Kitchen v Quinlivan

1. For the reasons outlined above, we consider that the Court is likely to be satisfied that the Director's decision to make the referral to the Committee involved a failure to take into account a relevant consideration and was invalid. While relief can be resisted on discretionary grounds, we consider the prospects of the Court refusing to make orders on this basis are poor.
2. Should it be the case that the Director did access the Written Submissions and Annexures at some point prior to 3:05pm on 6 November 2016 (sic),[35] please advise us of this as a matter of priority.
3. We would be pleased to discuss this advice with you at your earliest convenience.

• [185] No documentary evidence was produced in this proceeding to suggest that the factual basis upon which counsel proceeded in their advice was incorrect. In particular, by way of example, no instructions are produced from the Director's solicitor to her counsel that, for example, the Director had printed the submissions and taken them home over the weekend.
• [186] The Director said she received counsels' advice when she came back from holidays. Her evidence as to what she did in response to counsels' advice was somewhat difficult to follow, but it first needs to be considered in the context of her evidence given before counsels' advice was disclosed in this proceeding by the Order of Callaghan J in June 2025.
• [187] In her affidavit of 5 August 2024, constituting her evidence-in-chief before me, the Director said:

"79. I am certain I read the 96-page written reply of Dr Kitchen's 2018 Submission sometime between 2 to 4 November 2018. I cannot recall with specificity which of the 205 annexures (less the two electronic video files) were printed and reviewed by me in 2018. However, when I read the 205 annexures in full sometime in 2020, some of the annexures were familiar to me.

1. I am informed by PSR and believe that there is no printing record available from November 2018 to evidence the exact documents the case management team printed for me at that time.
2. I am certain that I did not see nor have regard for the two annexures that were electronic video files. I do not recall that the staff brought the electronic video file annexures to my attention. The legislation provided for written submissions and I had not [previously] received any electronic video files in support of any submission in any matter during my tenure as Director of PSR so I was not expecting any electronic video files and therefore did not know or think to ask for them."

• [188] Her affidavit went on that in respect of the reasons why she instructed her legal advisors to compromise the Federal Court proceedings, the Director said:

"96. At that time, the issues that were at the forefront of my mind and the reasons why I instructed the legal advisors to compromise the Federal Court proceeding included:

(a) First, although I was certain that I had read the 96-page written submission part of Dr Kitchen's 2018 Submission, I could not be certain that what was printed and given to me was the complete submission with all 205 documentary annexures.

(b) Secondly, the PSR did not, in 2018, maintain any records of documents printed, such that I was unable to confirm, by reference to any records, precisely what, if any, of the annexures to Dr Kitchen's 2018 Submission had been printed and provided to me by PSR staff.

(c) Thirdly, it was only around October 2020 that it was brought to my attention, and something which I did not know at the time of reading the submissions in 2018, that two of the annexures were electronic video files which I was certain I had not viewed.

(d) Fourthly, as Director of the PSR, I was obliged to act as a model litigant."

• [189] There was, in my view, some change in the Director's evidence between when she swore her affidavit on 5 August 2024 and when she gave her oral evidence in July 2025. That change was borne, in part, by the disclosure of counsels' advice set out above after the decision of Callaghan J.
• [190] In cross-examination, the Director said that when she came back from holidays and received counsels' advice as set out above, she instructed the PSR to "[j]ust go and get the printing records, and we'll have the records of exactly what was printed and when". I will return to that evidence shortly.
• [191] The Director then had staff organise a teleconference with counsel at which she gave certain instructions, which instructions she said were minuted, although she did not say by whom. No minuted instructions are produced in evidence.
• [192] The Director said in cross-examination that after receiving counsels' advice, she sought access to the PSR's printing records in the hope of locating evidence of what documents were printed and when. The Director gave evidence that a "tribunal officer ... would do most of the printing" and that the PSR "...had specialist printing and collating officers as well." No other witness called on the Director's behalf identified any such persons or said that the usual practices at the PSR included any such persons. No such specialist printing and collating officers were called to give evidence.
• [193] The Director also said in cross-examination that the PSR's computers had a server which backed up data or metadata from the printers and, after reading counsels' advice, she thought it would be possible to go back to a particular date to identify what documents were printed. In cross-examination (but not in her affidavit), the Director said that the agency had made a "major capital investment" in updating its servers in 2019 and 2020 and, in the process of transferring information to the new printers:

"... they forgot to back up the material from the printers. And so we did not have access to printing metadata from this week. ..."

• [194] The Director described the capital works programme as a "long, long process" undertaken by the IT Committee between 2019 and 2020, in which the capital investment had to be split into two financial years. She gave evidence that the old server had run out of capacity and the PSR had to put in a capital grant to get a new server. According to the Director therefore, the PSR no longer had access to the printing metadata from the particular week in question.
• [195] When the Director first gave this evidence, she appeared to be doing so from her personal knowledge as the Director of the PSR, and the evidence went in unchallenged, but it later emerged that this evidence, almost certainly, was hearsay; she was merely relying upon something that she said she had been told by persons in the IT department. Her oral evidence as set out above was, in my view, different from that in her affidavit by evidence-in-chief at paragraph 96(b) where the Director said "... the PSR did not, in 2018, maintain any records of documents printed ...". Paragraph 96(b), I find, was evidence that the PSR did not keep or maintain printing records in 2018, not that the records had existed, but had been lost through an IT/printer upgrade.
• [196] Further, at paragraph 80 of her affidavit, the Director said:

"I am informed by PSR and verily believe that there is no printing record available from November 2018 to evidence the exact documents the case management team printed for me at that time."

• [197] Her affidavit evidence therefore, was that there were no records to evidence "the exact documents" which had been printed, but her evidence at trial was that there was no available evidence to prove that any documents had been printed.
• [198] The Director did not call any person from the IT department or the Finance Department to prove that the servers had been changed in 2019 and 2020. Nor did she call any person from the IT department to prove there had been a failure to back up the metadata, with the accompanying loss of the printing records.
• [199] Furthermore, the Director gave evidence that she requested some (unidentified) persons to "... [go] off and investigat[e]" the issue in relation to the printing records, and when those persons told her what happened she "sent them to investigate again, if there was any way to retrieve [the printing records]" but they came back and told her that they could not produce them. She concluded:

"And that was the rea - with - in the absence of the printing records, that's why I, under oath, could not say, "Was I given all 205 annexures?" Because, by memory, I can't remember if I got 205. Um - that was the reason I compromised the Federal Court proceedings. So if you refer ---

Well ---?--- --- to the teleconference we had, that's all documented there."

• [200] The Director accepted that when she read counsels' advice, she understood that it would have been very important to tell counsel that she had accessed the submissions at some point earlier than 6 November 2018. She agreed with that, which is why she said she gave the instructions for someone to look for the printing records.
• [201] The Director accepted that counsel must not have originally received any instructions that the Director asserted that she had taken the 2018 submission home over the weekend because it was not referred to in counsels' advice. She explained this on the basis that she did not brief counsel personally. That, in my view, is not a compelling answer. It can be accepted that counsel were not given instructions by the PSR that the records had been printed and taken home over the weekend. It seems likely this was so because the Director had also not told anyone in the PSR legal department that she had done so. Ms Parker's email of 2 October 2020 is consistent with that conclusion.

• [202] During cross-examination, counsel for Dr Kitchen suggested to the Director that she had recently invented her version that she took the documents home over the weekend. As a result, the Director then sought leave to adduce evidence of the Director's prior consistent statements to that effect. I ruled on this application and ultimately the Director was permitted to call the evidence of her then junior counsel, Ms Slack.[36]
• [203] Ms Slack gave evidence that she participated in a teleconference with Mr Del Villar QC, Mr Dubé of Sparke Helmore Lawyers, Ms Parker of the PSR and Ms Howse of Sparke Helmore Lawyers on 13 November 2020. Ms Slack's evidence included that she recalled that during the teleconference the Director told those present that she had read the 96 page submission of Dr Kitchen's, and that she had read it in hard copy over the weekend before she received the email from Ms O'Keefe on 6 November 2018.
• [204] I ruled that Ms Slack's evidence was admissible pursuant to s 101 of the Evidence Act 1977 (Qld), which provides that where in any proceeding a previous statement made by the person called is proved for the purpose of rebutting a suggestion that the person's evidence has been fabricated, that statement shall be admissible as evidence of any facts stated therein of which direct oral evidence by the person would be admissible. Once that statement is admitted, it is admitted as to the truth of its contents. Nevertheless, pursuant to s 102 of the Evidence Act 1977 (Qld), in estimating the weight which ought to be attached to the statement rendered admissible by this part, regard shall be had to all the circumstances from which an inference can reasonably be drawn as to the accuracy or otherwise of the statement, including of the question whether or not the maker of the statement had any incentive to conceal or misrepresent the facts.

