Mann, Arnold v. The Capital Territory Health Commission [1981] FCA 180

IN THE FEDERAL COURT OF AUSTRALIA ) AUSTRALIAN CAPITAL TERRITORY } DISTRICT REGISTRY ; No. ACT G41 of 1980 GENERAL DIVISION }

ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

THE CAPITAL TERRITORY HEALTH COMMISSION © - '. - ~S

This is an appeal from the Supreme Court of the Australian Capital Territory (Connor J). The appellant is a salaried senior specialist general surgeon employed by the respondent. He sued his employer for a breach of the contract of employment. The learned trial judge found that it was an implied term of the contract that "the defendant would furnish the plaintiff with surgical work of a quantity and kind suitable for a senior

contractual term relied upon was one of several alleged in the statement of claim, but in this appeal the appellant has sought only to support that found in his favour by the

"The first question is whether the work the plaintiff is now doing is surgical work of

a kind and quantity suitable for a senior and experienced general surgeon. If not, the second question arises namely whether that state of affairs can be laid at the door of the defendant."

He found the evidence on the first question all one way, in favour of the applicant's case. He then expressed the

"The crucial question, therefore, is whether the defendant has failed to furnish the plaintiff with such work."

"It 1s for the plaintiff to persuade me that some action of the defendant has amounted to a failure to provide him with surgical work of a kind and quantity suitable for a senior and experienced general surgeon. Because of the other matters to which I have referred I do not feel any actual persuasion that this is so. It is possible that some action of the defendant is responsible in part for

It was submitted by the appellant that having found the implied term which he did, the learned judge was in error in proceeding to consider whether non-compliance was attributable to the respondent. If the judge meant by the way in which he expressed the term that there was an absolute liability upon it to ensure that the work was provided the submission would undoubtedly be correct. The remaining questions were breach and damage, and there could be little doubt that a breach had been established of such a term. A closer examination of the judgment dis- closes however that his Honour's view was that so far as concerned contractual responsibility, the Commission was to furnish the work, so far as it was able to do so. More precisely, the term was the negative of the question finally posed, namely whether some action of the defendant had amounted to a failure to provide (the applicant) with surgical work of a kind and quantity suitable for a senior and experienced general surgeon. He had considered this matter at some length, and if there be error, it was in the

way he first expressed the implied term, rather than in

following the well accepted precepts of contract law.

We are therefore of the opinion that the appel- lant has not established an error in the judgment entitling him to succeed. He is however entitled to ask this Court

to come to a different conclusion, favourable to himself.

We are ourselves unable to find that there was a term in the contract of employment in or to the effect of

The contract was partly written and partly oral. By far the greater part was in writing. The writing was not signed. At a time of a change in policy, when staff specialists were being recruited for newly created positions, the Board, which was the predecessor of the respondent Commission, placed advertisements for relevant places. The appellant answered an advertisement, and was told by letter dated 14 August 1974 from the Chairman of the Board, Dr. Wells, that he had been placed on a short list. A copy of the general conditions applicable to the specialist positions was enclosed with the letter. An earlier document giving information about the "Hospital Service Scheme" had been distributed and the appellant had a copy. He was thereafter interviewed by a panel in Melbourne, and by telephone was advised on 5 September (confirmed by letter the following day) that he was offered the position. At the request of the appellant, he and Dr. Wells had a long discussion about the appointment on 11 September 1974. The appellant was concerned, inter alia, to see how the appointment would operate in the changing scene; the

surgical work which would be undertaken at the Canberra

hospital (and at the Woden hospital, when it opened for surgery), the number of salaried appointments which would be made, and the amount of work which would be available to the appellant. Although the appellant gives a more detailed account of the conversation, his account is for the most part consistent with that of Dr. Wells. The learned judge made a finding on this matter:

position." By letter dated 24 September 1974 the appellant accepted the position, and his employment commenced on 1 October 1974.

He was then aged 44 and his employment was to continue until

In planning, Dr. Wells and those working with him had estimated that at least 30 per cent of the patients attending the hospital "would opt for so-called hospital service care", and it was thought that the resultant work might be more than four general surgeons could cope with.

In the event, only three, of whom the appellant was one, were appointed. The scheme was that there would be ""hospital-

care" patients who would receive attention free, even though

not insured. Indeed, the scheme was one for "uninsured" patients who came to one of the hospitals, or hospital centres, for treatment. The majority were to be "insured" patients, who would normally come through the private (non- salaried) profession, and be operated on by non-salaried surgeons. Some uninsured patients might also be admitted through private practitioners, but the number of these was expected to be very small. Private patients could be referred to salaried doctors, and the latter had a right of private practice enabling them to earn in this way up to 25% of their salaries, and keep for themselves half of those earnings. The informative document earlier referred

For the Hospital Service Scheme the Canberra Hospitals Management Board wants 27 leading clinical specialists to supplement present staff specialists and to establish the basic core of specialist staff for a free treat- ment scheme at the Canberra Hospital and Woden Valley Hospital.

Patients at these hospitals will be able to choose free medical care from staff specialists and general practitioners will continue to

for their private patients in the Canberra and Woden Valley Hospitals."

