Page v Healthscope Operations Pty Ltd

1. [1]

   This matter turns upon the determination of whether or not a contract exists between a specialist anaesthetist and the private hospital in which the anaesthetist was and is accredited to practice.

2. [2]

   The plaintiff is an anaesthetist who claims breach of contract by the defendant, which owns and operates Norwest Private Hospital, a hospital where the plaintiff worked on a regular basis. In broad, the plaintiff’s claim is that he was bullied by two nurses at the hospital in 2013 and 2014 and, as a consequence of his complaint about the bullying to hospital management, he lost the opportunity to work on a particular surgery list conducted by another doctor. The plaintiff claims damages in excess of 2.5 million dollars.

3. [3]

   The plaintiff’s amended statement of claim was filed on 8 July 2016. It is disputed by the defendant, which denies either the existence of a contract of the nature pleaded by the plaintiff, or that he was bullied as he claims.

4. [4]

   Separately from and prior to any further trial of the proceedings to hear and determine the plaintiff’s claim for breach of contract and damages, the Court is asked to consider two separate questions, pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). Rule 28.2 provides:

The Separate Questions

1. [5]

   On 1 November 2016 the Court made orders for the decision of two questions separately, before any further trial in the proceedings: r 28.2 UCPR. The order was made at the request, and with the consent, of the parties, since it was agreed that determination of those questions would decide whether the plaintiff had a case to bring against the defendant or not.

2. [6]

   The questions are those formulated by the parties. They are in the following terms:

   1. (1)

      Whether the plaintiff’s re-accreditation by the defendant in April 2012 gave rise to a contract between the parties to the effect of the contract pleaded in paragraph 5 of the Amended Statement of Claim?

   2. (2)

      If the answer to (1) is yes, whether the contract included the express terms pleaded in each of sub-paragraphs 6(a) to (g) of the Amended Statement of Claim, or terms to the same effect?

Factual Background

1. [7]

   The plaintiff is a registered medical practitioner who specialises as an anaesthetist.

2. [8]

   The defendant has owned and operated Norwest Private Hospital (“the Hospital”) since September 2009; the plaintiff provided medical services as an anaesthetist at the Hospital for a number of years, having been previously accredited by the defendant to do so. A significant portion of the plaintiff’s work at the Hospital was as anaesthetist to a particular surgeon operating at the hospital, Dr David Yee. It is not disputed that the selection of the anaesthetist with whom he would work in surgery was entirely a matter for Dr Yee, and not within the control or influence of the defendant.

3. [9]

   The plaintiff was re-accredited to provide anaesthetic services at the Hospital from 31 December 2011 for 5 years. The plaintiff asserts that from at least January 2013 he was subjected to bullying behaviour by two members of the nursing staff while working at the Hospital on surgical lists conducted by Dr Yee. A verbal complaint about the conduct of the nursing staff went unaddressed, and the conduct continued. This prompted a written complaint made to Hospital management by the plaintiff.

4. [10]

   The plaintiff asserts that, although an investigation commissioned by the Hospital confirmed his complaint in part, no steps were taken to prevent the bullying behaviour generally, or to remedy its effect on the plaintiff specifically. The alleged response from the defendant was to cause him to be prevented from working as an anaesthetist on Dr Yee’s lists, with this lost opportunity said to give rise to the substantial damages the plaintiff contends for.

5. [11]

   The defendant’s purported failure to adequately respond to the plaintiff’s complaints of bullying, he asserts, amounts to a breach of the Re-Accreditation Contract entered into on 31 December 2011.

Agreed Facts

1. [12]

   For the purposes of the Court answering the separate questions the parties agreed on the following facts:

Consideration

1. [13]

   The reaccreditation to the plaintiff was for a term of 5 years between 31 December 2011 and 31 December 2016.

2. [14]

   The parties agree that, on or around 6 December 2011 the plaintiff received an email from the Executive Assistant to the General Manager of the Hospital concerning his reaccreditation to the Hospital. The email attached a covering letter, an application for re-appointment of clinical privileges at the Hospital, and a copy of the Healthscope Limited Hospital By-Laws adopted on 28 June 2006. In July 2012 new By-Laws replaced those that previously existed, and the 2012 By-Laws applied to the plaintiff’s accreditation for all of the period of the alleged bullying.

