent changing its position to Mr Roche’s detriment, but a matter of the MAC taking effect according to the terms of the legislation. And, as the Arbitrator said, impairments that result from more than one injury arising out of the same incident are to be assessed together to assess the degree of permanent impairment of the injured worker (s 322(3) of the 1998 Act). This is consistent with s 65(2) of the 1987 Act, which provides that if a worker receives more than one injury arising out of the same incident, those injuries are to be treated as one injury for the purposes of Div 4 of the 1987 Act [46].

6. As Mr Roche suffered two injuries (an injury to his ankle and an injury to his wrist) in the one incident (the fall on 8 July 2008), his impairments (and his entitlement to lump sum compensation) had to be assessed together, not as separate injuries [47].

7. Having previously been assessed to have a six per cent WPI as a result of the incident on 8 July 2008 and having then been assessed by an AMS to have a nine per cent WPI as a result of that incident, he was only entitled to receive compensation for the difference between the two figures [48].

8. There was no “conventional estoppel” in the present case (see JC Equipment Hire Pty Ltd v Registrar, Workers Compensation Commission (NSW) [2008] NSWCA 43) [53].

9. While the authorities are clear that beneficial legislation should be given a beneficial construction (AB v Western Australia [2011] HCA 42), no submission was made as to how a beneficial interpretation of the legislation led to a different result. The issue was not one of statutory construction but of whether the complying agreement created an estoppel [56].

10. The denial of natural justice ground was rejected. The Arbitrator determined the matter “on the papers” after both sides consented to that course. Each side had every opportunity to make written submissions and did so [60].

11. On appeal, all of Mr Roche’s submissions were considered and for various reasons rejected. Therefore, if the Arbitrator failed to consider all of Mr Roche’s submissions, that omission did not alter the outcome [61].

12. As to the alleged mischaracterisation of the case, the Arbitrator identified Mr Roche’s claim for lump sum compensation in respect of an additional seven per cent permanent impairment on the basis of a contract, admissions and the law of estoppel. She said that a complying agreement “cannot give rise to an estoppel” because it is not an order of a court. While this statement was inaccurate, because complying agreements can give rise to estoppels by agreement (CSR Ltd v Gonzales [2010] NSWWCCPD 118), the Arbitrator’s conclusion that no estoppel arose in the circumstances of this case was correct [62].

13. The Arbitrator did not fail to consider all of the evidence. Mr Roche’s counsel’s reference on appeal to the terms of the complying agreement did not advance his position. Consistent with s 322(3), the complying agreement provided for the payment of a sum in respect of a six per cent WPI. It did not provide for the payment of an amount for the impairment that resulted from the ankle injury and a separate amount for the impairment that resulted from the wrist injury [63].

14. While the Arbitrator did not refer to whether the prior acts of the respondent constituted an admission, that omission did not alter the outcome. It was clear that the complying agreement involved an admission by the respondent that, as at the date the agreement was entered, Mr Roche had a WPI of six per cent. That admission would (unless it was induced by fraud) prevent the respondent seeking a refund of the payment made under the complying agreement, but was not relevant to the determination of Mr Roche’s impairment at a later date [64].

(a) her construction and application of the provisions of s 66A of the 1987 Act concerning the force and effect of the Complying Agreement entered into by the parties on 1 April 2011;

(b) her consideration of, and conclusions concerning, the proper application of relevant authority concerning the construction of s 66A and the application of that section to the relevant facts;

(c) her consideration of the evidence and argument advanced by the appellant, and

(d) failing to provide adequate reasons for her determination.

Held: The Arbitrator’s determination was confirmed. 

1. The appellant argued that he was not precluded from:

“having a (sic) multiple complying agreements while commencing further proceedings with (sic) the Workers Compensation Commission for determination, notwithstanding that the injury arises, including consequential injuries, from the one injurious event. It is further asserted that the decision of Gonzales is authority for that proposition” [41]

2. The above submission was rejected [42]. The lumbar spine impairment in respect of which this claim was made, if proven, was the result of the injurious event of 2006. Such impairment was not an “injury” in terms of s 4 of the 1998 Act, but rather a consequential condition being a result of the injury (see discussion by Roche DP, in Kumar v Royal Comfort Bedding Pty Ltd [2012] NSWWCCPD 8). Further, the appellant’s assertion that CSR Limited v Gonzales [2010] NSWWCCPD 118 (Gonzales) is authority for the proposition that “there will be circumstances where parties may not reach a final binding s 66A complying agreement with respect to all injuries” was wrong and a “misinterpretation” of what was there stated [43].

3. The appellant argued that the reference in the complying agreement to “lower extremities”, and the fact that no reference was made to lumbar spine, led to the conclusion that the agreement was limited to entitlement in respect of those limbs alone [44]. The meaning of the terms of a contract are to be determined objectively. Having regard to the surrounding circumstances known to the parties, and the purpose and object of the transaction, what required determination was “what reasonable parties would objectively understand the complying agreement to mean” (Warwar v Speedy Courier (Australia) Pty Ltd [2010] NSWWCCPD 92). That question takes into account circumstances at the time of the making of the contract. [45]

4. Whilst it was correct, as put by the appellant, that express reference was made to “lower extremities” and that there was no reference to “lumbar spine” in that agreement, the contract must, having regard to the terms of that section, be taken to fix the quantum of entitlement: s 66A(2). Evidence concerning the appellant’s knowledge and subjective belief as found in his statement may have relevance to a consideration of surrounding circumstances. However, it was noted that at the time of settlement the appellant had the benefit of legal advice. That there were no “agreed facts and admissions” associated with the agreement was, contrary to what seems to be argued, not determinative concerning the effect of that agreement [46].

5. The purpose of the provision, as stated in Gonzales, was that such complying agreements permit “a worker and an employer” to reach a final and binding agreement concerning entitlements to lump sum compensation. The section represents an exception to the “no contracting out provision” being s 234 of the 1998 Act. It is Parliament’s intention that such agreements provide finality, subject only to those exceptions appearing in the section. It was not argued that the provisions of s 66A(3) had any relevance to the present facts [47].

6. The appellant’s submissions concerning error in the Arbitrator’s approach to the construction and application of s 66A was rejected. The agreement reached was a compromise in respect of the appellant’s entitlement to lump sum compensation. Such compromise was the subject of agreement, and the provisions of s 66A were invoked. Whilst there was no express term of the agreement concerning payment of “the full extent of any [lump sum] entitlement” as there was in Gonzales, the terms of s 66A, in particular s 66A(2), had the consequence of finality [48].

7. The reasons given by the Arbitrator for her determination were sufficient, and, in so far as it was suggested that those reasons were deficient, such an argument was rejected [49].