[2014] ACTSC 84

APPEAL - Appeal from interlocutory decision of Master - Proper scope of appeal from Master under s 9 of Supreme Court Act 1993 (ACT) - Considered but not decided - Grounds in appeal led respondent to believe that appeal would be in House v The King sense

APPEAL - Whether Master erred in exercise of discretion - Appellant failed to demonstrate error in Master's decision - Appeal dismissed

PRACTICE AND PROCEDURE - Pleadings - Amendments - Application by plaintiff to amend Statement of Claim five years after proceedings were commenced - Action for damages for medical negligence - Whether expert report provides evidentiary basis for proposed amendments - Trial date previously vacated

Australian Capital Territory Supreme Court Act 1933 (Cth) s 8AAA

Supreme Court Act 1933 (ACT) s 9

Court Procedure Rules 2006 (ACT) rr 21, 502, 503, 5013

Aon Risk Services Australia v Australian National University [2009] HCA 27; (2009) 239 CLR 175

Balnaves v Armellin [2011] ACTSC 67

Balnaves v Armellin [2012] ACTSC 52

Draney v Barry [2002] 1 Qd R 145

House v The King [1936] HCA 40; (1936) 55 CLR 499

Konstruct v Arrow [2012] ACTSC 14

McKenna v Hunter & New England Local Health District [2013] NSWCA 476

Naxakis v Western General Hospital [1999] HCA 22; (1999) 197 CLR 269

Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479

Rothwells Ltd v Entity Group Ltd (1990) 101 FLR 460

Theodorelos v Nexus Projects Pty Ltd [2009] ACTSC 149

On Appeal from the Master of the Supreme Court of the Australian Capital Territory

John James Memorial Foundation Ltd ACN 008 453 469 (Second Respondent)

Mr D Shillington (Medical Indemnity Protection Society - First Respondent)

Ken Cush & Associates (Medical Indemnity Protection Society - First Respondent)

1. On 23 May 2008, Elise Kaye (the appellant) commenced proceedings against Dr Woods, an orthopaedic surgeon, and the John James Memorial Hospital (the Hospital) for damages arising from Dr Woods' treatment of the appellant in relation to an acute anterior cruciate ligament injury to the appellant's left knee. The appellant had been referred to Dr Woods by Dr Still. Dr Woods undertook three operations; on 17 May 2000, 16 October 2000 and 29 May 2002. The second and third operations were designed to address complications that arose from the first operation.

2. Initially, the appellant's claim concerned alleged negligence giving rise to serious complications associated with an infection that occurred after the third operation.

3. Discovery and interrogatories were completed by December 2010.

4. In April 2011, the appellant obtained a medico-legal report from Mr Jonathon Beacon, a United Kingdom orthopaedic surgeon, which not only criticised the manner in which the third operation was conducted but also questioned the manner in which the first operation was conducted.

5. In July 2012, the Court granted an application for extension of time to permit the appellant to raise matters concerning the advice given by Dr Woods and the earlier operations and procedures that he performed. The case was listed for hearing in July 2013.

6. In March or April 2013, the appellant's solicitors learned that Mr Beacon had been the subject of disciplinary proceedings in relation to inappropriate sexual behaviour towards patients, and had been struck off the roll of medical practitioners in the UK. As a result, the appellant sought an expert report from Dr James Powell, a Sydney orthopaedic surgeon.

7. On 31 May 2013 the hearing date in July 2013 was vacated on the basis that the appellant had had inadequate time to undertake investigations in response to an expert report served on the appellant on 28 March 2013. There was no suggestion that the appellant may have been seeking evidence in support of an alternative case.

8. On 26 September 2013, the appellant received the last of three reports from Dr Powell. The reports referred to a pre-existing mild chronic condition involving pain associated with malalignment of the patellofemoral joint in both knees. The appellant contends that the reports from Dr Powell and associated material support a claim for negligent failure on the part of Dr Woods to take the chronic condition into account when advising and treating the appellant's acute condition. The appellant says that, because of the existence of the chronic condition in both knees, surgery for the acute condition was incapable of rendering her physically suitable to play competitive netball and that, had she been so advised, she would not have undertaken the second and third procedures.

9. On 31 October 2013 the appellant foreshadowed the possibility of further amendments to her statement of claim and, on 14 November 2013, she applied to further amend her claim.

10. The application for leave to amend came before Master Mossop on 20 December 2013, when it was part heard. The appellant sought an adjournment so that she could provide a further draft amended claim to address some of the concerns raised by the respondent during the hearing. The adjournment was granted and the matter was relisted in February 2014. On 24 February 2014, Master Mossop refused leave for the appellant to further amend her statement of claim.

