Jeanette Jana BHT Ronald Jana v Western Sydney Local Health District trading as Westmead Hospital

[2021] NSWSC 1444

Supreme Court

New South Wales

Medium Neutral Citation:

Jeanette Jana BHT Ronald Jana v Western Sydney Local Health District trading as Westmead Hospital [2021] NSWSC 1444

Hearing dates:

8 November 2021

Date of orders:

11 November 2021

Decision date:

11 November 2021

Jurisdiction:

Common Law

Before:

Davies J

Decision:

1. The defendants are authorised to make the following deductions from the judgment sum:

i. such amount as is owing to Centrelink pursuant to a final notice received by the defendant(s);

ii. such amount as is the subject of a notice of charge or recovery from the National Disability Insurance Agency;

iii. such amount payable to Medicare pursuant to the Health and Other Services (Compensation) Act 1995 (Cth) and in accordance with any notice of charge.

2. After the deductions referred to in paragraph 2 pursuant to section 77 of the Civil Procedure Act 2005, the defendants are to pay the balance of the judgment sum into Court pending an application for the benefit of the plaintiff or as otherwise ordered by the Court.

3. Payment of costs will not be due and no interest shall be payable in respect of costs if the costs are paid within 28 days after whichever of the following events occurs last:

(a) The costs being agreed; or

(b) Receipt by the defendants of a Certificate as to Determination of costs by a Cost Assessor; or

(c) Receipt by the defendants of a written document signed by the plaintiff authorising and directing payment of the costs.

(d) If interest becomes payable in accordance with 5 (a)-(c) the interest will only be calculated from the date which is 28 days after the last event.

4. The Court notes that the parties agree that these terms are not to be disclosed except in the following circumstances:

(a) as required by law; or

(b) where the defendants seek contribution or indemnity from a third party; or

(c) a copy of these terms is provided to Centrelink (Department of Human Services) and NDIA in relation to the determination of any refund.      

Catchwords:

CIVIL PROCEDURE – plaintiff sued first and second defendant for injuries arising out of medical negligence – Calderbank offer accepted by plaintiff – approval of settlement – where three statutory deductions must be made from amount of settlement – where defendants propose term to be included in consent judgment withholding interest payable until certificates received from Commonwealth entities – whether such term should be implied in consent judgment

CONTRACTS – construction -- whether proposed term was a standard term in consent judgments – where implying term into judgment would have effect of varying s 101 of the Civil Procedure Act – where term does not fall within any of categories of implied terms identified in relevant case law – where no basis for implication of term

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 76, 77, 101

Health and Other Services (Compensation) Act 1995 (Cth) ss 4, 23, 24, 28, 30, 32, 33, 33B

National Disability Insurance Scheme Act 2013 (NSW)

Social Security Act 1991 (Cth) ss 1184, 1184B

Cases Cited:

BP Refinery (Westernport) Pty Limited v Shire of Hastings (1994) 180 CLR 266

Calderbank v Calderbank [1975] 3 All ER 333

Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1

State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503; [2002] NSWSC 178

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Jeanette Jana BHT Ronald Jana (Plaintiff)
Western Sydney Local Health District trading as Westmead Hospital (First Defendant)
Mohammed Sharif Dowla (Second Defendant)

Representation:

Counsel:
D Higgs SC & D Del Monte (Plaintiff)
M Windsor SC & S Kettle (First Defendant)
B Epstein (Second Defendant)

Solicitors:
Concordia Legal (Plaintiff)
McCabes (First Defendant)
HWL Ebsworth Lawyers (Second Defendant)

File Number(s):

2015/234156

Publication restriction:

Nil

Judgment

1. The plaintiff by her tutor sued Western Sydney Local Health District trading as Westmead Hospital and Dr Mohammed Dowla for failing to diagnose her complaints when she presented to the Hospital and to Dr Dowla, for failing to arrange for the performance of a lumbar puncture to determine that she was suffering from meningitis.

