Malouf v AME Properties Pty Ltd

[2007] FCA 1616

FEDERAL COURT OF AUSTRALIA

Malouf v AME Properties Pty Ltd [ 2007] FCA 1616

DR DAVID MALOUF & ORS v AME PROPERTIES PTY LIMITED
NSD 2008 OF 2007

STONE J
12 OCTOBER 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2008 OF 2007

BETWEEN:

DR DAVID MALOUF
FIRST APPLICANT

DR PETER ASLAN
SECOND APPLICANT

DR PAUL COZZI
THIRD APPLICANT

DR WILLIAM LYNCH
FOURTH APPLICANT

DR PETER NASH
FIFTH APPLICANT

AND:

AME PROPERTIES PTY LIMITED trading as ST GEORGE PRIVATE HOSPITAL
RESPONDENT

JUDGE:

STONE J

DATE OF ORDER:

12 OCTOBER 2007

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

Upon the applicants, by their counsel, giving to the Court the usual undertaking as to damages, and until further order of the Court,

1.From Monday, 29 October 2007 to Sunday, 27 January 2008, except in the case of emergency or as otherwise agreed between the parties, and subject to there being no substantial change in the level of usage by the applicants, the respondent refrain from varying the schedule of operating theatre sessions at St George Private Hospital set out in Schedule A to these orders; and

2.Except in the case of emergency or as otherwise agreed between the parties, the respondent refrain from varying the arrangements that have been made for the applicants’ use of the operating theatres at St George Private Hospital for the two weeks commencing 15 October 2007. 

3.The costs of this application for interim relief be reserved.

SCHEDULE A

Surgeon	Week 1	Week 2	Week 3	Week 4
Dr ASLAN	Wed all day	Wed all day	Wed all day	Wed all day
Dr COZZI	Tue AM Wed all day	Tue AM Wed all day	Tue AM Wed all day	Tue AM Wed AM
Dr LYNCH	Tue PM Thu AM	Tue PM Thu AM	Tue PM Thu AM Fri AM	Tue PM Thu AM
Dr  MALOUF	Mon PM	Mon PM	Mon PM	Mon PM
Dr  NASH	Mon all day	Mon all day Wed PM	Mon all day	Mon all day Wed PM

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2008 OF 2007

BETWEEN:

DR DAVID MALOUF
FIRST APPLICANT

DR PETER ASLAN
SECOND APPLICANT

DR PAUL COZZI
THIRD APPLICANT

DR WILLIAM LYNCH
FOURTH APPLICANT

DR PETER NASH
FIFTH APPLICANT

AND:

AME PROPERTIES PTY LIMITED trading as ST GEORGE PRIVATE HOSPITAL
RESPONDENT

JUDGE:	STONE J
DATE:	12 OCTOBER 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The applicants have approached the court for interim relief in relation to the respondent.  The applicants are five urologists who, in partnership, practise at St George Private Hospital in Sydney which is owned by the respondent.  The applicants, through their service company, lease consulting rooms in the hospital.  The lease is for a term of five years commencing in May 2003.  There are two options to renew for successive periods each of five years.  The permitted use under the lease is “Consulting suites for urology practice”.  It contains the usual provisions as to the standard of professional conduct required of the tenant and is quite explicit as to the tenant having full clinical autonomy and not being obliged to admit patients to the hospital.

2. In addition to the lease of the consulting rooms, the applicants have, and have had for some time, the right to use operating theatres at the hospital for surgery for their patients.  The theatre sessions allocated to each of the applicants are set out in the following table:

Surgeon	Week 1	Week 2	Week 3	Week 4
Dr ASLAN	Wed all day	Wed all day	Wed all day	Wed all day
Dr COZZI	Tue AM Wed all day	Tue AM Wed all day	Tue AM Wed all day	Tue AM Wed AM
Dr LYNCH	Tue PM Thu AM	Tue PM Thu AM	Tue PM Thu AM Fri AM	Tue PM Thu AM
Dr  MALOUF	Mon PM	Mon PM	Mon PM	Mon PM
Dr  NASH	Mon all day	Mon all day Wed PM	Mon all day	Mon all day Wed PM

1. By letters dated 31 August the respondent notified each of the applicants that it proposed to terminate certain theatre sessions previously allocated to them, effective 15 October 2007.  The letters added that the hospital would endeavour to make additional theatre sessions available on an ad hoc basis.  A further letter was sent on 27 September 2007 proposing to terminate additional sessions.  