11. The appellant appeals against that decision, and seeks leave to further amend her statement of claim.

12. The appeal is made under s 9 of the Supreme Court Act 1933 (ACT) (Supreme Court Act), which provides:

(1) For the purposes of the exercise of jurisdiction given to the master under the rules, this Act has effect, subject to this section, as if the court consisted of the judges and the master.

(2) A person who is dissatisfied with an order of the master made in the exercise of jurisdiction given under the rules may appeal, as prescribed under the rules -

(a) for an interlocutory order - to the court constituted by a single judge; and

(b) in the case of any other order - to the Court of Appeal.

(3) On an appeal under subsection (2) (a), the court -

(a) must have regard to the evidence given in the proceeding out of which the appeal arose; and

(b) may draw inferences of fact from the evidence; and

(c) may receive further evidence in any of the following ways:

(i) by oral examination before the court or a judge;

(ii) on affidavit;

(iii) by audiovisual link or audio link;

(iv) any other way the court may receive evidence.

(4) On an appeal under subsection (2) (a), the court may confirm, amend or set aside the order of the master and may make any order that in all the circumstances it considers just.

13. Although the grounds contained in the notice of appeal allege that the Master "erred" in numerous specific respects, when the matter came on for hearing the appellant contended that an appeal under s 9 of the Supreme Court Act is a rehearing on the evidence below (and such further evidence as the Court allows) which requires the Court to exercise its own discretion in relation to the granting of leave to amend the statement of claim.

14. Generally, in this jurisdiction it has been accepted that an appeal against an exercise of discretion by the Master is circumscribed by House v The King [1936] HCA 40; (1936) 55 CLR 499. The appellant must show an error of fact or law, that irrelevant matters were considered or relevant matters were not considered, or that the outcome is so unreasonable that the discretion must have miscarried: see, for example Konstruct v Arrow [2012] ACTSC 14 at [5].

15. However, that approach has not been adopted universally. In Rothwells Ltd v Entity Group Ltd (1990) 101 FLR 460 at 462, in relation to s 8AAA of the Australian Capital Territory Supreme Court Act 1933 (Cth) (the predecessor to the current s 9, which in substantially the same terms), Higgins J said:

That appeal is said to be neither an appeal stricto sensu or an appeal by way of re-hearing de novo. It is a re-hearing on the evidence in the court below with a discretion to receive further evidence. Regard is to be had to the findings and reasons of the court of first instance.

Accordingly, whilst House v The King [1936] HCA 40; (1936) 55 CLR 499; Evans v Bartlam [1937] AC 473; Paterson v Paterson [1953] HCA 74; (1953) 89 CLR 212; Gronow v Gronow [1979] HCA 63; (1979) 144 CLR 513; Do Canno v Ford Excavations Pty Ltd [1981] 1 NSWLR 409 would apply to an appeal stricto sensu, they have no application to an appeal by way of re-hearing.

16. Having considered Rothwells and other cases, in Theodorelos v Nexus Projects Pty Ltd [2009] ACTSC 149 at [84], Refshauge J stated:

1. Where no fresh evidence is called, the court's powers to substitute its own view of the facts is limited by the principles expressed in Edwards v Noble [1971] HCA 54; (1971) 125 CLR 296 (at 304) as expanded by Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531, which importantly state that it is not whether the court can substitute its view of the facts (for it has power to do so) but whether it should do so.
2. Where the decision the subject of the appeal is a discretionary decision, the principles in House v The King [1936] HCA 40; (1936) 55 CLR 499 apply. See also Gronow v Gronow [1979] HCA 63; (1980) 144 CLR 513.

17. I express no view about the correctness or otherwise of that approach.

18. Rule 5013 (1) (f) of the Court Procedure Rules 2006 (ACT) provides that "a notice of appeal to the court must state... if the appeal is from a decision of the master - briefly, but specifically, the grounds relied on in support of the appeal".

19. The grounds set out in the notice of appeal and the appellant's written outline of submissions make it clear that, prior to the commencement of the hearing of the appeal, the respondent was led to believe that the appellant would conduct the appeal by arguing that the Master had erred in the exercise of his discretion in the House v The King sense. In the context of the protracted history of this matter, the appellant should be confined to the approach indicated in the notice of appeal and submissions, i.e. to addressing errors in the way in which the Master exercised his discretion.

20. The issue on appeal is whether the Master properly exercised the discretion under r 502 and/or r 503 of the Court Procedure Rules when refusing to grant leave to amend the statement of claim.

