Commonwealth of Australia v Kutlu & Ors; Commonwealth of Australia v Clarke & Ors; Commonwealth of Australia v Lee & Ors; The Honourable Nicola Roxon MP Minister of State for Health & Ageing v Condoleon & Ors [2012] HCATrans 35 (10 February 2012)

Last Updated: 13 February 2012

[2012] HCATrans 035

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S279 of 2011

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Applicant

and

ALI KUTLU

First Respondent

DIRECTOR OF PROFESSIONAL SERVICES REVIEW

Second Respondent

BRUCE WALLACE INGRAM, PAUL DAVID HANSON AND TIMOTHY JOHN FLANAGAN CONSTITUTING THE PROFESSIONAL SERVICES REVIEW COMMITTEE NO 530

Third Respondent

CHIEF EXECUTIVE OFFICER OF MEDICARE AUSTRALIA

Fourth Respondent

DETERMINING AUTHORITY NO 530 ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH)

Fifth Respondent

Office of the Registry
Sydney No S280 of 2011

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Applicant

and

DR ROBERT CLARKE

First Respondent

DR LEON SHAPERO, DR RODNEY McMAHON AND DR BRIAN MORTON CONSTITUTING THE PROFESSIONAL SERVICES REVIEW COMMITTEE NO 631

Second Respondent

DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH)

Third Respondent

THE DIRECTOR OF PROFESSIONAL SERVICES REVIEW

Fourth Respondent

Office of the Registry
Sydney No S281 of 2011

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Applicant

and

DR IL-SONG LEE

First Respondent

WAL GRIGOR, PATRICK TAN AND DAVID RIVETT IN THEIR CAPACITY AS PROFESSIONAL SERVICES REVIEW COMMITTEE NO 292

Second Respondent

CHIEF EXECUTIVE OFFICER OF MEDICARE AUSTRALIA

Third Respondent

DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH)

Fourth Respondent

DIRECTOR OF PROFESSIONAL SERVICES REVIEW

Fifth Respondent

Office of the Registry
Sydney No S282 of 2011

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Applicant

and

DR IL-SONG LEE

First Respondent

BERNARD KELLY, ELIZABETH MAGASSY AND VAN PHUOC VO IN THEIR CAPACITY AS PROFESSIONAL SERVICES REVIEW COMMITTEE NO 348

Second Respondent

CHIEF EXECUTIVE OFFICER OF MEDICARE AUSTRALIA

Third Respondent

DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH)

Fourth Respondent

DIRECTOR OF PROFESSIONAL SERVICES REVIEW

Fifth Respondent

Office of the Registry
Sydney No S283 of 2011

B e t w e e n -

THE HONOURABLE NICOLA ROXON MP MINISTER OF STATE FOR HEALTH AND AGEING

Applicant

and

PAUL CONDOLEON

First Respondent

DIRECTOR OF PROFESSIONAL SERVICES REVIEW

Second Respondent

BRUCE WALLACE INGRAM, PAUL DAVID HANSON AND TIMOTHY JOHN FLANAGAN CONSTITUTING THE PROFESSIONAL SERVICES REVIEW COMMITTEE NO 580

Third Respondent

CHIEF EXECUTIVE OFFICER OF MEDICARE AUSTRALIA

Fourth Respondent

DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH)

Fifth Respondent

Applications for special leave to appeal

GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 FEBRUARY 2012, AT 2.16 PM

Copyright in the High Court of Australia

__________________

MR T.M. HOWE, QC: May it please the Court, I appear with my learned friend, MS A.M. MITCHELMORE, for the applicant, in each matter. (instructed by Australian Government Solicitor)

MR M.A. ROBINSON, SC: If the Court pleases, I appear with my learned friend, MS B.J. TRONSON, for the first respondent in each matter. (instructed by Avant Law Pty Ltd)

GUMMOW J: Thank you. There are submitting appearances from the other respondents, I think. We would be assisted by hearing first from you, Mr Robinson.