"The appropriate person in the agency who was responsible for having oversight of the agency's compliance with those Acts would come into my office periodically and take those. And - ah - at our annual meeting, when each legislation that we had responsibility for came, they would give an annual update."

• [233] Again, I am unable to determine if this is the same person as referred to in the paragraphs above, but no such Australian Public Service staff member with expertise in privacy legislation, archiving legislation or compliance, was called in the Director's case. Again, I infer that the evidence of this person, if called, would not have assisted the Director's case.[42]
• [234] When it was put to the Director that one of the things the agency was required to do was to retain case files indefinitely, she answered, non-responsively:

"...every year, they gave an update before the management committee, which included two very senior lawyers and myself and the accountant, and I was satisfied of their presentations. They told me there were no concerns."

• [235] It is unclear who 'they' were in this answer.
• [236] When given a second opportunity to answer that question the Director replied only:

"I would - the - whatever the legislation said was the requirement was what would - we would've been doing."

• [237] There is, as I have already set out, a Jones v Dunkel inference to be drawn against the Director in the circumstances of her unexplained failure to call evidence from any of:

(a) the specialist printing and collating officers;

(b) the head of IT;

(c) any member of staff to give evidence about the search for the printing metadata;

(d) any member of staff from the finance department to corroborate the evidence of a major capital works program to the printers;

(e) the archive specialist person; and

(f) her husband, or any person from AGES, her friends or peers, to corroborate that the Director cancelled her attendance at the conference dinner on the Friday night so as to read the printed documents.

• [238] When there were so many people who might have been called but were not, the inference that their evidence would not have assisted the Director's case is powerful.
• [239] Furthermore, if any of these many persons the Director identified at the trial had been identified by the Director in conference with counsel in November 2020, I am satisfied that the importance of their evidence would have been appreciated by the Director's legal representatives. There is no evidence that she so identified them then, suggesting that the statement when made in November 2020, could not be substantiated.
• [240] Fifth, having regard to the procedures which the Director said were in place for managing the proper storage and archiving of documents at the PSR, it is difficult to accept that any relevant documents would have been destroyed either:

(a) in the period from the time from making the decision on 6 November 2018 and the notice of the intention to review that decision on 1 February 2019;

(b) in the period of 1 February 2019 until the commencement of the Federal Court proceeding on 13 November 2019; or

(c) after commencement of the Federal Court proceeding.

The Director did not lead evidence to suggest such documents had in fact been destroyed in any of those periods.

• [241] Sixth, there was no urgency for the Director to read the submissions immediately when they were received. The time frames available under s 94(1) of the Act allowed the Director until 18 December 2018 to consider and respond to Dr Kitchen's 2018 submission. The Director asks the court to accept that she proceeded with urgency to read the submission, cancelling parts of her engagements with AGES in the process, merely because her approach to her work was to "eat the frog", which the Director explained as follows:

"How long did you think it would take you to read Dr Kitchen's submissions?‑‑‑Um - a fair while. I - I - I had a - a - I - my philosophy in life is eat the frog, which is that you do things that you must do first before you do an enjoyable social activity. It's been my philosophy my whole life; it comes from someone. Eat the frog. Um - it has appealed to me and so my obligation is to do those work tasks first.

Why was it so urgent to read Dr Kitchen's submission on that particular weekend? --- Because I eat the frog....."

• [242] In the context of the evidence, which I accept, that the PSR's practice was to prepare the submission summary email, done by a member of staff, and then send it to the Director for her consideration, "eat the frog" was an unconvincing explanation for the urgency with which the Director says she approached this task.
• [243] Seventh, when the s 93 Report was subsequently prepared, and 16 drafts of it were circulated between Ms Parker and Ms O'Keefe, the Director had no input whatsoever to the preparation of that document. If in fact the Director had read the 2018 submission, I would have expected some evidence of a discussion with the Director about it, or some input from her, but there is nothing.
• [244] Eighth, having told senior and junior counsel, and her solicitors, that she had read a printed copy of the 2018 submission over the weekend, there is no evidence of any investigations undertaken by Ms Parker, then a Principal Legal Officer of the PSR, or Sparke Helmore, or any person within the PSR or elsewhere to locate evidence of the metadata from the printing records or otherwise. Ms Parker did not give evidence that she or any person from the PSR, or its legal advisors sought out such material. I should record that I give this factor significantly less weight however, because the actions or inactions of other persons are not able to inform the truthfulness or otherwise of the Director's statements. I take the factor into account only in the context of other evidence that might have been available to support the Director's case, which I have already referred to above, which evidence was not called.
• [245] Ninth, the context in which the Director made the statement to her solicitors and counsel, following counsels' advice of 3 November 2020 bears some importance. At that stage, Dr Kitchen's Federal Court proceedings against the Director had been on foot for one year. Without unduly summarising the litigation, parts of which are set out above, it can fairly be described that the litigation had been vigorous on both sides. In the context of that litigation, the Director received the advice of Mr Del Villar QC and Ms Slack that her prospects of defending the Federal Court proceedings were poor. They reached that conclusion based on the information which is set out in the advice, and in particular in reliance upon the 17 minute period between when Ms O'Keefe made certain recommendations to the Director and when the Director emailed that she intended to establish a Committee for the matter.

"And I suggest that in order to understand and deal with or consider Dr Kitchen's submissions in 272, it would be necessary for you to go to those attachments to see what they were?---Ah - yes, and I did, and - ah - but - but can I just make a point? Um - I'd answer n - no. Sorry, I'll answer no because this paragraph did not actually address the - any of the concerns. The concern was not, 'Does Dr Kitchen have a consent form'. The concern was not, 'Do patients sign consent forms'. The concern was that patients came into the rooms; saw assistants of unknown qualification or experience on days when Dr Kitchen wasn't even there. They took histories; they took examinations; they booked patient - performed investigations; they told patients they needed surgery. They booked patients for surgery. The assistants got the patients to sign the consent forms, and the assistants took deposits from the patients from surgery all before Dr Kitchen was involved. The concern was not, 'Does he have consent forms and did patients sign them'. It was his level of clinical input into the - ah - process leading up to and performing consent. And if you do read - and wh - then when I went through the end, when you read those consent forms, you'll see they're highly technical. There's a lot of technical language in them that I think - um - some members of the public might have difficulty understanding, and that some assistants of unknown qualification were assistants and working outside their Ahpra headings might have difficulty understanding. Did you read - did you read the cataract consent form yourself? Were you satisfied that you could follow all the steps in it? So I - when I read that paragraph, then I ke - as I said, I read from beginning to end; when I hit all the consent forms, I noted them, and looked through them, but that wa - actually wasn't the concern that was asked."

• [257] On other occasions she was non-responsive and evasive on a range of issues including her understanding of the duty of disclosure, document retention generally, her understanding of legal process in circumstances of her having been a member of the AAT, her understanding about the need to narrow the scope of matters referred to the Committee so as not to waste the doctor's and the Committee's time and resources, and her understanding of the consequences of a referral, to name just a few.
• [258] In saying the above, I am cautious not to read too much into the Director's demeanor in giving her oral evidence. In R v Allen (a pseudonym),[44] President Sofronoff observed:

"[55] In Goodrich Aerospace Pty Ltd v Arsic, Ipp JA approvingly cited a judge's dictum from an English case which was as follows:

'I doubt my own ability, and sometimes that of other judges, to discern from a witness's demeanour, or the tone of his voice, whether he is telling the truth. He speaks hesitantly. Is it the mark of a cautious man, whose statements are for that reason to be respected, or is he taking time to fabricate? Is the emphatic witness putting on an act to deceive me, or is he speaking from the fullness of his heart, knowing that he is right? Is he likely to be more truthful if he looks me straight in the face than if he casts his eyes on the ground, perhaps from shyness or a natural timidity? For my part I rely on these considerations as little as I can help.'

[56] Ipp JA also quoted the following passage from an article by A M Gleeson QC:

'Reasons for judgment which are replete with pointed references to the great advantage which the trial judge has had in making the personal acquaintance of the witnesses seem nowadays to be treated by appellate courts with a healthy measure of scepticism. What might be called the Pinocchio theory, according to which dishonesty on the part of a witness manifests itself in a fashion that does not appear on the record but is readily discernible by anyone physically present, seems to be losing popularity.'

'These problems and doubts about demeanour findings explain why trial judges are expected to weigh their impressions as to demeanour carefully against the probabilities and to examine whether the disputed evidence is consistent with the incontrovertible facts, facts that are not in dispute and other relevant evidence in the case. Of course, demeanour may trump the probabilities, but it should be apparent from the judge's reasons that the probabilities and consistency with other relevant evidence have properly been taken into account.'"