2. The applicants claim that the hospital was not entitled to make these changes in the way it has done, and seek both interim and permanent relief to restrain it from doing so.  I am presently concerned only with the question of interim relief.  For that relief to be available the applicants need to establish some merit in their claims, as well as that such relief is justified on the balance of convenience.  The standard that the merit of the applicants’ claim must meet is variously expressed as requiring them to show that they have a prima facie case (Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618) or that there is a serious question to be tried (American Cyanamid Co v Ethicon Ltd ([1975] AC 396). In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, Gummow and Hayne JJ commented at 83:

   When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force.  There is then no objection to the use of the phrase “serious question” if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham, depends upon the considerations emphasised in Beecham.

3. In relation to the obligation to demonstrate that the applicant for interim relief has a prima facie case, their Honours explained at 82 that, in Beecham, Kitto, Taylor, Menzies and Owen JJ used the phrase “prima facie case” to mean that an applicant must show “a sufficient likelihood of success to justify in the circumstances preservation of the status quo pending the trial”.  They did not mean that an applicant must show that success at the trial is more probable than not.  It is with these principles in mind that I turn to consider the applicants’ claims.

4. Some of the background to the hospital’s decision to change the allocation of theatre sessions to the applicants was explained in an affidavit sworn on 11 October 2007 by Ms Tracey Burton, the Chief Executive Officer of the hospital.  Ms Burton outlined discussions between the applicants and representatives of the hospital concerning opportunities for a joint venture or some other form of new relationship between them.  It is not necessary to recount this evidence in detail.  It is sufficient to say that the negotiations did not progress very far and at some stage the applicants shifted their attention to the possibility of purchasing Hurstville Community Hospital.  According to Dr David Malouf, the applicants’ interest in the Hurstville Hospital did not indicate an intention to move their work from St George Private Hospital, but only to use Hurstville for excess work that could not be accommodated at St George. 

5. Ms Burton, however, regarded the relocation of the applicants as imminent and stated that the hospital had already suffered financially from the removal of some of the applicants’ work to another facility known as the National Day Surgery.  She said that it was necessary to mitigate any potential financial damage to the hospital by reallocating theatre time to other surgeons.

6. Ms Burton stated that the applicants have been offered alternative theatre times for all patients who, as at 31 August 2007, were booked in the disputed theatre sessions.  In addition, alternative theatre slots have been offered in respect of nine patients booked after that date.  In summary, Ms Burton deposed that alternative bookings have been offered for every patient scheduled up until February 2008.

7. Ms Burton raised the possibility of the applicants treating some of their patients at hospitals other than St George Private Hospital, pointing out that the applicants all have appointments at St George Public Hospital and that private patients can be treated there.  She also gave evidence that, commencing 15 October 2007, the hospital has scheduled 38 patients of other surgeons in the disputed theatre sessions.  She stated:

   If the orders sought by the Applicants are made by the Court, then it will be necessary to displace some of [those] patients… The level of displacement will depend upon the extent to which the Applicants utilise, or say they intend to utilise, the relevant theatre sessions.  If the orders sought by the Applicants are made, in many cases this will require the patient to be rescheduled to a different date.  Other patients may be able to be accommodated on the same day depending on the absence of other surgeons and how full their lists are.  Even if patients are able to be accommodated at the same time there will be disruption to the administration of the hospital. 

8. As noted above, the applicants dispute the respondent’s right to terminate the sessions and seek interim relief to restrain the respondent from implementing the changes to their allocated theatre sessions.  They complain that the new, ad hoc, arrangements that have been made are unsuitable for a number of reasons.  These include that the partners will have fewer sessions than they have had up to date and that those sessions, at least in part, will be at ad hoc times which makes it difficult for them to organise their practice.

9. The applicants rely on s 46 (misuse of market power) and s 51AC (unconscionable conduct) of the Trade Practices Act 1974 (Cth). I am not convinced that either of these claims has a great deal of merit. This raises the issue of whether these proceedings would be more appropriately pursued in another court. In any event, that is a matter for the docket judge.