MR ROBINSON: Your Honours, we say special leave in this matter should not be granted because the decision of the court below is plainly correct for the reasons given by the learned justices there. It is a correct application, we say, of Project Blue Sky and the principles contained therein, and the correctness of that decision is not at issue in these proceedings. The Commonwealth’s asserted Project Blue Sky public inconvenience argument we say is overstated because the case concerns a miniscule number of doctors and there are a small number of other known cases - professional services - - -

GUMMOW J: It does not concern a miniscule number of statutes though. There are provisions for consultation in a whole range of Commonwealth statutes to do with the appointments to various committees.

MR ROBINSON: That is accepted, yes, your Honour.

GUMMOW J: National Health Reform Act, Telecommunications Act, Fair Work Act, the list goes on.

MR ROBINSON: That is accepted, your Honour. In terms of the effect of non-compliance with those provisions, we say, the Full Federal Court got it right and there is no reason to look at it again. We say it is a direct application of Project Blue Sky and the only area where it has gone unstuck is - the public inconvenience argument of the Commonwealth, we say, is something that is simply overstated and your Honours cannot be swayed by that.

The inconvenience to the public that is asserted by the Commonwealth must be looked at as against the penalties that the doctors themselves face, who are participating in this professional services review process. Your Honours are aware that there is a penalty and disqualification scheme provided by the Health Insurance Act. Section 106Q allows for a determining authority to make one or more directions under that section when it receives a Professional Services Review Committee report if it contains a finding of inappropriate practice.

For example, the determining authority - under 106U is the power to make this decision - can make requirement for refund or repayment of Medicare that a doctor earns over a two-year period. That can be hundreds of thousands of dollars in one go in Medicare refunds ordered to be paid. Similarly, a medical practitioner can be partially or wholly disqualified from participating in Medicare and, as your Honours would appreciate, that can readily cripple a bulk billing doctor’s practice if he or she cannot continue to bulk bill for a certain period.

The Act sets out, at 106U(1)(h) a three-year period. If a doctor is found to be practising inappropriately a second time he or she can be sent to the Medicare Participation Review Committee and the penalty can be that he or she can be struck off for up to five years. So these are fairly heavy and significant disciplinary matters which can adversely affect or cripple a doctor’s practice in the time.

The other position we take is that the Commonwealth’s public inconvenience argument is overstated because the Commonwealth has already sought to remove most of the problems in this area in the future. About two months before the hearing in the Full Court below the Commonwealth, and its emanations, permanently abandoned about 39 Professional Services Review Committee’s deliberations and walked away from them. That significantly impeded the Commonwealth’s argument that there will be affectation in the community and it rendered it neutral.

Further, the Commonwealth has already taken positive steps to remedy what it says is the public inconvenience, drafting instructions with Parliamentary Counsel and a draft Bill has been created - we see in the second affidavit produced by the Commonwealth for the special leave application. So Parliament can deal with it. Parliament is dealing with it and we are yet to see what that Bill says, but we are told in the affidavit pretty clearly that it is retrospective validating legislation that will cause very little inconvenience for the Commonwealth and effectively remove the aspect that your Honour Justice Gummow mentioned earlier in relation to the wider affectation in other statutes dealing with consult. As for the de facto office adoption - - -

HAYNE J: In considering the application of principles of the kind dealt with in Project Blue Sky, is it relevant or necessary to give some content to the obligation to consult?

MR ROBINSON: Yes, your Honour. We say that there is.

HAYNE J: Did the Full Court?

MR ROBINSON: The Full Court did. It looked at it in a number of passages which I can take your Honour to. In fact, the ministerial briefing note is in the application papers, and your Honour can see exactly what the Commonwealth’s senior officers told the Minister when she made the 2009 appointments. The 2005 briefing notice is before this Court, but the last raft of instruments was put before the Full Court, so - - -

HAYNE J: I understand there is the material about what happened, but is it not necessary to begin consideration of Project Blue Sky, understanding what should happen when the Act says, “The Minister must consult”?

