AN APPLICATION MADE UNDER s 106, INDUSTRIAL RELATIONS ACT
10 In early March 2006, the Area Health Service refused to recognise that indemnity insurance cover was in operation for Dr Prince because there was no valid VMO contract in existence. The indemnity coverage provides a VMO with indemnity for certain work undertaken in public hospitals operated by the Area Health Service. The Area Health Service through its solicitors then demanded that Dr Prince sign a new standard VMO contract and agree to a retrospective variation. A regular operating list due for 16 March 2006 was cancelled by the Area Health Service on less than two days' notice when Dr Prince refused to accede to the demands to sign a new standard VMO contract and to agree to a retrospective variation. The Area Health Service threatened to cancel his lists unless a new standard VMO contract was signed or a retrospective variation agreed between the parties. After negotiations, an interim arrangement was entered without prejudice under which Dr Prince was to be remunerated at the lower rate pending a resolution of the issues existing between them. In June 2006, Dr Prince commenced proceedings under s 106 of the Industrial Relations Act 1996 against the North Coast Area Health Service seeking payment of the settlement package rates from July 2001 and reimbursement for the cancelled theatre list of 16 March 2006. Consequential orders for interest and costs were also sought.
A JURISDICTIONAL ISSUE RAISED
11 In August 2006, the North Coast Area Health Service filed a Notice of Motion seeking orders to have determined as a separate and preliminary question the jurisdiction of the Court to entertain the application filed by Dr Prince. In summary, the Area Health Service sought to argue that the provisions of the Health Services Act, in particular, upon the proper construction and application of ss 86 and 127 of that Act operated to impliedly repeal the provisions of s 106 of the Industrial Relations Act so as to exclude the operation of Ch 2 Pt 9 of the Industrial Relations Act in relation to VMO contracts.
12 The Notice of Motion was supported by two affidavits sworn by a solicitor instructed by the Area Health Service annexing a large number of documents dealing with the manner in which VMO rates were determined and also dealing with the history of the Settlement Package rates.
THE STATUTORY FRAMEWORK
13 The following provisions of the Health Services Act were relied upon as shedding light on the intention of the legislature:
· Section 4, Objects, in Clause (e) provided that an object of the Act was to regulate the conditions of contract of Visiting Medical Officers appointed by public health organisations, and in sub-clause (i) it was an object of the Act to make provisions for the funding of public health organisations.
· Section 7 provided that a "public health organisation" included an area health service.
· Section 17(2) provided that an Area Health Service was a body corporate with a corporate name as specified in Schedule 1.
· Section 24 provided that a Chief Executive was to manage and control the affairs of an Area Health Service.
· Section 25(b) provided that, in the exercise of his or her functions, the Chief Executive Officer was subject to the control and direction of the Director-General.
· Section 32(1) provided that the Director-General could determine the role, function and activities of any public hospital, health institution, health service or health support service under the control of an Area Health Service and for that purpose was able give any necessary directions to the Chief Executive of the Area Health Service.
· Section 37(1) provided that an Area Health Service could make and enter into contracts or agreements with any person for the performance of services, or for the supply of goods, machinery or material by that person with respect to the exercise by the Area Health Service of its functions conferred or imposed by or under this or any other Act.
· Section 37(2) provided that an Area Health Service could also, with the approval of the Director-General, make or enter into contracts or agreements with any person for the provision of any service by the Area Health Service to that person.
14 Attention was then directed to the provisions of Ch 8 of the Act dealing with visiting practitioners:
· Section 78 provided that a VMO was a medical practitioner appointed under a service contract (whether or not the practitioner or his or her practice company was a party to the contract) to provide services as a visiting practitioner for monetary remuneration for or on behalf of the public health organisation concerned.
· Section 80 defined a service contract as an agreement between a public health organisation and a medical practitioner to provide medical services to or on behalf of the public health organisation.
· Section 81 provided that the kinds of service contracts included but were not limited to: (a) fee-for-service contracts, (b) sessional contracts, (c) honorary contracts.
· Section 82 provided that a fee-for-service contract was a service contract under which a medical practitioner (or the medical practitioner's practice company) was remunerated for medical services performed by the medical practitioner by reference to a scale of fees for different kinds of medical services that were contained in, or specified or otherwise identified by, the contract.
