FEDERAL COURT OF AUSTRALIA

ACCC v The Australian Medical Association Western Australia Branch Inc

[2001] FCA 1471

TRADE PRACTICES – consent orders – Australian Competition and Consumer Commission sued two sets of respondents for alleged breaches of Part IV of Trade Practices Act  - alleged anti-competitive understanding in relation to fees payable to doctors treating public patients at a hospital owned and operated by second respondent – one set of respondents admitted contraventions and consented to proposed declarations, injunctions and pecuniary penalties – other set of respondents objected to declarations and injunctions being granted before trial of proceedings against them – extent to which, in those circumstances, Court should make orders on agreed statement of facts – whether s 191 of the Evidence Act provides the only means whereby a Court may proceed on the basis of agreed facts – whether appropriate to grant declarations, injunctions and order pecuniary penalties at this stage.

Trade Practices Act 1974 (Cth), ss 45(2)(a)(i), (ii), 45(2)(b)(ii), 45A, 80(4)

Evidence Act 1995 (Cth), s 191

Australian Competition and Consumer Commission v SIP Australia Pty Ltd (1999) ATPR 41‑702 referred to

Australian Competition & Consumer Commission v CC (NSW) Pty Ltd (No 9) [2000] FCA 23 referred to

ACCC v ABB Transmission and Distribution Ltd [2001] FCA 383 referred to

Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc & Ors [1999] FCA 18 followed

Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 referred to

ACCC v THE AUSTRALIAN MEDICAL ASSOCIATION WESTERN

AUSTRALIA BRANCH INC, MAYNE NICKLESS LTD TRADING AS HEALTH

CARE OF AUSTRALIA, PAUL CONSTANTINE BOYATZIS, DR DAVID EVAN

ROBERTS, MARTIN DAY and IAN GEOFFREY MACDONALD

W 121 of 2000

CARR J

19 OCTOBER 2001

PERTH

THE COURT ORDERS THAT:

1.         The applicant and the first, third and fourth respondents lodge any consent orders, revised in accordance with the within reasons, within 21 days of the date of this order.

2.         One half of the costs of and incidental to the hearing on 7 August 2001 (other than in respect of the preparation of the short minutes of proposed orders and the joint submissions and statement of agreed facts) be costs in the cause as between the applicant and the second, fifth and sixth respondents.  This order shall not take effect if any party files and serves within ten days written submissions in accordance with the procedure referred to below.

3.         Any party objecting to the order proposed in paragraph 2 above may file and serve written submissions within ten days.  Any party served with such submissions may file and serve any submissions in response within seven days of such service.

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

REASONS FOR JUDGMENT

introduction

1                     In this application the applicant on the one side and the first, third and fourth respondents on the other have agreed, subject to Court approval, to resolve the issues between them.  They have filed a document headed “Joint Submissions and Statement of Agreed Facts of the Applicant and the First, Third and Fourth Respondents”, together with two bundles of agreed documents and a minute of proposed orders which they ask the Court to make with their consent.  The questions which I have to consider are whether it is within the Court’s power to make those orders and, if so, whether it is appropriate to make orders in the terms sought, either at this stage of the proceedings or later.  Answering those questions involves not only consideration of the nature and terms of the proposed orders themselves, but also the circumstance that the proceedings remain contested so far as the applicant and the second, fifth and sixth respondents are concerned.

background

2                     In the originating application the applicant, Australian Competition and Consumer Commission, sues all of the respondents in respect of conduct which is said to have constituted contraventions by the incorporated respondents of s 45(2)(a)(i) and (ii) and s 45(2)(b)(ii) (and one attempted contravention of the latter provision) of the Trade Practices Act 1974 (Cth) (“the Act”) when read with s 45A of the Act.  The individual respondents are sued on the basis that they were said to have been knowingly concerned in the contraventions.

3                     In summary, the applicant alleges that in December 1996 the first respondent, the Australian Medical Association Western Australia Branch Inc (“AMA (WA)”), represented by the third and fourth respondents, Mr Boyatzis and Dr Roberts, arrived at an understanding with the second respondent, Mayne Nickless Ltd trading as Health Care of Australia (“MNL”), to fix the prices for the supply of medical services at the Joondalup Health Campus, a hospital previously owned and operated by the State of Western Australia (“the State”), but at the relevant time (and now) owned and, to some extent, operated privately by MNL, subject to a lease-back arrangement with the State for the public hospital facilities.  That understanding was referred to in the statement of claim as the “VMP Understanding” (VMP stands for Visiting Medical Practitioners).  The VMP Understanding included the terms of a document (“the Memorandum of Understanding”) signed by the fourth respondent on behalf of AMA (WA) and the fifth respondent on behalf of MNL on 9 December 1996.  MNL relies on the terms of that document in its defence.  I return to the matter of MNL’s defence later in these reasons. 

4                     The applicant alleges that AMA (WA) contravened s 45(2)(a)(ii) of the Act (when read with s 45A) by arriving at the VMP Understanding and that the third and fourth respondents were involved in that contravention by being directly knowingly concerned in the contravention. 