3. [15]

   The plaintiff signed the application for re-appointment and returned it to the Hospital on 15 December 2011. In April 2012 the General Manager of the Hospital advised the plaintiff that his application for re-appointment was successful and clinical privileges were granted for the 5 year period 2011 – 2016.

4. [16]

   The grant of clinical privileges does not involve any payment from the Hospital to the plaintiff or from the plaintiff to the Hospital.

5. [17]

   The question is whether the reaccreditation for the 2011 – 2016 period gave rise to a contract of the nature pleaded by the plaintiff in [5] of the Amended Statement of Claim. That paragraph of the pleadings and particulars is as follows:

6. [18]

   The plaintiff contends that all of the requirements for a valid contract, as pleaded, were present.

7. [19]

   The parties are identified as the plaintiff and Healthscope; offer and acceptance is represented by the application for reaccreditation and its grant; whilst mutual consideration is said to exist in the plaintiff’s agreement to abide by the By-Laws, and the concomitant obligations imposed on the defendant by their terms. This, it is said, gives rise to mutual accrued rights and benefits in a context where the parties clearly evinced an intention to create contractual arrangements, and be bound by contractual terms.

8. [20]

   The defendant denies the existence of a contract, submitting that the arrangement between the parties was in the nature of a conditional licence granted by the defendant to allow the plaintiff to enter the Hospital on certain conditions, including compliance with the By-Laws. No obligation was created such that the Hospital was bound to allow the plaintiff to enter the Hospital and provide anaesthetic services.

9. [21]

   The plaintiff contends that his reaccreditation by the hospital was a contract, expressly constituted by the correspondence surrounding his accreditation, the By-Laws under which the defendant conducted its business, the Codes of Conduct of the defendant, and various policy documents referred to in the Codes.

10. [22]

    The correspondence concerning reaccreditation was from the General Manager of Norwest Private Hospital dated 6 December 2011, and enclosing an application for re-appointment of clinical privileges, and a copy of the Healthscope By-Laws; the latter being a document produced by Healthscope Limited, rather than a document of the defendant. (The distinction is one without a difference in the plaintiff’s argument, but significant in the submission of the defendant. I have proceeded on the basis that there is no practical difference.)

11. [23]

    The “Accreditation Form – Schedule 6” is a form which a medical specialist must complete to be considered for accreditation (being either initial application or reaccreditation) with nominated hospitals, with a particular “scope of practice”. The form allowed an applicant to seek accreditation, or merely “re-credentialling only”. The form as completed by the plaintiff on 15 December 2011 sought accreditation in the “accreditation category” of anaesthesia at Norwest Private Hospital and one other private hospital operated by the defendant. Formally, his application was as follows:

12. [24]

    By adding his initials to the form the plaintiff acknowledged receipt of a copy of “the Healthscope Limited Hospital By-Laws”, and his agreement to “abide by the By-Laws”. (Ex 1.2)

13. [25]

    The plaintiff subsequently received correspondence from the General Manager indicating that his application for “re-accreditation to Norwest Private Hospital for clinical privileges in Anaesthetics” had been successful, with “permanent clinical privileges” granted to him for 5 years (Ex 1.3).

14. [26]

    To indicate his acceptance of his reaccreditation the plaintiff was required to sign a duplicate of the letter to “confirm acceptance of my appointment on the conditions set out in the By-Laws”.

15. [27]

    The By-Laws in existence at the time of acceptance of the grant of clinical privileges (Ex 1.1) were subsequently replaced by Healthscope Limited, with effect from 1 July 2012. Since the parties agree there are no relevant or material differences between the two sets of By-Laws, I have referred to those in force at the time of the alleged breach of contract (Ex 1.4) throughout, unless otherwise stated.

16. [28]

    The By-Laws are said to be for “use in relation to hospitals owned or operated by Healthscope Limited or a Healthscope Company” (Ex 1.4, pp 4). The defendant is a Healthscope company.

17. [29]

    The Foreward to the 2012 By-Laws refers to “Clinical Governance”, and notes that, “the Healthscope Limited Hospital By-Laws are the formal expression of the relationship between the accredited health professionals and the hospital,” a relationship said to be based on “mutual recognition of, respect for and support for each other’s clinical and commercial objectives” (Ex 1.4, pp 3). An explanatory note to the July 2012 edition of the By-Laws refers to the By-Laws as “the cornerstone of clinical governance in our hospitals”.