Later it explained the private practice aspect in the

"Rights of private practice - The Hospital Service Scheme aims to give patients and

The particular domain of the salaried specialist surgeons consisted of the uninsured patients. It was the appellant's understanding, based on what Dr. Wells told him, that the number of surgeons appointed to treat these patients would be determined in accordance with requirements. The number of appointments would not be excessive. Salaried surgeons were not to be left without adequate work. It has been inferred in this case that if the number had remained at three, this would have been adequate, but not excessive. It was in contemplation that some part-time surgeons (presumably from the private profession) might also be appointed, depending upon need. At the time of his discus- sion with Dr. Wells on 11 September 1974, the appellant knew that there were nine general surgeons already in

Canberra. He estimated that this number was excessive, and

was concerned at what the position would be "after a

reconciliation was effected'"' 1f there were three more full-

There was within the Australian Capital Territory strong opposition by the non-salaried, or private, profession to the new scheme. The scheme had originated in instructions given by the Government of the day. It is not necessary to go into the details of the grounds of opposition but the fact that it existed, and was widely publicised, and that the appellant knew these things before he agreed to accept the appointment is of relevance. One aspect of the new proposals which was attractive to him was that he would have the surgical work without having to be dependent on the private profession to refer cases to him. It 1s probably not unfair to say that he wanted for the most part to be in a non-competitive field, or one, at least, in which the number of his competitors, if they could be called that, would be strictly limited, i.e. to two or three. At the same time, he had no objection to accepting cases which might be referred by the private profession, and he apparently did

There was no language used in the Conditions of Service document or in the oral discussion with Dr. Wells (or anyone else) expressing in terms something in or to the effect of the term relied on. The language which perhaps most closely approached that used in the term as framed is to be found in the following exchange with Dr. Wells on 11

A. Well, I told him that I wanted a full time surgical job. I wanted a busy practice.

A. He said that that of course is what the board intended. It did not want people on its payroll who were just twiddling their thunbs.

There is we think no doubt that the appellant was led to expect, both from what he was told about the scheme, and from what Dr. Wells told him more directly about his own expected workload, that he would be kept busy in his role as a salaried general surgeon. The question is whether there was implicit in what was said, or there is to be implied, a contractual promise to the absolute effect of

We do not find in the evidence about the discus- sion anything which can fairly be regarded as an expression of the term. That is to say, the language, as to the whole, or any part or parts thereof, does not convey the meaning of

a contractual promise in or to the effect of that sued on.

promise 1s a different although closely related one.

The context has to be borne in mind. The pre- dominate purpose of the meeting was to provide elucidation. There was the political dispute, the outcome of which must at that time have been uncertain. The Conditions of Service

document, which applied to salaried specialist medical

officers in general occupies 16 pages of the appeal book,

and might reasonably be thought to contain virtually all necessary terms. The salary for Dr. Mann was not mentioned in the copy of it sent to him, and, so far as appears was

not discussed on 11 September 1974. Probably it was mentioned in the telephone message of 5 September, which

Dr. Wells confirmed the following day. He re-affirmed the salary in a letter dated 30 September 1974. We accept that, among other things, the appellant was concerned to ascertain whether he would have enough work, and to be reassured that this would not be reduced unacceptably by a return of

private surgeons to deal with uninsured in-service patients. If the term, or something like it, was something Dr. Mann thought he could ensure as a matter of contract, or if he wanted a written non-contractual assurance, he had ample opportunity to make an appropriate request, but the evidence does not disclose any. Dr. Wells spoke in terms of intention and expectation, and did not himself express a promise. If he had sought to do so it is most unlikely that it could have

been in the absolute and unqualified words now relied on.

It is an important matter that, whatever the work- load, the appellant was to be paid a salary. He was appointed until he became 65 years of age. A right to private practice gave him a fair opportunity to increase his gross earnings by one quarter. On the other hand, he under- standably and correctly emphasises that he needed an adequate amount of work to maintain his skills and his standing among

The question in this case 1s whether the par- ticular term alleged should be implied. In some employment situations, it may be correct to imply a similar term. There are a number of cases dealing with actors and producers to whom actual performance was regarded as vital:

see, for example, Marbe v George Edwardes (Daly's Theatre)

Ltd. (1928) 1 KB 269; White v Australian and New Zealand

Theatres Ltd. (1943) 67 CLR 266. In Collier v Sunday

Referee Publishing Co. Ltd. (1940) 2 KB 647, in a passage often referred to, Asquith J said (p.650):

"It is true that a contract of employment does not necessarily, or perhaps normally, oblige the master to provide the servant with work. Provided I pay my cook her wages regularly she cannot complain if I choose to take any or all of my meals out. In some exceptional cases there is an obligation to provide work. For instance, where the servant is remunerated by commission, or where (as in the case of an actor or singer) the servant bargains, among other things, for publicity, and the master, by withholding work, also with- holds the stipulated publicity: see, for instance, Marbe v George Edwardes (Daly's Theatre), Ld. (1928) 1 KB 269: but such cases are anomalous, and the normal rule is

illustrated by authorities such as Lager- wall v Wilkinson, Henderson s& Clarke, Ld. 80 LT 55 and Turner v Sawdon s Co. (1901) 2 KB 653, where the plaintiffs (a commer- cial traveller and a salesman respectively,

retained for a fixed period and remunerated by salary) were held to have no legal com- plaint so long as the salary continued to

be paid, notwithstanding that owing to their employers' action they were left with nothing to do. The employers were not bound to supply work to enable the employee, as the phrase goes, to "keep his hand in," or to avoid the reproach of idleness, or even to make a profit out of a travelling allow- ance. In such a case there is no breach of contract, but the result is much the same as if there had been, because in either event the plaintiff is entitled to a sum or sums which are measured prima facie by the amount

of salary in respect of the unexpired period of service."