5                     Next the applicant alleges that, in the meantime, on 5 December 1996 AMA (WA) arranged a meeting of doctors who practised at the Joondalup Health Campus, which the third and fourth respondents attended on its behalf.  At that meeting, so the joint submissions and agreed facts aver, the doctors present passed a resolution authorising the fourth respondent, as the then President of AMA (WA), to take whatever action was needed to settle a memorandum of understanding with MNL and the Western Australian Government.  This included industrial action and the orderly discharge of patients from the Joondalup Health Campus.  The applicant alleges that AMA (WA) thereby contravened s 45(2)(a)(i) of the Act by arriving at an understanding which contained an exclusionary provision.  In the further amended statement of claim (paragraph 54) the understanding is described as one which was arrived at by “Public Patient Practitioners” (a term defined in paragraph 10) present at the meeting, the purpose of which was to prevent, restrict or limit the supply by some or all of those doctors present, of medical services to public patients at the Joondalup Health Campus.  AMA (WA) is said to have been a party to that understanding.  The applicant also contends that the third and fourth respondents have been involved in that contravention by being directly knowingly concerned in the contravention. 

6                     Then it is alleged that between December 1996 and February 1997 AMA (WA) gave effect to the VMP Understanding by negotiating and agreeing with MNL the terms of an agreement dated 19 February 1997 (“the Joondalup VMP Agreement”) governing the supply of medical services by certain doctors to MNL at the Joondalup Health Campus and the fees to be paid by MNL to those doctors.  The applicant alleges that by doing so AMA (WA) has contravened s 45(2)(b)(ii) by giving effect to the VMP Understanding and that the third and fourth respondents have been involved in that contravention by being directly and knowingly concerned in the role of AMA (WA).  The applicant alleges a further similar contravention on the part of AMA (WA) and accessorial liability (being directly knowingly concerned in that contravention) on the part of the third and fourth respondents in respect of the negotiation of certain offers of engagement to be made by MNL to the relevant doctors. 

7                     Finally, the applicant alleges that AMA (WA) attempted to contravene s 45(2)(b)(ii) of the Act by writing a letter in October 1998 to MNL asserting that the Joondalup VMP Agreement was enforceable and binding on MNL.

8                     All of the allegations made above are admitted by the first, third and fourth respondents so far as they refer to their respective conduct. 

9                     I think that it would be appropriate at this stage to set out, as briefly as possible, some of the factual background to the above.  Before doing so, I must stress that many of the important factual and legal allegations made by the applicant (and conceded by the first, third and fourth respondents) are contested by the second, fifth and sixth respondents.  Those issues will have to be decided at the further hearing of this matter in due course.

10                  In mid-1995 the State announced plans for the privatisation of what was then the Wanneroo Hospital and which later became the Joondalup Health Campus.

11                  On 4 September 1995 the State Minister for Health entered into an agreement with AMA (WA) regarding the terms, conditions and remuneration of doctors providing medical services in non-teaching hospitals operated by the State for the care of public patients (“the State VMP Agreement”).  Those are the doctors who have been described in the statement of claim as “Public Patient Practitioners”.  The State VMP Agreement gave those doctors the option of being engaged as independent contractors on a fee for service basis i.e. being remunerated for each episode of medical care, rather than being paid a fee per session.

12                  The State VMP Agreement only applied in part to Wanneroo Hospital, due to an election made by certain doctors in 1992 to remain remunerated on a sessional basis.  By early 1996 certain doctors practising at the Wanneroo Hospital became increasingly concerned that they were being disadvantaged, in an income-earning sense, by being paid on a sessional basis at the Wanneroo Hospital when some of them were already engaged on a fee for service basis by the State at other public hospitals. 

13                  Doctors who provided medical services to public patients at Wanneroo Hospital have been described in the statement of agreed facts as “Wanneroo Public Patient Practitioners” and I shall adopt that expression in these reasons.  On or about 28 September 1995 a group of the Wanneroo Public Patient Practitioners, being concerned about the proposal to transfer operation of the Wanneroo Hospital to a private operator, approached AMA (WA) to act on their behalf in relation to the terms, conditions and remuneration schemes under which they would be engaged when the Wanneroo Hospital ceased to be operated by the State.  AMA (WA) commenced those negotiations with the State Minister for Health.  The negotiations included a proposal that Wanneroo Public Patient Practitioners at the proposed Joondalup Health Campus would be engaged on a fee for service basis by the State.  The doctors on whose behalf AMA (WA) negotiated included 30 doctors whose names are set out in Schedule 1 to the statement of claim and who are described in paragraph 27 of that document as “the Participating Public Patient Practitioners”.  Again, I adopt the same description of them in these reasons.

14                  On or about 6 November 1995 the State announced that MNL was the preferred tenderer for the operation of the proposed Joondalup Health Campus.

15                  There were various meetings between the parties concerned, including a meeting on 20 December 1995 at which certain of the Wanneroo Public Patient Practitioners present passed resolutions reaffirming their appointment of AMA (WA) as their agent, and their position that the State VMP Agreement should apply in full to the proposed Joondalup Health Campus. 

16                  During the course of 1996, AMA (WA) and the Public Patient Practitioners (including in particular the Wanneroo Public Patient Practitioners) became concerned about the proposed co-location at the Joondalup Health Campus of treatment for public and private patients.  Their concern was that a private operator managing a public hospital might erode the terms and conditions of the employment or engagement of Public Patient Practitioners.  Considerable efforts were made by AMA (WA) to have such terms embodied in an agreement between it and the Health Department of Western Australia. 

