Minister for Health & Aged Care v Harrington Associates Ltd [1999] FCA 549 (4 May 1999)

Last Updated: 12 May 1999

FEDERAL COURT OF AUSTRALIA

Minister for Health & Aged Care v Harrington Associates Ltd [1999] FCA 549

PRACTICE AND PROCEDURE - preliminary discovery - Federal Court Rules, O 15A, r 6 -- whether there is reasonable cause to believe the applicant may have a right to obtain relief - whether all reasonable inquiries have been made - whether applicant has insufficient information to enable a decision to be made to commence proceedings.

National Health Act 1953 (Cth), ss 67, 67A

Health Legislation Amendment Act (No 2) 1998 (Cth), s 3, Sch 1

National Health Regulations 1953 (Cth), regs 47(1), 48(2A)

Federal Court Rules, O 15A, r 6

Australian Health Insurance Association Ltd v Esso Australia Ltd [1993] FCA 376; (1993) 41 FCR 450, followed

Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd, unreported, Lindgren J, 26 May 1999, discussed and followed

Paxus Services Ltd v People Bank Pty Ltd [1990] FCA 500; (1990) 99 ALR 728, applied

Glowatzky v Insultech Group Pty Ltd, unreported, Branson J, 2 October 1997, cited

CCA Beverages (Adelaide) Limited v Hansford, unreported, O'Loughlin J, 15 November 1991, followed

Sancella Pty Ltd v Johnson & Johnson Pacific Pty Ltd [1998] FCA 1177, cited

MINISTER FOR HEALTH & AGED CARE v HARRINGTON ASSOCIATES LTD & ANOR

N 333 OF 1999

JUDGE: SACKVILLE J

PLACE: SYDNEY

DATE: 4 MAY 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 333 OF 1999

BETWEEN:	MINISTER FOR HEALTH AND AGED CARE Applicant
AND:	HARRINGTON ASSOCIATES LTD First Respondent HARRINGTON (SILVER CROSS INSURANCE) ASSOCIATES PTY LTD Second Respondent
JUDGE:	SACKVILLE J
DATE OF ORDER:	4 MAY 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The application be stood over until 6 May 1999, at 9.30 am.

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	N 333 OF 1999

BETWEEN:	MINISTER FOR HEALTH AND AGED CARE Applicant
AND:	HARRINGTON ASSOCIATES LTD First Respondent HARRINGTON (SILVER CROSS INSURANCE) ASSOCIATES PTY LTD Second Respondent

JUDGE:	SACKVILLE J
DATE:	4 MAY 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

The Proceedings

1 On 21 March 1999, a two page advertisement appeared in the mass circulation newspaper in Sydney, the Sunday Telegraph, advertising "Silver Cross&tm; Serious Illness & Crisis Cover". Silver Cross was described in the advertisement as "a totally new and more affordable insurance that pays you first so that you can pay the bills". The advertisement stated as follows:

"Silver Cross totally and comprehensively covers ALL serious illnesses and accidents.

No ifs. No buts. And most importantly, NO GAPS."

Readers were invited to seek further information from Silver Cross at a Locked Bag address or by fax. The advertisement also recorded that Silver Cross was "Underwritten by certain syndicates at LLOYD'S". Similar advertisements were placed in other Sunday newspapers in New South Wales and Victoria.

2 A news item in the Sunday Telegraph of 21 March 1999, perhaps not altogether unconnected with the advertisement in that newspaper, reported that a "revolutionary health scheme" promised to cut the cost of private health insurance. According to the item, the new product was to be launched in Sydney the following day, 22 March 1999. The report quoted "Silver Cross director Peter Woodcock" as saying that the scheme came under the "Insurance Act 1953 " and not the "Health Act".

3 In consequence of this publicity, the Department of Health and Aged Care ("the Department") and, later, the Australian Government Solicitor ("AGS") requested the first respondent to provide copies of the policy documents relating to the Silver Cross product. The correspondence suggested that the first respondent may have infringed s 67(1) of the National Health Act (Cth) ("National Health Act 1953 "), which prohibits a person, other than a registered organisation, from carrying on "health insurance business".