(See also Halsbury's Laws of England, 4th edn. Vol. 16,

para. 557; S53 American Jurisprudence 2d para. 133; Fridman,

In Langston v Amalgamated Union of Engineering Workers (1974) 1 WLR 185, an action under the Industrial

Relations Act 1971 (Eng.) Lord Denning MR, after commenting

that time had marched on since Collier's case, said (at

"In these days an employer, when employing a skilled man, is bound to provide him with work. By which I mean that the man should be given the opportunity of doing his work when

it is available and he is ready and willing to do it."

(See also Langston v Amalgamated Union of Engineering

This formulation does not involve a duty as absolute as that relied on here. In many situations, contractors and other employees, and perhaps professional employees in particular, make inquiries and seek information to see whether a risk as to the volume or continuity of work is

There are a number of matters which lead us to the conclusion that in the present case the term should not be implied. There is the difficulty of applying the term in question. Some of the considerations show up more clearly if the term is assumed and matters of breach and damage are considered. There is for example, no period stipulated during which compliance is to be tested. It would not be a once and for all situation; the term could be complied with at some times, and not at others, and so on. A variety of external factors could become operative. If the term created an absolute obligation on the Commission, some allowance would have to be made for the work received privately, and this could vary considerably. These and other matters are not, as counsel suggested at one stage, merely a matter of making cross implications. They go to the implication of the term relied on, and of that par- ticular term. It is perhaps one way of putting this aspect of the matter to say that the vicissitudes attending the

employmentwere too many and too varied to allow the term to

evidence shows to be the fact, that the system under which

the appellant would work involved "referral" to him by

other doctors. This is an important matter. The referral would be by an intern, or by another staff doctor or by a private practitioner, depending upon the circumstances.

The amount of work he received from any one of these

sources would depend on the judgment of the referring

doctor. It would be understood by Dr. Wells and Dr. Mann that this would depend on whether, in ail the circumstances, the appellant was regarded as the most suitable surgeon for the patient. The patient's own wish could of course be controlling, In casualty or emergency cases, the surgeon on duty at the hospital may of necessity be the one who has to perform the operation, although the patient, if conscious,

or his relatives, may also be able to control this situation. Most surgery is, however, "elective", which we understood to mean that it is planned some time ahead. So far as concerns uninsured patients who would present themselves at the hospital for treatment under the scheme envisaged at the time, and which was being put into operation, there would be few surgeons among whom a choice could be made. Nevertheless, it surely could not have been intended that these patients, even although they might be relatively poor, would be with- out some reasonable choice or adequate guidance as to who should operate on them, and should instead be allotted to a doctor, regardless of his skill, for the particular task, or his manner or compatibility, actual or perceived. The appel- lant and Dr. Wells visualised that there might be three or

four full-time specialist surgeons, and possibly, 1f the

need arose, some part-time ones. Even then, it was for the doctor carrying out the examination of the patient (and the appellant, doing clinical sessions, could be one of these) to decide to whom the patient should be referred for surgery. As the evidence shows, the choice could properly be based on considerations other than surgical expertise; matters such as ability to establish a suitable relationship with patients and faculty for co-operation with nursing and

There is then a wide consideration, which overlaps what we have been saying about the referral system. It is simply that the subject matter of the alleged implied agreement was the ailing bodies of men and women who would be needing surgery, men and women who must be regarded as being entitled to the services of a surgeon of their free choice. The referring doctors were not under any constraint whatever to refer patients to a particular surgeon. Undoubtedly Dr. Wells, experienced hospital administrator that he was, could have estimated with a considerable degree of accuracy the number of patients who would require surgery in fields within the plaintiff's obviously high competence. Nevertheless, it can hardly be thought that the plaintiff and Dr. Wells were agreeing in advance, against the back- ground of their knowledge of hospitals, doctors and patients, that in some fashion the free choice of patients and referring doctors was to be fettered in the interests of the plaintiff. It seems to us that respectable and respon-

sible medical practitioners could not have been agreeing

that a number of bodies, sufficient to keep the plaintiff busy to the extent he hoped for, would be delivered up to him for operation, regularly and without fail. What the plaintiff sought can only have been an assurance, necessarily vague and general in its terms, that those responsible for the administration of the Canberra hospitals would do what they properly could to see that he had a reasonable work-load, but that assurance, even if it can be spelled out from what Dr. Wells said, cannot have been a contractual promise. Certainly it could not have amounted

What happened was that, after a change in Govern- ment, and pursuant to a directive of the new Minister for Health, nine private surgeons were allowed to participate in the treatment of uninsured patients. This increased the number nominated as having access to that market from three to twelve. Senior counsel for the appellant says that this was the critical impermissible step. The submission, we believe, brings us closer to the point. When an implied term is relied upon, it should stand out as something that can be formulated with reasonable precision. An uncertainty as to what the terms should be, or the existence of equally plausible alternatives, is fatal. There is a quite delusive simplicity in introducing terms simply because their for- mulation has an air of reasonableness. This is apparent

from the formulation of the Privy Council in B.P. Refinery Pty. Ltd. v Hastings Shire Council (1976) 52 ALJR 20 at 26,

it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

it must be so obvious that 'it goes without saying' ;

it must not contradict any express term of the contract."

We do not understand the minority in that case to have

I certify that this and the | 6 preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Fox and his Honour Mr.

