Keogh v The Medical Board of South Australia (No 2) - [2007] SASC 421

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
KEOGH v THE MEDICAL BOARD OF SOUTH AUSTRALIA & ANOR (No 2)
[2007] SASC 421
Judgment of The Honourable Chief Justice Doyle
23 November 2007
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - CONDUCT OF PARTIES - DEMAND, OFFER AND CONSENT
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - NATURE OF PROCEEDINGS - PUBLIC DUTY INVOLVED
Plaintiff, Mr Keogh, succeeded in application for judicial review of Medical Board's decision dismissing complaint against second defendant, Dr Manock - Mr Keogh seeks order that Dr Manock pay costs on indemnity basis - Mr Keogh relies on Dr Manock's rejection of pre-trial offer to compromise - whether court should exercise its discretion in favour of Mr Keogh.
Held: Court has additional considerations when reviewing exercise of statutory power by body acting in the public interest - Dr Manock's refusal to compromise did not significantly increase length of proceedings - Dr Manock to pay Mr Keogh's costs as between party and party.
Supreme Court Act 1935 (SA) s 40(1); Supreme Court Civil Rules 2006 (SA) r 8(2) and r 263; Medical Practitioners Act 1983 (SA); Medical Practitioners Act 2004 (SA), referred to.
Pirrotta v Citibank Ltd (1998) 72 SASR 259; Hartford Holdings Pty Ltd v CP (Adelaide) Pty Ltd & Ors and Colliers Jardine Pty Ltd (2004) 234 LSJS 66, discussed.
Keogh v The Medical Board of South Australia & Anor [2007] SASC 342; El Deeb v Magistrates Court of South Australia (1999) 72 SASR 596; Kovalev v Minister for Immigration and Multicultural Affairs (1999) 100 FCR 323; Lobo v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 132 FCR 93; Pearce v South Australian Health Commission (1996) 66 SASR 486, considered.

KEOGH v THE MEDICAL BOARD OF SOUTH AUSTRALIA & ANOR (No 2)
[2007] SASC 421
Civil

DOYLE CJ: In this matter, which is a proceeding by way of judicial review, I made orders on 25 September 2007, following a hearing before me.
I set aside a decision of the Medical Board of South Australia (“the Board”), the first defendant in the proceedings. The Board had dismissed a complaint by Mr Keogh, alleging unprofessional conduct by Dr Manock, the second defendant in the proceedings: see Keogh v The Medical Board of South Australia & Anor [2007] SASC 342.
I remitted the matter to the Board for further consideration of the complaint.
I have now had written submissions on the question of the order that I should make as to Mr Keogh’s costs, other than reserved costs
Mr Keogh, the successful plaintiff, claims an order that Dr Manock should pay his costs on an indemnity basis, or on a solicitor and client basis. In making that submission he relies upon the fact that Dr Manock rejected an offer of compromise made by Mr Keogh. Mr Keogh makes a claim in the alternative that the Board should pay the costs of instituting the proceedings and obtaining leave to proceed.
General considerations
The power of the Court to award costs is found in s 40(1) of the Supreme Court Act 1935 (SA). In making an order as to costs, the Court exercises a broad discretion. The general rule is that costs follow the event: r 263 of the Supreme Court Civil Rules 2006 and r 8(2). Although that is the general rule the case must be considered on its merits. Rule 263(3) provides that in exercising its discretion, the Court may “have regard to any offer to consent to judgment or other attempt to settle the action or an issue involved in the action”.
Application for order against the Board
As is customary, the application for leave to serve the proceedings on the Board was considered without hearing the Board, the only defendant in the proceedings at that stage. After being served with the proceedings, the Board appeared and indicated that it would abide the outcome of the proceedings, and would not oppose the making of an order against it, other than an order for costs. It did so in accordance with well established practice.
Costs are not usually ordered against a submitting court or tribunal, or against a body in a position of the Board: El Deeb v Magistrates Court of South Australia (1999) 72 SASR 596. Of course, there is power to make an order for costs against a body such as the Board, and in the same position as the Board in this case, but usually such an order is not made.