2. On 20 October 2021 solicitors acting for the first defendant forwarded a letter to the plaintiff’s solicitors in these terms:

The first and second defendant offer to resolve these proceedings on the following basis:

1.   Judgment for the plaintiff against the first and second defendant in the sum of [$XXX] inclusive of all paybacks, plus costs subject to the approval of the court.   

The letter was expressed to be an offer pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333.

3. On 27 October 2021 the plaintiff’s solicitors wrote to the solicitors acting for each of the defendants in these terms:

We refer to correspondence from McCabes, dated 20 October 2021, offering a judgment for the plaintiff against the first and second defendant in the sum of [$XXX] inclusive of all paybacks, plus costs and subject to the approval of the court (the offer).

The plaintiff accepts the offer.

4. The parties came before me for approval of the settlement by reason of the plaintiff’s legal incapacity on 8 November 2021. The lawyers acting for the plaintiff proposed a judgment in these terms:

Judgment for the plaintiff against the first and second defendant in the sum of [$XXX] inclusive of all paybacks, plus costs subject to the approval of the court.

5. Three statutory deductions must be made from the amount of the settlement being $221,773.74 to the National Disability Insurance Agency; $179,728.00 to Centrelink; and $8,006.55 to Medicare.

6. The defendants proposed a more detailed judgment which authorised the making of deductions of monies owing to Centrelink, the NDIA, and Medicare, the payment of the balance of monies into Court, provisions concerning the payment of costs, and a provision whereby the terms of the judgment were not to be disclosed.

7. The defendants’ proposed judgment also included the following term:

4.   Payment of the judgment sum will not be due and no interest shall be payable in respect of the judgment sum if the same be paid within 28 days after whichever of the following events occurs last:

(a)   Entry of judgment by the Court; and

(b)   Receipt by the defendants of a valid Medicare Notice of past benefits or notice of charge in accordance with Health and Other Services (Compensation) Act 1995 as amended and a duly completed Medicare Compensation Recovery Notice of Judgment or Settlement form; and

(c)   Where the defendants or their insurers have been or are notified that there may be moneys owing to Centrelink (Department of Human Services), receipt by the defendants of a final notice informing them of the amount of the payback or of the fact that no moneys are repayable; and

(d)   Where the defendants or their insurers have been or are notified that there are moneys owing to the National Disability Insurance Agency (NDIA) receipt by the defendants of a Recovery Notice from NDIA informing them of the amount of the payback.

8. Mr Higgs of senior counsel for the plaintiff objected to the inclusion of paragraph 4 in the judgment. His principal position was that an agreement was reached in the terms set out in the correspondence and that no more was needed to reflect that agreement than the judgment put forward by the plaintiff. However, he did not object to the other proposed paragraphs by the defendants except for paragraph 4.

9. Mr Windsor of senior counsel for the first defendant (with whose submissions Ms Epstein of counsel for the second defendant agreed) submitted that the proposed term was a standard term that finds its way into most judgments where personal injuries matters are settled. In that way, the term was one which was implied into the agreement to deal with matters that are required to be dealt with.

10. Section 101 of the Civil Procedure Act relevantly provides:

101 Interest after judgment (cf Act No 52 1970, section 95; Act No 9 1973, section 85; Act No 11 1970, section 39)

(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.

(2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from -

(a) the date on which the judgment takes effect, or

(b) such later date as the court may order.

(3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary.

…

11. It may be observed that what is contained in paragraph 4 of the proposed judgment is inconsistent with s 101, unless the Court otherwise orders interest to be paid in accordance with paragraph 4.

12. In respect of each of the deductions, there are statutory provisions which ensure that repayment of the amounts is made to the relevant government entity.

13. The National Disability Insurance Scheme Act 2013 (Cth) provides for repayment of amounts paid by the NDIA for amounts that have been paid from that Scheme in relation to the participant’s impairment.

14. Section 109 relevantly provides:

109   CEO may send preliminary notice to potential compensation payer or insurer

(1) If:

(a) a participant or prospective participant makes a claim against another person (the potential compensation payer) for compensation; and

(b) the claim relates to the participant’s or prospective participant’s impairment;

the CEO may give written notice to the potential compensation payer, stating that the CEO may wish to recover an amount from the potential compensation payer.

