Peverill v Health Insurance Commission

[1992] HCATrans 136

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S21 of 1992

B e t w e e n -

RICHARD EDWIN PEVERILL

Applicant

and

HEALTH INSURANCE COMMISSION

Respondent

Application for removal of

cause under section 40 of the

Judiciary Act

MASON CJ

BRENNAN J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 7 MAY 1992. AT 10.21 AM

Copyright in the High Court of Australia

Peverill 1 7/5/92

MR J.J. SPIGELMAN, QC: If the Court pleases, in this matter

I appear with my learned friend, DR G.A. FLICK, for the applicant. (instructed by Morris Fletcher &

Cross)

MR D.J.S. JACKSON, QC:  May it please the Court, I appear in

the same matter with my learned friend,

MR D.J. McGILL. (instructed by the Australian

Government Solicitor)

MASON CJ:	Mr Spigelman.
MR SPIGELMAN:	Your Honour, could I hand up some outlines of

submissions.

MASON CJ: Thank you. Yes.

MR SPIGELMAN:  Your Honour, the reasons for the removal are

outlined primarily in the concluding paragraphs of

that outline. I have very little to add to that.

There is no authoritative guidance in this Court

and there are at least in some respects differences

in the reasoning in judgments in this Court on

matters which are critical in any argument in the

Full Federal Court.

The first proposition is that there are no

authoritative determination of the circumstances in

which a confiscatory law constitutes an acquisition

of property; confiscatory laws of the nature of

prohibitive imports or enemy property; the payroll

taxation penalties; those sorts of matters. In

particular, the expression in the Trade Practices

Commission v Tooth & Co Ltd, a decision of

Mr Justice Gibbs, at the passage we indicate in

paragraph 8, states that there are these recognized

exceptions, but that there is no principle that has

yet been authoritatively determined.

In Tasmanian Dams, the issue was only

considered in the majority judgments, and in this

respect three of the Judges, including two of

Your Honours, found that the effect on the property

of the Hydro-Electric Commission was merely an

extinguishment of certain rights and not an

acquisition at all. Mr Justice Deane dissented on

that matter by reason of the benefits that the

Commonwealth acquired. The benefits in that case,

of course, were nothing like the clear financial

benefit involved in a cancellation of the

Commonwealth's obligation. It was nothing like

that but, nevertheless, if the matter falls to be

considered in the Full Federal Court, these were

the judgments primarily relied upon before

Mr Justice Burchett.

Peverill 2 7/5/92

BRENNAN J:  What is the Commonwealth's obligation under the

Health Act?

MR SPIGELMAN:  The Commonwealth's obligation is to pay in

accordance with the assignment.

BRENNAN J: Is there an appropriation for that purpose?

MR SPIGELMAN: There would be an annual appropriation, I am

sure.

BRENNAN J: If the Act changes, albeit retrospectively, is

that an acquisition of property, or is it simply a

variation of the charter of entitlement?

MR SPIGELMAN:  No, we say it is an acquisition because all

relevant rights had vested at that point.

BRENNAN J:	So that a debt is created?
MR SPIGELMAN:	Yes, an enforceable one.

BRENNAN J: This is a different kind of - - -

MR SPIGELMAN:  The provisions of section 20 of the principal

Act, the Health Insurance Act 1973 - one can trace

it through, but the principal provision is

section 20(1):

medicare benefit in respect of a professional

service is payable by the Commission on behalf

of the Commonwealth to the person who incurs

the medical expenses in respect of that

service.

20A provides for the assignment from the patient to

the practitioner. Subsection (3) of 20A says:

Where an assignment under this section takes

effect ..... the medicare benefit is ..... payable

in accordance with the assignment or the

agreement -

They are the two central provisions.

BRENNAN J:  What is medicare benefit defined as?

MR SPIGELMAN: Medicare benefit is the payment in accordance

with a table. If one were to go to sections 9 and

10, which is where the relevant provisions

commence:

Medicare benefits under this Part shall be

calculated by reference to the fees for

medical services set out in the table.