• [259] Ultimately, the rational resolution of the question of whether I accept the Director's evidence that she read a hard copy of Dr Kitchen's submission on the weekend before she received Ms O'Keefe's email depends upon much more than an assessment of whether I considered the Director to be credible or not. Nevertheless, I cannot ignore that the Director's evidence did not generally present as either honest or reliable; and the findings which I made about the 31 July 2018 meeting lend weight to that conclusion.
• [260] That credit assessment is, however, a matter which I take into account when I turn to consider the Directors' evidence as to her state of mind below.
• [261] In accordance with s 102 of the Evidence Act 1977 (Qld), I give the Director's statement made in conference with counsel in November 2020, no weight.

Application of findings to misfeasance in public office

• [262] As I have already recorded, the trial proceeded on the basis that the first two elements of the tort of misfeasance in public office were not in dispute. That is, firstly, the Director held the office of the Director of the PSR appointed by the Minister pursuant to s 83(1) of the Act. Her role included acting as the PSR's "accountable authority", as described in the Public Governance, Performance and Accountability Act 2013 (Cth). As such, the Director was a "public officer" at the time of purporting to make the decision to refer Dr Kitchen to the PSR Committee under s 89(C)(2) of the Act.[45] She had the functions, duties and powers conferred on her by Part VAA of the Act. Secondly, in purporting to exercise the power under s 89(C)(2) of the Act, the Director was exercising power as a public officer.
• [263] It follows, as set out at [15] above, that it is only the necessary state of mind of the Director, that is in issue in these proceedings. As to that state of mind, the relevant questions to the two limbs are firstly whether the Director knowingly acted in excess of her power, and secondly, whether the acts which were done were done with reckless indifference to the harm that is likely to ensue.[46] The intention or state of mind of the Director when exercising the power "...is critical to the ascertainment of whether ... she misused the public office in that exercise."[47]
• [264] The pleadings first bare examination.
• [265] The plaintiffs' pleaded case in paragraph 21 of the FASOC is that:

"21. In exercising the power under s 93 of the Act to make the Referral, the defendant:

(a) knew that she could not validly exercise the power under s 93 without first taking into account Dr Kitchen's 2018 Submission;

(b) knew she had not taken Dr Kitchen's 2018 submission into account;

(c) proceeded to make the Referral knowing that she was not acting validly or, alternatively, with reckless indifference as to whether she was acting validly or not;

(d) knew that making the Referral was likely to cause harm to Dr Kitchen and to the company that conducted his practice; and

(e) alternatively to paragraph (d) above, was recklessly indifferent to the harm that making the Referral was likely to cause the plaintiffs."

• [266] The critical allegations therefore are paragraph 21(b) - that the Director knew that she had not taken Dr Kitchen's 2018 submission into account - and 21(c) that the Director proceeded with reckless indifference as to whether she was acting validly or not. Subparagraphs (d) and (e) go to the separate issue of likely harm.
• [267] I have already referred to above that in her first defence filed 22 September 2021, the Director did not assert that she had taken Dr Kitchen's 2018 submission into account. Rather, in response to paragraph 21(b) of the FASOC the Director denied the allegation for reasons set out in paragraph 27(b) of the defence, that the notice effecting the Referral to the PSR Committee, as required by s 93(6) of the Act, was the Referral Report (which had been prepared by the Director for the PSR Committee), which Referral Report contained extensive references to the substance of Dr Kitchen's 2018 submission, and that the Director had read and considered the notice effecting the Referral and the Referral Report before she signed each of them. This defence was settled by senior and junior counsel.
• [268] One month later, the Director amended her pleading responding to paragraph 21(b) of the FASOC, and now pleaded that between 2 and 4 November 2018 she read the 96 page submission but "could not recall" whether she was provided with the 207 attachments which formed part of the 2018 submission, and did not recall whether she read the attachments '...in full, in part or at all".
• [269] In her affidavit sworn 5 August 2024, the Director asserted at paragraph 79:

"I am certain I read the 96-page written reply of Dr Kitchen's 2018 Submission sometime between 2 to 4 November 2018. I cannot recall with specificity which of the 205 annexures (less the two electronic video files) were printed and reviewed by me in 2018. However, when I read the 205 annexures in full sometime in 2020, some of the annexures were familiar to me."

• [270] In her oral evidence the Director asserted that when she re-read the submissions subsequently, "most of the annexures were familiar to [her]" (my emphasis).
• [271] I will return to the inconsistency between her various pleaded positions and her oral evidence in due course.
• [272] Additionally, the defence also pleads reasons for the denial of paragraph 21(b) of the FASOC for reasons elsewhere pleaded in the defence including:

(a) for the reasons pleaded in paragraph 35A of the defence that while she consented to the making of the declarations by the Federal Court on 2 February 2021, the Director denied that that fact, alone or in combination with any other pleaded, was capable of supporting the inference that in the exercise of the power under s 93 of the Act to make the Referral, that she knew that she had not taken Dr Kitchen's 2018 submission into account; and

(b) the matters in paragraph 35B of the defence that the fact that the Director was aware that she had not read and viewed Dr Kitchen's 2018 submission (including attachments and electronic files) (which was denied) was not capable of supporting an inference that in exercising the power under s 93 of the Act to make the Referral that she knew that she had not taken Dr Kitchen's 2018 submission into account.

• [273] As to the relevant states of mind pleaded in paragraph 21 of the FASOC, Dr Kitchen then pleaded the following at paragraph 21A (underlining, striking through etc. omitted):

"21A. (a) The state of mind pleaded in paragraph 21(b) is to be inferred from the following matters:

(i) the defendant consented to the making of the declaration by the Federal Court of Australia on 2 February 2021, in the following terms:

"contrary to section 89C(2) of the Health Insurance Act 1973 (Cth) (the Act), the [defendant] did not take into account [Dr Kitchen]'s submission dated 29 October 2108 before making the referral to the second respondent under section 93 of the Act on 14 November 2018";

(ii) the defendant was aware that she had not read and viewed Dr Kitchen's 2018 Submission, namely the 96 pages, the attachments, and the electronic files (videos) which comprised those submissions, prior to making the Referral;

(b) The state of mind pleaded in paragraph 21(c) is to be inferred from the matters pleaded in paragraphs 21(a) and (b) and in paragraph 21A(a) above;

(c) The state of mind pleaded in paragraph 21(d) is to be inferred from the following matters:

(i) the defendant's knowledge that a Referral would involve an inquiry by the Committee into the medical practice of Dr Kitchen relevant to 10 MBS item numbers over a 12 month period, which would:

(A) likely take many days of Committee hearing time;

(B) require Dr Kitchen to be present and to answer extensive questioning about the services he rendered and his practice and to give evidence;

(C) likely require Dr Kitchen, and staff employed by him or the company that conducted his practice, to expend significant time in gathering and reviewing documents relevant to, and preparing for the Committee inquiring into, the rendering of each of those services;

(D) expose Dr Kitchen to the imposition of penalties, which could include disqualification;

(E) expose Dr Kitchen to disruption to his medical practice and loss of income;

(ii) the defendant's knowledge of the length and complexity of the PSR process as identified in the booklet "Your Guide to the PSR Process" (the Guide), a copy of which was enclosed with the letter from the defendant to Dr Kitchen dated 18 December 2017 (see e.g. pages 16-17);

(iii) the defendant's knowledge of the terms of the Guide, which refers to the need to reduce stress and to engage advisors, practice managers, practice partners and others to assist with the administrative burden of the PSR process (page 25);

(iv) the defendant's knowledge of the number of patients of Dr Kitchen and quantity of services rendered by Dr Kitchen and CQ Eye identified during the review period, which is to be inferred from the 11 December letter, in which Dr Favilla identified that during the review period, Dr Kitchen rendered 17,694 services to 3,791 patients with a total benefit of $3,839,591;

(v) the defendant's knowledge of the matters pleaded in paragraphs (a) and (b) above; and

(d) The state of mind pleaded in paragraph 21(e) is to be inferred from the matters pleaded in paragraphs 21(a)-(d), and 21A(a)-(d) above."

• [274] The Director's defence to paragraph 21A extends over many paragraphs, but broadly:

(a) denies that the pleaded inferences support the alleged state of mind;

(b) denies the alleged state of mind;

(c) repeats that the Director had read Dr Kitchen's 2018 submission.

• [275] It might reasonably be thought that whether the Director had read Dr Kitchen's 2018 submission or not was irrelevant given the consent declaration that the Director did not take the submission into account. Rhetorically one might ask, why does it matter if the Director read it, if she did not take it into account? But whether the Director read Dr Kitchen's 2018 submission or not might inform whether the plaintiffs can establish that the Director:

(a) knowingly acted in excess of her power (and with knowledge that it would cause or be likely to cause such injury); or

(b) acted with reckless indifference or deliberate blindness to that invalidity or lack of power (and the likely injury).