17                  On 24 April 1996 the State Minister for Health and MNL entered into an agreement (“the DHSA Agreement”) regarding the future private operation of the Wanneroo Hospital.  The DHSA Agreement included provisions to the effect that Public Patient Practitioners at the Joondalup Health Campus would be engaged via a contract of employment with a Board [as defined under the Hospitals Act (WA)]at remuneration levels, benefits, terms and conditions not exceeding those set out in session or fee for service contracts applying at other Perth metropolitan hospitals.  It also provided for a major redevelopment of the Wanneroo Hospital. 

18                  By July 1996 negotiations between AMA (WA) and the State Department of Health had reached the stage where it appeared to be understood that each Wanneroo Public Patient Practitioner at the Joondalup Health Campus would be given the option of working for either the State or MNL. 

19                  By December 1996 (i.e. immediately before the events which form the subject matter of the alleged contraventions and attempted contravention described above), AMA (WA) was under the impression that it had reached agreement on behalf of the Wanneroo Public Patient Practitioners with the State Minister for Health and MNL covering various basic options for the provision of medical services to public patients at the Joondalup Health Campus.  The options were as follows.  A doctor could elect to remain either as an employee of or an independent contractor to the State and be remunerated on either a sessional or fee for service basis.  Alternatively, a doctor could elect to become an employee of or independent contractor to MNL on either of those fee bases. 

20                  According to the facts as agreed between the applicant and the first, third and fourth respondents, immediately before the reaching of the VMP Understanding, the only remaining “sticking point” between AMA (WA) and MNL was whether the option of fee for service was to be at the election of the individual Wanneroo Public Patient Practitioner or MNL (where MNL happened to be the employer or where the services were provided to MNL by such medical practitioner acting as an independent contractor).

21                  A key point about the Memorandum of Understanding, which it will be recalled formed part of the VMP Understanding, was the resolution of this issue on the basis that the fee for service option was to be at the election of each individual Wanneroo Public Patient Practitioner and not at the discretion of MNL.  In the agreed facts it is stated:

“This concession [by MNL] effectively constrained the capacity of MNL to develop its own preferred combination of sessional and fee for service Public Patient Practitioners.”

22                  Between December 1996 and February 1997 there occurred the negotiations which I have described above at paragraph 6. 

23                  On 19 February 1997 the Joondalup VMP Agreement was signed on behalf of AMA (WA) and MNL.  It contained an agreed fee schedule in annexure form which comprised a direct copy of the Western Australia Public Hospitals Fee Schedule annexed to the State VMP Agreement.  On the same date, at a meeting of the Medical Council of AMA (WA) certain Wanneroo Public Patient Practitioners unanimously approved two documents, namely the Joondalup VMP Agreement and a document described as “JHC By-Laws”.  In the statement of agreed facts (paragraph 3.68) the JHC By-Laws and the Joondalup VMP Agreement are referred to as “the agreements”.  Part of paragraph 3.68 of the agreed facts reads as follows:

“The effect of the formal adoption and application of the agreements was to fix, maintain and control the prices for medical services or at least to hinder or prevent the potential for any price competition between Public Patient Practitioners for the supply of medical services to MNL for the care of Public Patients.  In simple terms the agreements applied the status quo existing in non-teaching hospitals operated by the State to the JHC [Joondalup Hospital Campus].  This in turn had the potential to have a knock-on-effect of setting benchmark fees for any future new entrant in the market for the acquisition of medical services from Public Patient Practitioners by the private operators of public hospitals.”

24                  Between May 1997 and late October 1997 the Health Department of Western Australia and MNL each advised the Wanneroo Public Patient Practitioners of the options from which they could elect to be engaged at the Joondalup Health Campus and each made offers of engagement.  The process by which the offers of engagement was documented and put into procedural effect was negotiated between AMA (WA), the Health Department of Western Australia and MNL.  The Wanneroo Public Patient Practitioners who entered into such contracts with MNL all invoiced MNL on the basis of the fees contained in the fee schedule to the Joondalup VMP Agreement and were in turn remunerated by MNL on that basis. 

25                  In 1998 AMA (WA) became aware that MNL had appointed a small number of Public Patient Practitioners at the Joondalup Health Campus on a basis other than that contained in the Memorandum of Understanding and, in particular, other than that contained in the Joondalup VMP Agreement.  On 15 October 1998 AMA (WA) wrote to MNL stating that the Joondalup VMP Agreement was enforceable and bound MNL.  It was the sending of that letter which led to the allegation, referred to in paragraph 7 above, that AMA (WA) thereby attempted to contravene s 45(2)(b)(ii) of the Act, and which AMA (WA) admits. 

26                  I now turn to the various consent orders which the applicant and the first, third and fourth respondents ask the Court to make.  They include declarations, injunctions, orders for the payment of pecuniary penalties by each of the first, third and fourth respondents, the institution by the first respondent of a trade practices compliance program and an order that the first respondent pay to the applicant the sum of $25,000 as a contribution towards its costs in these proceedings.  I turn first to the proposed declarations.