Peverill 7/5/92

There are a number of tables and provisions.	I do
not think I need take Your Honours to those.	Then
the entitlement is in 10(1):

Where ..... medical expenses are incurred in

respect of a professional service rendered in

Australia to an eligible person -

a number of these words are defined, but I do not

think anything turns on the definitions -

medicare benefit calculated in accordance with

subsection (2) is payable, subject to and in

accordance with this Act, in respect of that

professional service.

Subsection (2) basically says you get 85 per cent

of the fee specified in the table.

BRENNAN J: The first question in the analysis of a right is

the meaning of "subject to and in accordance with

this Act", is it not?

MR SPIGELMAN: That is so, Your Honour.

BRENNAN J: Until we get past that point, the question of

section 5l(xxxi) does not arise.

MR SPIGELMAN:  We submit it arises in the context of the Act

which is the Amendment Act.

BRENNAN J:  Of course, but the Amendment Act, as I

understand your argument, is retrospective in its

operation and thereby expropriates what is property

arising under this Act.

MR SPIGELMAN:  There are two ways we put the argument. The

Amendment Act expropriates the applicant's claim on

the Commonwealth. It is also, however, and the

second way we put the argument and the way not

dealt with by His Honour, though he made some

reference to it, he did not feel he needed to deal

with it, is that the Amendment Act is an Act with

respect to the acquisition by the applicant from

the individual patient of his rights.	Now, there
is a - - -

BRENNAN J: Should we not get the benefit of an intermediate

court's view on the nature of the right and the

effect of your second argument?

MR SPIGELMAN: Well, Mr Justice Burchett did express some

views about this and said he would have found in

our favour on that matter, but it was unnecessary

to do so.

Peverill 4 7/5/92

There is no case that has finally determinad

in this Court the question of the application of

the acquisition power to acquisitions by third

parties, but the view has been expressed on

numerous occasions that it does so extend.

MASON CJ:  But does that not make it desirable perhaps that

we should obtain the views of the intermediate

Court of Appeal? It is an open question as you

concede in this Court.

MR SPIGELMAN: It is open, although there is a clear

preponderance of views that have been expressed on

a number of occasions, but it has not been finally

determined. It is a matter which His Honour at

first instance did refer to referring to that

preponderance of views and adopted. Yes,

Your Honours, there are three additional judges of

the Federal Court could indicate the views, but I

would say there would be no question that they

would adopt what is a clear preponderance of views

in this Court in that respect.

TOOHEY J:  Mr Spigelman, if those questions were resolved

against the applicant there would still be grounds

of appeal, would there, which you would wish to

prosecute in the Full Court of the Federal Court?

MR SPIGELMAN:  Only on the notice of contention. The matter

that arose - we are not the appellant in the Full

Court.

TOOHEY J:  No, I appreciate that.

MR SPIGELMAN:  The matter arose in this way: there are a

number of issues raised on the pleadings - Anshun

estoppels and various matters. After the

proceedings were instituted the amendment

legislation was passed which led to an amendment of

the pleadings, and they are in truth a total answer

to these proceedings and were directed to be a

total answer and successfully so.

So that what happened before His Honour was

that the three paragraphs of the defence which

pleaded the Act, and our reply, which simply put in

issue its constitutional validity of the

Amendment Act, were separated for determination and

were determined on only the two grounds of the

reply. There was no argument before His Honour as

to the scope and effect of the legislation in

successfully terminating the whole of the
proceedings and that is why we say the only matters

before the Court are matters of law.

There is no doubt, Your Honours, that unlike

some of the matters for which application for

Peverill 7/6/92

removal is sought, this is a pristine

constitutional question, we say, untrammeled by

issues of fact. It is in a proper state for

removal to this Court, having been ordered by a

single instance judgment of the Federal Court.	The
relevant facts are marshalled, they are in an
extremely narrow compass.	The evidence below was
very small.	The issues are not determined in this

Court, but I primarily hang my submissions on the

fact that there is some divergence in judgments of

this Court. The Dams case is one, as to whether or

not the proper characterization of this legislation

is that it merely extinguishes a right and that by

reason of that fact does not constitute an

acquisition. The matter to which Your Honour

Justice Brennan directed my attention of whether it

is simply a qualification of a statutory right,

rather than taking away something, is a matter

which is capable of being answered in those terms,

namely it simply extinguishes something by

redefining it, rather than something which takes

away an existing right. Now the crucial difference

in this case is that all relevant rights had

vested.

