CHUNG KI LEUNG AND OTHERS v. ATTORNEY GENERAL AND ANOTHER

Headnote

Government's liability for negligence of subvented hospitals.

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JUDGMENT

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Sir Derek Cons, V.P., delivered the judgment of the Court:

1. On or about the 19th April 1985 the deceased, who was then aged 27 years, was admitted to the Obstetric Ward of the 2nd Defendant's hospital for the delivery of her second child. Following spontaneous birth, the deceased developed post-partum haemorrhage and went into shock in consequence of which she was transferred by ambulance from the 2nd Defendant's hospital to the Princess Margaret Hospital where she went into cardiac arrest and died on the same day.

2. For the moment these allegations must be taken as fact. They appear as part of the Statement of Claim in an action taken by the administrators of the estate of the deceased for the benefit of her dependants under the Fatal Accidents Ordinance, Cap. 22, and of her estate under the Law Amendment and Reform (Consolidation) Ordinance, Cap. 23, against the Attorney General and the Pok Oi Hospital as the 1st and 2nd Defendants respectively. The Plaintiffs' claim was struck out, in so far as it was laid against the Attorney General, by Barnett, J., in response to a summons relying upon all four paragraphs of Order 18 rule 19(1) and upon the inherent jurisdiction of the court. Against that order the Plaintiffs now appeal.

3. The Board of Directors of the Pok Oi Hospital and their successors in office were established as a body corporate by Ordinance 10 of 1954, which is now Cap. 1068 of the Laws of Hong Kong. By Article 5 of its Articles of Constitution the "supreme control, government and management of all property and affairs of the hospital" is vested in the Board. However its day-to-day affairs are in the hands of an Executive Committee to which, by Section 4 (5) of the Ordinance, the corporation is deemed to have delegated such of its functions as are necessary to the efficient attainment of that end.

4. The hospital is subvented by the Hong Kong Government on a deficiency basis, that is to say, Government has accepted that the hospital provides medical services which are considered necessary within a regional framework organized by Government, and which Government would otherwise provide itself; and that Government will by a grant meet in full the difference between the hospital's income and approved expenditure: see Notes for Guidance of Medical (Deficiency) Subvented Organizations, paragraphs 2, 3 and 21, exhibited to the affidavit of Victor Ng Hon Wing dated 31st April 1990. We are told that the difference between the two sums is in the region of 90% of the hospital's entire expenditure. A full perusal of the Notes for Guidance shows that in order to obtain such a useful grant the hospital must submit to very close budgetary supervision by the Government. Article 13 of the Constitution also provides for Government to be represented by five "official" members on the Executive Committee, two being financial officers and three with medical or welfare connections. Whether they would normally constitute an effective working majority would depend upon the number of unofficial members of the committee and whether they were accustomed to attend meetings, as to neither of which was there any evidence. We note also that in no way is Government given any direct power to hire or fire those employed by the hospital, whether professionally qualified or otherwise.

5. We are not in this appeal concerned with the allegations of negligence against the hospital. Those against the Attorney General are set out in paragraphs 2, 3 and 6 of the Statement of Claim:

For convenience we shall refer to the Director of Medical and Health Services and the Department of Medical and Health Services of the Hong Kong Government simply as "the Government".

6. Further and better particulars were not requested as to how the duty referred to in paragraph 2 was alleged to arise but Mr. Sarony, who appears for the Plaintiffs, as he did below, does not contend for any general duty to provide medical services to the public, such as rests, for example, upon the Secretary of State in England by reason of Section 3 (1) of the National Health Services Act 1977. He relies instead upon a particular duty, arising on the particular facts which, in so far as they are set out at all in the Statement of Claim, are mentioned only in the introductory words to the first paragraph of the Particulars of Negligence pleaded in relation to the Government:

"In so far as the supervision and/or provision of obstetrics services at the 2nd Defendant's hospital was under the financial and/or administrative/planning control of the Medical and Health Department ..."

7. There follow, in that and the succeeding paragraphs, details of the alleged shortcomings of Government, the most important of which is failing to provide specialist obstetric facilities at, or available at short notice to, the Pok Oi Hospital.

8. Further and better particulars were requested of the Particulars so pleaded. The answers to those relating to control indicate that the Plaintiffs rely upon the financial control exercised by Government. Those relating to administrative" and "planning" control refer back to the "financial" control, of which it is said

"As a subvented hospital, the consent/approval of the 1st Defendant had to be sought and obtained in all matters relative to expenditure for the medical staffing and provision of services and facilities at the 2nd Defendant's hospital."

9. It is pertinent to note that a request to specify the basis on which the Government was responsible for failure to institute an adequate system of blood grouping was not answered.

10. It is apparent that most of the argument below was concerned - as it was to some extent before us - with the width of discretion permitted with regard to the allocation of resources in the fulfillment of a statutory duty. In particular reliance was placed upon R. v. Secretary of State for Social Services etc. ex-parte Hincks & ors. English Court of Appeal 18th March 1980 unreported, and R. v. Secretary of State for Social Services & Anr. ex-parte Walker English Court of Appeal 25th November 1987 unreported. It was argued that if the courts would not interfere with the discretion of those who are under a statutory duty to provide medical and other services, a fortiori the courts will not interfere with the discretion of those who provide similar services on a voluntary basis. So did the judge find:

"In my judgment, what is complained of here lies wholly within the policy or discretionary area of the Director. There is no question in my mind but that the only issue is the provision of additional resources which, although no doubt highly desirable, depended entirely upon the availability of funds. I am unable to accept that somehow the Director is required, at a stroke, to provide for a comprehensive service. To so require would stultify the spirit of subvention which is to work towards policy targets."

