Sparke Helmore's MAD (Motor Accidents Division) - Special edition - Issue 159

Can surgery that makes a claimant better nonetheless be an injury?

That is the question that was placed before the Supreme Court of New South Wales in the latest chapter of Mandoukos v Allianz Australia Insurance Ltd – a matter returning to the Court after an unsuccessful judicial review and an unsuccessful appeal, neither of which have reached the present question.

This special edition of Sparke Helmore’s Motor Accident Division publication, prepared by our CTP Insurance team, provides commentary and analysis on the recent decision of Mandoukos v Allianz Australia Insurance Ltd [2026] NSWSC 911 and what it means for decisions under the Motor Accident Injuries Act 2017 (NSW) (the MAI Act).

The decision was determined by Schmidt AJ in a Judgment dated 31 July 2026.

Background

The claimant was injured in a motor accident on 8 January 2019, having previously been injured in a 2010 accident. In November 2019, a Medical Assessor found the 2019 accident had caused musculoligamentous strain of the cervical spine and aggravation of pre-existing multilevel degenerative spondylosis, but that the injury was a minor (now threshold) injury under s 1.6. That assessment was upheld on review in April 2020.

On 1 July 2020, the claimant underwent a C5/6 foraminotomy, which involved the removal of bone from his facet joints. Earlier judicial review proceedings concerning the radiculopathy dispute were unsuccessful before Chen J and, on appeal, before the Court of Appeal, which held that the consequential injury point had not formed part of the medical dispute referred.

The claimant then applied under s 7.24(2) for further medical assessment, with the referred injury described as:

… injury to bone – facet joint – cervical spine – due to foraminotomy surgery performed by Dr McKechnie on 1 July 2020 as a consequence of injury sustained in the MVA on 8 January 2019.

The Medical Assessor found the surgery was reasonable and necessary, that it had caused injury to bone, and that the injury was not a threshold injury.

The Review Panel’s decision

On the insurer’s review application, the Panel accepted that the accident had significantly aggravated a pre-existing and previously asymptomatic degenerative condition, that the surgery was reasonable, necessary and causally related to the accident, and that bone had been removed from the claimant’s facet joints. It nonetheless revoked the Assessor’s Certificate, finding that no injury had been sustained for the purposes of the MAI Act.

The Panel’s reasoning rested on four propositions that:

1. in the absence of evidence of identifiable detrimental impact on symptoms or functioning, it was doubtful the surgery could constitute an injury
2. the surgery was performed with therapeutic intent, invoking Basten JA’s observations in Dean v Phung
3. physiological change per se does not equate to injury, and
4. the indicia of injury include that it arises unintentionally, from an external force, not be planned or deliberate, and not be consented to by a reasonably minded individual.

The Panel observed that had the surgery constituted an injury, the removal of bone would necessarily have been a non-threshold injury, falling outside the s 1.6(2) definition of soft tissue injury.

The Court’s reasoning

On judicial review, Schmidt AJ held that the Panel had erred by asking whether the surgery was an injury, rather than whether the physical consequences of the surgery for the claimant’s body – the incision, and the permanent removal of bone from his facet joints – constituted further bodily injury within the meaning of s 1.4.

Her Honour held that consent, therapeutic intent, controlled disturbance and the successful alleviation of symptoms were all irrelevant considerations. She found that most surgery following a motor accident is performed with consent and with therapeutic intent, and the definition of injury is concerned with none of these matters. She considered that unlike s 3B of the Civil Liability Act 2002 (NSW), s 1.4 is not concerned with intentional acts or with therapeutic purpose.

Critically, the Court held that the Panel had erred in its comparison. The existence of resulting bodily injury is to be ascertained by comparing the physical state of the claimant’s body immediately before the accident with its state immediately after the surgery, not by comparing his position immediately before and after the surgery. It was determined that where that comparison discloses a further physiological change or disturbance, an injury within s 1.4 is established.

Applying Military Rehabilitation and Compensation Commission v May, her Honour held that had the Panel considered the physiological changes and disturbances caused to the normal physiological state of the claimant’s facet joints, it would have been driven to conclude that the surgery resulted not only in further soft-tissue injury, but in further bodily injury by the removal of bone. She found that, consistent with Mahony v J Kruschich (Demolitions) Pty Ltd, the total condition resulting from injury and reasonably undertaken surgery is attributed to the original injury.

Her Honour also observed that the insurer’s construction produced unintended consequences already evidenced on the facts:

1. The costs of surgery accepted to be reasonable and necessary had not been met.
2. If the resulting damage fell outside the statutory scheme, a policy responding only to injury as defined under the MAI Act would be unlikely to answer any claim for damages arising from it.

The Court ultimately held that the Review Panel fell into error in concluding that the claimant had not suffered an injury within the meaning of the MAI Act. Accordingly, the Panel’s Certificate was set aside.

Implications

The decision unsettles a proposition which has had real currency since the observations of Stern JA in Mandoukas [2024] NSWCA 71 at [52]-[54] – being surgery that improves a claimant’s symptoms cannot itself constitute an injury. Reliance on the absence of identifiable detrimental impact as a stand-alone basis for a no-injury finding should now be approached with caution, as should submissions framed around a comparison of the claimant’s position immediately before and after surgery. On her Honour’s reasoning, the comparison required by s 1.4 between the state of the body immediately before the accident and its state immediately after the surgery, and consent, therapeutic intent and successful treatment are all irrelevant to that inquiry.

The practical consequence lies in the threshold injury exposure. Her Honour observed that surgery is always likely to result in at least soft tissue injury, and that where surgery involves the remove of bone, injury to nerves, or the complete or partial rupture of tendons, ligaments, menisci, or cartilage, the resulting injury falls outside the definition of s 1.6(2). Accident-related surgery undertaken to treat what was accepted to a threshold injury may therefore convert the injury site to that of a non-threshold injury, with consequences both for the continuation of statutory benefits beyond 52 weeks and for entitlement to common law damages under the MAI Act.

Having said that, the decision does not displace the requirement that the surgery be causally related to the accident and reasonably undertaken. Causation was ultimately conceded in these proceedings and the reasonableness of the foraminotomy was not in issue. Where the evidence supports a finding that a claimant would have required the surgery in any event, the ’disentangling’ evidentiary burden discussed in Ridolfi v Hammond and Seltsam Pty Ltd v Ghaleb continues to apply.