• [276] Accordingly, the case substantially turns on the findings I make as to whether the Director read Dr Kitchen's 2018 submission or not.

• [277] As I have said, this case is not one of targeted malice.
• [278] Rather the case is one of whether the Director knew, or was recklessly indifferent to, the invalidity or lack of power under s 89C(2) of the Act in making the Referral.
• [279] It is in this context that the question of whether the Director read the 2018 submission, as opposed to whether she took it into account, is particularly nuanced. If, for example, the Director accepted, or it was found that the Director, had not read the 2018 submission and consequently had not taken it into account, it seems to me there would be little difficulty in concluding that there had been an absence of an honest attempt to perform the functions of her office; to proceed to make the Referral in accordance with s 89C(2) of the Act, would be to knowingly act in excess of her power or with reckless indifference or deliberate blindness to that invalidity or lack of power. That is sufficient to ground the tort in its second form.[48]
• [280] Here however, the court must consider the particular factual matrix in which there is a declaration that the Director did not take into account Dr Kitchen's 2018 submission (and is estopped from denying that she had not done so) whilst at the same time asking the court to accept she had, nevertheless read that submission, carefully and thoroughly over the course of Friday, Saturday and Sunday, 2 to 4 November 2018.
• [281] I do not accept the Director's evidence that she read Dr Kitchen's 2018 submission carefully or at all for the reasons I have given in paragraphs [208] to [259] above. I will not repeat those reasons. Suffice to say that for those reasons I am satisfied, on the balance of probabilities, that the Director did not read the 2018 submission before making the Referral.
• [282] Having concluded that the Director did not read the 2018 submission, it follows that the Director must have known that she was acting in excess of her power. Her pleaded case is that she knew she was required to firstly, read the 2018 submission and, secondly, properly consider it before making the Referral. It could not have been otherwise. The Federal Court declaration establishes that she did not do the latter; I find that she did not do the former.

The Director's state of mind as to the likely harm

• [290] I turn therefore to the second part of the criteria set out in paragraph [27] (a) and (b), being consideration as to whether the Director was aware of, or recklessly indifferent to, the fact that the plaintiffs would suffer harm. While there has been some difference of opinion at an appellate level as to the applicable test in relation to the office holder's state of mind as to the consequences of acting knowingly or recklessly in excess of power,[54] it seems to me the better view is that it is not sufficient to establish merely that it is reasonably foreseeable that the plaintiffs were likely to suffer harm.[55]
• [291] As set out above, the yardstick of recklessness as a state of mind for an intentional tort is determinedly subjectively, not objectively.[56] A person who "...wilfully shuts [her] eyes to what would result from further enquiry may be found to know of that result".[57]
• [292] It is submitted on behalf of the Director that her reading of Dr Kitchen's 2018 submission is inconsistent with a state of mind intending to cause harm to the plaintiffs. Whilst that may well have been true if that were the finding, it follows that the converse is also true. Having found that the Director did not read the submission, I am satisfied she proceeded with reckless indifference to the consequences, making the conduct as blameworthy as deliberately seeking such consequences.[58]
• [293] I have little difficulty reaching the conclusion that the Director was recklessly indifferent as to whether her Referral of Dr Kitchen to a Committee, with all that followed, would cause harm to him and the practice he conducted. In truth, there is significant evidence as to the adverse consequences of such a Referral.
• [294] Dr Kitchen was provided with a document described as "Your guide to the PSR Process - a resource for practitioners who are referred to Professional Services Review". The guide came with a covering letter from the Director dated 18 December 2017. The letter included:

"...I have received a request dated 11 December 2017, from the Chief Executive Medicare (Medicare) to review your provision of services for the period 1 February 2016 to 31 January 2017 (review period).

In accordance with subsection 88A(2) of the Health Insurance Act 1973 (Cth) ... I must decide to undertake a review if it appears to me that there is possibility that you have engaged in inappropriate practice, within the meaning of the Act, in providing services during the review period. In general terms, 'inappropriate practice' involves conduct in connection with the services you rendered or initiated during the review period that a body of your peers could reasonably conclude was unacceptable to the general body of your profession.

The PSR process can have significant outcomes, including directions to repay Medicare benefits and the imposition of periods of disqualification from participation in the Medicare Scheme.

• [295] The Guide itself contained the following information including:

(a) that "the PSR process can have significant outcomes", "has the potential to be confusing and complex", and, "can be time-consuming and legally complex";

(b) that the referred doctor should engage their medical defence organisation or legal advisor as early as possible to assist through the process;

(c) that the PSR suggested that the doctor inform people close to them that they had been referred to the PSR because having someone to discuss the matter with "will help you manage any potential stress or concerns that may arise during the process";

(d) that the PSR decision-making process is a peer review of the doctor's use of the MBS or PBS and whether or not the doctor's conduct in providing or initiating services "would be unacceptable to the general body of your peers.";

(e) that the six outcomes might include no further action, reprimand, counselling, a repayment order, partial or full disqualification from Medicare (a disqualification of up to three years from some or all MBS items which means that the services the doctor provides to the patients would not attract a Medicare benefit), or disqualification from the PBS for a period of up to three years;

(f) that if the matter is referred to a Committee, and a finding of inappropriate practice is made the Director can publish the doctor's name, address, profession/speciality, the nature of the doctor's conduct and the sanctions that the Determining Authority applied;

(g) that if the Director undertakes review and refers the doctor's matter to a Committee, which then conducts a review and refers its findings to the Determining Authority which makes a final determination, the indicative timeframe for finalisation of that pathway would be 2.5 years from Medicare's letter to the Director referring the doctor's matter to the PSR;

(h) that during the PSR process there would be times when the doctor would need to be away from their practice including to attend meetings with medical defence organisations or lawyers and to meet with the Director of the PSR;

(i) that if the matter is referred to a Committee the doctor will be required to attend hearing days which normally occur across four to six full days usually held in two day sessions with an interval of two weeks between each two day session;

• [296] The Director accepted she knew of the information contained in the guide, but obfuscated when asked questions about her knowledge of the consequences for the practitioner under review:

"Yes, and there can be no doubt, Professor Quinlivan, that if a person under review was referred to a committee by you ‑ ‑ ‑?‑‑‑Mmm.

‑ ‑ ‑ there could be significant and potentially very serious consequences for that person?‑‑‑It would depend on the circumstances of ‑ ‑ ‑

Yes. You understand the question that I'm putting to you, Professor Quinlivan? There could be, depending on those findings, significant and potentially very serious consequences for the person?‑‑‑If a person engaged in egregious conduct, if a committee found that they had engaged in widespread inappropriate practice, I agree that, in those circumstances, the person - uh - the DA might not look favourably upon that case ‑ ‑ ‑

So you say that unless it's egregious, there wouldn't be significant and potentially very serious consequences for the person under review?‑‑‑In my experience, the determining authority are a - a very - um - have been very considered and cautious. They virtually always recommend counselling for people. They do - um - often recommend a letter of reprimand, but as I say, that's a single letter that goes just privately to the individual - um - and then they ‑ ‑ ‑

That's a serious - just on that point, Professor Quinlivan, receiving a letter from the regulator as a professional doctor, that's a serious chiding, isn't it?‑‑‑I think it would depend - uh - I - if it - I received one, yes, I would - I would be - I would be mindful of it and would be trying not to - um - behave in such a way in the future that I ever had cause to receive such a letter again.

Yes. It would be one of the things that would, you would hope, cause the person to change their behaviour?‑‑‑I would hope they would reflect upon the matter.

And hopefully change their behaviour, not just reflect upon it?‑‑‑I would hope that, going forward, they would - uh - no longer engage in inappropriate practice.

You mentioned a moment ago that - you used, I think, the phrase "egregious conduct". Is that a phrase that's found in the legislation?‑‑‑No, that's - uh - that's my own term, sorry. I love the word."

• [297] The plaintiffs submit that the Director's evidence in relation to her knowledge of the consequences of the PSR process for the plaintiffs significantly damaged her credit. I agree. Her answers were, at best non-responsive, but in this particular part of her cross-examination I have no hesitation in concluding that she was deliberately obfuscating. There can be no doubt that a PSR investigation had the prospect of being time consuming, legally complex and stressful - the Guide referred to above said as much. An adverse outcome could have serious professional and financial consequences for the doctor being investigated. That the Director would not agree with such a simple proposition, drawn from the PSR's own documents, reflected most poorly on her.
• [298] The Director knew that an invalid Referral to the Committee could cause damage including stress, anxiety, loss of income and, potentially, damage to reputation. In the circumstances I conclude that the Director's overall state of mind was one of reckless indifference as to the harm that could be caused to the plaintiffs by an invalid Referral to the Committee.
• [299] It follows that were the lesser test of foreseeable risk of harm applied,[59] the same conclusion would have been reached, but that is not the test I have applied.