4 Responses to the various requests were made on the letterheads of both the first and second respondents, but neither provided the documents sought by or on behalf of the Department.

5 The Minister thereupon commenced proceedings against the respondents, pursuant to Federal Court Rules ("FCR") O 15A, r 6, seeking preliminary discovery of

"the following documents relating to the Silver Cross product (`the product'):

(a) any policy or policies of insurance;
(b) any contract or contracts of insurance; and
(c) any document in its possession custody or control relating to the product marketed by the first and/or second Respondent which defines, describes and/or records:
(i) an insured event
(ii) the terms upon which the product or the first and/or second Respondent have been underwritten by any person."

6 The Minister's application was filed on 19 April 1999. On that date, the Minister was given leave to abridge the time for service, on the basis that the matter was urgent, having regard to the possible effect of any breach of the National Health Act upon customers who had taken out, or might be considering taking out, the Silver Cross insurance. The hearing of the application took place on 22 and 28 April 1999.

The Respondents

7 The evidence indicates that the first respondent is an unlisted public company, subject to strike-off action. Mr Woodcock is recorded as a director of the first respondent. The second respondent is registered as a proprietary company. Mr Woodcock is also a director of this company. In correspondence signed by Mr Woodcock on behalf of the first respondent, the second respondent was described as a subsidiary of the first respondent responsible for marketing the Silver Cross product. The evidence did not explore the nature or status of the action apparently instituted to strike off the first respondent.

FCR O 15A, r 6

8 FCR O 15A, r 6 provides as follows:

"(6) Where -
(a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;
(b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and
(c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision-
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c)."

National Health Act and Regulations

9 Section 67(1) of the National Health Act provides that:

"[a] person (other than a registered organization) shall not carry on health insurance business."

A person contravening s 67(1) is guilty of an offence: s 67(2).

10 Section 67A(1) of the National Health Act provides as follows:

"(1) Where, on the application of the Minister...the Federal Court of Australia is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute a contravention of subsection 67(1), the Court may grant an injunction in such terms as the Court determines to be appropriate."

Section 67A(2) empowers the Court to grant an interim injunction, pending determination of an application under s 67A(1). Section 67A has been construed as conferring jurisdiction on the Court to hear and determine an application for an injunction to restrain conduct in breach of s 67(1): Australian Health Insurance Association Ltd v Esso Australia Ltd [1993] FCA 376; (1993) 41 FCR 450 (FC), at 460, per Black CJ.

11 The expression "health insurance business" is defined in s 67(4) of the National Health Act to mean

"the business of undertaking liability, by way of insurance:
(a) with respect to loss arising out of a liability to pay fees or charges in relation to the provision in Australia of hospital treatment or an ancillary health benefit; or
(ab) with respect to the happening of an occurrence that ordinarily requires the provision of hospital treatment or relevant health services, whether or not payment of benefits to the insured is dependent upon one or more of the following:
(i) such treatment or services being provided to the insured;
(ii) the insured requiring such treatment or services;
(iii) fees or charges being payable by the insured in relation to the provision of such treatment or services; or
(b) with respect to, or with respect to the happening of an occurrence connected with, the provision in Australia of hospital treatment or an ancillary health benefit;
but does not include
(c) accident and sickness insurance business;
(d) liability insurance business; or
(e) business of a kind prescribed for the purposes of this paragraph." (Emphasis added.)

"Relevant health services" is defined in s 67(4) to include medical, surgical, diagnostic, nursing and similar services or treatment.

12 The definition of "health insurance business" excludes "accident and sickness insurance business" (par (c)). The latter expression is defined in s 67(4) of the National Health Act to mean

"the business of undertaking liability, by way of insurance, to pay a lump sum, or to make periodic payments, on the happening of a personal accident, disease or sickness, but does not include:

(a) ...; or
(b) business of a kind prescribed for the purposes of this paragraph."

