NEW SOUTH WALES MEDICAL DEFENCE UNION LTD v GALE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY and SHELLER JJA 16 December 1994, 23 December 1994 [1994] NSWCA 229 LIMITATION OF ACTIONS — extension of time to sue — application made under s60G Limitation Act 1969 — whether "just and reasonable" to extend limitation period for the cause of action — patient allegedly injured by electroconvulsive and deep sleep therapy — electroconvulsive therapy allegedly administered despite assurances that it would not be — after such treatment, patient transferred to public hospital with severe pneumonia — patient alleges that she was unaware of the nature of her treatment or the wrongs done to her until eleven years later when such treatment was disclosed during a Royal Commission — shortly thereafter patient commences proceedings against estate of the medical practitioner in charge of her treatment — thereafter, upon discovery of difficulties in the medical practitioner's insurance, she seeks leave for extension of time and to proceed directly against the practitioner's alleged insurer under the Law Reform (Miscellaneous Provisions) Act 1946, s6 — primary judge (Badgery-Parker J) grants extension of time and leave to proceed — upon appeal arguing that the extension was not just and reasonable in the circumstances — held (dismissing the appeals): It was open to the primary judge to determine that it was "just and reasonable" in the circumstances to extend time for suing the estate of the medical practitioner and the alleged insurer — relevant considerations include unchallenged testimony that the patient was unaware of the nature of the treatment administered to her or that it was harmful until this was revealed much later during a Royal Commission — appeals dismissed. Dedousis v Water Board (1994) 125 ALR 193 (HC), referred to. WORDS AND PHRASES — "just and reasonable". Law Reform (Miscellaneous Provisions) Act 1946, s6(1), s6(4). Limitation, Act 1969, s57, s58, s60F, s60G, s601, s63. Kirby P and Sheller JA On 26 September 1994, the Court published reasons and made orders in a number of appeals and cross-appeals from judgments and orders entered in the Common Law Division of the Supreme Court by Badgery-Parker J. Three proceedings had been consolidated and heard together. They involved three patients of the late Dr Harry Bailey. The patients claimed damages against him (and following his death, against the executrix of his estate) and, as well, against the New South Wales Medical Defence Union Ltd (NSWMDU). For a general description of the background to this litigation, see Oswald & Anor v Bailey & Ors (1987) 11 NSWLR 715; Gill v Walton; Herron v Walton; Gardiner v Walton (1991) 25 NSWLR 190 (CA); New South Wales Medical Defence Union Ltd v Crawford (1993) 31 NSWLR 469 and New South Wales Medical Defence Union v Crawford [No 2], Court of Appeal (NSW), unreported, 30 June 1994; [1994] NSWJB 68. The patients' claims arose out of harm allegedly suffered by the three patients during treatment under the direction of Dr Bailey at the Chelmsford Private Hospital. The three patients were Mr John Lawlor, Ms Anna Anastassiou and Ms Dianne Gale. 2 UNREPORTED JUDGMENTS Orders, as recorded in the reasons of Kirby P, were made, finally disposing of the appeals of Mr Lawlor and Ms Anastassiou. However, in the case involving Ms Gale, the Court ordered: "Appeal and cross-appeal stood over, part heard, to be relisted: (i) Following the publication by the High Court of Australia of its decision in Dedousis v Water Board; or (ii) As ordered by the Court or by a Judge of Appeal" On 16 November 1994, the High Court of Australia duly published its decision in Dedousis. See Dedousis v Water Board (1994) 125 ALR 193 (HC). By that decision, the High Court overruled the earlier decision of this Court in Electricity Commission of New South Wales v Plumb (1992) 27 NSWLR 364 (CA). A number of points which the appellants (NSWMDU and the executrix of the estate of the late Dr Bailey) wished to contend in this Court, in challenge to the orders made by Badgery-Parker J in favour of Ms Gale, melted away upon a reading of Dedousis. Accordingly, when the proceedings were relisted before this Court on 16 December 1994, to conclude the part-heard hearing as earlier ordered, the matters in contest were confined. They were limited to a challenge by NSWMDU and the estate, to the determination of Badgery-Parker J that it was "just and reasonable" within the meaning of s60G of the Limitation Act 1969, to make an order extending the