IN THE FEDERAL COURT OF AUSTRALTA ) AUSTRALIAN CAPITAL TERRITORY

On Appeal from the Supreme Court of the Australian Capital Territory

There are two principal hospitals in Canberra. They are the Canberra Hospital (more recently the Royal Canberra Hospital) and the Woden Valley Hospital. Until 1972 the hospitals were staffed by doctors some of whom were jn

permanent employment and others visiting medical officers,

Following the change of government which occurred after

the 1972 elections there was outlined a new health service. This came to be known as Medibank. A group of patients

to be provided for were known as "Hospital Service Patients". These patients were covered for basic treatment at all levels. The fee for the initial consultation with a general practitioner was fully rebatable as was the fee of any specialist to whom they were referred. They were entitled to free hospital treatment without there being any means test. In most hospitals the treatment of Hospital Service Patients was to be undertaken by either full time or part time salaried specialists, In the Australian Capital Territory it was decided that Hospital Service Patients would be treated by full time salaried specialists. The authority immediately in charge of the administration of

the proposal was the Canberra Hospitals Management Board. Later the Board was succeeded by the Capital Territory Health Commission which is the respondent to this appeal, and the successful defendant in proceedings brought against it in the Supreme Court of the Australian Capital Territory by the appellant, The action was for damages for breach of contract, No point was taken that the respondent was not liable for such damages, notwithstanding that any contract which the appellant had was with the Board rather than the

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The term of the contract which the appellant alleged had been broken was that the Board would furnish the appellant with surgical work of a kind and quantity suitable for a senior and experienced general surgeon. The respondent submitted that the contract contained no such term. That 18 cone of the principal matters to be determined in this appeal. It was a matter upon which the appellant succeeded before the learned trial judge. ke failed in the proceedings at first instance only because the learned judge was not persuaded that any damage he had suffered resulted from breach by the respondent of the term in question,

The appellant was appointed a senicr specialist surgeon by the Board to act in that capacity in the two hospitals. The appointment along with others

was advertised by the Board about the middle of 1974.

A brochure was prepared. It was dated 20 June, 1974.

It was headed with the name of the Board under which appeared the words "Hospital Service Scheme", The brochure said that the information it contained had been prepared for the guidance of medical practit- ioners living outside Canberra who were interested

under the Hospital Service Scheme. A description of Canberra and its surrounds was given. There was information concerning each of the hospitals. The

was said that for the scheme the Board wanted "leading clinical specialists to supplement present staff specialists and to establish the basic core of specialist staff for a free treatment scheme" at the two hospitals. It was said that patients at the hospitals would be able to choose

free medical care from staff specialists or private

medical care on a fee for service basis. Private specialists would continue to have access to the hospitals for their private patients. There was then a heading, "Specialties", under which it was said that the Board would seek to provide the widest practicable range of specialty cover under the scheme and intended to supplement the coverage provided by full time salaried specialists with additional local specialists engaged on a part time basis. It was said

that all aspects of medicine were not covered under the specialties which were named, "but it is the clear intention of the Government to provide every possible aspect of medical care as the scheme develops", There was then a list of specialties, which included under the heading

"Surgery", chest surgery, gastro-intestinal surgery and

There were statements concerning the salaries to be paid, leave, (sabbatical, recreation, long service and sick), hours, compensation, superannuation, cost of travel and housing. It was also said under the heading "Research Facilities" that the Board sought specialists who were and who would remain "at the forefront of their specialty". Clinical research would therefore be encouraged.

The brochure gave details of where further information could be obtained and said that applications closed on 31 July, 1974,

The appellant graduated from the University of Melbourne with honours degrees in both medicine and surgery. He won the Ryan Prize in medicine and shared that prize in surgery. Between 1954 and 1956 he held appointments as junior and senior resident medical officer and also as registrar at the Royal Melbourne Hospital. He was in the United Kingdom between 1957 and 1959 when he became a Fellow of the Royal College of Surgeons. He is also a Fellow of the Australasian College. He returned to Melbourne and was an honorary assistant surgeon at St. Vincent's Hospital from 1961 to 1969. During that period

he carried on private practice in Collins Street, Melbourne,

as a general surgeon with a special interest in gastro- intestinal surgery. In 1971 he worked in an honorary capacity as a general surgeon in Israel. In 1972 he returned to the United Kingdom where he was appointed a senior research assistant at Royal Marsden Hospital. In 1973 he was appointed a senior lecturer at Kings College Hospital in London. In his evidence the appellant said that he found immense professional interest in salaried medical practice in the United Kingdom, He said that he found it satisfying and that it became his preferred method of practice.

The appellant was st111 in London when he read of the availability of senior specialist positions for general surgeons in Canberra. His interest in obtaining such a position was one of the reasons which prompted him to return to Australia in 1974, Upon his return he was furnished with a copy of the brochure to which I have earlier referred.

Applications for employment were to be addressed to Dr. Wells who was the chairman of the Board. The appellant made an application. On 14 August, 1974, Dr. Wells wrote the appellant a letter (described as a routine letter). it said that the Board had completed an initial assessment of the applications made. The appellant's name had been

included in a short list of applicants "for more detailed

assessment and interview with our consultants for your specialty". The letter enclosed a document described

headed "Conditions of Service Agreement". It said that "this agreement" was to apply to those salaried specialist medical officers employed by the Board, It continued, "All matters of particular relevance are included in this document, but other matters of procedure will be unified with the formation of a health commission", The document foreshadowed that in due course the powers and functions

of the Board would pass to the Commission upon its creation, Clause 1 of the document contained a number of definitions including a definition of "Senior Specialist". Such a specialist was a medical practitioner who had spent not less than eight years in practice, had spent not less than three years in supervised specialist training or had had not less than three years experience in that specialty, had obtained an appropriate higher medical qualification and had been

in full time practice in that specialty for at least six years. The document then began to deal with a number of

basic matters, These included salaries and their adjustment,

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board, lodging and residential accommodation, leave of various kinds, hours of duty, superannuation and the

cost of travel, A number of provisions were included under the heading "Conditions of Service", Clause 7.2 under this heading provided that the Board should "appoint the specialist medical officer to provide medical services for persons coming within the direct care responsibility of the Board", The document included a number of provisions in relation to termination of service. The Board was not entitled to terminate the service of any appointee except on grounds of misconduct, negligence or inefficiency. There were extensive provisions dealing with these matters and with appeals from decisions con- cerning them,

One type of leave to which a specialist medical officer was entitled was study leave which accrued at the rate of 26 weeks study leave for each completed six years of service. An acceptable programme of study to be carried out during the period of such leave was to be submitted to the committee referred to. A limited right of private practice was provided for. There was no express provision dealing with termination by the specialist but clause 6(2) provided that any specialist medical officer who had given or had

been given three months' notice of termination of service

should be paid all moneys due to him on termination of service, Because of the elaborate provisions concern-

ing termination by the Board it would appear that the provision was not intended to give the Board power to terminate the appointment on three months' notice except

on one of the grounds earlier referred to. On the other hand it would appear that the intention was that the appointee might himself give three months' notice of termination of the agreement, That was the interpretation of the provision which both counsel said should be given it.

As a result of the letter of 14 August, 1974, the appellant attended an interview in Melbourne.

On 6 September, 1974, Dr. Wells wrote him a further letter. The letter said, "This 1s to confirm my phone message yesterday that the Board has decided to offer you an appointment as a Senior Specialist in Surgery". The appellant was to meet Dr. Wells in Canberra on 11 September. They had not met earlier because Dr. Wells had been ill. The appellant had been interviewed by the deputy chairman and two other members of the Board. The interview was conducted on its behalf.

The evidence contains a lengthy account both by Dr. Wells and the appellant as to what transpired during their discussion. Dr. Wells was called in the appellant's case and gave evidence first. There is no conflict between the two on any matter of substance. The learned trial judge accepted their evidence as reliable. The relevant part of their discussion concerned the amount and type of work which the appellant was to do. In his eross-examination Dr. Wells said:

"T recall Dr Mann in particular wanted to be assured that he was not gust going to be dealing with minor cuts and boils in casualty and other surgeons had similar views, and so this raised what sort of additional medical support was going to be provided and whether there was going to be the satisfactory support to do the minor work."

. appointment which involved - well, a non-existent job in due course. I was very, very deeply con- cerned about the possibility of this

Did you tell him - I am sorry, but you must tell me whether you are making observations, or whether in fact you are telling us the content of your discussion? --- No. I assure you that was the content of my discussion; in fact, I alluded to this again and again.

You told him that you were concerned about what? --- About the possibility of being inactivated if every surgeon was appointed to service the uninsured patients, or as they were then to be called Medibank-levy patients.

"What did Dr Wells say to you in relation to that? --- He said to me that the board Gould not gustify expenditure on unnecessary appoint- ments, and that appointments would be made on the basis of need. There certainly was no intention to appoint everybody unless that was the requirement at the particular time when these decisions were made.

Did you ask him about what work load you desired? --- Well, I told him that I wanted a full time surgical gob. I wanted a busy practice,

What did he say to that? --- He said that that of course is what the board intended. It did

not want people on its payroll who were gust twiddling their thumbs."

After the interview concluded the appellant went away. Subsequently he received a letter dated 30 September, 1974, signed by Dr. Welis on behalf of the Board. The letter said:

accepting the position of Senior Specialist in general surgery at the Canberra Hospital.

Your duties will commence on 1 October 1974 at the agreed salary of $23,000".

. The appellant's letter of 24 September, 1974, is not in

The appellant commenced duties as planned and until the end of 1976 matters proceeded uneventfully. At the end of 1975 there had been a further change of government. The

incoming government decided to make substantial changes to

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the medical scheme which the previous government had

set up. Before bringing these changes about the then Minister for Health commissioned a report by a working party under the chairmanship of Professor E.S.R. Hughes. The working party's terms of reference required it to propose how the range of medical services in Canberra should be staffed and provided and to propose how high quality in the provision of those services could be achieved. The committee was asked to accept that the

full involvement of salaried and private staff would continue. The committee published its recommendations

on 1 September, 1976. It is unnecessary to go into detail but the recommendations proposed that all specialists, whether employed or part time, should have equal status

and equal opportunity for referral in respect of all patients, Thus there was to be no longer an assured nucleus of public patients whose cases must be referred

to the full time employed specialists. The working party's recommendations were adopted and implemented at the end of 1976.

That led to a situation pursuant to which the amount of work which was available to the appellant substantially diminished, The causes for that situation arising need to be considered because, as I have earlier mentioned, it

is the respondent's submission that any damage suffered by

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was that submission which the learned trial judge upheld. I do not, however, propose to refer to

the evidence about causes now. It 1S more con- venient to do so when I come to deal with the

competing submissions of the parties about causation. But I should say at this point that after the implementation of the new scheme at the beginning

of 1977 the amount of work available to the appellant began to fall away. In a comparatively short

period it reduced to a level which the evidence establishes was insufficient to enable him to

propose to refer to the detail of the evidence about

it. The appellant did not purport to treat the respondent's alleged breach of contract as a repudiation by it of its obligations thereunder. He has remained in the respondent's employment down to the present time. The

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For the appellant to succeed each of the following three questions needs to be answered in his favour:-

1. Was it a term of the contract between the appellant

and the Board, and thus the Commission, that the Board would furnish the appellant with surgical work of a kind and quantity suitable for a senior and experienced

2. Was there a breach by the respondent of the obligation

3. Was such breach causative of damage suffered by the appellant?

If these questions are answered favourably to the appellant,

there will arise for consideration the further question of

The learned trial judge answered the first two questions favourably to the appellant but was not persuaded that any Gamage he suffered was caused by the respondent's breach of contract. He decided the matter upon the onus of proof, Before us the respondent supported his Honour's judgment not only upon the basis that there was no causal relationship between any damage and breach, but also upon the basis that the contract did not contain a term to the effect of that

relied upon by the appellant and found by his Honour to be

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part of the contract. A notice of contention to enable this point to be argued was filed.