BRENNAN J: Yes, I see that. I must say that, for myself,

the point that I imagine the immediate court might
explore is the nature of the right itself, rather

than the problem of compulsory acquisition.

MR SPIGELMAN:  Mr Justice Burchett did that. Your Honours

have read the judgment. I am not saying that there

are not other points of view, obviously there are

and they could be explored by other judges in an

intermediate Court of Appeal.	I am not saying that
is not possible.	What I am saying is that in a

context in which there are, at least in some

relevant respects, differences of view expressed in

judgments of this Court, that would limit the

advantages to be gained, perhaps without obviating

all advantages, but limit the advantages to be

gained by consideration in an immediate Court of

Appeal.

MASON CJ: Mr Spigelman, how much is involved in this case?

MR SPIGELMAN:	From my client's point of view?
MASON CJ: Yes.
MR SPIGELMAN:	Many millions of dollars, Your Honour.
MASON CJ:	And what are the ramifications of the case in

terms of validity of the legislation beyond the

impact on your client?

Peverill 6 7/5/92

MR SPIGELMAN: According to the second reading speech, ~he

estimate by the Minister was that the

Commonwealth's potential exposure was about

$100 million. We are not quite sure on what that

is based but we assume it is retrospective claims

by pathologists around the country. There may be

issues about delay because my client - one of the

issues, for example, that would fall to be

litigated in the full case is: when did my client

start making claims on the Commonwealth for the

particular item numbers that are now in dispute,

because most pathologists did not do so?

There will be factual issues which obviously

would affect the quantum.	We do not know on what
basis the $100 million was computed.	We would

assume that it was probably on the worst case basis

which would mean retrospective adjustment for

everything; one doubts if that is feasible. So it

is something less than 100 million but we have no

way of knowing. But may I say, in this proceeding

alone, it is some millions of dollars involved.

So, from that point of view, it is a substantial

case, notwithstanding the fact that individually
each of the items are perhaps small because of

medical services are $30 and $20 and there happen

to be thousands of them each year.

BRENNAN J:  Your challenge is to the retrospective

provisions of the Act, not to the amending

provisions of the Act?

· MR SPIGELMAN:  We would not have thought it severable,

Your Honour. Each of the provisions of the Act -

the Act has no other purpose but its

retrospectivity. Each of the provisions of the Act

contain, at the foot of them, a date from which -

section 2(2) says:

Each of the provisions of subsections 4(1)

and 5(1) -

take effect as at the date -

shown by the note -

Each of the relevant provisions has such a note.

They really are an integral part of the scheme.

BRENNAN J:  So that if your challenge succeeds, the effect

in practical terms is that the old scale still

subsists?

MR SPIGELMAN:  No. This scale has been superseded.

BRENNAN J:  I see.

Peverill 7 7/5/92

MR SPIGELMAN:  It does not subsist as we speak now; it h~s

been superseded and replaced from a date which is

subsequent to the date involved in the principal

proceedings. It cuts both ways: there is no

urgency in the matter from the point of view of the

current activities of the Commonwealth, but there

is from the point of view of my client in terms of

what is a substantial claim, about which there have

been disputes for some years.

In that respect, Your Honours, we appreciate the test that the Court applies, other than the

differences that have been expressed in judgments
of this Court, to which we refer primarily in 9 and

even 10. Your Honour the Chief Justice in

Trade Practices Commission v Tooth & Co Ltd, did

use the formula, "direct legal operation and

effect", with respect to the acquisition power.

That is not a formula that we would have thought would apply in accordance with the contemporary

jurisprudence of the court, as reflected in -

perhaps beginning with Hematite and then the

Tobacco Franchise's case in section 90 Territory,
applied subsequently in section 92 in Cole v

Whitfield and in Street v Bar Association of

Queensland to section 117.

Nevertheless, if we were to go to the

Full Federal Court, I would expect that particular

passage will be quoted against me, and that is

another example of matters which may detract from

the advantage the Court would otherwise receive

from a consideration by an intermediate court of

appeal. Your Honours, we say that the matter is

ready to proceed; it is in a narrow compass. It

does not involve legal matters, unlike, for

example, the Blank Tapes case - when I say it does

not involve there, I say, it does not involve

factual matters - unlike, the Blank Tapes case,

which raises some of these issues, which seems to,

from reading the transcript, have a number of
factual ..... on it.	This one has none, and we

submit that it is in a proper state to be removed.