18. [30]

    Under a heading “What are these By-Laws”, clause 3 states that the By-Laws are intended to assist in understanding some of the policies of the Board of Directors. They are stated to be intended to be used by “both Healthscope Company employees and also by Health Practitioners who are accredited with respect to a Healthscope Hospital” (cl 5). There is no issue that the plaintiff is a health practitioner accredited to practice as an anaesthetist in a Healthscope hospital.

19. [31]

    The stated purposes of the By-Laws are various, but include (at Ex 1.4, pp 4):

20. [32]

    The meaning of specific words and phrases are set out, including:

21. [33]

    At clause 13 it is noted that the By-Laws do not communicate every policy of Healthscope Limited, or prevent the Board from taking decisions that would affect the By-Laws.

22. [34]

    The accreditation of health practitioners occupies clauses 22 – 69; the ending of accreditation clauses 70 – 95; and conditions of accreditation clauses 114 – 125.

23. [35]

    It is apparent from clause 22 that the practical purpose and effect of accreditation is for an individual health practitioner to be permitted to use the hospital’s facilities to treat his or her own patients. Clause 24 provides that a Health Practitioner can use those facilities only with the “continuing authority” of the General Manager of the particular hospital. Accreditation does not give “any right or entitlement to or guarantee of” access to beds at the hospital [for patients], any particular allocation of time in which to operate on patients, or patients to treat (cl 27).

24. [36]

    Compliance with the By-Laws appears to be a pre-condition to accreditation, since acknowledgement of a willingness to comply is required of applicants:

25. [37]

    Of the general conditions of accreditation, cl 117 provides:

26. [38]

    There is no clause imposing the same obligations on the defendant.

27. [39]

    The policies, rules and procedures of Healthscope Limited (cl 117.3) are said by the plaintiff to refer to and incorporate a number of policies published by Healthscope Limited from time to time and applicable to the defendant.

28. [40]

    The Code of Conduct issued in August 2011 (Ex 1.5) and re-issued in June 2014 (Ex 1.6) is one such document. The August 2011 version is prefaced by the “Managing Director’s Message” which states:

29. [41]

    The language used is of expectation: “how Healthscope expects”.

30. [42]

    The Overview states in part, “Our Code helps you understand how Healthscope expects you – as a Healthscope person – to behave at work […]”. It is specifically said not to be a set of “absolute rules”, but rather guidelines for the “Healthscope person” to follow. Compliance is mandatory as “part of your employment agreement” (Ex 1.5, pp 4).

31. [43]

    The Code of Conduct refers to and incorporates a series of specifically named policies, such as the Healthscope Corporate Policy 4.05 Disciplinary Procedures Policy, the Healthscope Corporate Policy .05 Whistleblowers Policy, the Healthscope Corporate Policy 4.23 Equal Employment Opportunity: Harassment and Discrimination, and the Healthscope Corporate Policy 6.16 Bullying in the Workplace.

32. [44]

    The June 2014 version of the Code of Conduct is a little different, although the language of the Foreword is similarly that of expectation.

33. [45]

    The Managing Director’s Message refers to the conduct of “our directors, managers and employees” as being crucial to the company. It continues:

34. [46]

    The 2014 Code similarly referred to and incorporated specific policies, in the same terms as the earlier Code.

35. [47]

    The section of both Codes entitled “Harassment or Bullying” is in identical terms, as follows:

36. [48]

    The individual policies referred to in the Code (being both the Code of August 2011 and of June 2014) form part of Ex. 1 (Ex 1.7, 1.8, 1.9 and 1.10) and Ex. P1. Their content is voluminous and it is not intended to set them out here. It is clear that the status of the various policies derives from the Code of Conduct.

37. [49]

    A contract is a promise or a set of promises, the performance of which the law recognizes as an obligation, and the breach of which gives rise to a remedy. The main criterion in determining whether a contract exists is the presence of real consideration, although other factors are also important, including the requirements of certainty and completeness of agreement. Offer and acceptance can be useful, but the existence or, conversely, absence of each is not ultimately conclusive: Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 80–81.

38. [50]

    The plaintiff asserts that the existence of rights and obligations and their mutuality in the agreement is essential in establishing consideration (T12:23). Those rights and obligations are outlined in the Healthscope Limited Hospital By-Laws. It is submitted that these By-Laws imposed substantial obligations on the plaintiff as a ‘health professional’ (2006 By-Laws) or ‘health practitioner’ (2012 By-Laws):

39. [51]

    Critically, the plaintiff submits, there are also substantial obligations imposed upon the defendant:

40. [52]

    In light of this, it is contended that each party accrued rights and benefits by means of the obligations undertaken by the other party, thus satisfying the test for the existence of contractual consideration: Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 at 269; (1966) 66 IR 258; 130 FLR 313.