time within which Ms Gale could proceed against NSWMDU and the estate. NSWMDU insisted that, unless Ms Gale could reopen and extend the limitation period which otherwise protected Dr Bailey, and after his death, his estate, no insurance moneys were payable and hence no entitlement arose on the part of Ms Gale against NSWMDU. To this extent, the submissions of NSWMDU remaining in the appeal, depended upon the success of the submissions of the estate. NSWMDU acknowledged this by adopting the estate's submissions in relation to the question whether Badgery-Parker J had erred in extending time under the Act. Both appellants placed on record that this was the sole remaining issue which they invited this Court to resolve in the appeal of concern to Ms Gale. For Ms Gale, it was made plain that she supported the order of Badgery-Parker J and the grounds given by his Honour for making such order. However, by notice of contention, it was suggested for Ms Gale that, if the order under s60G of the Act was found to be incorrect, Ms Gale would assert that she ought to have been granted an extension of time under s58 of the Act..All parties agreed that, if the Court confirmed the order made by Badgery-Parker J under s60G of the Act, it would not be necessary to venture into a consideration of the application of s58. As the consideration of that last mentioned section is never a pleasant task, we would refrain from accepting the invitation of counsel for Ms Gale to venture upon it unless it were necessary to dispose of the appeals. Because of shortage of time, when these proceedings were listed, the Court took the course of hearing the appellants' challenge to Badgery-Parker J's orders under s60G of the Act. It reserved consideration of the notice of contention, should that prove necessary. In our view, it is not. Badgery-Parker J's orders under s60G of the Act will be sustained. The challenge to his Honour's reasoning is without merit. A belated claim for damages for medical treatment The basic facts affecting Ms Gale's case were not disputed. She first saw Dr Bailey on 19 September 1977. She was admitted to the Chelmsford Private Hospital on 21 September 1977. Allegedly in contravention of assurances that were given, she was there submitted to electro-convulsive therapy (ECT). She WHEW SOUTH WALES MEDICAL DEFENCE UNION LTD v GALE (Kirby P and Sheller JAB developed aspiration pneumonia. On 23 September 1977, she was transferred from the Chelmsford Hospital to the Hornsby District Hospital for treatment of the pneumonia. On 29 September 1977, she was discharged from the Hornsby Hospital. She did not commence proceedings against Dr Bailey during his lifetime. The limitation period within which she might have sued Dr Bailey in respect of wrongs done, and damage suffered, in the Chelmsford Hospital expired on or about 23 September 1983. Ms Gale eventually gave evidence before the Royal Commission inquiring into the events at the Chelmsford Hospital. She did so on 29 November 1988. It was after that testimony that a statement of claim was filed on her behalf against the estate of the late Dr Bailey on 29 November 1989. In February 1990, a notice of motion was filed on Ms Gale's behalf seeking an order extending the limitation period within which proceedings might be commenced against the estate. On 21 December 1990, a further notice of motion was filed on her behalf seeking leave to commence an action against NSWMDU. Originally, the motion for extension of time was framed in terms of relief under s58(2) of the Act and/or Schedule 5 cl4(4)(b). It was this motion which Badgery-Parker J determined on 9 October 1992, having earlier been persuaded that Ms Gale (together with Mr Lawlor and Ms Anastassiou) had an arguable case against NSWMDU, notwithstanding the change of the articles of that company. Badgery-Parker J recorded the evidence upon which Ms Gale relied to support her application for an extension of the limitation period in respect both of her proceedings against the estate of the late Dr Bailey and her proceedings against NSWMDU: "1. A statement of agreed facts. 2. An affidavit of the applicant Dianne Michelle Gale sworn | February 1990 and an affidavit of her mother Shirley Marion Gale sworn the same date. 3. Records of Chelmsford Private Hospital relating to the applicant's admission and treatment there, including a document dated 21 September 1977 whereby she purported to give authorization for the administration to her of electro-convulsive therapy. 4. Following her having made that discovery, the applicant sought legal advice. 