Nevertheless, it is necessary to consider the case on its merits. The usual practice does not bind me, but is something to be considered.
There are no circumstances in the present case, such as misconduct or obstruction on the part of the Board, which would support a departure from the usual practice.
I consider it appropriate to apply the usual practice, and so I decline to make an order for costs against the Board.
Application for order against Dr Manock
Dr Manock was joined as second defendant at an early stage of the proceedings. He has opposed the making of the order sought by Mr Keogh.
Dr Manock accepts that it would be consistent with usual practice for the Court to order that he pay Mr Keogh’s costs of the action, as between party and party, at least from the time that Dr Manock was joined as a defendant.
But Mr Keogh seeks an order for costs on an indemnity basis, or as between solicitor and client.
Mr Keogh relies upon a letter written by his solicitors to Dr Manock’s solicitors in February 2007, shortly after an amended Statement of Claim was filed. This was a little more than six months before the hearing before me.
In that letter Dr Keogh’s solicitors accurately predicted that the claim to have the Board’s decision set aside would succeed. They correctly identified the basis upon which I made that order. On behalf of Mr Keogh they indicated that if Dr Manock consented to the decision of the Board being set aside, and to the matter being remitted to the Board for further consideration, Mr Keogh would bear his own costs of the proceedings. Dr Manock was also to bear his own costs of the proceedings.
Dr Manock’s solicitors rejected that proposal.
In a number of cases courts have considered the relevance to the exercise of the discretion as to costs, of a settlement offer made by letter from one party to another, when the result achieved by the party making the offer is as good as or more favourable than the proposed settlement, and the recipient of the offer has rejected the proposed settlement.
The case law was summarised by Debelle J in Pirrotta v Citibank Ltd (1998) 72 SASR 259. A letter of the kind in question is often called a Calderbank letter. At 264 Debelle J summarised the effect of the case law as follows:
Decisions in Australian courts on the effect of an offer in a Calderbank letter fall into two broad groups. Decisions in the first group hold that the letter can be taken into account for the purpose of determining whether a special order should be made displacing the ordinary rule that costs will follow the event and will be taxed on a party and party basis. The second group go further and hold that there should be a prima facie presumption that the party rejecting the offer should pay the costs of the other party on an indemnity basis from the date of the making of the offer.
I am content to adopt that summary of the position.
In Hartford Holdings Pty Ltd v CP (Adelaide) Pty Ltd & Ors and Colliers Jardine Pty Ltd [2004] SASC 161; (2004) 234 LSJS 66 at [85] the Full Court observed, referring to Pirrotta at 262:
… that there was a substantial body of authority to support the view that one of the circumstances which may justify an award of indemnity costs is an imprudent refusal of an offer of compromise.
The factors that have influenced the approach of Australian courts to costs orders in favour of a party who has bettered an offer of settlement made by that party are canvassed in the reasons of Debelle J in Pirrotta. There is no need to cover that ground again. Clearly enough there is a public interest in litigants accepting sensible and reasonable offers, thereby bringing litigation to an end. The prospect of an order for costs on a basis more favourable than party and party costs provides an incentive to a litigant to act reasonably and sensibly, when considering a settlement offer.
I proceed on the basis that an imprudent refusal by Dr Manock of the offer of compromise might justify an award of indemnity costs. However, as will appear, there are other matters to be considered.
The offer made by Mr Keogh was a sensible one, as events have demonstrated. Not only did the letter predict the outcome of the proceedings, but the letter also correctly identified the basis upon which the order would be made.
But these are not proceedings in which I would have made an order setting aside the Board’s decision, merely on the basis that Dr Manock consented to the making of that order, and on the further basis that the Board did not oppose the making of the order.