• [300] It being accepted that the Director was a public officer, and the power exercised by her was exercised as a public officer, I am comfortably satisfied, based on the whole of the evidence that the Director either, knowingly acted in excess of her power or acted with reckless indifference or deliberate blindness to the invalidity or lack of power. Furthermore, I am satisfied that the Director acted with reckless indifference to the harm that was likely to ensue. There was, in this case, the absence of an honest attempt to perform the functions of her office, and that constituted an abuse of process.
• [301] Accordingly, the Director committed misfeasance in public office when she made the Referral to establish a PSR Committee into the conduct of Dr Kitchen.

• [302] The quantum of Dr Kitchen's claim falls into a number of discrete categories which I will deal with in turn, but can be summarised as follows:

(a) a loss of income claim pertaining to cancelled consultation clinic days, a reduced number of clinic bookings or cancelled surgery sessions all arising out of his involvement with the Federal Court proceedings and the Committee hearings;

(b) expenses incurred in the conduct of the investigation and the Federal Court proceedings;

(c) legal costs;

(d) general damages for humiliation, embarrassment and damaged professional reputation; and

(e) exemplary damages.

• [303] Whilst there is a vast difference between the plaintiffs' loss of income claim (approximately $2.38 million) and the Director's assessment of that claim (something between approximately $137,000 and $576,000), there is no general disagreement as to the principles which apply regarding this claim.
• [304] Whilst the principles derive largely from negligence cases for personal injury, they have also been applied in cases involving intentional torts.[60] When considering a loss of income claim, it is necessary to identify both what capacity was lost and what economic consequences have flowed, or likely flowed, from that loss.[61] It can be accepted that some degree of speculation arises when assessing economic loss, the ascertainment of loss involving an evaluation of possibilities.[62]
• [305] At a high level of generality, the claim for lost income is based upon consultations and surgeries cancelled because Dr Kitchen was required to prepare for and attend meetings or court commitments to respond to the complaints against him. I am satisfied that those commitments were a significant interruption to the commercial operations of Dr Kitchen's practice.
• [306] I have considered the evidence of Dr Kitchen and Ms Seierup Hunter on this issue, along with that of Christopher Barrett, a senior product specialist surgical ophthalmology and orthoptist who has worked with and for Dr Kitchen since 2012. Mr Barrett was not required for cross-examination on his affidavit. I accept his evidence that since 2012 he has attended Dr Kitchen's rooms in Rockhampton every couple of months, typically on a Wednesday morning, and has been present for Dr Kitchen's theatre lists on Wednesday and Thursday afternoons on numerous occasions. He has also sometimes attended Dr Kitchen's theatres on a Saturday at the Mater Hospital in Rockhampton, and on other occasions attended theatre lists in other hospitals in Gladstone and Rockhampton on at least 40 occasions. He has observed ophthalmologists operating in Western Australia, New South Wales, the Australian Capital Territory, New Zealand and Germany, and has observed more than one hundred ophthalmologists perform various kinds of surgeries but most commonly cataract surgery. His evidence satisfies me, and I find, that Dr Kitchen is highly skilled and extremely efficient in his surgical techniques, and he operates more quickly and more efficiently than most other ophthalmic surgeons. I am satisfied that he brings that expertise and efficiency into his consultancy practice including:

(a) that Dr Kitchen has high staffing in his consultation rooms which allows him to rotate through his eight consulting rooms whilst staff are present in the rooms with the patients;

(b) Dr Kitchen's practice includes an integrated light system by which staff can indicate rooms in which patients are ready for his attention, allowing him to bypass patients who may need more time before they are ready for Dr Kitchen to consult with them. As a result of which the overall waiting times for patients is reduced and there is a concomitant reduction in the wastage of Dr Kitchen's time; and

(c) that Dr Kitchen has documented procedures whereby staff record each patient's particular needs and ensure that tests have been conducted before Dr Kitchen consults with them again so as to reduce any wasted time on Dr Kitchen's behalf.

• [307] According to Ms Seierup Hunter, whenever consultation clinic bookings were changed or cancelled, she updated the yearly planner for CQ Eye and sent an email attaching the updated planner to all CQ Eye staff. In particular, Ms Seierup Hunter was responsible for this role in so far as it concerned Dr Kitchen's time to prepare his response to the Investigation and to provide instructions to his lawyers in the Federal Court proceedings.
• [308] By way of example only, on 6 June 2019 Ms Seierup Hunter sent an email to staff reading:

"Please note that the days for cancelled clinics to allow Dr Kitchen time to work on PSR have been set as:

Ashlee and reception are in the process of rescheduling patients on these days.

We will continue to book up other days, BUT keeping bookings manageable and slightly reduced to allow for reduced Assistants (Cassie to work full time on PSR).

Moo - this means no cancelled Gladstone clinic next fortnight as originally thought."

• [309] Ms Seierup Hunter also gave evidence, which I accept, that Dr Kitchen instructed her to arrange cancellation of full days of consulting at CQ Eye so that he could deal with the PSR investigation and prepare for Committee hearings. She arranged for the cancellation of all consultations on: 29 March 2019; 8 and 12 April 2019; 12, 17, 24 and 28 June 2019; 14, 15, 16 and 26 August 2019; 23, 24, 25 September 2019; 8, 9, 10 and 11 October 2019; 3 and 4 December 2019; 20 and 29 January 2020; 17 and 28 February 2020; 2, 9 and 16 March 2020; 6 April 2020; 8 May 2020; 11 June 2020; 28 June 2021 and 5 July 2021.
• [310] Ms Seierup Hunter also arranged for the cancellation of full days of consulting on 27, 28 and 29 November 2019, so that Dr Kitchen could attend the Federal Court proceedings. Dr Kitchen also cancelled full days of consulting between and including, 20 to 29 November 2019, after he was disqualified from receiving Medicare benefits on 22 November 2019.
• [311] Additionally, on many other days Ms Seierup Hunter says, and I accept, that Dr Kitchen reduced his consultations with patients. She produced a spread-sheet of those dates. Further, Ms Seierup Hunter identified that between May 2019 through to mid 2021, CQ Eye engaged part-time and full-time staff to assist in responding to the Investigation by the Committee.
• [312] Further evidence of the extent of the work carried out to respond to the investigation into Dr Kitchen was provided by Ms Alina Sayer, a senior clinical orthoptist employed by CQ Eye. Her evidence included that she was required to carry out a variety of different tasks between May 2019 and November 2019 to respond to the PSR investigation. She would sometimes work late into the night to complete the tasks which Dr Kitchen had provided to her.
• [313] On 5 November 2019, Ms Sayer's role was further expanded so that she could assist Dr Kitchen in responding to the investigation. She was provided with lists of services, as well as patient lists, for the purpose of responding to the inquiries. In December 2019, Dr Kitchen asked staff whether they were prepared to come in and work over the Christmas break to work on the response to the PSR. Whilst Ms Sayer normally took four weeks break over Christmas, she worked almost full-time in the period taking only one or two days off over the break. Her evidence included that Dr Kitchen was regularly emailing her a list of tasks to complete over that period. While Dr Kitchen himself was overseas for Christmas, Ms Sayer said, and I accept, that staff would regularly work during the day and then when they returned to work the next morning there would be an email from Dr Kitchen with his comments on the work they had prepared the previous day, editing the draft text and giving instructions on more research on a particular topic. Ms Sayer was not required for cross-examination.

• [332] There was agreement in relation to the expenses claim as follows:

(a) staff expenses - $50,151;

(b) temporary administration assistant - $21,702;

(c) consultant orthoptist - $1,878; and

(d) travel and accommodation (to attend Committee hearings) - $5,490.83.

• [333] In contention is only the claim for travel and accommodation to attend to the Federal Court hearing. Those costs are agreed in the sum of $1,508.60, but it is not agreed that those expenses were a natural and probable consequence of the alleged misfeasance because they arose from a separate decision made by the Director under s 105(1) of the Act consequent upon receiving a notice from the Committee under s 104(2). The Director submits there was a break in the chain of causation. I reject that submission. The Committee would not have given Dr Kitchen a notice to appear, if he had not been invalidly referred in the first place. The amount is recoverable.
• [334] The total expenses claim amounts to $80,730.43.