10. For the purposes of the claim for interim relief, counsel for the applicants, Mr Agius SC, did not dwell on the statutory provisions but concentrated on the nature of the applicants’ licence to use the operating theatres and the alleged inadequacy of the period of notice given by the respondent.  The applicants submit, in the alternative, that the licence was irrevocable because it is coupled with the grant of an interest in land (the lease); or it was a contractual licence which could be revoked only on the terms of the contract in question; or it was a licence terminable at the will of the respondent subject to reasonable notice. 

11. The respondent argues that the licence was terminable and that adequate notice had been given.  In particular the respondent points to a provision in the by-laws of the hospital which must be adopted by those who seek accreditation to practise at the hospital.  By-law 17 deals with the terms and conditions of the appointment of accredited practitioners.  Among the terms is a clear statement that the availability of theatre sessions will be at the discretion of the CEO of the hospital, taking into account matters including but not limited to theatre session and nursing availability and the usage by the accredited practitioner of sessions previously allocated to that accredited practitioner. 

12. In achieving their accredited status at the hospital, the applicants have accepted the provisions of those by-laws.  The right to vary the theatre sessions does not, however, deal with the issue of what notice of any variation must be given.  It may well be that what is “reasonable notice” will differ according to the variation which is being notified and the circumstances in which the variation is sought.  In this case, of course, I am concerned with what purport to be permanent variations in the sense of depriving the applicants of some of the sessions that they presently have at the hospital.

13. My attention has been directed to the fact that the hospital requires six weeks’ notice from a doctor who does not require the use of the facilities that have been allocated to him or her.  It was submitted by counsel for the respondent that this is an indication of what would be appropriate notice to be given to the doctors if the hospital does not wish to make the facilities available.  It seems to me that this by no means follows.  Plainly the hospital has far greater resources and capacity to make alternate arrangements for the use of its facilities than an individual doctor or doctors have to locate alternate facilities.  It is also, I would think, inherently easier to fill an empty space where there is a high demand for facilities than it is to rearrange an existing appointment. 

14. I do not find that a prima facie case has been made out either for the argument that the applicants’ licences to use the operating theatres are annexed to an interest in land or that they are contractual licences.  I do think, however, that there is a prima facie case that the hospital was obliged to give the applicants reasonable notice before withdrawing the licence.  “Reasonable” is a term of indeterminate reference and what is required for reasonable notice must take into account all the circumstances of the case.  As I have said, I do not think that reasonable notice in these circumstances would be as little as six weeks.  I think it highly unlikely that it would be as much as the year or years to which counsel for the applicants referred.  I would be inclined to think it would be something in the order of 3 or 4 months.  Again, it is not necessary for me to make any precise determination of what would be reasonable notice.  I only need find, as I do, that there is a prima facie case that reasonable notice was not given.

15. The other requirement for the grant of interim relief is, of course, the balance of convenience.  In this case the hospital has made arrangements, at least up until the end of this year, to accommodate in ad hoc sessions the applicants’ patients who are presently scheduled to have surgery.  In addition, the hospital has reallocated the theatre sessions which it purports to withdraw from the applicants from the week commencing 15 October and in subsequent weeks to other doctors for other procedures.  I am impressed by the hospital’s argument that the arrangements that have been put in place, particularly for the coming week, could not be undone without severe inconvenience to many people including patients.  While the ad hoc arrangements that have been made for the coming week may be less than desirable, it seems to me the balance of convenience is against disturbing those arrangements.  That does not mean, however, that the applicants should be deprived of all relief.

16. In my view, the balance of convenience for future weeks tips in favour of the applicants.  For that reason I think that the appropriate orders would be along the lines of keeping in place the arrangements that have been made for the coming week but restraining the respondent from varying the past arrangements for a period after that.  I will hear the parties as to the appropriate orders in the light of these reasons.

17. The reasons given above were delivered ex tempore following which the parties were given time to consider appropriate orders.  It is not necessary to detail the discussion about orders which, other than the order as to costs, follow from the reasons given above.  In relation to costs, the applicants submitted that they should have their costs of seeking the interim relief.  The respondent submitted that costs should be reserved for determination on the disposition of the proceeding.  I am persuaded that the latter is the better course and therefore will now order that the costs of the application for interim relief be reserved.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated:        25 October 2007

Counsel for the Applicants:	J Agius SC, M Condon
Solicitor for the Applicants:	TressCox Lawyers
Counsel for the Respondent:	T Tobin QC, C Moore
Solicitor for the Respondent:	Blake Dawson Waldron
Date of Hearing:	12 October 2007
Date of Judgment:	12 October 2007