5. After the applicant had instructed solicitors [she took the steps to issue process and seek extension of time set out above]. 6. Until so informed by her solicitor on 5 December 1990, the applicant was unaware that the estate was not a good common law defendant, that Dr Bailey had been insured and that [NSW]MDU was the relevant insurer. " The primary judge's decision The affidavit of Ms Gale, referred to by Badgery-Parker J, was sworn 1 February 1990. It contained the following statements: "9. The one and only time I saw Dr Bailey before my admission to Chelmsford was in his Macquarie Street surgery during the day on 19 September 1977 when I was 24 and in my first year of teaching at the Correspondence School. He didn't do any physical examination other than observe my body at a distance. He spoke to me and suggested I undertake what he called "sleep therapy" which would require me going to the former Chelmsford Private Hospital... for a period of time. There was not a lot of discussion about the therapy nor its dangers or after effects. That evening I said to my mother in or to the effect "You won't let Dr Bailey give me ECT.' and she replied in or to the effect 'Don't worry, he said you won't have any.' 4 UNREPORTED JUDGMENTS 10. My mother drove me to Chelmsford where I was admitted on 21 September 1977. I signed the admission papers. Although I definitely have no recollection that I did so, it would appear that I signed an authorisation for electro-convulsive therapy ('ECT') at the time of my admission to Chelmsford. Produced to me at the time of swearing this affidavit and marked Exhibit '1 ' are what appears to be a true copy of the Chelmsford records of my hospitalisation from 21 September 1977 to 23 September 1977. I apparently signed the first page on 21 September 1977. I saw the other pages of Exhibit 1 for the first time on 29 November, 1988 when I gave sworn evidence to the Royal Commission presently inquiring into Chelmsford. 11. I attach a copy of the official transcript of my sworn evidence at the Chelmsford Royal Commission on 29 November 1988... I adhere to that evidence. 12. 1 did not realise until I was shown the notes of my hospitalisation on the occasion of my giving evidence at the Royal Commission on 29 November 1988 that 1 had been given ECT at Chelmsford on 22 September 1977 and it had been administered by Dr Gardiner. 13. I do not recall being transferred from Chelmsford to Hornsby District Hospital ('Hornsby') on 23 September 1977. My first memory of Hornsby was waking up in intensive care with my parents beside the bed and in an oxygen tent. When I was discharged from Hornsby on 29 September 1977 I was given a Discharge Summary... which I read and which stated inter alia that I had been treated at Hornsby for aspiration pneumonia, and that I was still suffering anorexia nervosa I thought that my pneumonia was a complication of my anorexia nervosa I did not know until 29 November 1988 when I saw the Chelmsford records... and gave evidence to the Royal Commission that I had been treated badly and neglectfully at Chelmsford, and that this had been the cause of my pneumonia and my transfer to Hornsby Hospital. On 29 November 1988 I also realised for the first time that the incidents of forgetting that I experienced dated from the time of my Chelmsford hospitalisation." The affidavit of Mrs Shirley Gale, the respondent's mother, also before Badgery-Parker J, contained the following statements: "3. I was present during part of the consultation between my daughter Dianne and Dr Bailey... on 19 September 1977. While we were all present a conversation occurred in words in or to the effect that Dr Bailey said to Dianne 'I'll put you to sleep for ten days to rest your pituitary' and I added 'Please go Di, it may do you the world of good. 'Di replied 'I won't go if he's going to give me ECT and interfere with my brain' and Dr Bailey replied 'No, we won't give you ECT' 4. My husband Barry (the father of the plaintiff) and I visited Dianne when she was transferred from the former Chelmsford Private Hospital to the intensive care unit at Hornsby District Hospital on 23 September 1977. I said to Barry words to the effect 'I feel like suing Bailey for all this' and he replied words to the effect 'It's not our place to sue anybody. It's Dianne 's. 