I deal first of all with the question to which the respondent's notice of contention gives rise, In his Honour's view the term was one which it was proper to imply in accordance with principles propounded in The Moorcock (1889) 14 P.D. 64 and in countless cases since, including the recent decision of the Privy Council in B.P. Refinery (Westernport) Pty. Limited v. Shire of Hastings (1977) 52 A.L.J.R.20. With respect, I have reached the conclusion that there 1s no place in the contract in the present case for an implied term to the effect of that here relied upon, In short I take the view that the implication of such a term is not necessary in order to give to the contract business efficacy.

Nevertheless,I am of opinion that his Honour's con- clusion was sound because the parties expressly agreed upon such a term, They did so in part of the conversation which took place between the appellant and Dr. Wells on behalf of the Board on 11 September, 1974. To the essential parts of that conversation I have earlier referred. It is my opinion that the words of the term relied upon may fairly

A proper understanding of the conversation requires one to take into account a number of background matters. They are as follows:

1. The position offered the appellant was that of senior

specialist surgeon - the most senior position which the Board had to offer, No doubt the appellant was offered the position because of his distinguished career as a surgeon and the depth of surgical experience which he then had, That emerges from the whole of the surrounding cir- cumstances, but the facts of his qualifications and experience coupled with the statement in the brochure that the Board was looking for "leading clinical specialists to supplement present staff specialists and to establish the basic core of specialist staff for a free treatment scheme" shows both the high calibre of the persons being sought and that the appellant was of this calibre. Plainly the Board through Dr. Wells knew it was dealing with a person of high quality and ability.

2. It is common ground between the parties that a surgeon needs continuing experience 1n order to maintain his skill. In relation to this matter Dr. Wells gave the following

[Orv NTs He SOTTO OE TION SRS CN eDND ROTO STON TEED OSD TON EWN DanvaNy TODO URETED ON SUISSE)

other people fully occupied to keep them competent.

It is well known that if (in) various medical specialties people are not busy enough with their medical work,

they tend to lose competence and so this was one of

the things that the Board had discussed in ensuring

I think that in most specialties which require long training to get into them in the first instance, they require continued considerable practice, not only to keep at the cutting edge of knowledge, relevant knowledge, but also in the cases of the operative specialties of course, to keep their technical and manual skills in operation.

Do you have any views as to general surgeons in particular?--- Yes, I think general surgeons have

be relevant can be looked up beforehand in preparation.

knowledge readily accessible at their fingertips the

whole time. At the same time, they have to keep their

areas and with many variations that occur in the human

body. I do not believe that these skills can be main-

' tained satisfactorily unless people, unless surgeons

are in fact kept busy. For example, a general surgeon who might have to remove a gall bladder would not be likely to be terribly gcod at it if he had not done

one for five years. There are many of these operations which the surgeons would need to keep their hands in. That infers the need to keep reasonably busy."

The contract was to be one pursuant to which the appellant

could expect to be employed for the remainder of his working

There was no provision in it for termination by the

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Board in any event other than on grounds of misconduct, negligence or inefficiency.

4, The matters referred to in paragraphs 2 and 3 need to

be taken into account together and with a further factor, namely, the statement in the brochure earlier referred to that the Board was seeking specialists who were and

who would remain "at the forefront of their specialty". Thus the contemplation was that the appellant would, in the capacity of senior specialist surgeon, remain employed by the Board (subsequently the Commission) for a period of over 20 years, During this time it was expected that he would remain at the forefront of his specialty. In the light of the evidence that would only be so if he were provided with work in sufficient quantities and also embarked on the research and took the study leave which the brochure also contemplated.

5. The appellant's conversation with Dr. Wells was con- ducted against the background of knowledge by both of simmering unrest and resentment on the part of the local medical profession concerning the introduction of the scheme, A major reason for that resentment was the realisation by the local profession that additional highly

experienced surgeons were to be introduced into Canberra

without any increase in the numbers of patients and with

a seeming assurance to the new practitioners of a steady supply of the more interesting and challenging cases, Having sketched in the background I can now come to the material words of the conversation. I have earlier set out the essential parts of it, but it should be appreciated that a proper appreciation of it does require the reading of the evidence of it in its entirety. Subject to that matter, it is my opinion that the following evidence establishes that there was an express term to the effect of that relied upon by the appellant:-

1. The evidence of Dr. Wells that he recalled the appellant wanting "to be assured that he was not just going to be dealing with minor cuts and boils in casualty",

2. The evidence of the appellant that he said that he was

not prepared to accept an appointment "which ianvolved - well, a non-existent gob in due course",

3. The appellant's evidence that he was concerned about the possibility of being inactivated if every surgeon was appointed to service the uninsured patients.