(1) At any stage of a proceeding, the court may give leave for a party to amend, or direct a party to amend, an originating process, anything written on an originating process, a pleading, an application or any other document filed in the court in a proceeding in the way it considers appropriate.

(2) The court may give leave, or give a direction, on application by the party or on its own initiative.

(3) The court may give leave to make an amendment even if the effect of the amendment would be to include a cause of action arising after the proceeding was started.

(4) If there is a mistake in the name or identity of a party, the court must give leave for, or direct the making of, amendments necessary to correct the mistake, even if the effect of the amendments is to substitute another person as a party.

(5) This rule does not apply in relation to an amendment of an order.

(6) This rule is subject to rule 503 (Amendment - after limitation period).

(1) This rule applies in relation to an application for leave in a proceeding to make an amendment mentioned in this rule if a relevant period of limitation, current at the date the proceeding was started, has ended.

(2) The court may give leave to make an amendment to include a new cause of action only if -

• (a) the court considers it appropriate; and
• (b) the new cause of action arises out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the party applying for leave to make the amendment.

(1) The purpose of this chapter, and the other provisions of these rules in their application to civil proceedings, is to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense.

(2) Accordingly, these rules are to be applied by the courts in civil proceedings with the objective of achieving -

• (a) the just resolution of the real issues in the proceedings; and
• (b) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(3) The parties to a civil proceeding must help the court to achieve the objectives.

(4) The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.

24. At [36] the Master correctly identified that the rules relevant to the application were rr 502 and 503 of the Court Procedure Rules, and that the relevant principles were set out in Aon Risk Services Australia v Australian National University [2009] HCA 27; (2009) 239 CLR 175 (Aon), and conveniently summarised in Balnaves v Armellin [2011] ACTSC 67 at [57] - [68]. I note that on appeal from the latter decision, in Balnaves v Armellin [2012] ACTSC 52, Aon was applied by the then Chief Justice but with a different outcome.

25. At [19] and [38] the Master correctly identified that he was required to consider whether the appellant had provided a reasonable explanation for the delay in applying to amend, and whether she had demonstrated a sufficiently arguable claim to warrant the granting of leave (as the strength of the case demonstrated is relevant to the exercise of the discretion to permit amendment).

26. The Master identified that a critical difficulty with the appellant's application was the lack of demonstrated arguability of the proposed new case. In His Honour's view, Dr Powell's reports provided limited support for the proposed amendments: at [41] - [56]. Further, there was no evidence from the appellant or her mother that the patellofemoral condition was a matter of concern to them at the time that they consulted Dr Woods, or that the contention that they now sought to advance about the interaction of the chronic condition, the treatment of the acute condition and the appellant's ability to play competitive netball was a matter that was of significance to the parties at the relevant time, or a matter that could have affected the manner in which the acute injury was treated: at [57] - [61]. In saying that, His Honour was well aware of the evidence from the appellant's solicitor that she had been instructed by the appellant and her mother "that neither of them had any knowledge of the matters raised by Dr Powell's medicolegal report": [16] and [58].

27. His Honour summarised his reasons for decision at [65]:

In summary, for the reasons set out above, I see the following factors as factors which weigh against a finding that it is appropriate in the circumstances to grant leave to make this amendment.

(1) While there is some explanation of the reasons for no longer relying upon Dr Beacon's opinion there is not a good explanation as to why expert opinion was not sought in relation to "the patellofemoral condition" prior to commencement of proceedings or at any time between 2008 and 2013.

(2) The expert opinion of Dr Powell does not provide evidence that would support a finding that the advice and treatment provided by Dr Woods fell below the standard expected of a reasonably competent orthopaedic surgeon. The one exception to that is his opinion in relation to the direction to suture the arthroscopy wound.

(3) The proposal to plead breaches of duty relating to the patellofemoral condition appears to be inconsistent with the limited scope of the initial referral by a sports medicine physician who might be expected to be providing broader advice to the plaintiff. There was no evidence from the plaintiff or her mother that would tend to undermine that limited scope for the referral and the duty of the first defendant.

(4) There is no pleading or evidence that would explain the causal link between what is proposed to be alleged as breaches of duty and the significant damage suffered by the plaintiff following the third operation and the existence of such a causal link would appear in the circumstances to be improbable.

(5) Granting the amendment in relation to "the patellofemoral condition" will lead to further delay in listing the matter for hearing, conducting a mediation and determining the case at a trial. That delay will result from the plaintiff seeking to secure further evidence from Dr Powell or other specialist doctors to support the claims and providing an opportunity to the first defendant to obtain evidence in reply. Having regard to the fact that the plaintiff has taken since at least May 2013 to obtain evidence from Dr Powell the further delay may well be substantial..

