Section 323 of the Workplace Injury Management and Workers Compensation Act 1998 is a frequently used provision in the assessment of an injured workers permanent impairment. This section mandates that when assessing the degree of permanent impairment resulting from a work-related injury, a deduction must be made for any proportion of the impairment that is attributable to a pre-existing injury, condition or abnormality.
We have recently secured an emphatic win for one of our clients in the Supreme Court of New South Wales1.
Factual Background
In October 2021, Ms Neader (the Plaintiff) suffered an injury to her left knee which ultimately led to a knee replacement in November 2022.
In September 2023, the plaintiff lodged a lump sum compensation claim2 relying on the assessment of Dr Joshua Hunt who assessed 20% whole person impairment (WPI). Later that year, the plaintiff was assessed by Associate Professor Paul Miniter who concluded that she had suffered 0% WPI as the knee replacement was not caused by her work rather her underlying asymptomatic osteoarthritis.
The Plaintiff filed an application in the Personal Injury Commission where she was assessed by Dr Rob Kuru. Dr Kuru concluded that she had suffered 14% WPI and applied a one-third deduction for pre-existing arthritis. This decision was appealed to the Medical Appeal Panel on the basis that the Assessor has erred in considering the evidence, in the criteria applied to arrive at the decision and failing to give adequate reasons. The Panel concluded that the Assessor had erred, but it still confirmed the assessment.
The matter was then filed in the Supreme Court of New South Wales seeking judicial review of the decision.
Issues in Dispute
Whether the Appeal Panel correctly followed the requirements of Section 323 as well as whether the reasons the Panel gave were inadequate.
Judgment
In the present case, the Plaintiff had developed some degenerative changes before her work injury, but she was not symptomatic and had no limitations in her knee. Unfortunately, she did not respond to conservative treatment and her knee deteriorated which meant she was required to undertake a total knee replacement.
Her honour, Schmidt AJ, confirmed the approach required for considering a 323 deduction which includes a consideration of “whether the pre-existing condition causally contributed to the impairment suffered as the result of the work injury, as well as whether a portion or part of that level of impairment was due to the pre-existing condition rather than the work injury”3.
Her Honour provides valuable insight into the use of Section 323 when there has been the implantation of a prosthetic device. She confirms that the pre-existing condition needs to be present in order for there to be a deduction. If it replaced, the pathology is no longer present and cannot be contributing to the current level of impairment.
In the present case, the Plaintiff’s pathology was dealt in the knee replacement procedure, and it was not impacting on the performance of the prosthetic device. This ultimately means that her level of impairment was not contributed to by her pre-existing condition. Her honour found that the Panel failed in its conclusion about the degree of impairment post-surgery but also why the pre-existing condition had made a 30% contributing to it. Thus, the Panel had not complied with the requirements of Section 323.
Furthermore, Her Honour criticised the short reasons provided by the Panel and concluded that they did not comply with the ‘well understood obligations to give adequate reasons for its decision’4.
Significance of this decision
Moving forward, this decision is significant in the Application of Section 323 for the assessment of permanent impairment as it confirmed that a deduction as required by the act does not depend on the ‘mere existence’ of a pre-existing condition. Evidence must be considered that established the condition contributed to the impairment. If it did contribute, an assessment has to be made as to the extent5.
If you or anyone you know are challenged with a Workers Compensation claim, please contact our firm for legal assistance or further information. For comprehensive legal support and information about our services, visit our website.
1 Neader v The Trustee for Vestito Unit Trust t/as TS 14 Plus Australia Pty Ltd [2025] NSWSC 866 (‘Neader’).
2 Workers Compensation Act 1987 s66.
3 Neader [9]-[10]; Ryder v Sundance Bakehouse [2025] NSWSC 526; Southwell v Qantas Airways Limited [2024] NSWSC 497 [50].
4 Neader [42].
5 Neader [27].