'I never mentioned this to her until after her evidence on 29 November 1989 at the Chelmsford Royal Commission. I told Dianne 'I wanted to sue Bailey at the time it happened but your father said it was none of my business, it was up to you.' " The evidence given by Ms Gale to the Royal Commission included the following: "Q. Your mother no doubt was anxious to know what your problem was. Did she make an enquiry of the resident medical staff as to what you were suffering from? A. That's right, and they explained that it was pneumonia. Mum said 'Well, WHEW SOUTH WALES MEDICAL DEFENCE UNION LTD v GALE (Kirby P and Sheller JAB that's the ethical description you give of it, but I want to know why Dian[nJe is in the state she's in.' And the matron or the resident doctor explained basically what had happened, that the liquid that they were putting in my stomach was regurgitating in my sleep and was taken into my lungs and causing infection. Q. Did you appreciate later that it was the right lung that was the one involved? A. No. A lot of this information I'm only just finding out today, which is stunning me a little bit. Q. You had some assistance at Hornsby apparently in relation to the anorexia problem, do you remember that? A. Nothing specific. I was put into a general ward and Dr Somerville came to speak to me to try and encourage me and I did speak to the matron when I was in intensive care and there was a young boy there that had also come from Chelmsford; he had had anorexia and the matron had told me that he was dying and she said 'If you want to end up like him just stay where you are and continue not eating' and that was enough to frighten me. I think I was out of bed very quickly." A medical opinion was placed before Badgery-Parker J from Dr Thomas O. Clark, psychiatrist. Alter an analysis of Ms Gale's medical history, this stated: "Tt seems that it was the ECT given while she was under sedation that caused the inhalation pneumonia which obstructed her breathing." Ms Gale was not cross-examined before Badgery-Parker J. It was never put to her that the statements of history, and of her realisation of her condition and its causes, were false or misleading in any respect. It is against this background that the conclusion of Badgery-Parker J must be understood. Of Ms Gale's case, his Honour said: "The relevant date for the purpose of s60F is 23 September 1983 and I am satisfied that by then (indeed probably as early as September 1977) she knew the fact, nature and extent of her injury. However I am also satisfied that at that date she did not know the cause of her injury, because although she knew that her condition upon discharge from Chelmsford was worse than her condition on admission, she did not know that that was the result of treatment afforded to her there, she did not know what treatment had been afforded in fact, and she did not know that the cause of her injury may have been negligence on the part of Dr Bailey. I am of the view, therefore that she is entitled to proceed under s60G. Further, I am satisfied, in terms of s60I(1)(a)(iii) that she was unaware of the connexion between her personal injury and Dr Bailey's act or omission at the expiration of the relevant limitation period and at any earlier time when proceedings might reasonably have been instituted. She became aware of the relevant matters of which she was previously unaware on or about 29 November 1988 so that the three year period specified in s60I(1)(b) expired on 29 November 1991. Her application for leave to join [NSW]JMDU as a defendant had been made prior to that date, but she had not prior to that date made an application for extension of the limitation period and accordingly she cannot satisfy the requirement of s60I(I)(b). That, however, is unnecessary (Wootton's case) and it is sufficient that the order be made within the period of three years commencing on 1 September 1990. If I now make an order in her favour it will be in time. The only remaining question is whether it is in the circumstances just and reasonable that an order be made. In my opinion it is. My conclusion to that effect is based on many circumstances including:- 1. that she suffered quite severe physical and psychological consequences of her treatment; 6 UNREPORTED JUDGMENTS 2. that the cause of those injuries was concealed from her by the tortfeasor Dr Bailey; 3. that it was through no fault of her own that she was unaware of material facts; 4. that the circumstances of her treatment and of other patients at Chelmsford had been fully investigated in the Royal Commission the transcript and report of which is available to the defendant; 5. that Dr Bailey in his lifetime was in a position to and did give instructions to the