Did the Court err in the exercise of its discretion?

28. In the notice of appeal, the appellant raises numerous alleged errors on the part of the Master. The appellant's written and oral arguments addressed the following alleged errors.

29. First, the appellant argues that an adequate explanation was given for the delay, and that the delay was largely due to Mr Beacon's situation, a matter that was beyond the appellant's control. The appellant contends that the Master erroneously attributed the delay to fault on the part of the appellant.

30. The Master's decision did not turn upon a finding that there had been an inadequate explanation for the overall delay, or that the general delay in the proceedings was solely or mainly the fault of the appellant. Delay is a relevant consideration, regardless of whether either or both parties are at fault in that regard. Delay has an impact on parties in other proceedings. There is no doubt that the proceedings have taken an extraordinarily long time.

31. In point (1) of the summary of his reasons for decision at [65], the Master did refer to the five-year delay between the institution of the proceedings and the appellant's attempt to raise issues associated with the underlying chronic condition. His Honour said:

... there is not a good explanation as to why expert opinion was not sought in relation to "the patellofemoral condition" prior to commencement of proceedings or at any time between 2008 and 2013.

...(While) the availability of additional expert evidence may provide an appropriate explanation for amendment to pleadings, that of itself is not sufficient to provide an explanation in circumstances where proceedings have been on foot for many years and the plaintiff has had an opportunity to obtain such expert evidence as she wishes over many years.

32. I agree with those observations. Prior to sustaining the acute condition in her left knee, the appellant and her mother were aware that the appellant suffered from chronic condition in both knees; the appellant was receiving treatment for that condition prior to the referral to Dr Woods.

33. Second, the appellant contends that the respondents have identified no particular prejudice arising from the proposed amendment. The appellant argues that, in weighing the considerations bearing on the objective of achieving a just resolution of the proceedings in accordance with r 21(2), the Master gave undue weight to the matter of prejudice.

34. In fact, at the hearing before the Master the respondents did allege actual prejudice, flowing from the failure of the appellant to clearly articulate in the proposed pleadings her case concerning the undefined "patellofemoral condition". However, far from giving undue weight to the matter of prejudice, the Master's decision contains no finding that the amendment would occasion particular actual prejudice to the respondents. His Honour's decision did not turn on prejudice to the respondents. The appellant's contention in this regard is, in reality, an argument this Court should reach a different decision on the merits.

35. Third, the appellant submits that the Master failed to give proper weight or consideration to the stage reached in the proceedings; in particular, to the fact that no hearing date has been allocated and that, given the delays in obtaining hearing dates in this Court, it is unlikely that a hearing date will be allocated in the near future. Consequently, so the appellant contends, the hearing of the proceedings would not be delayed if the amendments were permitted.

36. It is not apparent that this argument was made before the Master. The submission is unsupported by evidence and it is not self-evident. It fails to take account of the fact that the Court is endeavouring to ensure that older matters are heard as soon as possible. Further, the appellant's written submissions make it plain that, if the proposed amendments are allowed, the appellant will seek to issue further interrogatories, a procedure that would be likely to have an adverse impact on the progress of the proceedings.

37. Fourth, the appellant contends that the Master took into account an irrelevant consideration, being the terms of the referral from Dr Still to Dr Woods. The appellant says that the Master incorrectly considered that the referral by Dr Still in relation to the acute injury operated as a limit on the scope of the duty of care owed by Dr Woods.

38. This submission misconstrues the Master's reference to the terms of the referral. In referring to the terms of the referral, His Honour was merely making the point that the context in which Dr Woods operated on the appellant was that she was referred for treatment of a discrete injury to one knee. The appellant does not dispute that she was a candidate for anterior cruciate ligament reconstruction, not for treatment of a chronic condition in both knees.

39. Fifth, the appellant contends that the Master erred by applying an erroneously strict test when considering whether the appellant had demonstrated an arguable case.

40. The first aspect of the appellant's contention is that the Master erred in the manner in which he approached the opinions set out in Dr Powell's reports, and in his view that those opinions lacked the requisite force. There is an associated submission that, contrary to Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479, Naxakis v Western General Hospital [1999] HCA 22; (1999) 197 CLR 269 and McKenna v Hunter & New England Local Health District [2013] NSWCA 476, the Master assumed that the ultimate issue of the requisite standard of care was one for experts rather than for the Court. The Master erred by criticising the fact that Dr Powell's reports did not expressly state that Dr Woods had breached acceptable standards of behaviour. What Dr Powell said (or did not say) about the standard of care required of a competent specialist orthopaedic surgeon was not determinative of the question of breach, even at a final trial.