MR ROBINSON: Your Honour, the short answer to that is in the facts of this case, something should happen and in this case - - -

HAYNE J: Your answer is nothing happened, but can one apply Project Blue Sky without first understanding what should have happened? That will tell you the significance, if any, of not performing the various steps that should have been performed.

MR ROBINSON: Your Honour, we accept that that ought to be examined in this exercise, and the Full Court did that. It looked at what “consult” means in some detail in the decision and in the circumstances that was a necessary step - we accept that, your Honour. But in this case, that aspect of the exercise is straightforward. The Commonwealth simply chose not to attempt to consult with the AMA, did not lift a pen.

I can give your Honour the paragraph references in the application book to why that is so. The answer is we have done it before. We did it a long time ago when they were first appointed. Therefore, we did not feel the need to come back to the AMA in accordance with the Act. That is what the reasoning of the officer advising the Minister was in relation to the 2009 decisions for the panel and for the deputy director. It simply is not good enough. This is not the right case, in my respectful submission, to consider the meaning of “consult” at any deeper level than that which is set out by the Full Court.

As for the de facto officer’s doctrine, or the so-called doctrine as his Honour Justice Kirby keeps calling it, it simply does not apply in the present case, and we say for the reasons of the Full Court. The Full Court determined that the mandatory provisions of the statute determined the outcome here. There was no room for the added operation of the common law. In any event, a common law tail, we say, should not wag a statute law dog – or, since this case involves federal law and officers of the Commonwealth within the constitutional sense, it should not wag a constitutional law dog.

Further, we say this matter is not a suitable vehicle for determination of the nature and scope of this doctrine because it was the Commonwealth’s own considered decision in the first instance to positively choose not to consult with the AMA. There was no inadvertence or accidental mistake here, and the Full Court has accepted that at paragraphs 25 and 32 and 98 and 99.

The Commonwealth has already drawn and circulated its draft retrospective legislation, so that will be ventilated in another place, another time. If the de facto officer doctrine were to be expanded in scope, as the Commonwealth plainly desires here, ministers and senior administrators would simply become lazy in making important statutory appointments to quasi-judicial officers, tribunals, committees, even judicial appointments. It would not matter if the statutory requirements were not met, because all actions and decisions undertaken would be later validated by the common law. This sends the wrong message, and constitutes a very bad standard for public administration, in my respectful submission.

As to the issue of costs, there is an issue between the parties. Should special leave to appeal be granted, it should be made conditional on both the applicants paying the respondents’ costs in any event and the applicants not seeking to disturb the costs orders below in the Full Court. The applicants have accepted the first limb, and they have rejected the second limb as being not appropriate. They do not say why in their reply submissions. They simply say it is not appropriate.

In my submission, the making of both orders is common in this Court. If there is a matter of public interest or of general application, or if

the resolution of the points in issue is primarily desirable for the applicants who are governmental, and as the Court said in CSR v Eddy [2005] HCA 64; (2005) 226 CLR 1 at 35, paragraph 81, if they are “large and recurrent” litigants, and we say they are here.

The respondents, on the other hand, are each individual medical practitioners, sole practitioners, and they are not recurrent litigants and they have no interest in the legal position beyond this particular litigation and it was reasonable for them to make an application to the Full Court. It was reasonable for them to go to the Full Federal Court in the fashion that all parties were directed to in the premises, and it was an efficient way to go straight to the Full Federal Court and have the matters determined in the way they were.

They are not well positioned to meet an adverse costs order using the Eddy test. In addition, in New South Wales v Corby [2010] NSWCA 27; (2010) 76 NSWLR 439 at 441, paragraph 9, the Court of Appeal in looking at these issues accepted that if there was some uncertainty as to the correct outcome of a statutory construction issue, and that came from a lack of clarity in the legislation itself, then that would be an appropriate matter for asking the applicant to cover their costs as well. Accordingly, if leave is granted, we ask for those two things, not just one of them. Unless I can assist your Honours, they are my submissions.