defendant as to the nature of deep sleep treatment and electro-convulsive therapy carried on by him at Chelmsford, even though not specifically in relation to this plaintiff; 6. that other medical practitioners familiar with the administration of those forms of therapy at Chelmsford are available to be consulted by the defendant in the course of the preparation of its defence. ... in view of the conclusions that I have reached in relation to her application so far as the same is founded upon s60G, being of opinion that the conditions of application of that section have been established and that it is just and reasonable to do so, I order that the limitation period for her cause of action against [NSW]MDU be extended so that it will expire on 31 October 1992." There having been found to be no obstacle to the grant of leave to sue NSWMDU, except the expiration of the limitation period for suing Dr Bailey or his estate, and that obstacle having been removed by the extension of time, Badgery-Parker J went on, pursuant to s6(4) of the Law Reform (Miscellaneous Provisions) Act 1946, to grant leave to Ms Gale to commence an action against NSWMDU. He found that the conclusions which he had expressed in relation to the application based upon s60G of the Act in respect of the cause of action against NSWMDU applied equally to her cause of action against the estate of the late Dr Bailey. He therefore extended the limitation period for suing the executrix of that estate. The extended time was set to expire on 31 October 1992. Consequential cost orders were made. It is against those orders of leave and extension that NSWMDU and the executrix of the estate of Dr Bailey now appeal to this Court. Arguments of the appellants The arguments of the appellants, upon the sole point remaining in these appeals, were commendably brief. They were focused upon whether it was "just and reasonable" to extend the limitation period in the circumstances proved and accepted by Badgery-Parker J. The running was taken by the representative of the estate. It was put: 1. That the ECT which Ms Gale had undergone in September 1977 was actually administered by Dr Gardiner, who was still alive. By inference it was suggested that justice and reasonableness required that he be sued, for he could give evidence as the late Dr Bailey could not. But Dr Bailey was, by all the evidence, the specialist medical practitioner whom Ms Gale consulted. He was clearly in charge of her treatment. He was responsible for it. This point has no merit; 2. Then it was put that the consequential pneumonia flowed from the ECT, which was a readily discoverable treatment. Had Ms Gale persisted, even slightly, she could have discovered its administration to her. Her failure to do so was unreasonable. But this submission likewise has no merit. Given the unchallenged evidence of Ms Gale and her mother, it was expected by them that WHEW SOUTH WALES MEDICAL DEFENCE UNION LTD v GALE (Kirby P and Sheller JAY no ECT treatment would be administered to Ms Gale. This is what made the later discovery, at the time of the Royal Commission, all the more surprising, even shocking, to Ms Gale; 3. Then it was said that Ms Gale's own evidence showed that she pulled herself quickly together in Hornsby District Hospital and was out of bed not long after her admission. In these circumstances, it was suggested that the Court should infer that she would have discussed her condition with her parents and discovered that something seriously had gone amiss: even to the point that her mother was considering suing Dr Bailey. It was urged that it was impossible to accept that there had been no such discussion within the Gale family. It was open to Badgery-Parker J to reject this submission. But the evidence of Ms Gale's mother, unchallenged, asserted that whilst she and her husband had discussed the possibility, they had not sought to interfere in their daughter's affairs. Because this evidence was not challenged at the trial, it is unsurprising that Badgery-Parker J should have accepted them; 4. Then it was contended that Ms Gale's rapid recovery from the Hornsby District Hospital was such that, acting reasonably, she should have pursued her own interests and discovered the cause of her alleged damage (ECT). This submission must also be rejected. Ms Gale's sworn evidence was that she believed her condition to be the aftermath of her basic problem of anorexia nervosa. As there had been no candid disclosure to her of the complications during ECT (possibly because the patient had been