When proceedings challenge the validity of an exercise of a statutory power, conferred on a body that discharges or exercises its powers in the public interest, as the Board does, the Court will usually set aside an exercise of the statutory power only if satisfied that an invalidating error has occurred, that the error can be identified with reasonable precision, and that in all the circumstances it is appropriate to set aside the exercise of the power: see Kovalev v Minister for Immigration and Multicultural Affairs [1999] FCA 557; (1999) 100 FCR 323 at [11]; Lobo v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 168; (2003) 132 FCR 93; (2003) 200 ALR 359 at [56]. A similar approach was taken by Williams J, with whom the other members of the Court agreed, in Pearce v South Australian Health Commission (1996) 66 SASR 486 at 488-490 in a case in which a declaration that certain State legislation was invalid was made, the Attorney-General having appeared by counsel before the Court and having supported the grant of the declaration.
I would not have made the order that I made unless I was first satisfied that the Board had erred, and unless I was further satisfied that the error was one that called for the decision of the Board to be set aside. I would have required Mr Game SC, counsel for Mr Keogh, to put submissions to me on that matter. Moreover, it would not have been sufficient for me to identify the fact of an error. The error relied upon, and the basis of my decision, was an error by the Board in its approach to the issue before it. The point at issue was an important one, because it concerned the proper interpretation of the expression “unprofessional conduct” in the Medical Practitioners Act 1983 (SA). That Act has been repealed, but the same expression is used in the Medical Practice Act 2004 (SA), and is defined in terms that are relevantly the same.
As the concept of unprofessional conduct is central to the disciplinary provisions of the legislation, the correct meaning of that expression, and the correctness of the Board’s approach to that question, are important questions.
It is for those reasons, as I have already said, that even if Dr Manock consented to the making of an order setting aside the decision of the Board, and even if the Board did not oppose the making of that order, I would have required Mr Game to satisfy me that the Board had erred, and to identify with some care the nature of the error. I would also have considered it appropriate and necessary to indicate the correct approach, if I was satisfied that the Board had erred, so that when the matter was remitted to the Board it would know how it should proceed.
Bearing that in mind, it cannot be said that Dr Manock’s rejection of the settlement offer prevented the proceedings being brought to a quick conclusion. It would in any event have been necessary for the matter to be listed for hearing, and for the Judge before whom it came to be satisfied on the points identified by me.
I accept that Dr Manock’s opposition increased the length of the hearing before me somewhat, but his opposition did not significantly increase the length of the proceedings. Some time was spent by Mr Game on arguments that I did not accept. Those arguments, or some at least of them, also needed to be dealt with by me, if the matter was to be remitted to the Board, because they related to the manner in which the Board was to conduct proceedings before it.
This is not a case in which it was within his power, by submitting to an order, to bring the proceedings to a prompt conclusion, without the need to incur the costs of a hearing. Nor was the defect in the Board’s decision so obvious that I would describe his response as imprudent. Nor, as I have already said, did his appearance before me add significantly to the length of the hearing. On some of the issues argued before me the submissions put by Mr Swan, counsel for Dr Manock, were successful, although not on the central issue. In exercising my discretion as to costs I take all of these matters into account.
I am not satisfied that I should order that Dr Manock pay Mr Keogh’s costs on an indemnity basis, or on a solicitor and client basis. I am influenced significantly by the fact that Dr Manock’s continued opposition to the making of the orders sought did not significantly prolong the proceedings, and did not significantly add to the costs that would have been incurred by Mr Keogh.
Mr Keogh also complained of the late tender of an affidavit by Dr Manock, used to support an argument that the Court should exercise its discretion against the making of the order that I made. He complains that the issue was raised late in the piece, as it was. I agree that the matter relied upon should have been raised earlier, but in the end it was dealt with in a few moments, and had no significant impact on the proceedings.
Accordingly, I order that Dr Manock pay Mr Keogh’s costs of the proceedings, other than reserved costs, as between party and party.
I further order, the parties having agreed that this order should be made, that the order of the Medical Board of 27 June 2006 ordering Mr Keogh to pay Dr Manock’s costs of the proceedings before the Board, be set aside.