· Section 83 provided that a sessional contract was a service contract under which the medical practitioner (or the medical practitioner's practice company) was remunerated by reference to any hourly rate or rates for services provided but not on a fee-for-service basis.
· Section 86(1) provided that a VMO must not be appointed unless the terms and conditions to which the officer was to be subject were in the form of a written service contract between (a) the officer and (b) the relevant public health organisation. By sub-section (2) an appointment made in contravention of this section was void.
· Section 87(1) provided that the Minister could, by order in writing, approve of sets of conditions (including remuneration) recommended by the Association (defined in the Dictionary to mean the Australian Medical Association (NSW) Ltd) for inclusion in service contracts, entered into on or after the day on which the order took effect, of a class specified in the order.
· Section 87(2) provided that a standard service contract, in relation to a class of service contract (such as fee-for-service contracts, sessional contracts or honorary contracts) was a contract that, when entered into, contained the set of conditions (if any) approved for the time being under sub-section 87(1) for those service contracts, whether or not it contained other conditions that were not inconsistent with the approved set of conditions.
· Section 88(1) provided that a service contract of a class for which there was a standard service contract was not to be entered into unless it contained the set of conditions contained in the relevant standard service contract. By sub-section (2), a service contract entered into in contravention of this section was void.
15 Division 3, Ch 8 of the Act dealt with arbitrations concerning certain service contracts in the public health system generally.
· Section 89(1) provided that the Minister or the Association could apply either jointly or individually to the relevant Minister for the appointment of an arbitrator to determine the terms and conditions of work, the amounts or rates of remuneration and the bases on which those amounts or rates were applicable, in respect of medical services provided by VMOs under fee-for-service contracts or sessional contracts or both.
· Section 90 provided that, on receipt of an application under s 89, the relevant Minister must appoint a judicial member of the Industrial Relations Commission (now the Industrial Court) nominated by the President to be the arbitrator for the purposes of making a determination under Part 2.
· Under s 91(1), the arbitrator must, as soon as practicable after being appointed under s 90, determine the terms and conditions of work, the amounts or rates of remuneration and the bases on which those amounts or rates were applicable, in respect of medical services provided by VMO's under fee-for-service contracts or sessional contracts or both.
· Section 92(2) provided that, in making a determination under this Part, the arbitrator must have regard to the economic consequences of the proposed determination and the established principles of the Industrial Relations Commission in connection with the determination of remuneration under awards made under the Industrial Relations Act 1996.
· Section 93(1) provided that the Minister and the Association could appear before and be heard by an arbitrator by their respective representatives in any proceedings before the arbitrator and, in sub-section (5), provided that a person appearing before the arbitrator could be represented by an Australian legal practitioner.
· Section 96(1) provided that the Minister or the Association could appeal to a Full Bench of the Industrial Relations Commission against a determination made under this Part.
· Section 97(1) provided that the Minister or the Association may apply to the Industrial Relations Commission in Court Session for a declaration of right under s 154 of the Industrial Relations Act 1996 in respect of the interpretation, application or operation of the determination made under this Part.
· Section 98 provided that any provision of any service contract that was inconsistent with a determination made under Part 2 was, to the extent the inconsistency, of no effect on and from the date or dates that the relevant determination was to take effect and the contract was, on and from that date or those dates, taken to be varied so as to include the terms of the determination.
16 Part 3, Ch 8 dealt with criminal and disciplinary matters concerning visiting practitioners and imposed a duty on appointees who were charged with certain serious sex or violence offences to report that fact to the Chief Executive. The Part contained provisions allowing the termination of appointments because of serious sex or violence offences and provided in s 102 that no compensation, for breach of contract or otherwise, was payable in respect of the termination of an appointment of a visiting practitioner under the Part. Section 103 preserved appeal rights as to appointment or termination under Pt 4 but removed a right of appeal by a visiting practitioner against a decision under Pt 3 to terminate the appointment because the practitioner had been convicted of a serious sex or violence offence in respect of a minor or a patient or client.
17 Part 4, Ch 8 dealt with appeals concerning appointment decisions.
· Section 105 required a public health organisation to give notice in writing to a person of a decision to reduce any clinical privileges of a person appointed as a visiting practitioner that had previously been granted or where the organisation did not re-appoint a person as a visiting practitioner or where the organisation suspended or terminated the appointment of a person as visiting practitioner.
