The Supreme Court Finds Injury to Skin is a Non-Threshold Injury

In Brief

• A Claimant is not entitled to ongoing statutory benefits or common law damages if the only injuries they sustain in a motor accident are threshold injuries.
• Section 1.6 of the Motor Accident Injuries Act 2017 (MAIA) provides that a “soft tissue injury” is a “threshold injury“.
• Pursuant to the definition of “soft tissue” in s 1.6(2), an injury to the skin is not a “threshold injury“.

Facts

The Supreme Court handed down its decision in Allianz Australia Insurance Limited v The Estate of the Late Summer Abawi [2024] NSWSC 1245 on 4 October 2024.

The Claimant was injured in a motor accident on 8 December 2017.

The Medical Review Panel accepted that the accident caused the Claimant a range of soft tissue injuries, which were determined to be threshold injuries.

The Medical Review Panel, however, also found that the accident caused lacerations to each of the Claimant’s wrists, which were determined to be non-threshold injuries.

The Insurer sought judicial review in the Supreme Court.

The Definition of “Soft Tissue”

Section 1.6(1)(a) of MAIA provides that a soft tissue injury is a threshold injury.

Section 1.6(2) of MAIA defines “soft tissue” as “an injury to tissue that connects, supports or surrounds other structures or organs of the body (such as muscles, tendons, ligaments, menisci, cartilage, fascia, fibrous tissues, fat, blood vessels and synovial membranes), but not an injury to nerves or a complete or partial rupture of tendons, ligaments, menisci or cartilage“.

The Supreme Court’s Reasons

Justice Griffiths concluded that the lacerations to the Claimant’s skin were non-threshold injuries for the following reasons:

• The definition of “soft tissue” in s 1.6(2) includes a long list of examples of things which are “tissue that connects, supports or surrounds other structures or organs of the body“, namely “muscles, tendons, ligaments, menisci, cartilage, fascia, fibrous tissues, fat, blood vessels and synovial membranes“. Notably, skin does not appear in that list. [50]
• If Parliament intended to include “skin” within the definition of “soft tissue“, it could have simply added “skin” to the list of parenthesised examples of soft tissue in the definition in s 1.6(2). This is particularly so where the clear purpose of providing a detailed list was to provide greater certainty over what constitutes a “soft tissue injury“. [51]
• Parliament did not intend that an injury to tissue that is excluded from the list of examples in s 1.6(2) should, nevertheless, be regarded as being a soft tissue injury because the tissue in question comprised a combination of the individual examples included in the definition. As such, the fact that the skin is comprised of fibrous tissues, fat and blood vessels does not render skin soft tissue by extrapolation. [56]
• The list of examples of soft tissue in the definition in s 1.6(2) is explicitly non-exhaustive – through the use of the phrase “such as” – so as to not exclude “some kind of esoteric tissue” that “connects, supports or surrounds other structures or organs of the body“. Skin, however, cannot be described as “esoteric“.

In addition to this central reasoning process, Griffiths AJA made the following observations:

• A purposive approach to statutory construction is of limited value when the statutory framework includes competing objects. A construction which includes a skin injury as a threshold injury may assist to keep premiums affordable by limiting benefits to soft issue injuries (s 1.3(2)(d)). But may not promote optimum recovery and return to work (s 1.32(a) and (b)). [68]
• Statutory construction should not be guided by reference to what might be regarded as an appropriate policy outcome. That’s the role of Parliament, not the Court. [69]
• The Act contains numerous anomalous policy outcomes. For example, the combined effect of the definition of “injury” in s 1.4 and the definition of “soft tissue“ in s 1.6(2) means that damage to “artificial members, eyes or teeth, crutches or other aides or spectacle glasses” are non-threshold injuries. [70]
• Excluding “skin” from the definition of “soft tissue” will not “open the floodgates“. A Claimant is not entitled to statutory benefits or damages merely because they clear the “threshold injury” hurdle. To be entitled to treatment and care, they still need to demonstrate the treatment and care is reasonable and necessary. To be entitled to weekly payments, they still need to demonstrate a loss of capacity caused by the accident. To be entitled to damages for non-economic loss, they still need to demonstrate permanent impairment above 10%. [76] to [79]

For the above reasons, Griffiths AJA dismissed the Insurer’s application for judicial review.

Key Learnings

We are not entirely convinced by Justice Griffith’s reasoning on the floodgates issue.

As his Honour noted, it’s Parliament’s role to translate policy into legislative language. Parliament decided that a Claimant whose only injuries are soft tissue injuries should not be entitled to either ongoing statutory benefits or common law damages. It remains anomalous that one Claimant who has a series of soft tissue injuries may only be entitled to statutory benefits for 52 weeks because they did not suffer a skin injury, whereas another Claimant with the same soft tissue injuries is entitled to ongoing statutory benefits and damages for non-economic loss because they also suffered a scratch which caused them transient discomfort for a short period.

It may well be true that the Act includes many anomalies. But that is no excuse for not trying to avoid perverse outcomes where they are easily fixed.

In this instance, the anomalous outcomes which flow from a finding that a skin injury is not a threshold injury can be fixed by using the regulation power in s 1.6(5) of MAIA.

That power has already been used to exclude “radiculopathy” from the definition of a threshold physical injury (cl 4(1) of MAIR)  and to include “acute stress disorders” and “adjustment disorders” in the definition of threshold psychiatric injuries cl 4(2) of MAIA).

Noting that some skin injuries are truly minor and some are quite serious, the regulation power could be used to define what skin injuries are threshold and what skin injuries are non-threshold, perhaps by reference to which nerves (if any) are injured or perhaps by reference to TEMSKI.

If you have a query relating to any of the information in this case note, or would like to discuss a similar matter of your own, please don’t hesitate to get in touch with CTP Insurance Principal, Peter Hunt, today.

Additional McCabes Resources

• MC PIC Decision of the Week
• MC MAIA Toolkit
• The Proper Lookout Podcast
• MC Ready Reckoner