Health Insurance Commission v G and M Nicholas Pty Ltd [2004] FCAFC 260

FEDERAL COURT OF AUSTRALIA

Health Insurance Commission v G and M Nicholas Pty Ltd [2004] FCAFC 260 HEALTH INSURANCE COMMISSION v G AND M NICHOLAS PTY LTD T/AS MEDTEST PATHOLOGY SERVICES AND MEDICARE PARTICIPATION REVIEW COMMITTEE N 63 OF 2004 EMMETT, CONTI & SELWAY JJ 17 SEPTEMBER 2004 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N63 OF 2004

ON APPEAL FROM THE PRESIDENT OF THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: HEALTH INSURANCE COMMISSION

APPELLANT

AND: G & M NICHOLAS PTY LIMITED

FIRST RESPONDENT

MEDICARE PARTICIPATION REVIEW COMMITTEE

SECOND RESPONDENT

JUDGES: EMMETT, CONTI & SELWAY JJ

DATE OF ORDER: 17 SEPTEMBER 2004

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The appellant pay the respondents' costs of the appeal other than the costs of the argument in relation to indemnity costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N63 OF 2004

ON APPEAL FROM THE PRESIDENT OF THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: HEALTH INSURANCE COMMISSION

APPELLANT

AND: G & M NICHOLAS PTY LIMITED

FIRST RESPONDENT

MEDICARE PARTICIPATION REVIEW COMMITTEE

SECOND RESPONDENT

JUDGES: EMMETT, CONTI & SELWAY JJ

DATE: 17 SEPTEMBER 2004

PLACE: SYDNEY

REASONS FOR JUDGMENT

THE COURT: 1 On 25 August 2004, the Court ordered, by majority, that the appeal be dismissed with costs. At the time when orders were made, Medtest intimated that it wished to ask for a special order as to costs, namely, that the Commission pay Medtest's costs on an indemnity basis. Justice Conti, who published the reasons of the Full Court and pronounced the orders, therefore revoked the order as to costs and directed the parties to file and serve written submissions in relation to the question of costs. The parties have now done so. 2 The basis of the application for a special order is that, on 7 May 2004, Medtest's solicitors wrote to the Commission's solicitors by facsimile, relevantly saying: 'With respect, the notice of appeal is ill advised, misconceived and, for the reasons set out below, in our opinion bound to fail. The [Commission] should discontinue the appeal forthwith and pay our client's costs to date in relation to the appeal. If the [Commission] does not discontinue the appeal, [Medtest] will vigorously contest it. We caution that, upon doing so our respective clients will incur considerable costs. … If our client is successful on appeal (which we submit it will be) we will seek an indemnity costs order from the date of this letter. We caution that our costs are significant and are rapidly escalating on account of the commencement of preparations for the hearing. … Whilst we consider, based on the strength of the evidence, that our client should be reimbursed for costs it has incurred to date, in this appeal, our client has adopted a pragmatic approach and has instructed us to offer to settle the appeal on the following terms. 1. The appeal is dismissed. 2. Each party to pay its own costs. The offer is open for acceptance for 5 days from the date of this letter … If it is not accepted, we reiterate that on being successful at the hearing of this matter we will seek an indemnity costs order from the date of this letter.' The facsimile also canvassed the merits of the appeal. 3 The Commission's solicitors responded on 10 May 2004. After dealing with the contentions as to the merits of the appeal, they said, relevantly:: '… we note that by the time of receipt of your fax our client's preparation of the appeal in this case, including the preparation of written submissions by counsel, was well-advanced. As you know, the appeal books were prepared some time ago. …requesting the wholesale dismissal of our client's appeal involves no compromise by your client on the substantive issues in the case. Your request that our client withdraw its appeal is rejected.' 4 The written submissions filed on behalf of Medtest pursuant to Justice Conti's direction canvass certain of the issues raised in the appeal and cite extracts from the reasons of the President of the Tribunal. The submissions complain about the conduct of the Commission and its officers leading up to the decision of the Tribunal that was the subject of the appeal. They do not, however, advance satisfactory reasons why the Court should conclude that the commencement and prosecution of the appeal was unreasonable. 5 It is significant that the decision of the Full Court was a majority decision. It could hardly be said that the appeal was unarguable in circumstances where a judge of this Court was of the opinion that the appeal should be upheld. In those circumstances, it could not be said that it was unreasonable for the Commission to have commenced and prosecuted the appeal. 6 The letter of 7 May 2004 offered no compromise so far as concerns the substance of the appeal. The only element of compromise was an offer to forego the costs of the appeal. That is not of itself an adequate basis for departing from the normal order for costs in favour of a successful respondent. 7 Medtest's application for a special order as to the costs of the appeal should be refused. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Emmett, Conti & Selway.