Australia: Court rejects need for pre-existing symptomatic impairment to be permanent at time of subsequent accident

Allianz Australia Insurance Ltd v Motor Accidents Authority NSW & 2 Ors
Last Updated: 7 March 2011
Article by Ian Jones

Court rejects need for pre-existing symptomatic impairment to be permanent at time of subsequent accident

Judgment date: 3 March 2011

Allianz Australia Insurance Ltd v Motor Accidents Authority NSW & 2 Ors [2011] NSWSC 102

Supreme Court1

In Brief

  • The court determined that for the second sentence of Clause 1.33 of the MAA Guidelines for the assessment of permanent impairment to be engaged it is not necessary that the impairment arising from an initial accident be permanent at the time of a subsequent accident.
  • The permanency of a pre-existing impairment is to be determined as at the time of the assessment and not as at the time of the subsequent accident.
  • Clause 1.23 of the MAA Medical Guidelines for the assessment of permanent impairment requires the evaluation of impairment as at the time of assessment, whether that impairment arises directly from the accident in question or is a pre-existing or subsequent impairment within the meaning of Clauses 1.33 and 1.36 of those Guidelines respectively.


The plaintiff was the compulsory third party insurer of a motor vehicle at fault in an accident on 21 October 2005. The second defendant, Mr Cha, suffered both physical and psychological injuries in that accident. Most notably, the psychological injury was an exacerbation of a pre-existing condition arising from an initial motor vehicle accident on 7 February 2004. The third defendant was the compulsory third party insurer for the motor vehicle at fault in this initial accident.

A dispute arose between Mr Cha and the compulsory third party insurer in each accident as to his entitlement to damages for non-economic loss arising from his psychological injuries. This dispute came before MAS Assessor Dr Samuels on 16 July 2008 who diagnosed a Major Depression arising from both accidents. Dr Samuels assessed a 19% whole person impairment but did not apportion that impairment between the two accidents and provided no reasons for not doing so.

The plaintiff sought a review of that medical assessment. A Review Panel was convened on 30 July 2009 and a Certificate issued certifying that Mr Cha suffered from a Major Depression with Melancholia giving rise to a 26% whole person impairment.

In considering issues of apportionment, the Review Panel referred to the Guidelines and most notably Clause 1.33 which provides under the heading "Pre-Existing Impairment":

The evaluation of the permanent impairment may be complicated by the presence of an impairment in the same region that existed prior to the relevant motor accident. If there is objective evidence of a pre-existing symptomatic permanent impairment in the same region at the time of the accident, then its value should be calculated and subtracted from the current whole person impairment value. If there is no objective evidence of pre-existing symptomatic permanent impairments, then its possible presence should be ignored.

The Review Panel was satisfied that the depressive condition caused by the initial accident had not stabilised at the time of the subsequent accident and accordingly, could not at that time be classified as a permanent impairment for the purposes of an impairment evaluation being undertaken consistent with Clause 1.21 of the Guidelines.

Further, as the Review Panel determined that the psychiatric injuries arising from the initial accident had not stabilised as at the date of the subsequent accident, there was no objective evidence of a pre-existing symptomatic permanent impairment for the purposes of Clause 1.33 so that its "possible presence" was ignored in evaluating the permanent impairment occasioned by the subsequent accident.

The Review Panel resolved that the entirety of the 26% whole person impairment was attributable to the second accident and a Certificate issued to the plaintiff that Mr Cha's psychological injury gave rise to a greater than 10% whole person impairment.

Supreme Court Decision

The plaintiff's Summons was heard by Justice Hidden on 22 June 2010.

His Honour handed down his decision on 3 March 2011.

In construing Clause 1.33 Justice Hidden found that the clause is relevant in the determination of whole person impairment if at the time of the accident in question there is objective evidence of a pre-existing impairment but the permanency or otherwise of that impairment is to be determined as at the time of the assessment.

The Review Panel was considering two claims concurrently. The Review Panel made no evaluation of the permanent impairment arising from the initial accident even as at the time of the Review Panel's determination. The only basis for this was stated to be the Review Panel's finding that the impairment caused by the initial accident had not stabilised at the time of the subsequent accident.

Justice Hidden found that as a permanent impairment arose from the psychological injury sustained in the initial accident as at the date of the Review Panel's determination the Review Panel could, and should, have assessed the whole person impairment attributable to that accident. His Honour stated that the Review Panel was required to do so not only for the purpose of applying Clause 1.33 to its assessment of the impairment caused by the subsequent accident but also because there was before it a claim in respect of the initial accident.

Justice Hidden ordered the Review Panel Certificates and Statements of Reason issued to each compulsory third party insurer be quashed and the matter be remitted to MAS to be determined in conformity with the reasons of the Court.


Where an injured person sustains injuries in an initial accident and at the time of a subsequent accident those injuries are exacerbated and there is ongoing treatment for those injuries which cannot be regarded as having stabilised, MAS will be required to conduct an assessment of whole person impairment arising from the initial accident despite the unknown permanency of the injuries at the time of the subsequent accident. For psychological injury, this will require a hypothetical assessment on the Psychiatric Impairment Rating Scale of the impairment arising from the initial accident as at the date of the subsequent accident but evaluated at the time of the assessment.

While not considered by the court, the approach found by Justice Hidden appears consistent with the approach to assessment of mental and behavioural disorders in Clause 7.1 of the MAA Medical Guidelines for the assessment of permanent impairment, namely:

In order to measure impairment caused by a specific event, the assessor must, in the case of an injured person with a pre-existing psychiatric diagnosis or condition, estimate the overall pre-existing impairment using precisely the method set out in this chapter, and subtract this value from the current impairment rating.

1 Justice Hidden

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