41. The high point of Dr Powell's opinion came in answer to a question about whether the appellant "ought to have been warned that, regardless of the outcome of the surgery, it was unlikely that she would return to competitive netball" (emphasis added), when he responded:

It would not be unreasonable to warn a patient with significant difficulties over a number of years that return to a competitive sport that depended highly upon the knees may not be possible with or without reconstructive procedures involving the patellofemoral joint. (Emphasis added)

42. The appellant says that this statement reflected Dr Powell's understated mode of expression and, if the amendment was permitted, the appellant would clarify Dr Powell's opinion, in effect for the purpose of strengthening the stated written opinion. However, as His Honour pointed out at [53], the appellant's optimism in this regard is no substitute for evidence.

43. When the Master's observations about the opinions of Dr Powell are read in context, it can be seen that His Honour understood the appellant's arguments about Rogers v Whitaker (see [34] and [53]) and did not misapply the relevant line of authority. It was desirable to identify the line of authority for the purpose of ascertaining what might amount to an "arguable case".

44. The second aspect of the appellant's argument that His Honour set the "arguable case" hurdle too high is an assertion that His Honour erroneously criticised the absence of evidence from the appellant and her mother.

45. At [58] - [61], the Master noted that neither the appellant nor her mother had provided evidence that:

1. the chronic condition was of concern to them when they sought the assistance of Dr Woods;
2. there were reasons why the appellant's ability to play netball at a high competitive level was significant to them; or

1. had she been given advice in relation to the chronic condition, the appellant would not have consented to the first surgery

46. As to c), on the appeal, senior counsel for the appellant distanced himself from an argument that advice about the chronic condition would have affected the appellant's decision to undertake the first procedure. Rather, he contended that it may have affected her decision to undertake the second and third procedures.

47. There is no doubt that evidence of a), b) and/or c) may have supported the contention of an "arguable case".

48. The appellant submitted that there was no need for such evidence because there was uncontested evidence from the appellant's solicitor stating that neither the appellant nor her mother "had any knowledge of the matters raised by Dr Powell's medicolegal report".

49. In relation to this contention, I can find no fault in the Master's observation that the solicitor's statement "is so general as to be meaningless": at [58].

1. "... it is incumbent on the plaintiff to provide some evidence that the claim it seeks to advance in the amended pleadings is one which has utility, in the sense of being a reasonably arguable claim on the merits"; and
2. "... it is incumbent on the plaintiff to provide some evidentiary support for the arguability of the claim." (emphasis added)

51. This statement is undoubtedly correct. It is the approach that the Master adopted. In so doing, His Honour did not set the "arguable case" hurdle too high.

The end result of the evidence before me and the proposed pleading is that I am simply left to speculate as to why, in the circumstances, the first defendant is alleged to have been under an obligation to give advice about the patellofemoral condition and whether or not that would have been of any causal significance as a matter of fact.

53. At the end of this appeal, I am in the same dilemma.

54. Finally, the appellant contends that the Master failed to take into account that the proposed amendments do not introduce a new cause of action but merely plead further material facts and particulars of negligence. Consequently, r 502 does apply but r 503 does not apply. Alternatively, if they do raise a new cause of action, the new cause arises out of substantially the same facts or "story", as required by r 503(4)(b): Draney v Barry [2002] 1 Qd R 145 (at [57]).

55. It is not apparent that this argument was made clearly during a hearing before the Master.

56. The Master did not affirmatively find that the proposed amendments related to a new cause of action. He proceeded on the basis that, if they did, then the cause of action arose out of substantially the same facts or "story".

57. I am inclined to the view that the proposed amendments do not refer to a new cause of action, but simply refer to a materially different case.

58. However, in the circumstances of this appeal, it does not really matter whether the proposed amendments introduce a new cause of action or merely plead new material facts and particulars of negligence. Whether an amendment to introduce a new cause of action is "appropriate" under r 503 raises considerations that are similar to those raised when the r 502 discretion is exercised. Although the onus differs under r 502(1) and r 503(4), both rules require the Court to consider what is "appropriate", having regard to r 21 and the principles in Aon.

59. The context of these proceedings is that, 5 years after these proceedings were commenced and 13 years after some of the facts alleged to give rise to the cause of action, the appellant sought leave to amend her statement of claim for the purpose of including a materially different case. The Master thoroughly considered the matters raised by the appellant. The appellant has failed to demonstrate any error in the Master's decision.

I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell.