ACT Branch of the Australian Medical Association Ltd v Australian Capital Territory

[1994] FCA 117

ACT BRANCH OF THE AUSTRALIAN MEDICAL ASSOCIATION LIMITED v. AUSTRALIAN CAPITAL
TERRITORY
No. ACTG6 of 1994
FED No. 117/94
Number of pages - 7
Contract

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
DAVIES, FOSTER AND LEE JJ

CATCHWORDS

Contract - construction of agreement between Australian Capital Territory and the ACT Branch of the Australian Medical Association ("the ACT-AMA") - whether arbitration limited to matters raised by the ACT-AMA - ambit of claim lodged by the ACT-AMA.

Commercial Arbitration Act 1986 (ACT) - s.4(1).

HEARING

SYDNEY, 23 February 1994
#DATE 16:3:1994

Counsel for the appellant: R.J. Bainton QC

Solicitors for the appellant: Mallesons Stephen Jaques

Counsel for the respondent: T. Simos QC and Mr S.W. Gibb

Solicitor for the respondent: Australian Capital Territory

Government Solicitor

ORDER

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay the respondent's costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

DAVIES, FOSTER AND LEE JJ This is an appeal by leave from two declarations made by a Judge of the Supreme Court of the Australian Capital Territory, Higgins J.

1. An issue before his Honour was the ambit of an arbitration between the ACT Branch of the Australian Medical Association Ltd ("ACT - AMA") and the Australian Capital Territory.

2. On 30 November 1987, the ACT Health Authority (of which the Australian Capital Territory is now the successor) and the Capital Territory Group of the Australian Medical Association (of which the ACT - AMA is now the successor) entered into an agreement as to the terms and conditions of contracts to be offered to Visiting Medical Officers treating patients in Authority Hospitals. It is agreed that the Australian Capital Territory and the ACT - AMA are bound by that agreement, to which we shall refer as "the principal agreement".

3. The principal agreement set out in a schedule certain principles to be incorporated into contracts which were to be offered to Visiting Medical Officers. Also agreed and annexed to the principal agreement were the form of a contract to be offered in respect of sessional attendance at an Authority Hospital and the form of a contract dealing with attendance to be remunerated by a fee for service.

4. A clause contained in the schedule to the principal agreement provided:-
   

"10. Arbitration

. an independent arbitration process will be available to deal with matters arising in the course of the contract and at renegotiation.

. these processes for negotiation and arbitration are as outlined in the contract document and Annexure D."

The arbitration provisions set out in annexure "D" read:-

"1. AVAILABILITY

In the event that the Capital Territory Group of the Australian Medical Association ('CTG-AMA') and the ACT Health Authority ('the Authority') are unable to reach agreement on the terms and conditions for a contract for the provision of medical services for Visiting Medical Officers

('VMO') to the Authority within three months of the expiry of the current contract, conciliation and/or arbitration of the remaining issues in dispute shall take place and be completed within that three months period.

2. VARIATION OF CONTRACT DURING ITS TERM

(1) Subject to subclause (2) the contract will be binding on all parties for the life of the new contract.

(2) If during the term of the contract the parties agree that special and exceptional circumstances make it desirable to consider variation of the contract then the parties will negotiate that variation. If one party believes that special and exceptional circumstances exist but this is not agreed by the other party, then the arbitrator will consider whether such special and exceptional circumstances do exist. In the event that special and exceptional circumstances have been recognised but the parties cannot negotiate the appropriate variation then this matter will be referred to the arbitrator. The parties would not expect such circumstances would arise during the first year of the contract.

3. ARBITRATOR

To be a past or present Deputy President of the Australian Conciliation and Arbitration Commission nominated by the President of the Australian Conciliation and Arbitration Commission and appointed by the parties.

4. SUBJECT MATTER TO BE ARBITRATED

Such of the terms and conditions of the contract as have been the subject of negotiation but have not been agreed.

5. FRAMEWORK WITHIN WHICH THE ARBITRATOR MUST OPERATE The arbitrator will be required to make his determination consistent with the prevailing wage fixation principles. Such determination shall have regard to the reasonable costs incurred by the practitioners in the course of their practices.

6. OPERATING ARRANGEMENTS

The arbitrator shall determine the processes to be followed in arbitration, shall not be bound to act in a formal manner and shall not be bound by any rules of evidence but may inform himself/herself on any matter in such manner as he/she thinks just.

The arbitrator shall act according to equity, good conscience and the substantial merits of the case, without regard to technicalities and legal forms. Any appearance costs to be borne by individual parties.

7. TIMETABLE FOR CONTRACT NEGOTIATION AND ARBITRATION

(i) The Capital Territory Group of the AMA shall lodge its claim for new or revised amounts or rates of remuneration and terms or conditions no later than six months prior to the date of expiration of existing contracts.

(ii) The ACT Health Authority shall enter negotiations with the Capital Territory Group of the AMA on the content of any claim within two weeks of its lodgment.

(iii) In the absence of agreement between the parties by a date three months prior to the date of expiration of existing contracts, the claim shall be referred to the independent conciliation and/or arbitration.

(iv) The Arbitrator shall make every endeavour to settle the matter within two months of referral and before the expiration of existing contracts.

(v) Any period of time referred to in this paragraph may be varied by consent of the parties.

8. EFFECT OF THE ARBITRATOR'S DECISION Any decision of the Arbitrator will be binding on both parties."

1. These provisions for arbitration did not encompass the arbitration of disputes between the Australian Capital Territory and individual practitioners in respect of matters arising under their individual contracts. Those individual contracts, in the form of the agreed contracts annexed to the principal agreement, included other and different arbitration provisions.

2. After execution of the principal agreement, contracts in the form of the annexed contracts were offered to medical practitioners and were accepted. Each contract was to operate for a term to expire in November 1990. On the expiry of those contracts in 1990, further contracts in an agreed form were offered and accepted for a term to expire in November 1993.

3. On 5 May 1993, with a view to the pending expiry in November 1993 of the contracts, the ACT - AMA wrote to ACT Health setting out a list of 10 matters to be discussed in relation to the new contracts. The proposal contained the introductory words "Present contract will be the basis of the new contract. The new contract will be formed from amendments to the document." That letter constituted the lodgment of a claim for the purposes of clause 7(i) of annexure D.

4. On 21 June 1993, ACT Health wrote listing a wide range of matters which it wished to be the subject of negotiation. That proposal raised for negotiation many of the matters which had been negotiated and agreed in 1987. Thus, the commencing paragraph of the proposal of ACT Health, read:-
   

"In ensuring the delivery of a quality health service, ACT Health is committed to securing community confidence in all aspects of health delivery and the expenditure of health funds. This means that all aspects of the VMO arrangements must be scrutinised to ensure maximum efficiency and effectiveness in the way services are performed, structured and valued. Such scrutiny will of necessity need to take into account the recent range of changes that have occurred in the world of work generally and the processes that facilitate them. It is also necessary to ensure compliance with statutory and other requirements for public accountability appropriate for a responsible Government."

1. Subsequently, the ACT - AMA instituted proceedings in the Supreme Court of the Australian Capital Territory. One of the issues raised was whether the arbitration pursuant to cl.10 of the schedule and annexure D was limited to such of the ten items set out in the letter of the ACT - AMA of 5 May 1993 as were not agreed or whether it included matters set out in the letter from ACT Health of 21 June 1993.

2. The learned trial Judge held that the ambit of the arbitration included all the matters raised by both parties which had not been agreed. His Honour made the following declarations:-
   

"3. The 'Arbitration Framework' is applicable in respect of any negotiations between the ACT and the first plaintiff relating to the terms of future contracts between the ACT and the Members for the supply of professional services.

4. The subject matter to be arbitrated pursuant to the terms of the Arbitration Framework is such of the terms and conditions of a contract for the provision of medical services for Visiting Medical Officers as have been the subject of negotiation but have not been agreed and the subject matter to be arbitrated may include any terms and conditions required and negotiated by the ACT as successor to the Authority and may include any terms and conditions relating to the matters referred to in the Schedule to the said Agreement."