13 Regulation 47(1) of the National Health Regulations (Cth) ("National Health Regulations") prescribes certain kinds of businesses which are excluded from the definition of "accident and sickness insurance business". The businesses prescribed include the following:

"(b) the business of undertaking liability, by way of insurance, to pay a lump sum, or to make periodic payments, on the happening of a personal accident, disease or sickness, where the business includes the offer, promotion or offer and promotion of a policy (or a group of policies) in which:
(i) the amount of benefit varies according to the kind of insured event that occurs; and
(ii) the insured event is defined in terms that involve the provision of hospital treatment or relevant health services;
whether or not the insurer's liability is in any way contingent on any treatment or services being provided to the insured, or on the payment of fees or charges for any treatment or services."

14 Regulation 48(2A) of the National Health Regulations provides that, for the purposes of par (e) of the definition of "health insurance business" in s 67(4) of the National Health Act 1998 :

"health insurance business does not include the business of undertaking liability by way of insurance for:
...
(f) benefits payable:
(i) because of an event defined in the policy; and
(ii) in a lump sum or in parts; and
(iii) if the total benefit payable for each event defined in the policy is at least $10,000."

15 One of the principles underlying this regulatory framework is that of community rating, whereby all members of an insured group must be charged the same premiums regardless of personal characteristics such as age, sex, or health status: see Explanatory Statement accompanying Statutory Rules 1997, No 133; Australian Health Insurance Association Ltd v Esso Australia Ltd [1993] FCA 376; (1993) 41 FCR 450 (FC), at 457, per Black CJ. Another principle is that those offering health insurance should have the financial resources to meet any claims: AHIA v Esso, at 458.

Background to the Application

16 The publicity accorded to Silver Cross on 21 March 1996 prompted the Department to write to the first respondent on 23 March 1999, asking for a "copy of the proposed Silver Cross product" to be supplied by the close of business on that day. The letter noted that only organisations registered under the National Health Act could carry on health insurance business in Australia. The Department repeated its request on 24 March 1999, in letters directed both to "Silver Cross" and to the first respondent.

17 On 31 March 1999, the Department received a written response to its letter of 23 March 1999 from the first respondent, signed by Mr Woodcock. The response, which was dated 23 March 1999, asserted that Silver Cross was a general insurance cover and did "not engage in `health insurance business'". It also expressed the view, without clear explanation, that the issues raised under the National Health Act were "not relevant". No documents were provided.

18 In the meantime, an officer of the Department filled in a coupon contained in the Sunday Telegraph advertisement and forwarded it to the address provided. On 30 March 1999, the officer received a brochure under cover of a letter from a person described as the General Manager of Silver Cross. The brochure included this passage:

"Once the medical specialist diagnoses and confirms that your condition needs to be treated you receive an upfront lump sum payment that covers you completely - no gaps. Also, if your condition turns out to be more serious than the medical specialist originally diagnosed then you will receive a higher benefit."

The brochure also stated that Silver Cross was "marketed by" the second respondent and was "underwritten by certain Syndicates at LLOYD'S".

19 The brochure included a form that the customer was invited to complete and return to Silver Cross. The form contained a declaration by the customer that the answers given to the questions were true and correct and that no information had been withheld "likely to affect the decision of the Company" as to "My/Our eligibility for insurance". The form stated that the declaration was to be the "basis of the contract between the Company and Myself/Ourselves". The customer also agreed "to accept the Company's policy subject to terms and conditions therein". The form did not identify "the Company".

20 Notwithstanding that the Department had already obtained a copy of the brochure, the AGS, on 6 April 1999, wrote to the first respondent requesting the information made available to people returning the coupon in the Sunday Telegraph. The AGS's letter stated that consideration was being given to an application for an injunction under the National Health Act.

21 The first respondent replied to this letter on 8 April 1999. The reply gave no substantive information, but requested that the AGS identify the provisions of the National Health Act that it claimed had been breached. The letter concluded with this unhelpful, if not disingenuous, statement:

"Meanwhile, we regret that due to the need for a further print run on material, which has just been ordered, we are unable, at this juncture, to provide you with a sample."

