Peverill v Backstrom

[1994] FCA 1109

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IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY )	No. NG 748 of 1992
GENERAL DIVISION	1

Between :  R I O EDWIN PEVERILL

Applicant

And :	DAVID LEON BACKSTROM & ORS First Respondent
CHARLES AKRILL MITCHELL

Second Respondent

ERNEST HUMPHREY CRAMOND

Third Respondent

STUART JAMES BRYANT

Fourth Respondent

MINISTER FOR HEALTH HOUSING

& COMMUNITY SERVICES

Fifth Respondent

REASONS FOR JUDGMENT

EINFELD 4 SYDNEY 16 JUNE 1994

The applicant moves for a stay of the orders made on 31 May dismissing the application for judicial review and for orders under section 39B of the Judiciary Act relating to the determinations of the Medical Services Committee of Inquiry and of the delegate of the Minister for Health in relation to his pathology practice. The order sought in the motion is for a stay of my first instance decision pending the determination of an appeal to the Full Court.

No notice of appeal has been filed although its proposed content	has been outlined. I think there is a small technical problem
in staying a decision pending the determination of an appeal which has not yet been presented but that matter can be dealt with by the appropriate framing of the order. The motion is opposed and therefore I shall give very short reasons as to why I propose to grant it.
The dispute between the applicant and the Minister for Health goes back many many years as is pointed out in the judgment. In fact, the original reference to the Committee of Inquiry was in February 1987 which means that we are now almost seven and a half years on without the matter having been finally resolved. It is not to the point to try to determine who is to blame for this long period of gestation because the blame is fairly widespread, if "blame" is the right expression. For its part, the Court has also contributed to the delays for various practical reasons that appear in and are quite obvious from the judgment under appeal.
The question therefore in the first instance is whether there is or is likely to be an arguable appeal against the decision. In my opinion, there are clearly available arguments to challenge
principal bases. One is that he says that the first instance the first instance decision. The applicant puts it on two
decision exceeds the power of a judge in a matter such as this. The second is that the issues of legal principle which apply are by no means clear and that the interpretation of previous decisions and the application of the appropriate principles in this particular decision may very well be either incorrect or inadequate and at any rate certainly require review, yet again, by an appellate court. I say "yet again" because, as the judgment itself discloses, there are at least two significant appeal decisions in relation to matters of this kind which are quite difficult to interpret consistently.
It is not appropriate that I comment on the first of the proposed grounds of appeal. It is said that the issues of fraud and misuse of the Medicare system were outside the Committee's terms of reference and the Court's powers. That approach will either be supported or not supported by the Full Court, depending upon its reading of the first instance judgment. It will suffice for me to say that there is no reason that I can think of why the applicant should not be permitted to advance the argument and I will make no comment for obvious reasons as to what its chances of success are or ought to be. I merely draw attention to the fact that it was the Minister who concluded that the applicant had made a deliberate misuse of the Medicare system and had performed tests irrespective of the needs of the patient to enrich himself at the expense of Medicare. These are
observations which make quite clear what conclusions the Minister
has drawn and what he read into the determination of the
Committee. It will be for the Full Court to determine whether those conclusions and my summaries of them are justified.
However, as to the second issue of principle raised, I think there are grounds for doubting that the principles applicable to a case such as this are yet settled, and that the attempt to rationalise and try to express the principles to have emerged from earlier decisions may well be susceptible to successful challenge and worthy of reconsideration. Certainly a great degree of practicality is required because the legislation and the concepts embodied in it are difficult, not least because as is correctly pointed out for Dr Peverill, the only matters strictly before the Committee and the Court were a limited number of services rendered by the applicant for consideration as excessive. Yet the whole case was presented and conducted on the basis that these particular services were part of a widely used system of pathology testing which it was not denied has been carried on by the applicant for many years both before and after those which were the subject of this hearing. To what extent the Court is entitled to take account of such matters, particularly to what extent the Committee was entitled to envisage its investigations as a microcosm of a broader practice is a matter of some difficulty which it is perfectly reasonable that a Full Court should be asked to review.
The matters are of such difficulty and complexity as to enable the applicant to argue with force that there is certainly an
be right that the Court should allow events to take place which arguable chance of success. In such circumstances it would not
would have the effect of foreclosing any benefits to the applicant from a successful appeal. Whilst of course the Court must hold the balance as equally as possible between the parties, it is wrong to consider the respondents as being in the same position as the applicant in this regard. The applicant has at stake his practice and reputation and, as the evidence brought on the stay has shown, the capacity to dispose by sale of his practices to a third party. The applicant argues that this is the status quo that should be preserved.