Declarations

27                  The declarations set out in the short minutes of order, tendered by those parties on 7 August 2001 and as amended during the course of oral addresses on that date, are as follows:

“1.  (a)   in December 1996, the First Respondent arrived at an understanding with another and certain visiting medical practitioners in competition with each other to fix, control or maintain the prices for medical services to be provided by visiting medical practitioners to the Second Respondent at the Joondalup Health Campus for the care of public patients (“the Understanding”), in contravention of s 45 of the Trade Practices Act 1974 (Cth) (“the Act”);

        (b)   in the period December 1996 to February 1997, the First Respondent gave effect to the Understanding by negotiating and entering into a written agreement with the Second Respondent dated 19 February 1997 establishing the prices to be paid by the Second Respondent to visiting medical practitioners at the Joondalup Health Campus for the care of public patients for the duration of the written agreement, in further contravention of s 45 of the Act; 

        (c)   in 1997, the First Respondent gave effect to the Understanding by agreeing with the Second Respondent the manner in which visiting medical practitioners would be offered engagement by the Second Respondent to supply medical services for the care of public patients at the Joondalup Health Campus in further contravention of s.45 of the Act;

        (d)   in October 1998, the First Respondent attempted to give effect to the Understanding by asserting to the Second Respondent that the written agreement dated 19 February 1997 was binding and enforceable, being conduct of the kind referred to in s.76(1)(b) of the Act; and

        (e)   in December 1996, the First Respondent arrived at an understanding with certain visiting medical practitioners which contained a provision which had the purpose of preventing the supply of medical services by the visiting medical practitioners of the Second Respondent for the care of public patients at the Joondalup Health Campus, in further contravention of s.45 of the Act.

2.     (a)   in December 1996, each of the Third and Fourth Respondents was knowingly concerned in, or a party to, the First Respondent arriving at the Understanding in contravention of s.45 of the Act;

        (b)   in the period December 1996 to February 1997, each of the Third and Fourth Respondents was knowingly concerned in, or a party to:

               (i)         the First Respondent giving effect to the Understanding by negotiating and entering into a written agreement with the Second Respondent dated 19 February 1997 establishing the prices to be paid by the Second Respondent to visiting medical practitioners at the Joondalup Health Campus for the care of public patients and providing for procedures for those prices to be reviewed and established indefinitely;* and

               [* it will be noted that the words which I have underlined differ from the corresponding wording in paragraph 1(b) above.  I was not told whether this difference is deliberate.  Given the complete correspondence between the description of the contraventions in paragraph 1 and the descriptions of the other accessorial conduct in paragraph 2, the parties concerned may wish to consider some minor re-drafting.]

               (ii)        The First Respondent giving effect to the Understanding by agreeing with the Second Respondent the manner in which visiting medical practitioners would be offered engagement by the Second Respondent to supply medical services for the care of public patients at the Joondalup Health Campus,

               being conduct of the kind referred to in s.76(1)(e) and s.80(1)(e) of the Act; and

        (c)   in December 1996, each of the Third and Fourth Respondents was knowingly concerned in, or a party to, the First Respondent arriving at an understanding with certain visiting medical practitioners which contained a provision which had the purpose of preventing the supply of medical services by the visiting medical practitioners to the Second Respondent for the care of public patients at the Joondalup Health Campus, being conduct of the kind referred to in s.76(1)(e) and s.80(1)(e) of the Act.”

28                  At the hearing on 7 August 2001 Mr R J Wright, counsel for the second, fifth and sixth respondents (“the MNL Parties”) made submissions about the use of the statement of agreed facts, the appropriateness of the Court granting declaratory and injunctive relief at this stage of the proceedings and the terms in which the proposed injunctions were expressed.  He relied upon written submissions prepared by him and also made some oral submissions.

29                  The position of the MNL Parties was stated as being that they did not wish to interfere with the resolution of the proceedings as between the applicant and the first, third and fourth respondents, but that there were some matters which affected their interests.  The first was the use of agreed facts which, so the MNL Parties contended, was pursuant to s 191 of the Evidence Act 1995 (Cth) (“the Evidence Act”).  It is convenient to dispose of this point at the outset.

30                  Section 191 of the Evidence Act reads as follows:

“1.    In this section:

         agreed fact means a fact that the parties to a proceeding have agreed is not, for the purpose of the proceeding, to be disputed. 

 2.     In a proceeding:

(a)     evidence is not required to prove the existence of an agreed fact; and

(b)     evidence may not be adduced to contradict or qualify an agreed fact;

unless the court gives leave.

 3.     Subsection (2) does not apply unless the agreed fact:

(a)     is stated in an agreement in writing signed by the parties or by lawyers representing the parties and adduced in evidence in the proceeding; or

(b)     with the leave of the court, is stated by a party before the court with the agreement of all other parties.”

31                  The MNL Parties submitted that, on its proper construction, s 191 of the Evidence Act had the effect that a fact would not be an agreed fact upon which the Court could rely unless it had been agreed by all parties to the proceeding.  Counsel referred to the reference to the definition of “agreed fact” in subsection (1) as a fact that “the parties to a proceeding” have agreed was not to be disputed, the reference in subsection (3)(a) to the requirement that the agreement in writing be signed by “the parties or … lawyers representing the parties” and the requirement in subsection (3)(b), if the agreement is stated orally, for it to be with “the agreement of all other parties”.