22 In a further letter of 12 April 1999 addressed to the first respondent, the AGS set out the relevant provisions of the National Health Act and the National Health Regulations. The letter requested a copy of the "policy documents that relate to the Silver Cross product, and any other documentation that defines the `insured event'". The letter advised that, in the event of non-compliance, proceedings might be taken under FCR, O 15A, r 6 for preliminary discovery.

23 The first respondent replied by letter, signed by Mr Woodcock, on 13 April 1999. The letter referred to "the Silver Cross product being marketed by our subsidiary company" and enclosed a copy of the brochure already in the possession of the Department. It did not provide any policy documents. As already noted, the proceedings were commenced on 19 April 1999.

24 In the course of the first day of the hearing (22 April 1999), the solicitor for the respondents handed three documents to a solicitor from the AGS. The documents were not accompanied by any covering letter. The respondents did not authenticate the documents or indicate whether or not they comprised all those sought by the Minister in his application. The three documents (which were subsequently put into evidence by the Minister) are as follows:

* a document described as "Lloyd's certificate of insurance effected through Global Underwriting Services Pty Ltd";

* a document entitled "Silver Cross Certificate Wording"; and

* a document entitled "Silver Cross Schedule of Benefits".

Each document is in a printed form, but has not been completed.

General Observations

25 Two general observations should be made at the outset.

26 First, it is doubtless correct, as Lindgren J observed in Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd, unreported, 24 May 1996, that the questions posed by FCR, O 15A, r 6 are to be answered in the context of an adversary system, in which a proposed respondent is ordinarily entitled to withhold its evidence prior to the commencement of proceedings. Nonetheless, a party asked to produce documents for the purpose of enabling another party to consider whether it has a cause of action is not necessarily acting in an appropriate or even responsible manner if it refuses or ignores the request. In this case, having regard to the obvious public interest in resolving swiftly the question of the possible application of the National Health Act to the Silver Cross cover, it is difficult to understand why the respondents were so coy about making available the documents requested. Except for very limited documentary evidence, the respondents led no evidence and accordingly gave no explanation for their unwillingness to produce the Silver Cross policy documents prior to the hearing.

27 Of course, the comment in the previous paragraph in no way diminishes the need for the Minister in these proceedings to satisfy each of the conditions specified in O 15A, r 6 before an order for preliminary discovery can be made in his favour. It is relevant to bear in mind, however, that O 15A, r 6 is to be construed beneficially. In Paxus Services Ltd v People Bank Pty Ltd [1990] FCA 500; (1990) 99 ALR 728, Burchett J said this (at 733):

"It is no answer to the applicant's application under r 6 to say that the proceeding is in the nature of a fishing expedition.... Rule 6 is designed to enable the applicant, in a situation where his proof can rise no higher than the level the rule describes, to ascertain whether he has a case against the prospective respondent - that is, to `fish' in the old sense....

It would be unfortunate if a rule designed to amplify the court's power to penetrate obscurities and uncertainties in the interests of justice were to be weakened by restrictive and unnecessary glosses. I think the rule is of a beneficial kind within the meaning of the well known principle of interpretation, and should be given the fullest scope its language will reasonably allow. The proper brake on any excesses in its use is the discretion of the court, which is required to be exercised in the particular circumstances of each case." (Citations omitted.)

This approach has received general acceptance in the Court: see Glowatzky v Insultech Group Pty Ltd, unreported, 2 October 1997, Branson J, at 8-9, and authorities cited there.

Order 15A, r 6(a)

28 FCR O 15A, r 6(a) poses an objective test, namely, whether there is reason to believe that the applicant has or may have the right to obtain relief from a person whose description has been ascertained. The reference to "a person whose description has been ascertained" distinguishes O 15A, r 6 from O 15A, r 3, which deals with the case where "an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person": see Glowatzky, at 8.