These are matters which ought not to be lightly treated in a democracy. The Minister as the representative of the public interest is perfectly entitled, and very properly argues, to protect that interest. But the fact that, on the evidence, the applicant has been carrying on his basic practice for something over ten years, with the public interest at stake during all that period of time, suggests that no undue harm will come from a further continuation for a short period during the preparation of the appeal. In the circumstances it is appropriate to conclude that the applicant should be entitled to maintain his status quo pending the hearing of the appeal.
The respondents have arguedthatmaintaining the status quo means maintaining the totality of the status quo. They seek an order that if the applicant is granted a stay there should also be some order which prevents him from disposing of his practice in the
Court that Dr Peverill has a proposal to sell the business on 4 intervening period. There is confidential evidence before the
July next. The respondents seek an order in effect that this proposed sale also be stayed. I do not accept that submission. The concept of the status quo in applications for stays is principally to preserve the rights and position of the party who is most affected by the judgment under consideration and has the most to lose if a stay is not granted but the appeal is successful. There can be no doubt that in this case that is the applicant.
In any event, I do not think it is appropriate, even if it is possible, for the Court to make an order which would have the effect of pronouncing an injunction to prevent any proposed sale and therefore of forcing the applicant to continue his practice against his will pending the appeal. I say that that would be the effect because, although the applicant could just stop practising, he would in the process lose all his referring practitioners, and at the end of the day would have no goodwill and nothing left to sell to a proposed purchaser. This would be quite a grotesque result. If the Full Court does not interfere with the judgment at first instance in any real substance, the applicant will not be able to practice in any event. As the respondents are arguing for the upholding of that first instance judgment, they are therefore to be held to be arguing that the applicant should no longer be in practice as a specialist pathologist. The sale of his business would have that effect at a much earlier stage, namely on 4 July, than it would if the
matter goes all the way to a completed appeal, perhaps even to the High Court after the Full Court.
It is argued that if such injunctive relief is not given, the Minister will be denied the fruits of the litigation. That is simply not correct. The immediate fruits of the litigation, so far as the Minister is concerned, are that the applicant is to be reprimanded, counselled, repay the amount involved in the over-servicing, and pay a penalty. The substance of those matters will remain. It may not be of much use to counsel a pathologist who is no longer in practice but the potentiality of the applicant returning to pathology practice at some time in the future in some other place or in another way would be significantly affected by the upholding of this judgment on appeal. Moreover, the rest of the matters will remain.
It was also said that if the sale is allowed to go ahead there is no point in the appeal. That may or may not be so. It is a matter entirely for the applicant as to whether he prosecutes the appeal and it is a matter entirely for the Full Court as to whether it decides to hear and determine the appeal if the practice has been disposed of. But it certainly is not the fact that if the appeal is not proceeded with, the Minister's success below will become useless or pointless. There will, as I have said, remain the decisions on reprimand, repayment and penalty, and the consequent effect on the applicant's future opportunities to practice as a pathologist. The Minister in fact made clear in his determination that the undertaking that used to be
recommended should be revoked, would have been revoked had it not required from specialist pathologists and which the Committee
been for the fact that the procedure itself is no longer in existence. I think that makes quite clear that the Minister has always intended that the applicant not be permitted to continue to practice, and that he will use other methods to stop him practising now.
I think that it is appropriate for a stay to be granted. It will be open to the respondents to apply for the revocation of the stay if and when the sale of the practice goes ahead on 4 July. It will then be more appropriate to consider whether a stay should be granted in respect of the remainder of the Committee's findings. For examplie, it would not at all be unrealistic to make a submission that in the circumstances the appeal is more academic than anything else and that the overpaid moneys should be repaid and perhaps that the penalty should also be paid. I make no comment at the moment on whether I would be prepared to revoke the stay at that time but it is certainly open to the respondents to make an application in that regard at that time if they feel so inclined. The possibility that I should therefore condition the stay of the appeal on the basis that the moneys should be paid at this time is thus, I think, a little premature and I would prefer to consider it at a later time if the matter is brought back for that consideration.
There will be a stay of the judgment at first instance on condition that the notice of appeal is filed by not later than
appeal. It will also be conditioned on the prosecution of the 4 pm on Wednesday 22 June and it will operate on that notice of
appeal with due expedition. Liberty will be reserved to the respondents to apply for the revocation or variation of the stay at a later time, and to the applicant to apply for any variation of the stay after 4 July.
I make the orders 1, 2 and 3 in the motion.	Costs of the motion
for a stay will be costs in the appeal.

Justice Einfeld