· Section 106 provided a person who was dissatisfied with a decision of a public health organisation with an appeal to the Minister against such a decision. No appeal to the Minister was available where: there was a decision not to re-appoint where the organisation had ceased to offer appointments of the kind to which the person sought re-appointment; a decision by a public health organisation under s 105 reducing the clinical privileges of a person where the decision was based on grounds other than lack of professional competence of the person; and, a decision not to re-appoint or terminate the appointment if the decision was based on the fact that the practitioner had been convicted of a serious sex or violence offence in respect of a minor and the offence committed involved sexual activity or acts of indecency with or in relation to the minor.
· Under s 108, on receipt of a notice of appeal the Minister was to appoint a committee of review to determine the appeal. The section also set out the manner in which the Committee was to be constituted.
· Under s 110, in any proceedings before a review committee, a party to the proceeding may appear in person or by an agent but representation by an Australian legal practitioner was not to be allowed unless there was consent of all parties and by leave of the committee.
· Section 111(1) provided that the Committee had, for the purposes of appeal, the powers, authorities and immunities conferred by the Royal Commissions Act.
· Section 112 required a committee to determine the appeal and to make such orders with respect to the matter being appealed as the committee considered proper. Under s 113, an order of the committee under s 112 had force and effect from the day it was made, was taken to be the final decision of the public health organisation concerned and was to be given effect to accordingly.
18 Part 5, Ch 8 dealt with the effect of the Act on agreements with visiting practitioners. By s 114, the section applied to any agreement between a public health organisation and a visiting practitioner relating to the performance of work by the practitioner whether or not the agreement also related to other matters. By sub-section (2), a provision of the Act (other than Pts 2, 3 and 4 of Ch 8) or a regulation or by-law made under the Act that was inconsistent with any of the rights and obligations under any agreement to which the section applied had to the extent of the inconsistency, no force or effect in relation to the visiting practitioner concerned.
19 The respondent Area Health Service also referred to the provisions of Ch 10 of the Act dealing with the administration of the public health system.
· Under s 127, in determining what amounts of money were to be paid to each area health service out of money appropriated from the Consolidated Fund, the Minister was to have regard to a number of nominated matters.
· Under s 127(4), the Minister could attach to the payment of any subsidy or part of any subsidy such conditions as the Minister determined from time to time.
20 The respondent Area Health Service also referred to a determination made by the Director-General of the Department as the delegate of the Minister pursuant to s 127(4) of the Act. The determination, entitled "Accounts and Audit Determination for Public Health Organisations", was binding on the Area Health Service as a recipient of payments from the Consolidated Fund.
· Clause 3.18 of the Determination prohibited the Area Health Service without specific approval of the Director-General or the authorised delegate to provide to any VMO remuneration or conditions of service other than in accordance with the rates and conditions specified in policy directives or information bulletins issued by the Department.
· In February 2005, the Director-General as delegate of the Minister issued a policy directive that was mandatory in its terms applying to visiting practitioners' appointments. Under this directive the conditions of appointment for VMOs including fee-for-service - RDA contracts and the fee-for-service (non RDA) contracts were specified, as well as the standard form fee-for-service (RDA) package.
21 The Health Services Regulation 2003 also made provision in relation to VMOs.
· Clause 7(1) of the Regulation provided for a maximum appointment of five years as a VMO. Under Clause 7(2), a person if otherwise qualified was eligible for re-appointment from time to time.
· Under Clause 8(1), a person could resign an appointment as a visiting practitioner by giving three months' written notice to the public health organisation concerned. Clause 8(2) permitted the public health organisation to waive the requirement for notice or to accept a lesser period of notice if reasonable to do so.