32                  Mr Wright submitted that as his clients did not agree with or accept many of the facts which had been agreed between the applicant and the first, third and fourth respondents, the Court should not proceed on the basis of the agreed facts.

33                  I was not taken to any authority by any party in relation to this point. 

34                  However, I accept the submission made by Mr C G Colvin, counsel for the applicant, that s 191 of the Evidence Act is a facilitative provision which provides a useful mechanism for parties, amongst other things, to make agreements for the purpose of resolving certain factual issues.  It does not, in my opinion, preclude some or all of the parties to a proceeding from otherwise agreeing a particular fact or facts for the purposes of that proceeding.  Mr Colvin said that the fact that the applicant and the first, third and fourth respondents used the expression “statement of agreed facts” did not mean that they were inviting me to exercise the powers conferred by s 191 of the Evidence Act. 

35                  In my view, s 191 does not prevent me from continuing the practice of determining by consent a matter such as this on the basis of agreed facts.  A fairly recent example of this Court adopting that course can be seen in the decision of Goldberg J in Australian Competition and Consumer Commission v SIP Australia Pty Ltd (1999) ATPR 41‑702.  I shall proceed to do so on the same basis, not on the basis that s 191 has any application.

36                  I am satisfied that, on the basis of the admissions made in the pleadings and the statement of agreed facts, I have power to make the declarations sought.  The next question is whether it is appropriate that I should do so. 

37                  The MNL Parties submitted, for various reasons, that I should not make these declaratory orders at this stage.  I shall not summarise all of those arguments, but I shall refer to two of them. 

38                  The first was that, as a matter of “fundamental general law principle” in relation to making declaratory orders, the declarations should not be made merely on admissions or by consent, but only if the Court were satisfied by evidence.  I reject the submission.  I do so on the basis, first, that providing the public interest and the interests of other persons who might be affected are protected, it is convenient, expedient and cost-effective to proceed in such a manner.  Secondly, this practice has been adopted in several similar cases in this Court, including SIP Australia Pty Ltd.

39                  The second argument advanced by the MNL Parties was that I should not make the proposed declarations at this stage because the question whether an understanding was in fact arrived at in December 1996 between the first respondent and the second respondent and certain visiting medical practitioners in contravention of s 45 of the Act and was given effect to, are matters which are very much in issue between the applicant and the second, fifth and sixth respondents.  The fact that the applicant and the first, third and fourth respondents have admitted certain allegations and agreed certain facts did not, so it was put, have the result that the facts alleged were true.  Nor did it follow that the legal characterisation by those parties of those facts is correct.  The MNL Parties submitted that I should not make the declarations until after hearing all the evidence about whether the alleged understanding was actually entered into and given effect to, and whether the relevant conduct of the first, third and fourth respondents (having regard to the applicable legal principles) constituted contraventions of s 45 of the Act or being knowingly concerned in such contraventions. 

40                  The applicant referred me to various decisions in which the course proposed by it had been adopted.  They included the series of decisions which culminated in Australian Competition & Consumer Commission v CC (NSW) Pty Ltd (No 9) [2000] FCA 23 as reflected in the schedule in paragraph 16 of the reasons of judgment in that case, and ACCC v ABB Transmission and Distribution Ltd [2001] FCA 383 in which Finkelstein J granted declarations comparable to those sought in this matter in relation to the second, sixth, seventh and eighth respondents in that matter before the hearing of the case against the remaining respondents. 

41                  It does not appear that what I shall call “the non-consenting respondents” in ACCC v ABB Transmission and Distribution Ltd contended that his Honour should not grant the declarations sought at that stage. 

42                  I note that in ACCC v SIP Australia Pty Ltd, Goldberg J did not grant any declarations.  Apparently none were sought.

43                  The question whether declarations should be granted at this stage of the proceedings is, of course, one of discretion.  Much depends on the particular circumstances of each case. 

44                  I note that the reference, in paragraph 1(a) of the proposed declarations, to arriving “… at an understanding with another” must be a reference to the second respondent, who (as I have mentioned) denies arriving at any such understanding.  I note also the express references to the second respondent in all but one of the rest of the proposed declarations.

45                  In this matter I propose to follow the course taken by French J in Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc & Ors [1999] FCA 18.  At para [38] in that case his Honour said this:

“Whilst the declarations which are sought against the Colleges appear to be both within power and appropriate, they are declarations of apparently general application.  They concern the nature of licensing agreements in respect of which proceedings between the ACCC and REIWA and Mr Griffith have not yet been concluded.  I do not think it appropriate at this time to make the declarations in these general terms unless and until there is either a consent by REIWA and Mr Griffith or until there are findings after trial to support the declarations.  This should not in any way affect the efficacy of the relief agreed between the ACCC and the other parties.”

46                  For similar reasons to those given above by French J, I do not think that it is appropriate to grant the declarations sought in this matter at this stage.  