11. For ourselves we obtain little assistance from this approach. The Plaintiffs' claim turns solely on what is suggested to be, not a statutory duty, but a common law duty of care. If that is established then financial questions, including the allocation of available resources, may well be one of the factors to be taken into consideration in determining what was reasonably required in the particular circumstances. But until the duty is established, money is irrelevant.

12. No suggestion is made by the Plaintiffs that the hospital is either the servant or the agent of Government. Mr. Sarony relies on the basic principle to be found in Donoghue v. Stevenson [1932] A.C. 562. This we take from the speech of Lord Atkin @ p. 580/1:

"Who, then, in law is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing mind to the acts or omissions which are called in question. This appears to me to be the doctrine of Heaven v. Pender, as laid down by Lora Esher (then Brett M.R.) when it is limited by the notion of proximity introduced by Lord Esher himself and A.L. Smith L.J. in Le Lievre v. Gould. Lord Esher says: 'That case established that, under certain circumstances, one man may owe a duty to another, even though there is no contract between them. If one man is near to another, or is near to the property of another, a duty lies upon him not to do that which may cause a personal injury to that other, or may injure his property.' So A.L. Smith L.J.: 'The decision of Heaven v. Pender was founded upon the principle, that a duty to take due care did arise when the person or property of one was in such proximity to the person or property of another that, if due care was not taken, damage might be done by the one to the other.' I think that this sufficiently states the truth if proximity be not confined to mere physical proximity, but be used, as I think it was intended, to extend to such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act."

13. The "close and direct relations" there referred to are said to be established, if we understand the argument correctly, by the stringent financial control exercised by Government over the expenditure of the hospital, and by its integration of the hospital into the regional network of hospital services in the New Territories, which Mr. Sarony has referred to as "the system".

14. In this respect the judge found in the Plaintiffs' favour:

"Mr. Sarony carefully took me through the Notes and Articles of Constitution to which I have already  made reference. Without going into them in detail, I am prepared to accept that it is at least arguable that because of the very real and tight control which the Director exercises over the hospital by reason of the allocation of resources and the supervision of the ways in which those resources are expended, and' by reason of his Department's substantial representation upon the executive or medical committee of the hospital, the Director has moved well beyond the area of pure policy and has a very real contribution to make to the management of the hospital."

and later on:

"The Director has exceeded a simple allocation and supervision of funds in the general public interest and has assumed a special responsibility towards individual members of the public using the hospital."

15. In further support of the assumption of special responsibility Mr. Sarony submitted, with the consent of Mr. Whaley, who appears again for the Attorney, two documents which were not before the judge below. One is a standing circular dated 3rd July 1980 from the Director of Medical and Health Services to all subvented hospitals detailing the procedures for emergency admissions to Government regional hospitals, including, inter alia, the New Territories. The other is a memorandum dated 25th August 1981 from the Consultant at the Obstetrics and Gynaecological Unit in Princes Margaret Hospital addressed, inter alia, to the Medical Superintendent and the Medical Officer-in-charge of the Obstetrics Unit at Pok Oi Hospital, proposing "suggestions concerning referral and transference of cases to our clinics/hospitals".

16. The memorandum is not put forward, as at one stage it appeared to be, as founding a separate head of negligence particularised in paragraph 6 (vii) of the Statement of Claim. We understand that it is now relied upon solely as an illustration of how responsibility may be traced back through the system to the Government at its head. No application has been made to adduce any further evidence.

17. With respect to the judge below we do not find, in the circumstances shown to us, a proximity between Government and the deceased sufficient to impose upon Government a duty to take care. The provision of financial assistance creates relations only between those who are parties to it. It is immaterial, for example, to the patient who it is who actually funds the hospital to which she is admitted. She is concerned only to receive proper medical treatment. If she does not, for a reason which could have been prevented perhaps by the injection of further funds, then it is tempting to look towards the source of funds already provided. But in the principles of responsibility for negligence we are not able to draw in the law a line between sins of omission and sins of' comission.

18. Nor does it make any difference that strings have been attached to the financial provision, strings which enable, in this instance, Government to have a large say in the general affairs of the hospital. However, the legal control and the particular management remain in the Board of Directors and the Executive Committee, who, while being wise not to break the strings attached by Government, will manage those affairs in such ways as they consider to be in the best interests of the hospital.

19. We have not been made aware of any reported case in which the provision of monies or control by way of the purse strings has been held to attract a duty of care towards those for whose benefit the money is ultimately expended. In Commonwealth of Australia v. Introvigne (1982) 41 ALR 577 the State Department of Public Instruction of New South wales agreed with the Commonwealth that it would

It was further agreed:

"That all charges incurred for salaries and some other matters be in the first place paid by the Government of New South Wales and be refunded by the Federal Government."

A boy in a school within the Federal Area was injured by a flagpole which fell on him as the result of inadequate supervision by the school staff. The Commonwealth was held responsible. But the case is readily distinguished from the present in that the establishment and operation of schools in the Australian Capital Territory was a governmental function recognised by the Commonwealth as its responsibility: see per Mason, J., @ p. 588. In other words, the duty of care was already made out.

20. Integration into the system offers initial attraction, for undoubtedly it is Government which has organized the system according to what it considers to be the needs of the appropriate area. But on analysis it becomes apparent that it is only a framework which has been created by Government. Such framework has little proximity to the eventual patient, whose close relationship is with the individual services provided within that framework. Some of these are provided by Government itself, for which naturally it assumes responsibility. But the remainder are provided by independent institutions and we have been shown no ground for extending to Government the responsibility that those institutions equally naturally assume towards their patients.

21. For these reasons we conclude that the Plaintiffs' claim against Government was correctly struck out from the action. The appeal must be dismissed.