THE SUBMISSIONS
22 The respondent Area Health Service argued that the substance of the relief sought by Dr Prince under s 106 of the Industrial Relations Act 1996 was the imposition upon the respondent of an obligation to pay him the settlement package rate both retrospectively and prospectively, although he did not qualify for those rates of pay and would not be entitled to receive a standard form of contract under which those rates were paid. This was not a case where the terms of the standard form of contract were themselves unfair. The respondent argued that Dr Prince was qualified only for payment of the rates available under the standard fee-for-service contract and he did not qualify for the settlement package rate. Apart from these propositions, on a consideration of the whole of the Health Services Act, there was an implied repeal of s 106 of the Industrial Relations Act. By reference to the various sections of the Health Services Act, the Regulations and the determination under the Act dealing with other matters in which money from the Consolidated Fund was to be dealt with by Area Health Services, it was clear that, in accordance with longstanding authority, the legislature had set up a comprehensive legislative scheme for the regulation of the engagement and payment of VMOs and that legislative scheme came into direct conflict with the provisions of s 106 of the Industrial Relations Act such that both statutory schemes could not stand together.
23 It was accepted by the respondent that, although the later Act, the Health Services Act, did not expressly repeal s 106 of the Industrial Relations Act, there was an implied repeal where the two statutes were held to be inconsistent (Goodwin v Phillips (1908) 7 CLR 1 at 7; Butler v Attorney-General (Vic) (1961) 106 CLR 268 at 273; 290; Rose v Hvric (1963) 108 CLR 353 at 360; Saraswati v The Queen (1991) 172 CLR 1 at 17; Shergold v Tanner (2002) 209 CLR 126 at 136-137).
24 The inconsistency between the two statutory regimes, insofar as they dealt with the regulation of remuneration of VMOs, was said to be demonstrated by the following matters:
(a) it was an express object of the Health Services Act that it regulate the conditions of contracts of VMOs appointed by public health organisations including Area Health Services in respect of recognised establishments and services. It was apparent that the objective was to obtain uniformity of regulation across the public health system;
(b) the regulatory regime in the Health Services Act appeared to be comprehensive;
(c) the legislator proceeded on the basis that it was desirable for the Health Services Act to provide for and require the use of standard service contracts containing standard sets of conditions that had been the subject of ministerial approval or otherwise determined by arbitration by a judicial member of the Industrial Court; and, in the case of fee-for-service contract remuneration for VMOs, was regulated by reference to a scale of fees for different kinds of medical services contained or specified in the contract;
(d) the Minister was given broad statutory power under the Health Services Act to determine conditions attaching to the payment of any subsidy to Area Health Services under s 127(4). That power might properly extend to conditions affecting remuneration paid to the VMOs engaged by an area health service such as found in the Accounts and Audit Determination. Thus, the Minister could determine that an area health service was to provide benefits to certain VMOs above and beyond those to which they would be contractually entitled, otherwise the contract conditions and rates would remain unaltered for other VMOs. If the Minister made such a determination and issued it as a policy directive then the area health service was obliged to comply, such compliance was assured by the operation of s 127(4) and Clause 3.18 of the Accounts and Audit Determination;
(e) the legislature had proceeded on the basis that, where the Industrial Court was to have a particular role or function in the scheme concerning remuneration of VMOs, it was appropriate to find that expression in the Health Services Act ;
(f) the arbitrator's role expressly conferred by the Health Service Act on a judicial member of the Industrial Court was concerned with the making of standard determinations of terms and conditions of work in respect of medical services provided by VMOs across the public health system. The arbitration procedure was not available to settle a dispute about fees or other terms and conditions that should be provided to an individual on a case by case basis. The arbitrator was no more concerned with individual disputes about applicable contractual terms for a particular doctor than was the Minister under s 87. The procedure under Ch 8 of the Act was concerned with the making of standard contracts applicable to appropriately identified VMOs;
(g) the power under s 106 of the Industrial Relations Act 1996 was not available to assist an individual to procure a variation of the terms of remuneration in a fee-for-service contract for a VMO. There were no means for a VMO to challenge the decision of the Minister (whether made by him or the Director-General as his delegate) or the determination of an appointed arbitrator being a judicial member of the Industrial Court in relation to rates of pay approved or determined pursuant to the Health Services Act in respect of a specified class of service contract for VMOs for use throughout the public health system in New South Wales.
25 It was submitted that, if the Court was empowered pursuant to s 106 of the Industrial Relations Act to vary the fee-for-service contract applicable to the applicant so as to compel the Area Health Service to apply rates of fees for service exceeding those specified for the purposes of the VMOs fee for service standard contract, there would be a derogation from the power of the Minister given by the Parliament under the Health Services Act.