47                  One of the main factors which concerns me is that if the MNL Parties are successful in their defence that there was no such relevant understanding, there would remain on the record declarations by the Court which might be inconsistent with such a finding.  I appreciate that in ACCC v CC (NSW) Pty Ltd (No 9) there was a different outcome (see [26]) as between those respondents who admitted contraventions and settled, and those who did not do so.  However, I prefer the approach taken by French J in REIWA. 

48                  Subject to the drafting point to which I have referred above, and subject to what transpires at trial, I consider that the terms of the proposed declarations are appropriate.  The drafting point can be addressed after trial. 

49                  I have considered the public interest in the settlement of cases and the likelihood that the first, third and fourth respondents no longer wish to be concerned with these proceedings.  However, I do not think that the course which I propose to take in this matter cuts across those interests.  So far as those respondents are concerned these proceedings will, to all intents and purposes, have been disposed of by the other orders which I propose to make.

the injunctions

50                  The injunctions contained in the minute of proposed consent orders are in the following terms:

“The First Respondent be restrained, whether by itself, its officers, servants, agents or members howsoever from making any contract or arrangement or arriving at any understanding or giving effect to any contract, arrangement or understanding or attempting the same in respect of the supply of medical services by independent contractor visiting medical practitioners to any hospital facility in Western Australia not operated by, or on behalf of, the State for the care of public patients which contains a provision that fixes, controls or maintains the price for the supply of such medical services or which prevents, restricts or limits the supply of such medical services or which constrains the ability of such individual independent contractor visiting medical practitioners to agree the terms of supply of medical services with the owner or manager of the hospital facility.

Each of the Third and Fourth Respondents be restrained, whether by himself, his servants or agents howsoever from being knowingly concerned in, or a party to, the making of any contract or arrangement or the arriving at of any understanding or the giving effect to of any contract, arrangement or understanding or attempting the same being a contract, arrangement or understanding where one or more parties to such contract, arrangement or understanding are visiting medical practitioners in respect of the supply of medical services by independent contractor visiting medical practitioners to any hospital facility in Western Australia not operated by, or on behalf of, the State for the care of public patients which contains a provision that fixes, controls or maintains the price for the supply of such medical services or which prevents, restricts or limits the supply of such medical services or which constrains the ability of independent contractor individual visiting medical practitioners to agree the terms of supply of such medical services with the owner or manager of the hospital facility.”

51                  The MNL Parties submitted that the above orders should not be made.  They pointed to the fact that the second respondent provides hospital services and as a result it deals with, and is likely to continue to deal with, the first respondent on a range of professional and industrial issues.  The operation of the proposed injunctions was something which, so it was put, the second respondent would have to “take into account” in its dealing with the first respondent.  If the first, third or fourth respondents breached either of the proposed orders and the MNL Parties were involved in that conduct they might be guilty of contempt for obstructing the course of justice by aiding or abetting or being knowingly concerned in such disobedience.

52                  I accept that the MNL Parties have an interest in whether these injunctive orders are made.  But even without the injunctions being in place they would have to consider whether any of their proposed dealings with the first respondent might or might not be in contravention of the Act.  If the proposed injunctions are granted, even on an interim basis pending the eventual disposal of these proceedings, they may have to give even more careful consideration to that question or risk being in contempt.  But I do not accept that the perceived need for perhaps more careful consideration is a valid basis for refusing to grant the proposed injunctions.

53                  Next the MNL Parties submitted that:

·          the Court should not grant the proposed injunctions until it is satisfied, on the basis of evidence, that there has been conduct in contravention of s 45 of the Act;

·          the terms of s 80(1) required a court to be satisfied that a relevant person has engaged in conduct that constitutes a contravention or, relevantly, accessorial liability in respect of a convention; and 

·          the Court could only grant an injunction without being so satisfied if all of the parties consented – a reference to s 80(1AA).

54                  The MNL Parties submitted that if the evidence at the trial establishes (as they contend it will) that there was no understanding containing a provision that fixed controlled or maintained prices for the relevant services then, so the MNL Parties argued, there would be no foundation for at least a significant part of the proposed injunctive orders.  The MNL Parties also referred to their “shield of the Crown defence” i.e. that they operated the relevant part of the Joondalup Health Campus on behalf of the State for the care of public patients at all the relevant times.  If that defence is made out, they submitted that there will have been no contravention of s 45 of the Act.  They contended that until all of those factual and legal matters have been determined, the Court should not make orders in the above form because it cannot be satisfied that the first, third and fourth respondents’ conduct constituted a contravention of Part IV of the Act or relevantly related conduct. 

55                  I note that in relation to paragraphs 41 and 46 of the statement of claim, which plead the entering into and giving effect to the VMP Understanding (either as a price fixing contravention or one which contained a provision having the purpose effect or likely effect of substantially lessening preventing or hindering competition), the second respondent pleads a bare denial.  There is no plea, for example, that MNL did not enter into any commitment and that any commitment was unilateral on the part of the first, third and fourth respondents.  Nor is there any pleading in the defence which specifically challenges the factual basis for the application of s 45A, or the assertions concerning substantial lessening of competition either in purpose or effect.  The pleader has chosen the course, generally speaking, of bare denials and non-admissions of fact, save in relation to the “shield of the Crown” defence, where there has been a greater degree of specificity.  The result is that I must say that I have had some difficulty in ascertaining with any degree of precision just what is the substance of the defence of the MNL Parties.  But, I approach the matter on the basis that so far as they are concerned they dispute that an understanding was arrived at or given effect to as pleaded in the statement of claim.  However, I am left with the impression that their main defence is that of the “shield of the Crown”. 