(2) If:

(a) a participant or prospective participant makes a claim against another person (the potential compensation payer) for compensation; and

(b) the claim relates to the participant’s or prospective participant’s impairment; and

(c) an insurer may be liable, under a contract of insurance, to indemnify the potential compensation payer against any liability arising from the claim for compensation;

the CEO may give written notice to the insurer, stating that the CEO may wish to recover an amount from the insurer.

15. Section 114 makes it an offence if a potential compensation payer (here, the defendants) has been given a notice under s 109 and the potential compensation payer makes a compensation payment to the participant (that is, the plaintiff).

16. Repayment of Medicare is governed by the Health and Other Services (Compensation) Act 1995 (Cth). Section 4 defines compensation as a payment of damages or a payment in settlement of a claim for damages that is made in respect of an injury to a person.

17. Section 23 requires a notifiable person (here, the defendants) to notify the Chief Executive Medicare in writing if a judgment or settlement has been made in respect of a claim within 28 days after the judgment or settlement is made. The notice must inform the Chief Executive whether the compensation payer or insurer intends to make an advance payment (defined in s 33B of the Act) in respect of the compensation.

18. Section 24 of the Act relevantly provides:

Notice of charge - claims resulting in judgments or settlements

(1) Subject to subsection (1A), if the Chief Executive Medicare receives a notice under subsection 23(1), the Chief Executive Medicare must give to:

(a) if the notifiable person in relation to the claim for compensation from which the judgment or settlement resulted is an insurer - that insurer; or

(b) otherwise - the compensation payer;

written notice specifying the sum of the amounts (if any) that are payable to the Commonwealth under this Act or the Charges Act in respect of the amount of compensation.

(1A) A notice under subsection (1) is not required if the compensation payer or insurer makes an advance payment in respect of the compensation.

19. Section 28 of the Act provides that if the Chief Executive Medicare gives a compensation payer a notice under s 24, the compensation payer must pay to the Commonwealth the amount specified in the notice within 28 days. Failure to do so involves a criminal penalty.

20. Section 30 of the Act provides:

Notice of charge suspends liability to pay compensation etc.

(1) If an amount is recoverable under section 28 from a compensation payer in respect of an amount of compensation, the compensation payer is not liable to pay to the compensable person any amount of the compensation until the amount is paid to the Commonwealth, or until the end of the 28 day period for complying with section 28, whichever happens first.

(2) If an amount is recoverable under section 28 from an insurer in respect of an amount of compensation:

(a) the insurer is not liable to indemnify the compensation payer in respect of the compensation payer's liability to pay to the compensable person any amount of the compensation; and

(b) the compensation payer is not liable to pay to the compensable person any amount of the compensation;

until the amount is paid to the Commonwealth, or until the end of the 28 day period for complying with section 28, whichever happens first.

21. Section 32 relevantly provides:

32 Offence to make payment before discharging liability to the Commonwealth

(1) If a judgment or settlement has been made in respect of an amount of compensation, a compensation payer or insurer must not pay to the compensable person any part of the compensation before the Chief Executive Medicare has issued a notice under section 24 unless:

(a) the time within which the Chief Executive Medicare must issue such a notice has expired; and

(b) if the Chief Executive Medicare had given a notice under section 21, in respect of the claim for compensation, during the 6 months preceding the day on which an amount of compensation was fixed under the judgment or settlement—the insurer or compensation payer withholds from the compensable person an amount of compensation equal to the amount set out in the notice under paragraph 21(2)(b).

Penalty: Imprisonment for 12 months.

(1A) Subsection (1) does not apply if the compensation payer or insurer makes an advance payment in respect of the compensation.

