Appanna v Anglesea Hospital Limited
[2017] NZHC 2257
•18 September 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-001794 [2017] NZHC 2257
BETWEEN NALENDRA (NAYLIN) APPANNA
Plaintiff
AND
ANGLESEA HOSPITAL LIMITED Defendant
NEW ZEALAND PRIVATE SURGICAL HOSPITALS ASSOCIATION INC Proposed Intervener
Hearing: 15 September 2017 Appearances:
E Sweet and B Moore for Plaintiff/Respondent
M J Fisher and K J Ng for Applicant/DefendantJudgment:
18 September 2017
JUDGMENT OF VENNING J PARTICULARS/FURTHER DISCOVERY
This judgment was delivered by me on 18 September 2017 at 4.00 pm, pursuant to Rule 11.5 of the
High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: DLA Piper, Wellington
Kemps Weir Lawyers, Auckland
Copy to: A H Waalkens QC, Auckland
M J Fisher/K J Ng, Auckland
APPANNA v ANGLESEA HOSPITAL LIMITED [2017] NZHC 2257 [18 September 2017]
Introduction
[1] The plaintiff is an obstetrician and gynaecologist. The defendant owns and operates a private hospital. The plaintiff performed medical procedures, including surgeries on patients at the defendant’s hospital. The defendant suspended the plaintiff’s operating privileges on 30 March 2016. On 6 October 2016 the Court granted an interim injunction in favour of the plaintiff reinstating his credentialing status and operating privileges pending further of the Court.
[2] The plaintiff says that in suspending his operating privileges the defendant was in breach of an agreement with him. He also says the defendant has not complied with the injunction order in that it has failed to provide appropriate nursing support to him to allow him to operate at its hospital.
[3] The plaintiff raises three causes of action against the defendant:
· breach of agreement;
· breach of fiduciary duty;
· judicial review.
[4] Under the first two causes of action the plaintiff alleges he has suffered and continues to suffer loss and damage. He claims:
· damages for harm caused to his reputation;
· damages to compensate for pecuniary loss;
· general damages of $25,000.
Application
[5] The defendant seeks orders for further and better discovery and for further particulars. The applications are directed at obtaining information concerning the losses claimed by the plaintiff.
[6] The defendant argues that High Court rr 5.26, 5.32 and 5.33 require the plaintiff to particularise the amount of damages claimed.
[7] The defendant’s application for further and better discovery seeks the following:
1 documents relating to the financial performance of the plaintiff’s
business as a surgeon since 31 March 2012, including: (a) annual financial statements;
(b) income tax returns and GST returns;
(c) records evidencing the identity of each patient referred to the plaintiff by general practitioners or others, including those patients:
(i) on whom the plaintiff performed a surgical procedure;
(ii) on whom the plaintiff did not perform a surgical procedure;
(d)invoices issued by the plaintiff in relation to surgical procedures performed by the plaintiff at Anglesea Hospital Limited or Southern Cross Hospital Limited or Braemore Hospital Limited, or Grace Hospital Limited;
2all documents (including electronic documents) coming into existence subsequent to 2 September 2016 evidencing communications between the plaintiff or his legal advisers and Southern Cross Hospital Limited or its legal advisers in relation to the plaintiff’s credential and status at Southern Cross Hospital Limited, including any credential in the applications and the decisions made by the credential and committee of Southern Cross Hospital Limited in relation to such applications; and
3all documents (including electronic documents) evidencing communications between the plaintiff or his legal advisers and Braemer Hospital Limited or its legal advisers in relation to the plaintiff’s credential and status at Braemer Hospital Limited, since
2007, including any credential in the applications and the decisions made by the credential and committee of Braemer Hospital Limited in relation to such applications; and
4all documents (including electronic documents) evidencing communications between the plaintiff or his legal advisers and Grace Hospital Limited or its legal advisers in relation to the plaintiff ’s credential and status at Grace Hospital Limited, since 2007, including any credential in the applications and the decisions made by the credential and committee of Grace Hospital Limited in relation to such applications
[8] The defendant filed its application on 10 August. The plaintiff filed an opposition. Although there then followed correspondence between the parties’ lawyers, no resolution was reached. Shortly before this hearing the plaintiff filed an affidavit (on 12 September). In that affidavit he has confirmed that he will provide the documents sought in 1(a), (b) and (d) of the further discovery application (with patient information redacted) and that, while he considers the information in relation to 2 to be irrelevant he has provided two documents setting out in detail the history of his relationship with Southern Cross Hospital and which discloses his attempt to regain credentialing status with that hospital. He has also agreed to provide the documents sought under 3 in relation to Braemer Hospital, and says that in relation to Grace Hospital “no documents of the nature specified exist”.
[9] The plaintiff proposes to provide particulars of damages when his expert’s
evidence is completed and exchanged.
Issues for determination and matters in dispute
[10] The issues before the Court are now quite confined. The plaintiff acknowledges he must provide particulars of damages. The issue between the parties is one of timing for the provision of particulars.
