Medlab Hamilton Ltd v Waikato District Health Board HC Auckland CIV 2007-419-477

[2007] NZHC 1780

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2007-419-477

UNDER  The Judicature Amendment Act 1972 and the Court's inherent power of review

IN THE MATTER OF     an application for review

BETWEEN  MEDLAB HAMILTON LIMITED Plaintiff

AND  WAIKATO DISTRICT HEALTH BOARD First Defendant

AND  PATHOLOGY ASSOCIATES LIMITED Second Defendant

CIV 2007-470-290

AND UNDER                  The Judicature Amendment Act 1972 and the Court's inherent jurisdiction

IN THE MATTER OF     an application for review under the Act

BETWEEN  MIDLAND PATHOLOGY BOPY LIMITED

Plaintiff

AND  BAY OF PLENTY DISTRICT HEALTH BOARD

First Defendant

AND  PATHOLOGY ASSOCIATES LIMITED Second Defendant

Hearing:         30 May 2007

Counsel:        PJ Radich and E Willis for Plaintiffs in both proceedings

MG Colson for First Defendant in proceeding CIV 2007-419-477

BJ Upton for Second Defendant in both proceedings

MEDLAB HAMILTON LIMITED V WAIKATO DISTRICT HEALTH BOARD AND ANOR HC HAM CIV

2007-419-477  1 June 2007

Judgment:      1 June 2007 at 11.30 a.m.

JUDGMENT OF RODNEY HANSEN J

This judgment was delivered by me on 1 June 2007 at 11.30 a.m., pursuant to Rule 540(4) of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:           Minter  Ellison  Rudd  Watts,  P  O  Box  2793,  Wellington  for  Plaintiffs  in  both proceedings

Bell Gully, P O Box 1291, Wellington for First Defendant in CIV 2007-419-477
Sharp Tudhope, Private Bag TG12020, Tauranga for First Defendant in

CIV 2007-470-290

Simpson Grierson, Private Bag 92518, Auckland for  Second Defendant in both proceedings

2

Introduction

[1]      In  these  proceedings  the  plaintiffs  challenge  by  way  of  judicial  review decisions made by District Health Boards to award contracts for laboratory testing services  to  Pathology  Associates  Limited  (PAL).     The  plaintiffs  are  related companies  with  existing  contractual  arrangements  with  the  Boards  and  who competed for the contracts.

[2]      I was asked to determine how the two proceedings should be heard.   The plaintiffs and the Bay of Plenty District Health Board (BOPDHB), with qualified support from the Waikato District Health Board (WDHB), asked for the proceedings to be heard together.  PAL opposed the application.

[3]      After hearing argument, I came to the clear view that the proceedings should be heard concurrently.  I made an order accordingly with an associated direction for a fixture for five days to be allocated on the earliest convenient date after 20 August. My reasons now follow.

Background

[4]      The contracts were awarded following an established procedure involving the issue by the District Health Boards of a Request For Proposal (RFP).  They received proposals from would-be providers and undertook evaluation processes.  BOPDHB commenced its process in June 2006 and decided to negotiate a contract with PAL in about October 2006.  WDHB’s process was undertaken somewhat later; its decision to negotiate a contract with PAL was made in December 2006.  Both Boards entered into contracts with PAL in February 2007.

[5]      The proceedings were not issued immediately and may have been deferred pending the delivery of the judgment of Asher J in Diagnostic Medlab Limited v Auckland District Health Board & ors HC AK CIV 2006-404-4724 20 March 2007. In the event, both sets of proceedings were commenced on 11 April 2007.  To date

they have been managed together.   Orders for discovery have been made and provisional  arrangements  made  for  hearing  time  depending  on  the  outcome  of today’s hearing.

[6]      When filing the proceedings the plaintiffs applied for an order that they be heard sequentially.   Later BOPDHB sought an order for consolidation of the proceedings.  In the course of argument, it became clear that the common position of the plaintiffs and BOPDHB was that the proceedings should be heard concurrently. An order for consolidation was not sought.

Legal principles

[7]      The jurisdiction to make orders for consolidation and for proceedings to be heard together is in r 382 of the High Court Rules, associated, in the context of judicial  review  proceedings,  with  the  power  under  s 10(2)(k)  of  the  Judicature Amendment Act 1972 to exercise powers of direction vested in the Court by rules in respect of originating applications.  Rule 382 reads as follows:

Where 2 or more proceedings are pending and it appears to the Court—

(a)      That some common question of law or fact arises in both or all of them; or

(b)      That the rights to relief claimed therein are in respect of or arise out of—

(i)       The same event; or

(ii)      The same transaction; or

(iii)     The same event and the same transaction; or

(iv)     The same series of events; or

(v)      The same series of transactions; or

(vi)     The   same   series   of   events   and   the   same   series   of transactions; or

(c)      That for some other reason it is desirable to make an order under this rule,—

the Court may order those proceedings to be consolidated on such terms as it thinks  just,  or  may  order  them  to  be  tried  at  the  same  time  or  one

immediately after another, or may order any of them to be stayed until after the determination of any other of them.