22. Section 33 provides:

Interest not payable on amount withheld

If:

(a) a judgment or settlement has been made in respect of an amount of compensation; and

(b) a compensation payer or insurer has paid to the compensable person a part of the compensation, but withheld an amount referred to in paragraph 32(1)(b); and

(c) an Australian law would, apart from this section, make the compensation payer or insurer liable to pay interest on the sum withheld, because the sum is withheld after the judgment or settlement has been made;

despite that law, the compensation payer or insurer is not liable to pay that interest

23. This provision would appear to override the provisions of s 101 of the Civil Procedure Act until the requirements of the Health and Other Services (Compensation) Act have been complied with.

24. Division 2A of Pt 3 of the Act provides for an alternative arrangement whereby the compensation payer or insurer can make what is called an advance payment to the Commonwealth. The advance payment under s 33B(2) is to be equal to 10% of the amount of compensation payable under the settlement. If that advance payment is made, the compensation payer is then in a position to pay the remainder of the compensation to the person entitled (see s 32(1A)).

25. In relation to the money payable to Centrelink, the Social Security Act 1991 (Cth) provides in s 1184 that if a compensation payer is liable to pay compensation to a person, the Secretary may give written notice to the compensation payer that the Secretary proposes to recover from the compensation payer the amount specified in the notice. Section 1184B provides that if such a notice has been given, the compensation payer is not liable to pay the compensation while the notice has effect.

26. It is within that statutory framework, that the defendants seek to imply a term which would not require them to pay interest until the last of the three notices to be received from the NDIA, Medicare and Centrelink is received by the defendants. That is, it is sought to imply a term into the agreement which has the effect of varying the provisions of s 101 of the Civil Procedure Act. In relation to the Federal legislation, it is only s 33 of the Health and Other Services (Compensation) Act which, by force of s 109 of the Australian constitution, varies the operation of s 101. The circumstances where that occurs are limited to the situation identified in s 32(1)(a) and (b) of the Health and Other Services (Compensation) Act.

27. In State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503; [2002] NSWSC 178, Einstein J said that there were two categories of contractual terms. The first category was express terms. The second category involved implied terms. His Honour then went on to say:

[43]   The second category is subject to a further division:

•   terms which the law finds in a certain class of contract, either by common law or statute, although those terms may not find specific expression in the contractual statements or documents of the parties. [“category “A” terms”]

•   terms which are to be implied into a contract to give effect to the presumed intention of the parties: Castlemaine Tooheys Ltd v Carlton and United Breweries Ltd (1987) 10 NSWLR 468 at 486 – 487 per Hope JA, Byrne v Australian Airlines (1995) 185 CLR 411 at 448 per McHugh and Gummow JJ. [“category “B” terms”]

[44]   Terms which are to be implied into a contract to give effect to the presumed intention of the parties can be further sub-divided as follows.:

•   terms implied into a contract to give effect to the presumed intention of the parties can be implied according to a notorious custom or usage in a particular trade, industry or locality: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurances (Australia Ltd) (1986) 160 CLR 226 at 236 per Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ. [“category “B(i)” terms”]

•   terms implied into a contract from a prior course of dealing: McCutcheon v David MacBrayne [1964] 1 WLR 125 at 134 per Lord Devlin, Hardwick Game Farm v Suffolk Agricultural Poultry and Producers Association [1969] 2 AC 31 at 90 per Lord Morris of Borth-y-Gest, at 113 per Lord Pearce. [“category “B (ii)” terms”]

•   terms implied into certain contracts familiar to courts where the principal terms of the agreement are settled but necessary subsidiary terms are absent: Coal Cliff Collieries v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 38 per Handley JA. [“category “B (iii)” terms”]

•   terms which are implied to give efficacy to the particular contract: BP Refinery (Westernport Port) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 at 282 – 283. [“category “B (iv)” terms”]

Implication of Terms Ad Hoc

[45]   The principles upon which a Court will imply a term into a contract as a matter of fact are not in doubt and have been stated and re-stated authoritatively many times. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, the Privy Council, on appeal from the Supreme Court of Victoria, listed the five requirements necessary to be satisfied as follows (at 282 - 283):

‘Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) 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; (3) it must be so obvious that ‘it goes without saying;’ (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.’