4. The appellant's evidence of Dr. Wells' statements to him that -

(b) there certainly was no intention to appoint "everybody unless that was the requirement at the particular time when these decisions were made";

(c) the Board intended the appellant to have a full time surgical job - a busy practice. It did not want people on its payroll "who were just twiddling their thumbs",

By no means unimportant is the use by Dr. Wells of the

word "assured", Plainly the appellant wanted assurances

of the amount of work which he would have. According to Dr. Wells he used that word. It is perhaps unnecessary to pause to emphasise that the ordinary meaning of that word is a promise making a thing certain; an engagement, pledge or guarantee. In the recounting of a conversation which had proceeded over a number of hours and had taken place some years before the evidence of it was given, one would not tie a witness to actual words. But the overall impression which the evidence to which I have referred gives 1s that the two parties to the conversation were intending it to be clear between them that there was, as a matter of obligation,

to be provided a sufficient flow of work to enable the

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The respondent sought to rely upon the appellant's knowledge of the political objections to the scheme as a reason why he could not have reasonably expected the assurances which he was given. But in my opinion his knowledge in that respect provides a strong reason why one would take the opposite view. It was that very knowledge which prompted him to seek the assurances to which reference is made in the evidence, His concern was to ensure, so far as he could, that he would not become a victim of the political dispute which was brewing. He wished to remain apart from it.

It was also submitted on behalf of the respondent that on no basis could it be inferred that the parties were con- tracting in such absolute terms, The subject matter of their contract in this particular respect was patients - human bodies to be operated upon, The obligation imposed upon the Board by such a term would involve it in compelling patients to undergo major surgieal treatment by the appellant, perhaps in many cases against their will. That being the case the parties to the conversation should not be taken to have intended that any assurances sought and given were intended to be promissory in a legal sense, that is contractual. Rather the case was one where the appellant as an experienced

surgeon seeking a position went about obtaining as much

information as he could about the amount of work he would have and the Board's future intentions in order to make his own independent judgment about what the future was likely to hold. In support of its submission the respondent placed reliance not only upon the nature of the subject matter of the contract and the entirety of the surrounding circum- stances, but also upon the length of time for which a person such as the appellant would be entitled to the benefit of the promise in question, It was submitted that neither party could reasonably have contemplated that the obligation of the Board in respect of such a matter might remain in force for a period of over 20 years.

In my opinion the respondent's submission should be

rejected. I think a reading of the evidence of the conver- Ui

sation as a whole reveals that the appellant intended to .obtain,

as contractual promises, the assurances to which I have earlier referred, and that Dr. Wells on behalf of the

Board was willing to give them as such. Both contemplated that the contract would be in force for many years. The documents themselves contemplatal this when they spoke of leave, including sabbatical and study leave, and research.

A further submission made on behalf of the respondent

was that no term to the effect of that relief upon should, be

found because the system of which the appellant became part was

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a referral system. That submission was made because three senior specialists in general surgery were employed by the Board and were available to do general surgical work, The appellant was one of these, The practice was for work to be referred to one of the three by general practitioners or by other, although more junior, staff medical officers. Thus the respondent was able to say that the appellant in practice depended upon referrals for the amount of his work. If work were not referred to

him by other medical practitioners he would not get it otherwise. However, in no conversation nor in any document which preceded the appellant taking up his duties was there any mention of such a system. Nor was there any reference to the proposed adoption of a practice whereby the appellant would depend upon referrals for a sufficient

appointed, Nothing being said in any of the documents

or conversations as to how work was to be shared, it must have been contemplated that some system would have to be introduced to enable work properly to be allocated and shared amongst the doctors in question, But to my mind,

that circumstance does not cut down the unqualified nature

of the assurances which the appellant was given. No problem arose as the result of the referral system which was in force because under it the appellant received a sufficient flow of work. The problem did not arise until the change in the system occurred at the end of 1976. It is my opinion that if he had received insufficient work under the referral system which existed prior to the change in the system, the appellant could have complained of a breach of contract. The fact that he acquiesced in the system which was instituted is not of any moment. His acquiescence in 1t resulted from the fact that the system worked without detriment to him. His statement in evidence that 98 per cent of his work came from referrals does not alter my conclusion in this regard. That was a statement of fact and was an answer given in the context of questions attempting to bring out alleged problems which the appellant had in working under a referral system where he had become one of 12 rather than one of three.

I have considered whether the appellant's acquiescence in the limited referral system which existed between 1974 and 1976 ought not to be treated as a variation by conduct of the original terms of the agreement, But in my opinion there is no material upon which it would be possible to

base a finding that the appellant had by his acquiescence

Pe AAR RN RNR EPRINEN SO RECN aN mh ne ake Nat wer at

in the system agreed to any modification of the guarantee of sufficient work which he had been given before commenc- ing his duties.

For the reasons I have given I am of opinion that the words used by the parties to the conversation when considered against the background earlier mentioned were used with the intention that they should be contractual and that they did involve the giving by Dr. Wells on behalf of the Board of an assurance to the effect of the term which 1s relied upon. Thus the contract did, as his Honour found, contain a term that the Board (and thus the Commission) would furnish the appellant with surgical work of a kind and quantity suitable for a senior and experienced general surgeon,

The next question is that of breach. The evidence plainly establishes that the work with which the appellant was provided after 1976 was substantially inadequate. The evidence is all to the effect that it was quite insufficient to enable him to maintain his surgical skill. The Commission was, of course, entitled to change the system. But that entitlement does not mean that 1t could ignore its obligation to the appellant. No defence based upon frustration,

impossibility of performance or some aspect of public policy

has been raised, nor do I think that it could have been. The inescapable fact is that the establishment of the new system had the effect of reducing substantially the amount of available work to the appellant.