41. [53]

    The defendant states that the agreement is absent consideration and as such, it cannot constitute a valid contract. No money changed hands between the plaintiff and the defendant, in the traditional sense of consideration; in non-employment cases such as the present, the necessary consideration had been satisfied by a licence fee payable: Sklavos v Australasian College of Dermatologists [2016] FCA 179.

42. [54]

    As the plaintiff submitted, the parties to the agreement can be readily identified, and the language of the accreditation process is consistent with offer and acceptance. To that extent, there is some consistency with what might be expected in a contractual relationship. The existence of real consideration, and evidence of clear intent by both parties to the agreement to enter into a contract, however, is less straightforward.

43. [55]

    The plaintiff submits that mutual consideration is to be found in the plaintiff’s promise to abide by the By-Laws, and in the obligations the By-Laws imposed upon the defendant, as noted in [50] and [51] above. The defendant contends that no consideration moved from Dr Page.

44. [56]

    It is clear that the relationship between the plaintiff and defendant was not a commercial one, in the sense that no money changed hands between them. When the plaintiff applied for accreditation, or reaccreditation, he paid no fee and did not incur any obligation to do so. When his application for reaccreditation was granted, the grant came with no direct financial reward to either the plaintiff or defendant.

45. [57]

    In effect, the plaintiff made a promise to abide by requirements as to conduct in exchange for the prospect of being able to enter the Hospital and use its facilities to treat his patients, although always subject to the on-going permission of the General Manager. The question is whether a promise of that nature is in fact real consideration, in circumstances where the promise given by the plaintiff did no more than secure from the defendant the possibility that he could enter and use the Hospital.

46. [58]

    In Beaton v McDivitt (1987) 13 NSWLR 162 at 168, Kirby P said:

47. [59]

    The plaintiff gave his promise to abide by the By-Laws as the necessary pre-condition to being granted accreditation. By the grant of accreditation, the defendant did no more than allow that the plaintiff could enter the Hospital and use its facilities, if the General Manager permitted such entry and use. I am unable to accept that this was an exchange of mutual consideration, the quid pro quo that the authorities speak of as the giving of one valuable thing for another: Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 456 – 457.

48. [60]

    The defendant referred the Court to Le Mans Grand Prix Circuits v Iliadis [1998] 4 VR 661. In this case, proceedings were instituted when the plaintiff was injured at the respondent’s go-kart track while attending a radio station promotion. The Victorian Court of Appeal had to determine whether a document executed by the plaintiff which, in its terms exempted the respondent from all legal liability, constituted a contract between the parties. The Court held that there was no contract as “the respondent’s attendance at the appellant’s track, and his participation in the go-kart racing, were not obviously in pursuance or in the course of a commercial dealing or relationship with the appellant” (at 667).

49. [61]

    The plaintiff referred the Court to the decision of Pisano v Health Solutions (WA) Pty Ltd [2014] WASC 356, a case which was said to be factually similar to the present, in that McKechnie J was asked to determine whether there was a contract between a “credentialled” doctor and the private hospital in which the doctor practiced. His Honour found that there was an agreement between the parties, although without giving reasons for his conclusion. He did not, however, conclude that the agreement was as the plaintiff contended for, adopting an analogy more consistent with a licence agreement than with a contract:

50. [62]

    That decision may be illustrative, but it is not binding on this Court. I did not find it particularly helpful given the absence of any more fulsome account of the basis for the conclusion of the Court than that found at [40] of the judgment.

51. [63]

    The analogy given in Pisano v Health Solutions (WA) Pty Ltd applies here to the extent that it illustrates a licence agreement: the plaintiff’s agreement to abide by the By-Laws was no more than a promise he made to gain conditional access to the showground. The defendant gave no promise or guarantee of anything of value in return for the plaintiff’s promise. Indeed, whether the plaintiff could in fact access the showground was still dependent upon the General Manager giving authority for that to occur, authority which was not bought by the tender of any real consideration by the plaintiff. There was no obvious commercial relationship between the plaintiff and defendant.