GUMMOW J: Mr Howe, there are three matters we wanted to raise with you. The first is, if there were to be a grant of special leave, it would be on the condition as to payment of costs as sought in this Court and non-disturbance of the costs orders in the Federal Court. Is that accepted?

MR HOWE: Yes, it is, your Honour.

GUMMOW J: Secondly, the draft notices of appeal - one of which is at page 269 has no less than 19 paragraphs. That cannot be necessary.

HAYNE J: If it takes you an encyclopaedia to tell us what is wrong, Mr Howe, you are not looking good.

MR HOWE: Yes, the only explanation for the apparent prolixity of the various grounds of appeal is that there are five sets of proceedings involving different fact situations involving different decision-makers under the Act who dealt with matters in relation to the practitioner respondents at a different stage and the question of, for instance, Project Blue Sky directs attention to whether or not the Acts and decisions of an invalidly appointed decision-maker are invalid. There are different Acts and decisions here that were the subject of the separate question stated for adjudication by the Full Court of the Federal Court.

So in order to, in effect, agitate all of the necessary issues that is why the appeal grounds are expressed that way, but we absolutely accept, I think what is implicit in what fell from his Honour Justice Hayne, that you can collapse those into two broad areas - Project Blue Sky analysis and the application of the de facto officer doctrine in the event that the first analysis is resolved against the Commonwealth’s interests.

Then the outcome of consideration of those two broad issues will necessarily have fairly ready application to all of the different Acts and decisions of the two different decision-makers in relation to the four or five different practitioner respondents. So we do not want the Court to think that we have overstated the complexity of the matter in the way we have agitated those appeal grounds.

GUMMOW J: No, but the draft could be redrawn so that the two areas are isolated and then applied to each particular situation.

MR HOWE: We will undertake to use our best endeavours in that regard.

GUMMOW J: Yes, all right, you have leave to redraft the notice of appeal on those lines. The other thing that needs attention is in S283 there is an identification of the then Minister of State by a name. This should not happen and it is happening all the time. What should be identified is the Minister’s portfolio? It is the Minister of State for Health and Ageing. Is that portfolio still identified in that way? There has been no change in it, has there, under the administrative arrangements?

MR HOWE: I think that is right, your Honour.

GUMMOW J: Well, all it needs to say is Minister of State for Health and Ageing.

MR HOWE: We will attend to that change.

GUMMOW J: Yes, that should be attended to as well. It would be a day case, I would think?

MR HOWE: I agree, your Honour.

GUMMOW J: Do you agree with that, Mr Robinson?

MR ROBINSON: Yes, your Honour.

GUMMOW J: Very well, those matters can be attended to and there will be a grant of special leave. The matter will be a one-day case and the parties should attend to the directions that will be given by the Registrar for the preparation of the appeals.

MR ROBINSON: I should say, your Honour, I am contemplating a short constitutional point.

GUMMOW J: What is that?

MR ROBINSON: Section 67 of the Constitution, the appointment of officers of the Commonwealth by the Executive and given the – the point is that - - -

GUMMOW J: What is the point? Do not just say section 67.

MR ROBINSON: Well, the de facto officer’s principle - - -

GUMMOW J: The consistency of that with section 67, yes.

MR ROBINSON: Yes, your Honour, it could affect the operation of the Constitution in relation to section 67, and given that the Court has not dealt with it before it might be better to provide for a day plus. We will deal with it in our notice of contention.

GUMMOW J: Yes, we will say a day plus, I think. If you take that point you had better give section 78B notices.

MR ROBINSON: Yes, indeed, your Honour.

AT 2.36 PM THE MATTER WAS CONCLUDED