26 Here the specific statutory regime provided for uniformity of fees for identified services under specific classes of contract for VMOs throughout the whole of the State public health system. It was therefore highly improbable that the legislature intended that an individual contract between a VMO and an area health service, insofar as it concerned fee-for-services, could be examined by this Court and if found to be unfair declared void or varied having regard to the particular circumstances of the VMO. Such conclusions were more compelling when regard was had to the provisions of s 107 of the Industrial Relations Act, enabling the Court to make an order for the purpose of prohibiting the respondent from entering into a fee-for-service contract in similar or the same terms with any other VMO in the public health system. Such an order would be in direct conflict with the parliamentary approved authority of the Minister to do the very opposite by resort to s 87 and s 127(4) of the Health Services Act and a judge of this Court to arbitrate a result to the very opposite effect.
27 Submissions for Dr Prince referred to the same line of authority as governing the test of inconsistency between statutes and the implied repeal of previous provisions because of the terms of a later statute. It was submitted that on a proper analysis there was no inconsistency between the two statutes or at least not sufficient inconsistency to meet the test laid down by the authorities. Further, it was pointed out that s 106 was remedial in nature and was structured to enable a person aggrieved by a contract to obtain relief. In those circumstances, the test was more difficult to overcome than in normal circumstances of simply two statutes appearing to cover the same subject matter. The jurisdiction created by s 106 was beneficial in nature and granted fundamental civil rights. A Full Bench of the Commission in Beahan v Bush Boake Allen Australia Pty Ltd (1999) 93 IR 1 (between 13 and 18) stated that the approach to construction of legislation which is contended to affect pre-existing rights and an established system of law requires even more clarity of intent than otherwise and the jurisdiction would only be removed in circumstances of "irrestible clearness". It was also submitted that the Full Bench in Beahan applied the reasoning in Nagle v Tilburg (1993) 51 IR 8, namely, to succeed on a motion to effectively strike out an application, the applicant for such a course "must demonstrate that no order could be made which would be within jurisdiction".
28 It was further noted that in Beahan the Full Bench stated that s 106 was directed to an impugned contract, whether existing or terminated, as to the fairness of express or implied terms and that such unfairness would depend upon the facts of each particular case by focusing attention on the contractual relationship between a particular employer and employee and where the unfairness might arise from the terms of the contract itself, the surrounding circumstances and/or the manner of performance of or operation of the contract. In the present case, issues of unfair conduct and unfair performance of the contract were an essential part of Dr Prince's case. Authorities such as Incitec Ltd v Industrial Court of New South Wales (1992) 29 NSWLR 83; Walker v Industrial Court of New South Wales (1994) 53 IR 212 and Rothmans Distribution Services v Industrial Court (1996) 53 IR at 160) firmly established that a contract might be unfair as to its express or implied terms, in the way the contract operated in practice, and/or through the conduct of the parties to the contract. The section was directed to the unfairness of the individual contract between the parties, and unfairness may be assessed by reference to a comparison with the treatment of other persons: this was now specifically recognised by s 106(2).
29 Reference was then made to specific provisions of the Health Services Act. It was accepted that Ch 8 set up the mechanism for standard service contracts to be approved but it did not require the Minister to do so. Section 87(1) and (2) made it clear that a contract might contain additional terms which were not inconsistent with the standard terms. It was also clear that the Minister could choose not to approve a set of conditions at all. The settlement package rates to be applied to certain VMOs at Grafton Hospital were an example of other conditions that were not inconsistent with the approved set of conditions under a standard service contract and expressly permitted by s 87(2). Further, arbitration of contractual terms was not required and the last determination dealt only with sessional contracts. The fee-for-service contract terms (with which Dr Prince's claim is concerned) were not arbitrated. In the absence of a fee-for-service determination, there is a fee-for-service agreement between the Australian Medical Association and New South Wales Health which agreement provides the framework for the terms and conditions of VMO appointments and contracts. It was asserted to be not uncommon for arrangements to be made over and above the standard framework and that such arrangements were subject to approval on a case by case basis.