It has been considered and put into shape by one

judge of the Federal Court, for the reasons we have

outlined in terms of the divergence of views that

have been expressed in this Court, there is some

restriction on the usual position as to the benefit

to be obtained by consideration from an

intermediate court of appeal. If the Court

pleases, they are out submissions.

MASON CJ: Yes, Mr Spigelman. Yes, Mr Jackson.

MR JACKSON: Could I hand to Your Honours, copies of our

outline?

Peverill	7/5/92
MASON CJ: Yes.
MR JACKSON:	And could I answer one of the questions posed

by Your Honour Justice Brennan, concerning
Health Insurance subsection (1) that:

appropriation. Section 125 of the

All amounts payable by the Commonwealth under

Part II -

which includes the entitlements which are the

subject of these proceedings were under -

an arrangement in force under section 129A

shall be paid out of Consolidated Revenue

Fund, which is appropriated accordingly.

MASON CJ: Generally the Commonwealth and its manifestations

are anxious for a determination by the Full Court

of this Court of a constitutional question as soon

as possible, Mr Jackson. This case seems to stand

as a marked exception to that general approach.

MR JACKSON:  The attitude of one's client is not always the

same as the attitude of the advocates, either,

Your Honour. The principal reasons though, which

we have set out in the outline, as Your Honours

will have seen, are basically practical ones.

There are two groups - or two areas: one is that a

number of points which were either ventilated

before Mr Justice Burchett and not decided by him

will come up in the proceedings, including those

raised by the notice of contention by our learned

friends. But apart from that there are two other

points. One is, as can be seen from our learned

friend's outline of submissions, in paragraph

S(ii), the alternative contention for legislation:

is legislation with respect to the acquisition

by the Applicant of the patient's chose in

action, which the Applicant accepted "in full

payment" for his services.

and, as we apprehended, that is the alternative

contention mentioned at the end of
Mr Justice Burchett's reasons, which was not

decided by His Honour, and which was not subject of

debate beforehand. We submit it is a practical

consideration which may weigh in Your Honour's
discretion, that Your Honours might have the

benefit of the intermediate appellate court's view

on that point.

Another point which was ventilated before

Mr Justice Burchett, but which does not appear in

the reasons, is the argument that concerned the

Peverill 9 7/6/92

operation of the cases and in particular both the

Tasmanian Dams case and Trade Practices

Commission v Tooth. This is the argument set out,

if I could refer to our learned friend's
submissions, in paragraphs 8 and 9, and we accept,
as Your Honours will have noticed, because there is

no dispute of it in our outline of argument, that there is something to be said for this case being

different from those which have gone before.

We are not quite sure, with respect, as to

whether the considerations which have been already

argued before this Court in the Tapes case or in
the Australian Capital Television case will cover

the ground which, as our learned friends submit in

paragraphs 8 and 9, is not covered by the existing

decisions. It may do so and that is the other

practical reason which, we submit, might weigh in

Your Honour's discretion in letting the case go to

the Full Court of the Federal Court, at least at

this stage.

The second area of practical reasons why we

submit the case ought to go to the Full Court of

the Federal Court is that which is set out in

paragraph 1 of our outline. The argument before

Mr Justice Burchett, concerning whether the

legislation was on just terms, was very narrow

indeed. It was confined to the proposition, as we

set out in the outline, that the legislation was

not a law on just terms because it did not provide

full value for the property acquired. To use our

learned friend's words, the way we would prefer to

express it is that the Commonwealth has acquired

part of the chose and it has so acquired that part

for no consideration.

His Honour's consideration, then, of the

concept of just terms, was much more expansive and
considered many other factors, which were not the

subject of debate beforehand, or any affidavit

material as we apprehend it, and it is for that

reason we make the submission which is set out on
the foot of page 1 of the outlines, that a possible
outcome of the appeal is that some of the

considerations which were taken into account by

Mr Justice Burchett as being relevant to whether

the legislation was on just terms, because they

were not the subject of any actual debate before

His Honour, or, as we apprehend it, any evidence

before His Honour - His Honour took into account, for example, findings he had made in another case which were not put into evidence, or informally

treated as being in evidence - that the case

may - - -

Peverill 10 7/5/92

BRENNAN J:  As to the terms on which the property was

acquired?