• [335] The plaintiffs claim legal costs for the investigation in the sum of $452,356.23 in circumstances where the "Investigation" is defined in paragraph 19 of the second further amended statement of claim and refers to the notice issued by the Director dated 14 November 2018 to establish a Committee and refer Dr Kitchen to it.
• [336] As a starting premise, the costs must have been reasonably incurred and causally related to the act of misfeasance as found. Having concluded that if the Director committed any misfeasance, she did so on 14 November 2018, no legal costs prior to that day are recoverable.
• [337] I accept that it was reasonable for Dr Kitchen to retain solicitors to act on his behalf in responding to the Investigation on the basis that it was not something that he could reasonably do himself. This is particularly so in circumstances where Professor Quinlivan agreed that she recommended to all persons under review that they seek legal advice. However, that does not mean that all legal costs are recoverable.
• [338] The Director's response to the legal costs is that the costs were not reasonably incurred, to the extent that this complaint is particularised in the expert report of Mr Walter, to which I will return.
• [339] The evidence as to legal costs incurred was primarily contained in an affidavit of Mr Russell, solicitor engaged on behalf of Dr Kitchen. A copy of the firm's letter of retainer was in evidence, as well as bundles of all tax invoices relevant to the claim. I am satisfied having heard Mr Russell's evidence, that the amount as claimed is an accurate reflection of the costs incurred and as charged. To the extent that there was one item identified incorrectly that ought to have been referrable to the Investigation proceeding rather than the Federal Court proceeding, is reflected in the figure to which I refer at paragraph [335] above.
• [340] The Director's challenge to the legal costs was unconvincing for the following reasons.
• [341] First, Mr Walter, an experienced solicitor and costs assessor who provided evidence on behalf of the Director accepted, quite properly, that he had assessed the costs on the Federal Court scale in circumstances where, in accordance with the cost disclosure notice given to Dr Kitchen by his solicitors, the costs ought to have been assessed on the Supreme Court scale, on a solicitor and own client basis. Second, even if costs were to be assessed on the Federal Court scale, Mr Walter frankly accepted that he had never performed a costs assessment in the Federal Court, that being a role undertaken exclusively by a Registrar of that court. While I accept therefore that Mr Walter was doing his best to make a proper and fair assessment, in truth his evidence was no more than an opinion as to how he considered a Federal Court Registrar would have proceeded with such an assessment.

• [347] Dr Kitchen claims general damages for humiliation, embarrassment and damage to his professional reputation, as a consequence of the proceedings against him.[64]
• [348] It can be accepted that the court has power to award general damages for misfeasance in public office to compensate for circumstances such as indignity and damage to reputation.[65]
• [349] An assessment of general damages involves a subjective and impressionistic evaluative judgment.[66]
• [350] Although the plaintiffs submit that there is "no doubt" that Dr Kitchen's reputation has been badly affected by the invalid Referral and its consequences, it is true, as the Director submits, that Dr Kitchen did not lead any particular evidence about such damage to his reputation.
• [351] Dr Kitchen deposed to being aware of the "substantial damage to [his] professional reputation" as a consequence of the very large scale of the PSR investigation into his practice. Whilst I am satisfied that there is no direct evidence of any other person as to damage to reputation there can be little doubt in my mind that he must have been professionally humiliated and embarrassed by the proceeding against him. Additionally, the stress and inconvenience to Dr Kitchen caused by the invalid Referral would have been most significant.
• [352] Critically to my mind, was the fact that Dr Kitchen's disqualification meant that he was required to give every patient in his practice notice informing them that they would not be able to claim a Medicare benefit in respect of any service provided by him. Given the general public importance of the provision of the Medicare rebate to medical services, it can be accepted that the loss of being able to recover that benefit would have been reputationally damaging to Dr Kitchen. This is even more so in the context of Dr Kitchen's evidence, that he offered affordable cataract surgeries via bulk-billing and no fee options.
• [353] Next there must have been a most considerable amount of stress associated with the invalid Referral when Dr Kitchen was facing the prospect of a loss of his livelihood. For any person, the loss of livelihood would rightly be a matter of genuine and unrelenting concern. For a person of Dr Kitchen's training, qualification, experience and age, it would have loomed as a fall from grace of indescribable proportions. As such, I am satisfied that the stress upon him must have been enormous.

• [357] Exemplary damages have a penal purpose and may be awarded for a tort such as misfeasance in public office where the commission of the wrong complained of has been high-handed, insolent, vindictive or malicious or has in some way exhibited a contumelious disregard of the plaintiff's rights.[68] The focus of the enquiry is on the wrongdoer.[69]
• [358] Chesterman J described the principles to be applied when assessing exemplary damages in Multinail Australia Pty Ltd v Pryda (Aust) Pty Ltd,[70] at paragraphs [153]-[155] as follows:

"[153] The High Court explained in Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1 at 8:

"Exemplary damages ... go beyond compensation and are awarded 'as a punishment to the guilty, to deter them from any such proceeding for the future, and as a proof of the detestation of the jury to the action itself ... Mayne and McGregor on Damages ... contains an oft-cited description of exemplary damages:

'... They can apply only where the conduct of the defendant merits punishment, which is only considered to be so where his conduct is wanton, as where it discloses fraud, malice, violence, cruelty, insolence or the like, or, as it is sometimes put, where he acts in contumelious disregard of the plaintiff's rights.'"

In XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12; (1985) 155 CLR 448 Brennan J said (at 471 in a passage approved by the High Court in Lamb at 9):

"As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and to deter him from committing like conduct again, the considerations that enter into the assessment ... are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. In Merest v Harvey ... substantial exemplary damages were awarded for trespass of a high handed kind which occasioned minimal damage ... The social purpose to be served by an award of exemplary damages is ... 'to teach a wrong-doer that tort does not pay'."

[154] The plaintiff claims that the circumstances attending the first defendant's procurement of Campbells to repudiate the plaintiff's contract called for an award of exemplary damages. The defendants resist the claim. They point out that the award of such damages will be "unusual and rare": per Windeyer J in Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 at 153, and that the conduct said to justify the award must be "outrageous" per Lord Reid in Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027 at 1089. It must be conduct "which shocks the tribunal of fact, representing the community" per Kirby J in Gray v Motor Accident Commission (1998) 196 CLR 1 at 35. The defendants stress the opinion of Hill and Finkelstein JJ in Hospitality Group Pty Ltd v Australia Rugby Ltd [2001] FCA 1040; (2001) 110 FCR 157 at 194, a decision which inter alia set aside an award for exemplary damages. Their Honours said:

"The award of exemplary damages is ... an extraordinary remedy. When awarded, it gives a windfall to the plaintiff. In the case of the economic torts, in which intention is an element and damages are 'at large', a defendant must be guilty of something bordering on the malicious before the remedy will be granted. If that were not so, exemplary damages would be granted whenever a defendant commits an intentional tort, that is not the law."

I do not know that it is right to say that an award of exemplary damages is extraordinary but it is, with respect, clearly right that not every commission of an intention tort will justify such an award. There must be something in the nature of high handedness, or malice or cynical disregard of the plaintiff's rights before an award should be made. The cases say no more than this. As the majority of the High Court said in Gray (at 6):

"Exemplary damages are awarded rarely. They recognise and punish fault, but not every finding of fault warrants their award. Something more must be found ... It may be doubted whether a single formula adequately describes the boundaries of the field in which they may properly be awarded. Nevertheless, the phrase ... 'conscious wrongdoing in contumelious disregard of another's rights' describes at least the greater part of the relevant field."

[155] The authorities also emphasise the need for restraint or moderation when making such an award and of the danger that exemplary damages, when combined with an award of compensatory damages, will be excessive. See e.g., XL Petroleum at 463. So the need for exemplary damages, and/or the amount of such an award will be less where a very substantial sum of compensatory damages has been assessed."