1. His Honour's declarations gave effect to the general purpose of a submission to arbitration, namely to provide a means of resolving issues or disputes arising between parties. Thus, s.4(1) of the Commercial Arbitration Act 1986 (ACT) defines "arbitration agreement" in these terms:-
   

"'arbitration agreement' means an agreement in writing to refer present or future disputes to arbitration"

1. An unusual contention is put on behalf of the ACT - AMA. The crux of it is that, although both the Australian Capital Territory and the ACT - AMA have a vital interest in the terms and conditions on which medical practitioners may carry on their practices in Authority Hospitals, yet only the ACT - AMA has the right to raise issues for negotiation and to pursue those issues to arbitration. The contention, if accepted, would bind the Australian Capital Territory to the points agreed in 1987, leaving the ACT - AMA free to raise matters for negotiation and arbitration at any future renegotiation. To read the principal agreement in this way would require the implication of a term that the obligations of the Australian Capital Territory ceased at the expiration of a reasonable time, an unlikely reading of the agreement.

2. The contention necessarily draws a distinction between issues and disputes arising during a contract period and issues and disputes arising with respect to future contracts. With respect to the former, the procedures set out in cl.7 of annexure D do not apply. There is no room for disputing the point that, during a contract term, the Australian Capital Territory may raise an issue which it alleges, because of special and exceptional circumstances, should be resolved by the parties or by an arbitrator.

3. We agree with the trial Judge that the effect of the principal agreement was not to bind the Australian Capital Territory to the terms and conditions agreed upon in 1987 and to restrict the opportunity of negotiation and of arbitration to matters which thereafter may be raised by the ACT - AMA. Rather, the principal agreement set out the principles agreed for the period of the three year contracts to be offered immediately thereafter. The principal agreement provided for a process of negotiation and arbitration in respect of any issue a party might wish to raise, either during the course of the contracts or as to the terms and conditions of subsequent contracts.

4. There is no ambiguity in the principal agreement on this point. All relevant matters may be the subject of negotiation and of arbitration if agreement is not reached. Clause 10 of the schedule provides for an independent arbitration process "to deal with matters arising in the course of the contract and at renegotiation." There is no suggestion in that provision that the matters to be arbitrated are limited to those which the ACT - AMA may wish to raise.

5. Clause 4 of annexure D describes the subject matter to be arbitrated as "Such of the terms and conditions of the contract as have been the subject of negotiation but have not been agreed." In the context of negotiations with respect to future contracts, that clause provides that the subject matter to be arbitrated will be such of the terms and conditions of the future contracts as are not agreed. Again, there is no restriction of the arbitral process to matters raised by the ACT - AMA.

6. When the ACT - AMA lodged its claim in May 1993, it expressly proposed that the future contracts be as set out in the existing contracts, subject to the matters raised in the 10 points of the claim. This formulation accorded with cl.7(i) of annexure D, which specifies that a claim shall set out the new or revised amounts or rates of remuneration and terms or conditions sought, a provision which necessarily implies that the claim will assert that matters in the contracts which are not specifically raised for negotiation should remain unchanged.

7. When, in accordance with cl.7(ii) of annexure D, ACT Health entered into negotiation with the ACT - AMA, it entered into negotiations with respect to the whole subject of the terms and conditions of the contracts to be offered, that is to say, with respect to the proposal by the ACT - AMA that the 10 points which it raised would be incorporated into the future contracts but that otherwise the future contracts would be in the existing form.

8. Mr Russell Bainton QC, who appeared for the ACT - AMA, submitted that the ambit of the negotiation was limited by cl.7(ii) of annexure D to the 10 points of claim expressly stated by the ACT - AMA on 5 May 1993. For the reasons we have given, however, the claim was not limited to the 10 specific points which it expressed; it also proposed that the contracts would otherwise remain unchanged.

9. Clause 7 of annexure D is a facultative provision and its terms are directory. They are not mandatory preconditions affecting the substance of an arbitration. In the event of non-compliance with cl.7, the Supreme Court of the Australian Capital Territory may give appropriate directions, as ss.47 and 48 of the Commercial Arbitration Act provide. Higgins J accordingly proceeded to give such directions. His orders to that end are not under challenge.

10. We therefore accept the submissions which have been put by Mr Theo Simos QC and Mr S.W. Gibb, who appeared on behalf of the Australian Capital Territory.

11. The wording of the declarations made by the trial Judge could be the subject of discussion. However, counsel raised no issue with respect to it and were content that the declarations resolved the issue which they had asked his Honour to determine. We therefore need not consider the precise terms of the declarations.

12. For these reasons, in our opinion, the appeal should be dismissed with costs.