30 It was submitted that the effect of Ch 8 of the Health Services Act was to set up the mechanism to regulate the conditions of contracts of VMOs at a global level and that it did not attempt to regulate the individual contract between a VMO and an area health service other than to require that certain standard terms be incorporated if they were approved by the Minister or arbitrated. In contrast, s 106 of the Industrial Relations Act was directed solely at the individual contract. Nothing in the Health Services Act was directed at dealing with or providing a remedy in respect of unfair conduct by parties to individual contracts or in relation to unfairness associated with the operation of an individual contract. While there was an appeal procedure in Pt 4, Ch 8 in relation to certain appointment decisions, there was nothing in the Health Services Act concerning the operation or fairness of individual contracts. Properly viewed there was no inconsistency between Pt 2, Ch 8 of the Health Services Act and s 106 of the Industrial Relations Act.
31 Chapter 10 of the Health Services Act in Pt 2 dealt with the financial administration of the public health system. Section 127(4) empowered the Minister to place conditions upon the payment of subsidies to area health services and any instrument or condition made pursuant to this power by the Minister or his delegate was subordinate to the legislation. There could be no inconsistency between an instrument made under legislation and another Act: delegated legislation could not expressly repeal an Act of Parliament. The conditions attached to a grant of subsidies as an instrument of delegated legislation could not by implication repeal s 106 of the Industrial Relations Act. Further, there was nothing in s 127 of the Health Services Act that indicated any intention of Parliament to repeal s 106 of the Industrial Relations Act.
32 If it was assumed that approval for the payment of this rate to Dr Prince was necessary under s 127(4), it was submitted that it was difficult to see how such a course would impact upon the jurisdiction of the Court under s 106 - there was no inconsistency between the two statutes. At its highest, there may be a factor impacting upon the exercise of the discretion to grant relief if unfairness was found in the contract. It was then pointed out that it was clear from the documentary evidence that approval had been given by the Director-General for the payment of the settlement rates to staff specialists at Grafton Hospital following submissions made by the respondent in June 2001. At that time Dr Prince was a specialist VMO at Grafton Hospital and approval for those rates had been given by the Director-General on 6 August 2001. The clarification of that approval formed part of the unfairness: approval had been given in terms and was unambiguous and the respondent actively sought to have the approval revoked in relation to the applicant. There were further issues. The current written contract dated 1 October 2005 provided for the payment of the settlement rates although the respondent now asserted that such contract was invalid. In addition, the variation of the Director-General's approval was made without authority, being signed by a Deputy Director General who did not have a delegation to make such a decision.
33 Attention then was drawn to the provisions of s 114 of the Health Services Act. It was submitted that the effect of this provision was to give no force or effect to s 127 insofar as it would otherwise remove any rights under an agreement made pursuant to Ch 8. It was submitted that the provision included the right to seek a remedy under s 106 in relation to unfairness in the contract. It followed that s 127(4) had no force or effect to the extent that (as asserted by the respondent) it removed the applicant's right to seek remedial orders under s 106.
34 In drawing attention to the fact that the alleged unfairness resulted from the operation of a contract and the conduct of the respondent making the contract unfair for allowing such unfair conduct, it was submitted that the additional contractual terms sought were not inconsistent with any of the approved sets of conditions under the Act.
35 Dr Prince suggested a similar jurisdictional argument as raised by the present respondent had been rejected by a Full Bench in Gibson v Western Sydney Area Health Service (2003) 130 IR 95. That case centred around the operation of Pt 4, Ch 8 of the Health Services Act that provided an appeal in respect of certain decisions made about appointments and the alleged direct conflict with the operation of s 106 of the Industrial Relations Act. The majority judgment referred to s 106 as being focused upon the individual contract and that the subject matter of the two legislative provisions was substantially different. The majority had rejected the same line of argument being pursued in those proceedings by the respondent, namely, that the Health Services Act provided detailed regulation in connection with visiting practitioners' service contracts including a careful scheme of arbitration.
36 It was observed that, in other legislation dealing with public employment, Parliament had been able to specify what parts of the Industrial Relations Act would not apply. For example, the Public Sector Employment and Management Act 2002 in s 72(4) made it clear that the provisions of the Industrial Relations Act dealing with unfair dismissal and unfair contracts did not apply to or in respect of the employment of an executive officer. It was noted that, if Parliament had intended to exclude VMOs from the operation of s 106 of the Industrial Relations Act, it could have done so expressly just as it had in relation to the Public Sector Employment and Management Act.