52. [64]

    Accreditation gave the plaintiff no rights or entitlements. He had no right to practice within the Hospital; he was not guaranteed any work within the Hospital, or that there would be patients for him to treat; he was not guaranteed the allocation of any particular level of access to theatre time. It was entirely open to the defendant to accredit the plaintiff, but then withhold the General Manager’s authority for him to enter and practice within the Hospital.

53. [65]

    The plaintiff’s promise to abide by rules of conduct, the By-Laws, was not given in exchange for any promise of value from the defendant. In short, I am unable to conclude that there was consideration.

54. [66]

    In the absence of real consideration, there cannot be a contract.

55. [67]

    That conclusion is supported to a degree by the “aspirational” language of the By-Laws and, more particularly, the Codes of Conduct and policies, and in having regard to the identity of the persons to whom the By-Laws and Codes applied. These features do not point to a conclusion that there was clear intent by the parties to enter a contractual agreement.

56. [68]

    The character and nature of the documents upon which the plaintiff relies to establish the existence of a contract, notably, the Codes of Conduct and associated policies, do not in my view support the existence of a contract between the plaintiff and defendant. The documents manifestly apply to employees, inclusive of managers and members of the Board of Directors. They do not apply to accredited health professionals present in a Healthscope hospital pursuant to accreditation.

57. [69]

    In considering whether a contract exists it is important to have regard to the context in which the agreement between the parties was made, and the circumstances surrounding its making.

58. [70]

    Here, the plaintiff is a doctor providing specialist services to patients in the premises, and utilising the facilities of, the defendant, the operator of a private hospital. The plaintiff exercises his profession and conducts his professional practice entirely independently of the defendant. Whatever the relationship may be between the plaintiff and defendant, it is not one of employee and employer.

59. [71]

    That is significant because of the character and nature of many of the documents upon which the plaintiff relies to establish the existence of a contract, notably, the Codes of Conduct and associated policies. Those documents apply to employees, including managers and members of the Board of Directors. They do not apply to accredited health professionals present in a Healthscope hospital pursuant to accreditation.

60. [72]

    This is apparent from the language of the documents overall. A few extracts suffice to demonstrate the point.

61. [73]

    From the Code of Conduct the statement of “Code Overview and Values” which notes:

62. [74]

    Further, from the section of the Code headed “Your Workplace”, and with reference to the Equal Employment Policy:

63. [75]

    The plaintiff had no employment agreement with Healthscope or the defendant, and he was not an employee of either. He was not obliged to comply with the Code or associated policies as a condition of his employment, and he had no employment that could be ended as a consequence of failure to comply with the Code or a policy. These documents could not apply contractually to the plaintiff, or someone in the position of an accredited health practitioner, in the same way as they were clearly intended to apply to employees. If they were intended to operate contractually beyond the scope of employment, it is reasonable to expect that clear language expressing that intent would have been used. Beyond the scope of employment, the Codes and policies are aspirational; compliance is expected, but not contractually enforceable.

64. [76]

    The policies use similar language, against the context of employment. An extract from the Bullying policy (Ex 1.5; Ex P1) is a sufficient example. Under the heading “Purpose” is the following:

65. [77]

    The plaintiff, who was not a member of staff, had no employment to terminate.

66. [78]

    Manifestly, in relation to persons other than employees of Healthscope, the policies are statements of best practice rather than contractual terms. They do not give rise to contractual obligations and could not be seen as an expression of contractual intent as between the plaintiff and defendant.

67. [79]

    Having considered the evidence, I have concluded that the reaccreditation agreement was an agreement in the nature of a conditional license granted by the defendant to the plaintiff, such that the plaintiff was accredited to enter the Hospital and provide therein medical services within his area of expertise, subject to a separate authority from the General Manager so to do. The accreditation did not give rise to a contract, and did not contractually oblige the defendant to enforce the Code of Conduct and associated policies for the plaintiff’s benefit.

68. [80]

    It did not give rise to a contract between the parties to the effect of the contract pleaded in paragraph 5 of the Amended Statement of Claim.

69. [81]

    Accordingly, Question 1 must be answered No.

70. [82]

    This question as posed by the parties only requires an answer if the answer to Question 1 is yes. Having answered Question 1 in the negative, this second question falls away and need not be answered.

    1. (1)

       Question 1: The answer to Question 1 is No.

    2. (2)

       Question 2: The answer to Question 1 being in the negative, Question 2 requires no answer.

    3. (3)

       The Amended Statement of Claim filed on 8 July 2016 is dismissed.

    4. (4)

       Costs in favour of the defendant.