[11] The defendant submits the remaining categories of documents which the plaintiff does not agree to disclose are still relevant. The defendant says details of the patients’ records including their identity are necessary. The defendant’s expert accountant, Mr Lucas, has said the records evidencing the identity of each patient are necessary to allow him to make an assessment of the level of referrals that the plaintiff received in the period before his operating privileges were suspended and the impact of the level of referrals after his suspension. Mr Lucas says the identity is required to ensure the referrals are “legitimate” and to allow reconciliation with the invoices received.
[12] Ms van Praagh, the defendant’s Chief Executive Officer, has filed two affidavits. In her second affidavit she suggests the patients’ names could be replaced with their National Health Index (NHI). She would then use her access to NHI records to verify the referral was actually a “real” patient.
[13] The defendant supports the request for the information relating to Southern Cross, Braemar and Grace Hospitals Limited on the basis that an issue at trial will be whether the pecuniary loss alleged by the plaintiff could have been within the reasonable contemplation of the parties at the relevant time. Mr Fisher argues the Court will need to consider the circumstances which led to the alleged loss including the unavailability of other hospitals and the reasons why the plaintiff’s application for credentialing had been declined by those other hospitals.
Further particulars
[14] I generally accept the force of Mr Fisher’s submissions on behalf of the defendant that rely on rr 5.26, 5.32 and 5.33. In particular, where a plaintiff seeks to recover a sum of money, as the plaintiff does in this case, he is required to state the
amount as precisely as possible1 and a plaintiff seeking to recover special damages must state their nature, particulars and amount in the statement of claim.2 As the Commentary to McGechan makes clear, in this context the essential characteristic of special damages is that damage has occurred, can be proved as an established fact and is calculable.3
[15] The reason it is desirable that the quantum of damages is specified is that, in the absence of particulars of the sum claimed, a defendant is deprived of the opportunity of paying into Court. Further the absence of a particularised quantum hampers meaningful discussions as to settlement. It will not assist the expeditious
hearing of the matters in issue.4
[16] The plaintiff seeks special damages based on the actual custom and business lost by, on his case, the wrongful suspension of his credentialing by the defendant. Such loss will be calculated by contrasting the income the plaintiff had formerly earned generally and particularly by carrying out operations at the defendant’s hospital while fully credentialed with the income he has earned after 30 March 2016. That exercise will require consideration of the income the plaintiff has earned from 1
April 2016 to 31 March 2017 with perhaps an extrapolation thereafter.
[17] I accept that at the time the plaintiff’s claim was filed on 2 August 2016 his focus was on the application for injunctive relief and he was not in a position to provide any proper assessment of damages. However, almost six months have passed since the end of the financial year to 31 March this year. The plaintiff should now be in a position where his accounts to 31 March should be completed. Further, and in any event, the invoices for the relevant period will be available.
[18] I reject the submission for the plaintiff that provision of particulars should await the conclusion of the finalisation of the plaintiff’s expert’s brief. For the reasons given above there is a proper purpose in requiring particulars of damage as
soon as they are reasonably available. The rules require particulars of special
1 High Court Rules 2016, r 5.32.
2 High Court Rules, r 5.33.
3 Andrew Beck and others (eds) McGechan on Procedure (online looseleaf ed, Thomson Reuters)
at [HR5.33].
4 Milne v North Shore City Council HC Auckland M-264/90, 9 November 1990.
damages where they are capable of assessment. It is not solely a matter of evidence. Provision of the particulars of damage will not require an amended statement of claim as there is a good argument that the particulars sought are of pleadings rather than themselves being pleadings.5 Particulars of the loss can be provided without the need to file an amended statement of claim.
[19] The plaintiff has an expert accountant engaged and assisting him with his claim. He has the ability to formulate his claim for special damages for custom and business lost.
[20] While the claim for reputational damages may not be able to be precisely calculated for reasons set out above, the plaintiff should also state what he generally claims is the value of his reputational loss. In Ayers v Lexis NZ Ltd Kós J confirmed particulars of such claims should be provided.6
Further discovery
[21] Mr Fisher relied on the evidence of Mr Lucas noted above to support an argument that records evidencing the identity of each patient referred to the plaintiff was required as was the details of the patients on the invoices issued by him. Mr Fisher also referred to Ms van Praagh’s second affidavit in which she said that provision of a patient’s name will enable a “cross-checking verification process” to be undertaken in relation to the invoices issued.
[22] The Court must be satisfied that the documents sought (in this case including patient details) should have been discovered. The defendant and its expert are not, with respect, carrying out an audit process here. The relevant information is information which will enable the defendants to understand and test the basis for the plaintiff’s claim to special damages. The damages claimed are for actual custom or business lost. The plaintiff proposes to discover invoices issued by him in relation to surgical procedures performed by him at the defendant’s hospital, Southern Cross Hospital, Braemer Hospital Limited and Grace Hospital from 31 March 2012. The
invoices (even with redacted patient names) will enable the defendant to identify
5 Ayers v LexisNexis NZ Limited [2012] NZHC 3055 at [47]–[49].
6 Ayers v LexisNexis NZ Limited, above n 5, at [55]–[59].
when the operation was carried out, in which hospital, what type of operation was carried out, and the fee charged. The comparison between the invoices issued for operations prior to 31 March 2016 and after will enable the defendant to test the plaintiff’s claim for damages. The discovery obligation is ongoing so that the discovery required will be of all invoices from 31 March 2012 until the date of the affidavit initially. The obligation to discover further invoices will continue thereafter.