56                  I consider that, in terms of s 80, I am entitled to reach the requisite degree of satisfaction that the first, third and fourth respondents have, respectively, contravened, attempted to contravene and been knowingly concerned in the alleged contraventions referred to above, on the basis of the admissions made by those parties and the statement of facts agreed as between them.  I do not consider that I have to have formal evidence before reaching such a degree of satisfaction simply because there are other respondents who say that there has not been any contravention at all.  Subject to my observations below about the wording of the proposed orders, in my view, the Court has power to make the injunctions sought.

57                  This is consistent with the course taken in numerous similar cases.  In particular I refer to the series of decisions of Lindgren J in the CC (NSW) Pty Ltd litigation as cross-referenced in the schedule referred to in paragraph [40] above.

58                  The MNL Parties submitted that injunctive relief was not necessary against the first, third or fourth respondents because it did not appear likely that they would knowingly contravene the Act unless they were restrained by an injunction.  I do not accept the proposition that the proposed injunctive relief, to which those respondents consent, should be refused for that reason.  Section 80(4) of the Act makes it clear that the Court may grant an injunction against a person whether or not it appears that that person intends to engage again in contravening conduct.  Given the public interest which these proceedings are brought to protect, I reject this submission. 

59                  Mr Wright, on behalf of the MNL Parties raised concerns which were common to both of the proposed injunctions.  I think that those concerns were justified and, at the hearing on 7 August 2001, Mr Colvin conceded that some re-drafting might be required. 

60                  Those portions of the proposed injunctions which refer to a provision:

“… that fixes, controls or maintains the price for the supply of such medical services …”

are obviously intended to mirror the deeming provisions of s 45A.  However, s 45A(1) includes a requirement that the relevant provision be one which relates (so far as is relevant to this case) to services supplied by any of the parties in competition with each other.  That horizontal element appears to be missing from the proposed orders.  In my opinion those portions of the proposed injunctions should be re-drafted accordingly. 

61                  The next piece of re-drafting which, in my view is required, relates to those portions of the proposed orders which read:

“… or which prevents, restricts or limits the supply of such medical services…”.

62                  This is clearly directed at the making of any contract or arrangement or arriving at any understanding or giving effect to any such contract arrangement or understanding which contains an exclusionary provision.  However, in my opinion, the drafting is too wide and extends the prohibition to conduct which might not be unlawful.  A necessary qualification should be that any two or more of the parties to the contract arrangement or understanding be competitive with each other. 

63                  The final part of the proposed injunctions relates to a provision:

“… which constrains the ability of such individual independent contractor visiting medical practitioners to agree the terms of supply of medical services with the owner or manager of the hospital facility.”

64                  As Mr Wright pointed out, such a provision would not, without more, amount to a contravention of Part IV of the Act or otherwise be unlawful unless it was qualified, for example, in terms of having the purpose or effect of substantially lessening competition. 

65                  In reply, Mr Colvin sought an opportunity, if there were such matters of concern (which in my view there are), to bring in different forms of orders.  I think that the applicant should be given that opportunity.  As the orders are at present worded, the defects (as I see them) discussed above make it inappropriate to grant the proposed injunctions.

66                  Mr Wright objected to the reference to:

“… any hospital facility in Western Australia not operated by, or on behalf of, the State …”

as not being sufficiently clear and unambiguous.  I shall not set out the whole of his submissions on this point, which is developed in paragraph 40 of the written submissions filed on behalf of the MNL Parties.  In my view, the words are sufficiently clear.

67                  I have further concerns about whether it is appropriate in all the circumstances to grant these injunctions, even in re-drafted form, at this stage of the proceedings. 

68                  First, I note that the injunctions proposed are permanent injunctions unlimited as to time.  That is a matter which can be considered later by reason of the more basic concern, expressed immediately below, which I have about these proposed injunctions. 

69                  For reasons similar to those which caused me to decline to make the declarations sought, I do not think that it is appropriate at this stage to grant these injunctions as permanent injunctions.  In particular, I refer to the possibility that after a trial it might be found that there had been no contraventions as alleged. 

70                  Nevertheless, I consider that it would be appropriate to grant suitably re-drafted injunctions to have effect until further order or the final disposition of this application i.e. interlocutory injunctions.  There can be little doubt that, given the admissions and the agreed statement of facts, the applicant has a strong case against the first, third and fourth respondents and that as between the applicant and those respondents the balance of convenience favours the grant of interlocutory injunctions.  So far as the interests of the MNL Parties are concerned, I have already given my reasons why the matters which they put forward would not, as a matter of discretion, cause me to refuse to grant such injunctions. 