[46]   This statement has been approved by the High Court many times: Secured Income Real Estate v St Martin’s Investments Pty Ltd (1979) 144 CLR 596 at 605 - 606. Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 66, 117 - 118, Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422, 441. The onus for showing that the criteria have been satisfied lies on the party that asserts the implied term; that onus is heavier where, as here, the subject contract is a detailed and complex one. In Codelfa Construction Pty Ltd v State Rail Authority of NSW (supra, at 346) Mason J said: ‘[t]he more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the question at issue. And then there is the question of identifying with any degree of certainty the term which the parties would have settled upon had they considered the question.’ [emphasis added]

28. It does not seem to me that the proposed implied term in the present matter falls within any of the categories identified. Mr Windsor’s submissions went close to the assertion that a term such as paragraph 4 was a “notorious custom or usage” found in the settlement of personal injuries claims. Mr Windsor put it in this way:

There are arrangements in place not only to reflect agreements that have been made in the fashion that this one was made, but also requiring further orders which reflect a regime of management of common law personal injury cases, including cases where there is an infant or someone under a disability.

29. Whilst it may be accepted that terms of settlement frequently contain provisions similar to what is contained in paragraph 4, that situation usually results from a negotiation between the parties, generally after the time the settlement figure has been agreed. That seems to me to be some distance from suggesting that such a term can be implied into an agreement. Such a term does not always appear in an agreement of this type.

30. Nor can the term be regarded as a necessary subsidiary term as referred to in Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 38.

31. Finally, this term does not satisfy the requirements set out in BP Refinery (Westernport) Pty Limited v Shire of Hastings (1994) 180 CLR 266 at 282-283. It is not necessary to give business efficacy to the contract, and it is not so obvious that it goes without saying. One particular difficulty in that regard is that, on its face, it seeks to modify s 101 of the Civil Procedure Act.

32. There is nothing inherently unfair in not implying such a term. The prima facie position appears in s 101 of the Civil Procedure Act. The Commonwealth has made one exception to that by precluding the requirement to pay interest, pursuant to s 33 of the Health and Other Services (Compensation) Act. Moreover, until the money is paid either to the plaintiff or to the Commonwealth entity, the defendants have the benefit of the money.

33. No basis has been shown for the implication of paragraph 4 as proposed by the defendants.

34. On 8 November 2021, I approved the settlement pursuant to s 76 of the Civil Procedure Act and made this order:

Judgment for the plaintiff against the first and second defendant in the sum of [$XXX] inclusive of all paybacks, plus costs.

35. The following further orders should now be made:

1. The defendants are authorised to make the following deductions from the judgment sum:

1. such amount as is owing to Centrelink pursuant to a final notice received by the defendant(s);

2. such amount as is the subject of a notice of charge or recovery from the National Disability Insurance Agency;

3. such amount payable to Medicare pursuant to the Health and Other Services (Compensation) Act 1995 (Cth) and in accordance with any notice of charge.

1. After the deductions referred to in paragraph 2 pursuant to section 77 of the Civil Procedure Act 2005, the defendants are to pay the balance of the judgment sum into Court pending an application for the benefit of the plaintiff or as otherwise ordered by the Court.

2. Payment of costs will not be due and no interest shall be payable in respect of costs if the costs are paid within 28 days after whichever of the following events occurs last:

(a)   The costs being agreed; or

(b)   Receipt by the defendants of a Certificate as to Determination of costs by a Cost Assessor; or

(c)   Receipt by the defendants of a written document signed by the plaintiff authorising and directing payment of the costs.

(d)   If interest becomes payable in accordance with 5 (a)-(c) the interest will only be calculated from the date which is 28 days after the last event.

1. The Court notes that the parties agree that these terms are not to be disclosed except in the following circumstances:

(a)   as required by law; or

(b)   where the defendants seek contribution or indemnity from a third party; or

(c)   a copy of these terms is provided to Centrelink (Department of Human Services) and NDIA in relation to the determination of any refund.

36. The parties and their lawyers are to be congratulated for having resolved what was clearly a difficult and complicated case.

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Decision last updated: 11 November 2021