assured that ECT would not be administered), it is unsurprising that Ms Gale should have mistaken or misunderstood the cause of her ongoing disabilities. To the extent that she had pursued the Hornsby Hospital, the statement by the matron, recounted to the Royal Commission, that "liquid that they were putting in my stomach was regurgitating" would have appeared consistent with her expectations of treatment for anorexia nervosa. It made no reference to an ECT as an operative cause. It was open to Badgery-Parker J to so conclude; and 5. For Dr Bailey's executrix, it was stressed that justice and fairness involved not only the position of Ms Gale but the position of Dr Bailey and his estate. Ms Gale had sued the estate after Dr Bailey's death. The estate and NSWMDU were thus deprived, by her delay, of a statement from the proposed defendant. This involved a serious forensic disadvantage. Mention was made in this connection of the references in this Court to the loss of opportunity to gather contemporaneous records and impressions in a timely way which it is the purpose, in part, of limitation law to defend. See eg Herron v McGregor and Ors; Gill v McGregor and Ors (1986) 6 NSWLR 246 (CA), 265f; Gill v Walton; Herron v Walton; Gardiner v Walton (1991) 25 NSWLR 190 (CA), 206f. Badgery-Parker J acknowledged the force of this consideration. He weighed it in the list of factors which he took into account. He set off against it the seriousness of the claims of Ms Gale and the continuing availability of other medical practitioners who worked with Dr Bailey at the Chelmsford Hospital. There can be no suggestion that Badgery-Parker J failed to take this consideration into account in reaching his conclusions and making his orders. Conclusions: the discretion did not miscarry It is important to note that what was involved in this case was the exercise by Badgery-Parker J of a judicial discretion. Moreover, it was a discretion which is expressed (so far as the limitation issue was concerned) in language of the greatest possible generality: 8 UNREPORTED JUDGMENTS "60G(2) If an application for an order under this section is made to a court by a person claiming to have a cause of action to which this section applies, the court, after hearing such of the persons likely to be affected by the application as it sees fit, may, if it decides that it is just and reasonable to do so, order that the limitation period for the cause of action be extended for such period as it determines." (emphasis added) Because what is "just and reasonable" will necessarily differ from one judicial decision-maker to another, appellate courts exercise considerable restraint in disturbing discretionary decisions made by reference to such broad criteria. Essentially, it is necessary for an appellant to accept that the discretion has miscarried, occasioning an injustice, before it will interfere. In the present case, we see no indication that the discretion exercised by Badgery-Parker J miscarried. Still less do we see any relevant injustice to the appellants which has not been taken into account by the primary judge in considering the countervailing injustice to Ms Gale which would arise if the extensions sought were not ordered. In short, it was open to Badgery-Parker J to reach the conclusion which he did. In the circumstances, it was the correct conclusion. The appellants' appeals to this Court should therefore be dismissed with costs. Having regard to this conclusion, it is unnecessary for the Court to consider the issues raised for Ms Gale in the notice of contention which was filed defensively. Mahoney JA In the litigation to which the President has referred, I have stated my view as to the extension of time granted or to be granted to plaintiffs in this litigation. I have, in particular, indicated the differences in the position of plaintiffs in respect of claims against the estate of Dr Bailey and in respect of claims against the Union. I shall not lengthen this matter by repeating what has been said. On this basis, I agree with the orders proposed by Kirby P. Appeals dismissed with costs. Counsel for the Appellant (NSWMDU): JP Pavlakis (solicitor) Counsel for the Appellant (Mrs Bailey, estate of the late Dr H Bailey): RS Cuddy (solicitor) Counsel for the Respondent (Ms Gale): RWR Parker QC/PW Bates Solicitors for the Appellant (NSWMDU): Blake Dawson Waldron Solicitors for the Appellant (Mrs Bailey, estate of the late Dr H Bailey): Stewart Cuddy & Mockler Solicitors for the Respondent (Ms Gale): Teakle Ormsby & Associates