MR JACKSON:  As to the way in which the amending Act had

been brought, I suppose, into law. There had been
prior litigation between the same disputants in

which the question of what was the appropriate item

in the schedule had been decided by His Honour.

And it was as a result of that litigation, which
was lost by the Health Insurance Commission, that

the amending Act, which was the subject of the

challenge before His Honour and now the subject of

these proceedings was brought into force, because

prior delegated legislation which had been

ineffective would have dealt with the matter.

Then there was a dispute before His Honour in

a prior case to the effect that in the absence of

that ineffective prior legislation the appropriate

item number was, in general terms, item 1345 of the

table. That was the subject of a trial and the

Health Insurance Commission was unsuccessful. That

provided for a substantially higher payment in

money terms than that which was, in the absence of

the ineffective earlier legislation, intended by

the Health Insurance Commission to be the

appropriate item. It was in those circumstances

that the amending Act was brought into force.

His Honour deals with the way in which the

litigation proceeded before him in the other case

prior to these proceedings which was not dealt with

in argument before him or raised.

BRENNAN J: But if there was an expropriation of property,

there was no compensation at all, was there?

MR JACKSON: Quite.

BRENNAN J: What is the subject of evidence or of submission

be whether there was an expropriation of property? that could be made? The sole question must surely

MR JACKSON:  The debate, at that point, depends, as we

apprehend it, Your Honour, on, first of all, what

you characterize as the property which is

expropriated. There are two ways readily which

come to mind that might characterize it: one is

that what has been expropriated is the part of the

entitlement to payment in respect of that

particular medical service. If the service was $20

and, say, $6 had been taken away, what you have

expropriated is $6.

The second is to say what has been

expropriated is the entitlement to payment in its

totality and, instead, has been by way of

Peverill 11 7/5/92

replacement, an entitlement given to another sum, a

lesser sum.

MASON CJ: But what are the just terms in either case for

the expropriation?

MR JACKSON:  In the second case the submission is the just

terms are that the legislation has the effect of

retrospectively producing the result which was

originally intended by the ineffective legislation.

BRENNAN J: That is a novel suggestion that that can be just

terms for what is an expropriation.

MASON CJ:  I do not think that would require much

concentration by the intermediate Court of Appeal,

Mr Jackson.

BRENNAN J:  Or by this Court.

MR JACKSON: There are many - and this is not, as

Your Honours might appreciate, the primary thrust

of the appeal.

MASON CJ:  But it seems to be the primary thrust of your

opposition to removal?

MR JACKSON:  It is one of three points, Your Honours, yes,

and it is the last one with which I am dealing.

TOOHEY J: But are you suggesting, Mr Jackson, that if you

were successful in respect of some of the other

grounds of appeal, that is 7, 8, 9, 10 and 11, that

the matter might go back to Mr Justice Burchett for

reconsideration on the constitutional question?

MR JACKSON:	On the question of just terms.
TOOHEY J:	You say those grounds of appeal bear upon just

terms, do you?

MR JACKSON:  Yes. His Honour said that the matters which

are raised in those grounds were relevant for

consideration of just terms. Our submission about

that is that they are not primarily, but if they

are, they have been dealt with in a way where

effectively there has been a denial of natural

justice.

BRENNAN J:  The curious thing, it seems to me, is that there

has been remarkably little attention paid to what

is the property that is said to be expropriated and

the nature of it.

MR JACKSON: There was some debate before His Honour about

that, Your Honour, but it does not - I am not sure

what our learned friends say, but His Honour did

Peverill 12 7/5/92

not spend a lot of time considering it in the

reasons.

MASON CJ:	What were your submissions in relation to the property point?
MR JACKSON:	Our submission before His Honour - and I will

try and paraphrase them as accurately as I can -

was that the right conferred by the Act is in the
nature of a gratuity conferred by the Commonwealth
upon the person who is, in common parlance,

described as the patient; that the right was, or

is by virtue of section 20 and the following

sections, assignable in a very limited way

according to the statutory procedure.