I turn to the question of causation. His Honour's reasons for not finding damage suffered by the appellant to have been caused by the respondent's breach of contract were based upon evidence of a number of other matters which his Honour thought could themselves explain the fall in the volume of the appellant's work. These matters were -

1. The necessity for the appellant to obtain referrals. His Honour thought that the appellant may have received substantially less numbers of referrals because of the part he had played in medical politics in the Territory. The appellant agreed that he had taken a strong stand in support of the salaried medical system. He had written articles about it in a newspaper. Dr. Wells said that the appellant had become the recipient of bad feeling on the part of other doctors and had defended himself against it. He was thus at odds with the local medical profession who were unlikely to refer many cases to him for that reason,
2. Evidence that the appellant had other problems with

members of the local medical profession. It is not useful

to go to the detail of these. It is enough to say that he was at oods with practitioners 1n private practice in a number

Ree meatal oe ROR mL nee La Ew ae cnn ae ham Met eden hn

3. The appellant's refusal to participate in the activities of the Division of Surgery, a unit established after the change in the scheme at the end of 1976. The appellant considered the unit to be carrying on an activity which was illegal by reason of the operation of a provision of the Trade Practices Act 1974,

4, The appellant's failure to disclose, in accordance with his contract, amounts earned by him in private practice.

His reasons for refusing this information are given in the evidence. I do not find iat necessary to refer to the detail of it,

With respect to his Honour I do not find that any of the matters referred to provide relevant grounds for not finding damage suffered by the appellant to have been caused by the respondent's breach of contract. I have earlier found: that there was no term of the contract obliging the appeliant to participate in a referral system. He was promised a sufficient flow of work. He did not receive it. ItWas not suggested that failure by him to obtain a sufficient amount of work was due to any breach of contract on his part. The only breach he has committed is failure to disclose the amount of his earnings in private practice. But that could not be causative of his receiving insufficient

work, It might have been used as the basis for an argument

that he had not established breach or that he had suffered no damage. But his Honour found that his private practice was not providing substantial work for the appellant. This was said to be demonstrated by his small operating require- ments. In the shelter of the contract which the appellant has he could take sides in medical politics, claim, as he apparently did, that too many unnecessary operations for appendicitis were being carried out or go on, notwithstanding that his manner and ways of dealing with fellow practitioners might not have been, at least in their eyes, all that could be desired. None of those matters could affect his entitlement to a sufficient flow of work, If it had been found during the currency of the original scheme that other doctors or patients were unhappy with having to deal with him, it may be, although I express no opinion on the point, thst the Board would have had some redress. But the uncon- tradicted evidence was that during that period the appellant had no problem in obtaining a sufficient flow of work. His problems arose only after the change in the system.

In my opinion the appellant has established that damage which he has suffered was caused by the respondent's breach of contract.

He is therefore entitled to succeed in this appeal.

neh nbn int amen ct tn NNR AN Ra firs ee Res cee Te tare

annette diameter itilenen emo ntde | is tine i cain mR

The remaining question is that of damages. T have had the opportunity of reading the judgment to be delivered by the other members of the Court. In the result my opinion will not prevail. It does not therefore seem useful or appropriate for me to express an opinion as to what amount the appellant would have been entitled to recover had he succeeded. There are, however, some matters in relation to damages which should be noticed.

Firstly, I mention that the preference of counsel for the appellant was that there should be a new trial limited to the question of damages if we were of opinion that the appellant was entitled to succeed. I would not have been prepared to order a new trial, The evidence on damage was led. No question of credit is involved. The respondent opposes a new trial and we are in as good a position as the trial judge to assess such damages as the appellant is entitled to.

Then it should be remembered that the contract is still on foot. The appellant continues to be employed as a senior specialist and to receive the emoluments and other benefits which are provided for in his contract. He has suffered no financial loss in the sense of losing income which he might otherwise have earned or the security

of the employment which he has. The principle which

applies 1n a case such as this 1s that the appellant may

only recover such damage as he has suffered down to the date of the institution of the proceedings, 22 June, 1978. He is not entitled to recover damages in respect of any period thereafter, at least in these proceedings; Lewis v. Peachey (1882) 1 H. & C, 318; 158 E.R. 989 and McGregor on Damages, 14th ed, (1980) paras.293-295, The reason for this principle is obvious. The respondent may at some date in the future decide to change the system again. It may be that under such a change the appellant would be supplied with a sufficient flow of work, Alternatively he may cease, for some other reason, to suffer damage. That would be the case if he were to die prematurely or become, through illness or accident, incapacitated for his work as a surgeon. Furthermore, he might decide to give the Commission three months notice thus bringing the contract to an end.

What I have said is subject to any operation which should be accorded to Order 38 Rule 29 of the Rules of the Supreme Court of the Australian Capital Territory. The rule provides that where damages are to be assessed in respect of any continuing cause of action they shall be assessed down to the time of the assessment. In the light of the discussion in National Coal Board v. Galley (1958) 1 A.E.R.91 at pp.100-102, I would have some reservation as to whether

the rule has any application in this case. I express no

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SADIE Nae es. Tai onal Leet a Rhett ae ath ARS RAR Rade lah it mmeetinenes oN Haller h ti carat inet Sal At oR ohm Bate

view upon the question, particularly as no argument on the point was addressed to us. If the rule were to apply damages would be assessed down to the date of his Honour's judgment, 27 November, 1980, rather than 22 June, 1978.

The only other matter I would mention in relation to damages is the meagreness of the evidence about them. There is evidence, although scant, of some hurt to the appellant's feelings. More importantly, although the evidence plainly establishes that the appellant has not had a sufficient flow of work to maintain a high standard of professional competence, there is no evidence of what the particular consequences to him of that situation have been, In those circumstances it would not seem to me that the case is one for the award of a figure anywhere near the very substantial sum for which senior counsel for the appellant contended.