29 The applicant does not have to make out a prima facie case in order to satisfy r 6(a). As O'Loughlin J said in CCA Beverages (Adelaide) Limited v Hansford, unreported, 15 November 1991 (at 12):

"reasonable cause to believe that the applicant may have the right to obtain relief is all that is required."

On the other hand, it is not enough for the applicant to state that he or she believes that there is a case. Thus it is necessary to go beyond the affidavit evidence of the solicitor from the AGS, that she believes that the Minister may be entitled to injunctive relief against the respondents under s 67A of the National Health Act.

30 The Minister's case was that the brochure and other documentation emanating from the respondents established that there was reasonable cause to believe that the Minister might have the right to obtain injunctive relief in this Court against either or both of them. In my view, this submission is correct. The Silver Cross brochure states that a payment will be made under the policy once a medical specialist diagnoses and confirms that the condition of the insured person needs to be treated. This language is consistent with the respondents being involved in the business of undertaking liability by way of insurance, with respect to the happening of an occurrence that ordinarily requires the provision of hospital treatment or "relevant health services". If this is the case, their activities would fall within par (ab) of the definition of "health insurance business".

31 The language of the brochure is also consistent with the respondents satisfying the terms of reg 47(1)(b) of the National Health Regulations. If so, they would be outside the definition of "accident and sickness insurance business" in s 67(4) of the National Health Act: see par (b) of that definition. It follows, if this is the correct position, that the respondents' activities would be excluded from the definition of "accident and insurance business" and that, in turn, their activities would not be excluded from the definition of "health insurance business" in s 67(4) of the National Health Act.

32 I should add that other documentation in evidence is consistent with the language of the brochure. This includes the covering letter of 30 March 1999 from the General Manager of Silver Cross and the Sunday Telegraph advertisement.

33 Mr Dupree for the respondents argued that the Minister could not satisfy the terms of O 15A, r 6(a), because it was clear from the brochure that the respondents were not the actual underwriters of any insurance cover. Since the prohibition in s 67(1) of the National Health Act applies only to a person who carries on the business of undertaking liability by way of insurance, the marketing role performed by the respondents could not constitute a contravention of s 67(1).

34 If attention is confined to the evidence other than the policy documents produced by the respondents at the hearing, it is simply unclear whether either or both respondents have actually undertaken liability by way of insurance. The wording of the brochure is curious to say the least. The customer is invited to apply for insurance coverage to "the Company" and to be bound by "the Company's policy". Yet the document does not identify "the Company". While it states, or rather implies, that the policies are underwritten by certain Lloyd's syndicates, the brochure is consistent with the second respondent (which is named as the marketer) being "the Company" and thus undertaking liability itself by way of insurance.

35 The reference to Lloyd's does not detract from this proposition. Assuming the reference to be correct, so far as the evidence goes the underwriting may have taken the form of reinsurance arrangements between the respondents and the Lloyd's syndicates. (I leave to one side the possibility, referred to in argument, that a person marketing health insurance policies might be engaged in "health insurance business" if, for example, the marketer's commission is a percentage of premiums collected by it).

36 The respondents may well have been able to lay to rest any question of whether they, or either of them, have undertaken liability, by way of insurance, to Silver Cross customers. They could have done so very simply, by adducing evidence to clarify the position. Any such evidence plainly would be within their knowledge and control, but they chose not to tender it. As I have explained, they belatedly took the course of handing to the Minister's representatives the three printed documents, without explaining their provenance or the role the documents have played in the conduct of their business.

37 In the absence of evidence clarifying the significance of the three printed documents, I am not prepared to conclude that they demonstrate that there is no reasonable cause to believe that the Minister may have the right to claim relief in the Court from one or both of the respondents. The respondents are not entitled to inferences in their favour when they have left crucial gaps in the evidence on issues within their own knowledge. In my opinion, the Minister has satisfied the requirements of O 15A, r 6(a).