71                  The applicant and the first, third and fourth respondents may, if they so wish, file an amended minute of proposed interlocutory injunctions.  With a view to minimising the risk of further drafting disputes, they should consult with the MNL Parties on the re-drafted orders before lodging them.  It should be understood that if such re-drafted proposed orders are lodged which do not satisfactorily address the concerns which I have expressed above, then they may either not be granted at all or may be granted in an amended form without further input from the parties.  The parties may also care to consider whether the injunctions might be more clearly expressed.  Each of the proposed orders comprises a single sentence which contains well over a hundred words.

pecuniary penalties

72                  The applicant and the first, third and fourth respondents propose that there be orders that the first respondent pay to the Commonwealth a pecuniary penalty in the sum of $240,000 in three instalments.  The first instalment is to be paid within four months of the making of the order, the second within eight months of the making of the order and the final instalment of $80,000 within twelve months of the making of the order.  It is proposed that an order be made that each of the third and fourth respondents pay to the Commonwealth a pecuniary penalty in the sum of $10,000 within four months of the date of the order.  I am satisfied, on the basis of the admissions made by the first, third and fourth respondents in their defences and in the agreed statement of facts (and only on that basis), that the first respondent has contravened the Act on the three occasions alleged and agreed upon and has attempted to contravene the Act on the fourth occasion referred to earlier in these reasons.  I am also satisfied, again only on the same basis, that the third and fourth respondents were knowingly concerned in the contraventions. 

73                  In those circumstances s 76(1) empowers the Court to order those respondents to pay to the Commonwealth such pecuniary penalty as it determines to be appropriate having regard to all relevant matters including the particular matters referred to in s 76(1)(f).

74                  As Goldberg J pointed out in SIP Australia Pty Ltd at [23] those considerations are not the only matters to which the Court should direct its attention.  His Honour referred to what he described as a “useful guide to the range of relevant matters” (and I agree that it is) which were set out by French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152-3.

75                  I have given consideration to each of those factors which appear to me to be relevant in this matter, to the extent that the material before me enables me to do so. 

76                  I note that the maximum pecuniary penalty which could be ordered against the first respondent is $10 million, and against each of the third and fourth respondents the maximum would be $500,000.  The proposed penalties can be seen to be at the lower end of the scale. 

77                  I have taken into account the public role which the first respondent carries out.  The AMA (WA), and the national body of which it forms part, serve the public interest by concerning themselves with maintaining and enhancing the quality of medical services and thus public health generally.  It is an organisation which has traditionally existed for reasons not confined solely to the well-being of medical practitioners. 

78                  On the other hand, I have also taken into account those parts of the agreed facts which show that the first respondent’s attention was drawn, at the material time, to the possibility that its conduct and its proposed conduct might be in contravention of the Act.

79                  In my view, the proposed pecuniary penalties are within the range of penalties which the court would consider appropriate.  Orders will be made in due course in the terms sought in that regard. 

80                  I should add that, quite properly, the MNL Parties made no submissions about the proposed pecuniary penalties.

the compliance program

81                  Paragraph 7 of the minute of proposed orders provides that the first respondent is to institute at its own expense a comprehensive trade practices compliance program in respect of Part IV of the Act in the form of Annexure “A” to the minute, and to maintain that program for 3 years. 

82                  There is a clear nexus between the contraventions and attempted contravention which the first respondent has admitted and the proposed trade practices compliance program.  I have examined the terms of the proposed compliance program and they appear to me to be appropriate.  During the course of submissions on 7 August 2001 the applicant proposed certain drafting refinements.  For the record, (as I understand it) they involve the re-wording of paragraph (f) so that it will refer to “… all future agreements in respect of the supply of medical services by independent contractor visiting medical practitioners to any hospital facility in Western Australia not operated by or on behalf of the State of Western Australia (“VMP Agreements”).”  In paragraph (h) the reference to “AMAWA Inc.” is to be deleted and the words “which might involve AMAWA Inc in any respect” are to be inserted after the first reference to “VMP Agreements”.  In case I have misunderstood the proposed amendments, I should make it clear to the parties concerned that they may make such minor drafting changes as they see fit when re-lodging the consent orders.

83                  The applicant no longer sought orders in terms of paragraphs 8 and 9 of the short minutes of order.  The final order sought was an order that the first respondent pay to the applicant an agreed sum of $25,000 as a contribution to the applicant’s costs in these proceedings.  In my view, it is appropriate that such an order be made.

costs of the proceedings on 7 August 2001

84                  I have given consideration to what would have taken place if the MNL Parties had not opposed the making of the orders agreed to in the short minutes of order.  I have formed the view that it would have been likely that the joint submissions and statement of agreed facts would have been lodged with those minutes and that I probably would have held a short hearing to canvass various matters with counsel for the applicant on the one hand and counsel for the first, third and fourth respondents on the other.  I think that the Court has been assisted quite considerably by the intervention of the MNL Parties in reaching an appropriate conclusion.  But I have not accepted all of their submissions.  In my view, it would be in the interests of justice if one half of the costs of and incidental to the hearing on 7 August 2001 (other than in respect of the preparation of the short minutes of proposed orders and the joint submissions and statement of agreed facts) be costs in the cause as between the applicant and the second, fifth and sixth respondents.  But if any party wishes to contend that some different order should be made they may file and serve written submissions on the point within ten days.  Any party served with such submissions may file and serve any submissions in response within seven days of such service. 

Conclusion

85                  The relevant parties may lodge a further minute of proposed orders consistent with the above reasons.

A/g Associate:

Dated:              19 October 2001