[23] That information, taken together with the plaintiff’s financial accounts, income returns and tax GST returns, will enable the defendant to test the plaintiff’s claim for loss of custom and business. The identity of each patient referred is not required to enable the plaintiff to establish its loss nor for the defendants to test it. I agree with the plaintiff’s expert Mr Braithwaite that:
… the appropriate, [method], to assess the loss and damage suffered, … is to examine the level of income prior to the suspension, and to compare this to the level of income subsequent to the suspension.
The information to enable the quantification of the income prior to and subsequent to the suspension will be contained within the details of the invoices issued by the plaintiff.
Income from patients seen or operated on will be included within the amounts that the plaintiff has invoiced.
[24] Further, as Mr Braithwaite observed, even if there was a variation between the number of referrals and the invoicing of patients, the level of invoicing represents the more accurate measure of income. The change in level of the income represents a more accurate basis for measure of loss and damage.
[25] It is not necessary for the further detail of the patients’ names to be provided.
[26] I accept that information concerning the defendant’s ability to operate at Southern Cross Hospital and the other hospitals may be generally relevant in relation to the issue of foreseeability of damage. However what is important is the state of the defendant’s knowledge of those circumstances at the time it suspended the plaintiff’s operating privileges. At trial the Court will not be drawn into whether the actions taken against the plaintiff by other hospitals was reasonably taken or not.
The fact the plaintiff had his credentialing suspended at other hospitals could only be relevant in that it would limit the ability of the plaintiff to operate at hospitals other than the defendant’s hospital. Importantly, overlying that, is the further qualification that the relevance also depends on whether the defendant knew of that position (which must be a matter within the defendant’s knowledge).
[27] Any information concerning the dealings between the plaintiff and those other hospitals which was not in the defendant’s knowledge at the relevant time would be irrelevant to its decision to suspend. The defendant cannot rely on such information as ex post facto justification for its suspension of the plaintiff.
[28] To the extent the information is relevant, the information the plaintiff has provided regarding Southern Cross in his recent affidavit is sufficient. I note the plaintiff has agreed to provide the discovery sought regarding Braemar and, as Ms Sweet has confirmed, the plaintiff has also agreed to clarify in his affidavit the position regarding Grace Hospital Ltd.
Result/orders
[29] The plaintiff is required to provide further particulars of the damages claimed as compensation for the pecuniary loss suffered by the plaintiff as a consequence of the defendant’s suspension of the plaintiff and is also to provide particulars of the damages claimed for the harm caused to the plaintiff’s reputation. In both cases the particulars are to be provided by 6 November 2017. For the avoidance of doubt the particulars may be provided by notice without the need for an amended statement of claim to be filed.
[30] The plaintiff is to provide discovery of the documents sought in the application of 1(a), (b) and (d) (with the identity of the patients to whom the invoices relate redacted) and the information sought in 2, 3 and 4 of the application.
[31] In making the orders for discovery under items 2, 3 and 4 above I record that in relation to paragraph 2 the information provided already in relation to Southern Cross is sufficient.
[32] The plaintiff is to file and serve such affidavit of further discovery by 22
September 2017 as suggested.
Timetable directions
[33] The fixture commencing 30 April 2018 is confirmed. After discussion with counsel I fix the following timetable for the steps hereafter:
(a) the plaintiff is to serve his evidence, list of documents relied on and copies of the documents by Monday, 4 December 2017;
(b) the close of pleadings date will be Monday, 18 December 2017;
(c) the defendant is to serve its evidence and list of documents relied on and copies of those documents, by Monday, 5 February 2018;
(d)the plaintiff is to serve any expert witness briefs in reply (restricted to experts) by Monday, 5 March 2018;
(e) the plaintiff is to file and serve common bundle of documents by
Monday, 26 March 2018;
(f) other standard pre-trial directions in accordance with HCR 9.2–9.9 to apply;
(g) leave reserved to apply for a pre-trial conference if necessary.
Costs
[34] Both parties seek costs. The plaintiffs submit that the applications were unnecessary given the concessions made. The defendant submits that the applications were necessary and in fact the plaintiff’s attitude would support an uplift in costs.
[35] On my assessment the applications were properly brought. The plaintiff had failed in his obligations to provide particulars and had not provided discovery of
relevant documentation. The application was necessary. However once the plaintiff made the offer for discovery prior to the hearing, it should not have been necessary to pursue the hearing on the issue of discovery. Against that the plaintiff maintained an unrealistic approach towards provision of particulars of damage arguing that particulars would only be provided once the expert witness briefs were provided. On my assessment the parties have had an equal measure of success at the hearing itself.
[36] The fair result is for the defendant to have costs on the application and preparation of submissions for both applications on a 2B basis together with the disbursements associated but the costs of the hearing itself are to lie where they fall.
Order accordingly.
Venning J
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