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Dungan v Padash  NSWCA 66
Forty five years after Scorsese’s dissection of the human psyche in the seminal film Taxi Driver the Court of Appeal in Dungan v Padash  NSWCA 66 considers the following issue:
Does the causal link between a motor vehicle accident and a psychological condition break at the point when the physical cause of the psychological condition ceases to be accident-related?
The majority decision is not ultimately dispositive of this question, with the determining factor being the nature of the psychological diagnosis.
On 30 November 2016 the then-51-year-old respondent was driving his taxi when it was rear-ended by another vehicle. Liability was admitted in full.
The respondent continued to work on the day of the accident and for about a month thereafter. However, he alleged he was unable to continue to work as a result of lower back pain arising from the accident.
Radiological investigations found degenerative changes in the lumbar spine, although the respondent contended his back was asymptomatic prior to and at the time of the accident.
The respondent alleged his inability to work also contributed to the development of a psychological condition.
The matter proceeded to a General Assessment in the Claims Assessment and Resolution Service (CARS). The respondent was awarded damages of $47,724.71 plus costs and disbursements. The respondent rejected the CARS award and commenced proceedings in the District Court of NSW.
As to the plaintiff’s physical injury, the Primary Judge preferred the evidence from the defendant’s Occupational Physician, Dr Keller, who opined that the plaintiff’s current experience of lower back pain arose from pre-existing degenerative changes in the lumbar spine.
As to the plaintiff’s psychological injury, the primary judge preferred the evidence of the plaintiff’s expert Psychiatrist, Dr Jungfer, who opined that the plaintiff was suffering from an Adjustment Disorder secondary to pain.
The Primary Judge found that the acute onset of back pain after the accident set the Adjustment Disorder in motion, and that it was this Disorder which was responsible for the plaintiff’s ongoing loss post-30 November 2017 (when the Primary Judge found the plaintiff’s physical symptoms ceased to be tied to the accident).
The plaintiff was awarded damages of $278,817.75 plus costs and disbursements.
The Defendant (Appellant) appealed, contending that damages ought to be confined to those incurred up to the point at which the plaintiff’s pain (and therefore his psychological condition) ceased to be accident related, that is, 30 November 2017.
The plaintiff (respondent) cross-appealed, contending that the defendant at trial had failed to discharge its evidentiary onus to disentangle the plaintiff’s physical symptoms from the accident- see Watts v Rake. Therefore, the Primary Judge erred in his determination that the plaintiff’s pain was explained by his degenerative condition.
The cross appeal was dismissed, which left one fundamental issue on appeal – whether the Primary Judge was in error in determining that the Adjustment Disorder and consequential damage persisted beyond 30 November 2017, in circumstances where he also found that the respondent’s lower back pain ceased to be accident related by 30 November 2017 and that his pain and Adjustment Disorder were ‘inextricably linked.’
The Court of Appeal spent considerable time attempting to ascertain what was meant by an ‘Adjustment Disorder.’ The Court noted it was unclear upon what source Dr Jungfer relied to reach that diagnosis and whilst it was accepted that the DSM-IV or DSM-V was the industry standard, in the absence of evidence being led at trial about those publications, it was inappropriate for the Court to take judicial notice of the indicia for an Adjustment Disorder contained therein. It therefore became necessary to understand how the Primary Judge interpreted that diagnosis from the description provided by Dr Jungfer.
His Honour White JA (with whom Emmett AJA agreed) observed that the Primary Judge:
Having done so, the Primary Judge should have found (if his reasoning were to remain internally consistent) that the respondent’s ongoing psychological symptoms were not causally related to the short-term trauma suffered from the accident.
Thus, the appeal was allowed and the award of damages was limited to $41,965.65 plus costs and disbursements.
In her dissenting opinion, McCallum JA disagreed that the evidence from Dr Jungfer went as far as to suggest that the abatement of pain ought to result in a coincidental abatement of the psychological condition. Thus, the Primary Judge did not come into error by accepting the evidence of Dr Jungfer and finding that the Adjustment Disorder could persist beyond the point when accident-related pain ceased.
Because of the success the Insurer had on appeal, a perverse result in terms of costs which can be charged by their lawyers arises under the Motor Accident Compensation Amendment (Claims) Regulation 2016, the effect of which is to visit a very substantial costs penalty on the insurer’s lawyers for their success in the appeal.
In this case, if the Regulations apply, the insurer’s lawyers would be able to charge the insurer about $8,500.00, rather than about $85,000.00, for work done prior to 1 September 2020 in order to achieve this exceptional outcome.
The Court has the power under Section 153 of the MACA to make other costs orders if applying the Regulations would result in a substantial injustice, and is currently considering the issue and what, with respect, must be unintended consequences of the Regulations. Watch this space.