Adam
If your client was conditionally discharged after he had appealed to the tribunal as a restricted patient, I think it may be considered that his application lapsed because appeals by restricted patients are governed by S70 whereas conditionally discharged applicants apply under S75.
A similar rationale was applied in R (SR) v MHRT [2005] EWHC 2923 (Admin) - an application by a guardianship patient lapses if, prior to the hearing, he is detained under S3 because S3 applications come within S72(1) and guardianship applications come under S72(4) - this is an explanation from Jones under S66.
Not sure if that helps.