• [359] I start from the premise therefore, that not every commission of an intentional tort will justify an award of exemplary damages, and I must be satisfied that there is something in the nature of highhandedness or cynical disregard of the plaintiffs' rights before I could make an award.
• [360] The pleaded claim in respect of exemplary damages is contained in paragraph 25 of the FASOC which provides (underlining, striking through etc. omitted):

"25. The exercise by the defendant of the power under s 93 of the Act:

(i) with knowledge of invalidity or lack of power (as pleaded in paragraphs 21(a) to (c) above);

(ii) with knowledge that it would cause or be likely to cause harm to the plaintiffs (as pleaded in paragraph 21(d) above);

(aa) alternatively, was an act done with reckless indifference to the invalidity or lack of power and the likely harm pleaded in paragraph (a), for the reasons pleaded in paragraph 21(e) above;

(c) exhibited a cynical disregard of Dr Kitchen's rights;

(d) constituted conscious wrongdoing in contumelious disregard of Dr Kitchen's rights;

(e) was influenced by a desire to maximise financial recoveries from high volume medical specialists;

(i) The particulars of the defendant's conduct relied on to justify an award of exemplary damages, are that:

(A) the defendant wrote to Dr Kitchen by letter dated 16 August 2018, stating:

(1) "In accordance with section 98C... I invite you to make written submissions to me...about the action I should take in relation to the review...";

(2) "After considering your written submissions, if any, I will, as required by subsection 89C(2), do one of the following...refer the review to a Profession Services Review Committee (under section 93 of the Act);

(B) the Guide, a copy of which was enclosed with the letter from the defendant to Dr Kitchen dated 18 December 2017 stated:

(1) that, prior to the exercise of the power under s 93 of the Act, the "Director will consider a submission by the practitioner (Section 89C(2))" (page 17); and

(2) "You will have the opportunity to provide...written submissions addressing the findings made by the Director in the Draft Report presented after the meeting..." (page 21);

(C) the defendant communicated her decision to make the Referral within 17 minutes of receiving Dr Kitchen's 2018 Submission for the first time (the email from Ms Georgia O'Keefe having been received by the defendant at 4.05 pm on 6 November 2018 and the defendant responded to it stating her decision to establish the Committee at 4.22 pm that day);

(D) the defendant proceeded to make the Referral notwithstanding that Dr Dunlop, the consultant ophthalmologist the defendant had engaged to report on his examination of the plaintiffs' records, concerning the MBS items:

(1) expressed no substantive concern regarding eight of the 11 MBS items he examined;

(2) one item in respect of which Dr Dunlop expressed concern (Item 42673) had been the subject of a voluntary repayment form lodged by Dr Kitchen and a change in his practice;

(3) of the remaining 2 MBS items, Dr Dunlop had expressed concern in relation to only three individual specialists' attendances, out of a total of 110 such attendances referred to him;

(E) the defendant proceeded to make the Referral notwithstanding that the few concerns expressed in the report of Dr Dunlop were substantially answered in Dr Kitchen's 2018 Submission;

(F) the defendant decided to make a referral notwithstanding that the defendant received legal advice from Georgia O'Keefe, the case manager of the PSR Agency in her email of 6 November 2018, the effect of which was:

(1) that Dr Kitchen's 2018 Submission was extensive, and questioned the basis of the review and the concerns expressed in the Quinlivan August 2018 Report;

(2) Dr Kitchen's 2018 Submission provided evidence in support of his assertion that his practice exceeded the standard of practice of his peers;

(3) that based on Dr Dunlop's assessment, repayment to Medicare could, at best, be achieved in only four of the 10 MBS items that was said to be of concern in the Quinlivan August 2018 Report;

(G) the practices of the PSR Agency, adopted or, alternatively, maintained during the period of which the defendant was the Director of the PSR Agency:

(1) to adopt budgets for funds to be recovered from PSR investigations unconnected to any objective assessment of the extent of inappropriate practice under s 82 of the Act;

(2) to target (or increase attention to) specialists, rather than lower charging medical practitioners;

(3) to target MBS Service Items 104 and 105 (being the most frequent attendances and therefore those for which practitioners had most often claimed benefits and for which they received substantial benefits) whether or not there was any basis for suspecting that the practitioner's conduct in relation to those Services amounted to inappropriate practice;

(1) the Annual Report of the PSR Agency for the year ended 30 June 2017, particularly the contents of Director's Introduction, the statement that the PSR "has a role in raising debts to the Commonwealth", the references to PSR Agency's Performance and the Director's Comments;

(2) the Annual Report of the PSR Agency for the year ended 30 June 2018, particularly the contents of Director's Introduction, the statement that the PSR "has a role in raising debts to the Commonwealth", the Performance Statement, and the Director's Comments;

(3) the Annual Report of the PSR Agency for the year ended 30 June 2019, particularly the contents of Director's Introduction, the Performance Statement, and the Director's Comments.

(1) exerting maximum financial and professional pressure on practitioners the subject of requests for review from Medicare; and

(2) maximising the recoveries of the PSR Agency and the amounts repaid by practitioners to the Commonwealth.

(ii) In her letter to Dr Kitchen of 14 November 2018, the defendant stated that she had considered Dr Kitchen's 2018 Submission in deciding to make the Referral, despite knowing that that was untrue (for the reasons particularised in paragraph 21 above).

(iii) In the Federal Court Proceeding, the defendant submitted, and maintained for almost two years (from the commencement of the proceedings on 13 November 2019 until 2 February 2021), that she had taken Dr Kitchen's 2018 Submission into account, and had thereby validly made the Referral when she knew that was not the case (for the reasons pleaded in paragraph 21 above)."

• [361] The plaintiffs' pleaded claim therefore, is that the exercise by the Director of the power to make the referral under s 93 of the Act, was an act done with knowledge of the invalidity or the lack of power and with knowledge that it would cause or be likely to cause harm to the plaintiffs. Alternatively, it was an act done with reckless indifference to the invalidity or lack of power and the likely harm. Furthermore, the exercise by the Director of the power under s 93 was highhanded, exhibited a cynical disregard of the plaintiffs' rights, constituted conscious wrongdoing in contumelious disregard of plaintiffs' rights and was influenced by a desire to maximise financial recoveries from high volume medical specialists, such as to justify an award of exemplary damages.
• [362] Whilst a broad range of conduct was relied upon to support these allegations, primary amongst them, was the Director's email communicating her decision to make the Referral within 17 minutes of receiving Dr Kitchen's 2018 submission by receipt of the email from Ms O'Keefe. It seems to me that having communicated her decision to make the Referral within that 17 minute period, as I have found without the benefit of having read Dr Kitchen's 2018 submission and taking them into account, it follows in my view that the act was done with reckless indifference to the invalidity or lack of power and the likely harm to be caused to Dr Kitchen and CQ Eye.
• [363] However, I also bear in mind that the plaintiffs' case is not one which proceeded on the basis of targeted malice, but rather is one in which the Director either knowingly acted in excess of her power and with knowledge that it would cause or be likely to cause injury, or alternatively, acted with reckless indifference or deliberate blindness to that invalidity or lack of power and the likely injury. However, Chesterman J observed, there must be something in the nature of highhandedness, malice or cynical disregard of the plaintiffs' rights before an award should be made. Nevertheless, the recklessness of the conduct might itself demonstrate the sort of highhandedness or cynical disregard of the plaintiffs' rights to justify an award.

"192. In Whitbread v Rail Corporation NSW [2011] NSWCA 130, McColl JA held:

'[64] The principles as to the quantum of an award of exemplary damages were conveniently collected in James v Hill [2004] NSWCA 301 (at [66] ff) per Tobias JA (Sheller and Hodgson JJA agreeing). Relevantly (at [69]) the 'objectives of an award of exemplary damages are to punish the wrongdoer, deter him and others from committing like conduct again, to provide vindication to the victim and to denounce the wrongdoer's behaviour.'

[65] If exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting; there is 'no necessary proportionality' between the amount awarded as compensation for the damage suffered by the plaintiff and the amount of exemplary damages awarded against the defendant: Harris v Digital Pulse Pty Limited [2003] NSWCA 10; (2003) 56 NSWLR 298 (at [254]) per Heydon JA; cited in Amalgamated Television Services Pty Ltd v Marsden (No 2) (2003) 57 NSWCA 338 (at [23]); James v Hill (at [84])."

1. 193. In the same case, Whealy JA observed that:

'[214] In Australian law, an award of exemplary damages is intended to punish the defendant and also to deter the defendant, and others, from behaving in the same or similar reprehensible manner. The objects of such an award encompass condemnation and admonition of the defendant and his behaviour. The purpose of damages of this kind is to mark out the court's strong disapproval of the conduct and to visit retribution on the person thus sanctioned. It also embraces the notion that such an award will assuage the victim's potential desire or need for revenge and thus avoid any temptation to engage in self-help likely to endanger the peace. Lamb v Cotogno [1987] HCA 47; 164 CLR 1 at 8-13; Uren v John Fairfax and Sons Pty Limited [1966] HCA 40; 117 CLR 118 at 138; Luntz, Assessment of Damages for Personal Injury and Death: General Principles (2006) LexisNex[i]s Butterworths [7.2] at 98-99.

[215] The type of conduct that will attract an award of exemplary damages has been described as 'conduct showing a conscious and contumelious disregard for the plaintiff's rights': XL Petroleum NSW Pty Ltd v Caltex Oil (Aust) Pty Ltd [1985] HCA 12; 155 CLR 448 at 472 per Brennan J. It has plainly been recognised in cases where trespass to the person has been alleged against police officers who have been shown to have acted in a high-handed and contumelious fashion: Adams v Kennedy [2000] NSWCA 152; 49 NSWLR 78; Knight v State of New South Wales [2004] NSWSC 791 per Hoeben J.'"