38 It is implicit in what I have said that I do not think it appropriate to distinguish the position of each of the respondents. Although the brochure specifically mentions only the second respondent, the precise role played by each of the respondents in relation to the Silver Cross cover is not clear. The correspondence, for example, was conducted on the first respondent's letterhead, which refers to that company as the "marketers... of Silver Cross". Once again, the respondents have chosen not to clarify the true position. In these circumstances, there is reasonable cause to believe that the Minister may have the right to claim relief against both respondents.

39 I should add that, if the documents provided by the respondents to the Minister's representative do set out the terms and conditions of the Silver Cross insurance cover, the case that those who have undertaken liability by way of insurance (whoever they might be) have contravened s 67(1) of the National Health Act is strengthened. The "Silver Cross Schedule of Benefits", for example, makes it clear that many of the lump sum benefits are payable only if the insured person requires a specific medical or surgical procedure. This would seem to indicate that the insurance cover is within par (ab) of the definition of "health insurance business" and also within reg 47(1)(b) of the National Health Regulations (thus falling outside the definition of "accident and sickness insurance business"). The document also makes it clear that the total benefit payable for each event defined in the policy is not at least $10,000, so that the terms of reg 48(2A) of the National Health Regulations are not satisfied.

Order 15A, r 6(b)

40 The respondents contended that the Minister had not satisfied O 15A, r 6(b), on two grounds. It was said, first, that the Minister had not made all reasonable inquiries and, secondly, that the Minister had sufficient information to enable him to make a decision whether to commence a proceeding in the Court to obtain relief against the respondents.

Reasonable Inquiries

41 In my view, the Minister has satisfied the requirements that he make all reasonable inquiries. Mr Dupree suggested that further inquiries should have been made of the Minister's office (as distinct from the Department), having regard to the fact that there had been correspondence between the first respondent and the Minister over a period of time. Ms Ruddock, of the AGS, gave evidence that she understood that those instructing her would have been provided with relevant files from the Minister's office. There is no reason to doubt that her understanding was correct.

42 It is true that the evidence included some correspondence between the first respondent and the Minister and others, but the correspondence did not relate to the Silver Cross product in the form marketed on and from 21 March 1999. Nor does the evidence suggest that the Minister was ever provided with details of the terms and conditions of the policies governing the Silver Cross cover offered to the public after that date. Moreover, as Mr Robertson (who appeared for the Minister on the second day of the hearing) pointed out, the legislation was amended in a material respect after the date of the most recent correspondence between the first respondent and the Minister: Health Legislation Amendment Act (No. 2) (Cth), s 3, Schedule 1 (inserting par (ab) into the definition of "health insurance business").

43 Mr Dupree rather faintly suggested that the Minister should have sought the relevant documents by subpoena or notice to produce. He did not explain how, consistently with the terms of FCR, O 15A, r 6, this could be done before substantive proceedings were commenced. It is sufficient to say I do not think that such a course was open to the Minister.

Sufficient Information

44 Whether the Minister has sufficient information to make the relevant decision is to be assessed objectively. It is not enough for an applicant to show that he or she believes that more information is needed; the objective fact must be established: Alphapharm, at 12. As Lindgren J said in that case (at 13), O 15A, r 6(b)

"contemplates that after making all reasonable inquiries, the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding."

45 In my opinion, the Minister has satisfied this test. At the time the Minister commenced these proceedings, he did not have available the terms and conditions of any policies governing the Silver Cross cover. Plainly he lacked critical information, namely, the precise terms of the insured event and the precise entitlements of insured persons. That information is necessary to enable the Minister to determine whether the liability undertaken by way of insurance answers the description in either par (ab) or (b) of the description of "health insurance business", or is excluded from the definition by reason of the definition of "accident insurance business" and the terms of reg 47(1)(b) of the National Health Regulations.