The Commonwealth is not the party which

requests the services; the services are requested

by the patient. The contractual relationship, if

any, is between the patient and the medical

practitioner. So that upon an assignment, what

happens is that there is an assignment of a

statutory entitlement to a gratuitous benefit which

is the subject of an appropriation under the

section which I mentioned to Your Honours before,

and that the retrospective alteration of that right

did not attract the operation of paragraph 31.

There are a number of analogies which were debated before His Honour as to what the

characterization of the right is, whether it is in

effect a statutory debt or not. That did not

really figure much in His Honour's - - -

BRENNAN J:  By "gratuitous", you mean simply not for a

consideration that passes to the Commonwealth?

MR JACKSON: Quite. It would be quite different, we

submitted before His Honour, I think, and we would

submit in a further hearing of the proceedings, if

in fact the contractual relationship, so that the

request and the benefit which was obtained under the request was between the Commonwealth and the

medical practitioner, or potentially quite

different. The sale of goods analogy which has

appeared in some of the cases would come into play,

the only difference being the services instead of

the goods which are being provided. I do not

really want to go on at too much length about that

subject-matter unless Your Honours wish me to.

They are in fact our submissions, unless I can

add anything of use.

MASON CJ: Yes. Yes, Mr Spigelman?

MR SPIGELMAN:  Your Honours, paragraph 1 of my friend's outline as elaborated refer to steps in

Peverill 13 7/5/92

His Honour's reasoning. One cannot transpose steps

in his reasoning into, as it were, factual issues

that remain undetermined. All the matters are

Court of Appeal would find any of those steps correct or to be taken or not is a matter for further argument, but they are not unresolved factual issues.

before Court; obviously they would be before the intermediate

There was one particular error that my friend

made in his submissions. There were previous

proceedings between these parties to which

His Honour referred, but it was not those

proceedings that declared the schedule invalid.

That was declared invalid by Mr Justice Gummow in

other proceedings. There were then proceedings

between these parties which at the time were

thought to be a test case about particular claims.

It is true His Honour makes reference to the

outcome of those proceedings, but that is not some
unresolved factual issue that would require an

intermediate Court of Appeal to fix it up in some

way.

Finally, there were detailed submissions made

to His Honour about the nature of the item of

property. He dealt with it at page 72 of the

application book without any detailed consideration

of those submissions. He just simply concluded

that the statutory right was, as he put it, plainly

property. We say the nature of the property was

that the claim on the Crown or the Commonwealth -

and there is authority for this - is a specialty

debt and as such, is a chose in action.

We gave His Honour authority. His Honour did

not deal with that authority, but obviously the
matter could be considered further. It is not as

if His Honour ignored it. His Honour regarded it

as so plain as not requiring the recitation of	authority. If the Court pleases, they are our
submissions in reply.

MASON CJ:  Thank you, Mr Spigelman. The Court will take a

short adjournment to consider the course it will

take in this matter.

AT 10.58 AM SHORT ADJOURNMENT

Peverill	14	7/5/92
UPON RESUMING AT 11.18 AM:

MASON CJ: There will be an order for removal as sought in

the notice of motion, but I should say that if it
transpires on the hearing of the appeal that there

by this Court, then those questions will be remitted back to the Full Court of the Federal Court for determination.

are some questions arising under the determination

notice of appeal that has been filed to the

Now, that leaves outstanding the question of

costs. Do you apply for an order for costs,

Mr Spigelman?

MR SPIGELMAN:	We do, Your Honour.
MASON CJ:	Do you oppose it, Mr Jackson?
MR JACKSON:	Yes, we do, Your Honour.

MASON CJ: But it is an application which has been

contested; why does not the ordinary rule apply?

MR JACKSON:	There is no reason why Your Honours cannot apply it as a matter of discretion. There is
really nothing I should add.

MASON CJ: Yes. There will be an order for costs in favour

of the applicant.

MR SPIGELMAN: If the Court pleases.

AT 11.20 AM THE MATTER WAS ADJOURNED SINE DIE

Peverill 15 7/5/92