[8]      The discretion to make orders under r 382 is a wide one, to be exercised broadly in the interests of justice.  Among the factors which will favour an order (if grounds are made out) are the savings that will be achieved in time and cost to the parties (and, I would add, in judicial resources) and removing the risk of inconsistent decisions – see CallPlus v Telecom New Zealand Limited (2000) 15 PRNZ 14 and Amalgamated  Finance  Limited  v Wyness  HC  WN  CP156/86  19  February  1987 where McGechan J made orders that four proceedings be heard concurrently for reasons of, convenience, expedition and to reduce the risk of inconsistent decisions.

Discussion

[9]      The two  proceedings  have  much  in  common.    The  plaintiffs  are  related companies and have the same legal representation.   The second defendant in each proceeding – the successful contracting party – is the same person.   Although the proceedings involve different District Health Boards and, obviously, distinct decisions, there is much that is common in the factual and legal context in which the decisions were made.   Both Boards followed a request for proposal process recommended to Crown Entities.  Both operate within the same statutory framework. The challenges to their decisions raise the same underlying  issues.   In terms of r 382(a) there are common questions of law and fact.

[10]     There are important points of difference in the facts and the legal issues. Perhaps the most important factual difference between the two proceedings is that whereas BOPDHB decided to retain the incumbent provider, the WDHB made a decision to change.  There is much that is common in the grounds of judicial review relied on; both plaintiffs complain of unfairness and inadequate consultation.  But in the WDHB proceeding, the plaintiff also relies on irrationality and wrongful delegation, whereas in the BOPDHB proceeding, additional grounds are pre- determination, breach of legitimate expectation and mistake of fact.

[11]     The parties supporting concurrent hearings contended, nevertheless, that the critical underlying legal issue is common to both, namely the circumstances in which a decision of a District Health Board to contract a provider may be challenged by way of review.  Mr Radich and Mr Cooke QC both emphasised that jurisdiction to review,  the  extent  to  which  a  decision  will  be  scrutinised  (a  “hard  look”  or otherwise), and the individual grounds relied on involve inter-connected legal issues. They further submitted, and I do not understand it to be disputed, that there are also common issues as to the relief available.  Among the legal issues that will need to be addressed in both proceedings, are the relevance of s 87 of the New Zealand Public Health and Disability Act 2000 and s 20 of the Crown Entities Act 2004 and, of course, the two grounds of review – unfairness and inadequate consultation – that both plaintiffs rely on.

[12]     The  common  legal  issues  and  the  importance  of  avoiding  inconsistent findings, make a compelling case for having both proceedings heard together by the same Judge.  Mr Colson for the WDHB, while expressing a preference for sequential hearings, did not demur from both matters being heard at the same time as long as that did not delay a determination of the challenge to his client’s decision.  He did not, however, accept the plaintiffs’ further argument that there would be practical advantages to the parties if simultaneous decisions are made and I put that consideration to one side.

[13]     Mr Upton for PAL maintained his opposition to the proceedings being heard together.   He argued for two separate hearings with the District Health Board not involved in the first hearing permitted to be present and to make submissions on common issues of law which would be treated  as preliminary questions  for the purpose of the proceeding to be heard second.  He said that would mean that if those issues were determined in favour of the defendants, the need for a second hearing would fall away.

[14]     I am completely unattracted to that solution.  It would require an order under r  418  that  certain  questions  be  determined  determined  separately.     Such  an application would itself involve further delay and expense with no  assurance of success.  As Lord Scarman said in Tilling v Whiteman [1980] AC 1 at 25,:

Preliminary points of law are too often treacherous shortcuts.   Their price can be, as here, delay, anxiety, and expense”

[15]     I was left  in no doubt that the case for the two proceedings to  be heard together was irresistible.  If they are to be heard together before the same Judge, it is plainly preferable that the hearings take place concurrently, and not sequentially.  A concurrent hearing will permit common legal and factual issues to be addressed in the most logical, efficient and coherent way.  Without in any way seeking to bind the trial Judge, who will finally determine the way in which the cases are argued, I would envisage that, along the  lines suggested by Mr Cooke, the case  for  both plaintiffs would be presented first, followed by the Health Boards.  There would then be submissions  by counsel for  PAL  in  each  proceeding  and  the  hearing  would conclude with replies from the plaintiffs.

Result

[16]     The order for the proceedings to  be heard concurrently is confirmed.   A conference  is  to  be  convened  for  the  purpose of  making  any  further  necessary pretrial directions.