46 If the respondents had adduced evidence explaining the provenance and precise significance of the policy documents handed to the Minister's representatives, they might well have been able to establish that the Minister had received (albeit belatedly) all the information required to make the decision contemplated by O 15A, r 6(b). However, that evidence was not forthcoming and I cannot be satisfied that the documents produced set out the terms and conditions upon which Silver Cross cover is provided to members of the public. This ultimately may well prove to be the case. But in the absence of information of the kind to which I have referred, I do not think the Minister yet has sufficient information to enable him to make the decision contemplated by O 15A, r 6(b).

Order 15A, r 6(c)

47 It follows from what I have said that there is reasonable cause to believe that each of the respondents is likely to have possession of documents relating to the question whether the Minister has the right to obtain relief under s 67A(1) of the National Health Act. The documents are those containing the terms and conditions on which the respondents, or either of them, invite customers to take out Silver Cross cover or on which they provide such cover to customers.

Order 15A, r 6 is Satisfied

48 The Minister has satisfied the preconditions for preliminary discovery specified in O 15A, r 6. It was not suggested that, in these circumstances, I should exercise my discretion adversely to the Minister. In any event, subject to resolving the form of order, I am satisfied that relief should be granted to the Minister. Having regard to the interests of policy holders and potential policy holders, it is in the public interest that the Silver Cross policy documents be made available to the Minister so that he can make an informed decision about whether proceedings should be instituted against the respondents or either of them under the National Health Act. The evidence does not suggest that the respondents would suffer any unfair prejudice in consequence of orders requiring production of relevant policy documents.

Leave is Sought to Amend the Application

49 In the course of his address, Mr Robertson produced suggested short minutes of order that, if adopted, would have required the respondents to discover documents beyond those described in the application. The proposed short minutes include contracts of any description between the respondents, or either of them, and Global Underwriting Services Pty Ltd (named on the certificate of insurance handed to the Minister's representatives) or Lloyd's. Mr Robertson applied to amend the application to accommodate the additional documents embraced by the short minutes of order.

50 Mr Dupree contended that the respondents, had they known that the Minister sought documents beyond those identified in the application, might well have conducted their case differently and, in particular, might have adduced evidence. He pointed out that the respondents had not objected to the application coming on at very short notice, but that they might well have taken a different course if the application had been framed more broadly.

51 In my view, although it is by no means clear that the respondents would have adopted a different forensic course (Mr Dupree was careful not to be dogmatic), I think that to allow the proposed amendment at the heel of the hunt would create a risk of unfair prejudice to the respondents. The application to amend should be refused.

Orders

52 My present view is that each of the respondents should be ordered, within five days of these orders, to make discovery to the Minister by filing and serving a list, verified by affidavit and conforming to the requirements of FCR, O 15, r 6, of documents which are or have been in their possession, custody or power and which comprise or are within the following categories:

(a) any policy or policies of insurance, or contract, or contracts of insurance relating to the Silver Cross cover referred to in the brochure forming part of annexure KR11 to the affidavit of Kirsty Ruddock, sworn on 19 April 1999 ("the brochure");

(b) any document, relating to the Silver Cross cover referred to in the brochure, which defines, describes or records:

(i) an insured event; or

(ii) the terms on which the respondents or either of them have agreed to indemnify or pay moneys to any person on the happening of an event.

53 It will be seen that the proposed orders require the respondents to comply with the formal requirements of FCR, O 15, r 6. In my opinion, this is the appropriate course as the reference in r 6 to an order that the respondent "make discovery" incorporates the requirement of a verified list adopted by FCR O 15, r 6: cf Sancella Pty Ltd v Johnson & Johnson Pacific Pty Ltd [1998] FCA 1177.

54 I shall stand the proceedings over for a short time, to enable the parties to make submissions, if they wish, on the form of the orders and as to costs. My present view, however, is that the respondents should pay the Minister's costs.

I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

Associate:

Dated: 4 May 1999

Counsel for the Applicant:	Mr P Renehan (22 April 1999); Mr A Robertson SC (28 April 1999)
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	Mr J R Dupree
Solicitor for the Respondent:	M L Marmentini & Co
Date of Hearing:	22 and 28 April 1999
Date of Judgment:	4 May 1999