• [374] Awards in respect of exemplary damages for cases, for example, of wrongful arrest and/or false imprisonment tend to be substantially less. The New South Wales Court of Appeal recently gathered together some of those comparatives[73] and described cases in which awards of $10,000 and $5,000 had been made.[74] Those cases are not of assistance here, because on many of those occasions the person who had been wrongfully arrested and imprisoned had only been held for a matter of hours in wrongful detention. The circumstances here are dramatically different, but likewise are substantially different from that which was before Chesterman J in Multinail.
• [375] Whilst the plaintiffs accept that such an award, if ordered, should be tempered in the way described in Multinail, they raise three particular issues for the court's consideration. The first is the unrecoverable shortfall in legal costs in the Federal Court proceedings which, I accept, was a sum of over $1 million. Second, despite an award for the loss of income, that award cannot compensate for the hundreds of hours of early mornings, late nights and weekends wasted on what the plaintiffs describe as "an utterly pointless mountain of work". Third, the plaintiffs contend that it is right to make an award to punish the Director, but also to deter the Commonwealth from permitting the PSR and its officers from repeating similar conduct in the future.
• [376] I consider it is right to make a substantial award of exemplary damages in this case. The Director of the PSR is in a position of significant authority in the exercise of powers over medical practitioners. With such power, comes responsibility. The need for medical practitioners to comply with the Director's demands, or risk losing their right to practice gives the Director a power to be exercised cautiously, thoughtfully and, I suggest, sparingly. Here, the Director did none of those things. She proceeded with reckless disregard of the consequences for the plaintiffs and in doing so failed the test of public probity. It is right that the court award exemplary damages, and I assess the amount at $100,000.

• [377] I therefore assess the plaintiffs' damages as follows:

(a) $1,347,500 for loss of income (including interest);

(b) $80,730.43 for expenses incurred in the conduct of the investigation and the Federal Court proceedings;

(c) $408,070.23 for legal costs;

(d) $50,000 for general damages; and

(e) $100,000 for exemplary damages.

• [378] I order that there be judgment for the plaintiffs against the Director in the sum of $1,986,300.66.
• [379] I will hear the parties as to costs.

[1] Northern Territory v Mengel (1995) 185 CLR 307 at 345 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ).

[3] Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ.

[4] (1998) 196 CLR 329 at [37]-[38].

[5] Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 at 191E-F (Lord Steyn).

[6] Mengel at 347 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ) cited with approval in Sanders at [38] (Gleeson CJ, Gaudron, Kirby and Hayne JJ); Three Rivers at 192F-G (Lord Steyn).

[12] [2006] QSC 294 at [64].

[13] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-362 (Dixon J), although the Director did not refer me to any authority to support that submission.

[14] [2012] FCAFC 18; (2012) 200 FCR 1 at [130] (Gray, Rares and Tracey JJ).

[15] [2017] NSWSC 252 at [123]- [125]

[16] Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262 at [2] (Gummow, Hayne and Heydon JJ); Brett Cattle Company Pty Ltd v Minister for Agriculture, Fisheries and Forestry [2020] FCA 732; (2020) 274 FCR 337 at [277] (Rares J).

[17] Three Rivers at 191E-F (Lord Steyn), citing the first instance decision, Three Rivers District Council v Bank of England [1996] 3 All ER 558 at 581 (Clarke J), following Brennan J's formulation in Mengel.

[18] Kitchen v Quinlivan [2025] QSC 176 (ex tempore).

[19] [1939] HCA 23; (1939) 62 CLR 464 at 531-533.

[20] Kitchen v Director of Professional Services Review [2023] FCAFC 160 (Charlesworth, Derrington and Downes JJ).

[21] Kitchen v Quinlivan [2025] QSC 176 (ex tempore) at [57].

[22] Kitchen v Quinlivan [2025] QSC 176 (ex tempore) at [57] - [59].

[23] This part appeared in italics and in red font as described in the preamble to the 2018 submission.

[24] Kitchen v Quinlivan [2025] QSC 176 (ex tempore).

[25] A period for which she used a term the "Relevant Time" in her affidavit.

[26] The email bears the time stamp "3:22 PM" but the matter proceeded on the basis that it was printed and extracted at a location without daylight savings time, but in its native format, the email is timed 4:22pm. There was no dispute that the correct time stamp on the email was 4:22pm.

[27] Kitchen v Quinlivan [2025] QSC 176 (ex tempore) at [33]-[60].

[28] Stephenson v Dental Corporation Pty Ltd [2025] QCA 212 at [108] (Doyle JA); Robert Bax & Associates v Cavenham Pty Ltd [2012] QCA 177; [2013] 1 Qd R 476 at [46] (Muir JA).

[29] Kitchen v Director of Professional Services Review [2019] FCA 1978 (Rangiah J).

[30] Kitchen v Director of Professional Services Review [2019] FCA 1978 (Rangiah J).

[31] Kitchen v Director of Professional Services Review (No 2) [2019] FCA 2022 (Collier J).

[32] The letter is incorrectly dated 13 June 2020, but it was in fact 6 July 2020.

[33] Counsels' advice and a number of other documents were the subject of an application before Callaghan J prior to the trial. Callaghan J ordered disclosure of certain material that the Director had maintained was protected by legal professional privilege.

[34] Order of Callaghan J on 25 June 2025.

[35] The date of 6 November 2016 is an error. The correct date is 6 November 2018.

[36] Kitchen v Quinlivan (No 2) [2025] QSC 326 (ex tempore).

[37] Nominal Defendant v Clements [1960] HCA 39; (1960) 104 CLR 476 at 479 (Dixon CJ).

[38] Nominal Defendant v Clements [1960] HCA 39; (1960) 104 CLR 476 at 495 (Windeyer J); McKerlie v Western Australia (No 2) [2006] WASCA 274 at [76] (Roberts-Smith JA with whom the President and Pullin JA agreed).

[39] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 308 (Kitto J).

[40] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 308 (Kitto J).

[41] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 308 (Kitto J).

[42] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 308 (Kitto J).

[44] [2020] QCA 233.

[45] Obeid v Lockley [2018] NSWCA 71; (2018) 98 NSWLR 258 at [111]- [117] (Bathurst CJ).

[46] Mengel at 347 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ) cited with approval in Sanders at [38] (Gleeson CJ, Gaudron, Kirby and Hayne JJ); Three Rivers at 192F-G (Lord Steyn).

[47] Brett Cattle at [270] (Rares J).

[48] Three Rivers at 192G (Lord Steyn).

[49] Director's admission of paragraph 21(a) of the FASOC.

[51] Per Lord Steyn at 192F-G with whom Lords Hope of Craighead at 197C-D and Hobhouse of Woodborough at 231F-H agreed, and Lord Hutton at 228A-D.

[52] Brett Cattle at [284] (Rares J).

[53] [2012] FCAFC 18; (2012) 200 FCR 1 (Gray, Rares and Tracey JJ).

[54] See the analysis of this issue in Brett Cattle by Rares J at [280] to [283].

[55] Obeid v Lockley [2018] NSWCA 71; (2018) 98 NSWLR 258 at [154] (Bathurst CJ); Brett Cattle at [280] (Rares J).

[56] Banditt at [2] (Gummow, Hayne and Heydon JJ); Brett Cattle at [277] (Rares J).

[57] Banditt at [2] (Gummow, Hayne and Heydon JJ).

[58] Three Rivers at 192G (Lord Steyn).

[59] South Australia v Lampard-Trevorrow [2010] SASC 56; (2010) 106 SASR 331 at [263]- [264] (Doyle CJ, Duggan and White JJ).

[60] Doerr v Gardiner [2023] QCA 160 (Morrison JA, Bond JA, Livesey AJA).

[61] Husher v Husher [1999] HCA 47; (1999) 197 CLR 138 at [7] (Gleeson CJ, Gummow, Kirby and Hayne JJ).

[62] Malec v JCHutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 at 639 (Brennan and Dawson JJ).

[63] 5 per cent being the rate generally allowed on past economic loss in common law assessments.

[65] Nyoni v Shire of Kellerberrin (No 10) [2018] FCA 1576.

[66] Lule v New South Wales [2018] NSWCA 125 at [106] (Macfarlan JA); Irving v Pfingst (No 2) [2025] QSC 224 at [18] (Brown J).

[67] [2018] FCA 1576.

[68] Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 at 129 (Taylor J); XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12; (1985) 155 CLR 448 at 471 (Brennan J).

[69] Gray v Motor Accident Commission (1998) 196 CLR 1 at [15] (Gleeson CJ, McHugh, Gummow and Hayne JJ).

[70] [2002] QSC 105.

[71] Multinail at [160] (Chesterman J).

[72] [2024] NSWCA 40; (2024) 113 NSWLR 509.

[73] New South Wales v JR [2024] NSWCA 308.