FEDERAL COURT OF AUSTRALIA

Regis Aged Care Pty Ltd v Secretary, Department of Health [2018] FCA 177

ORDERS

THE COURT ORDERS THAT:

1.    The parties file a joint minute of proposed orders on appropriate relief in light of the Court’s reasons, no later than 4 pm on 9 March 2018.

2.    In the absence of any joint proposed orders pursuant to paragraph 1 of these orders, no later than 4 pm on 16 March 2018, the parties are to file and serve submissions, limited to five pages, on appropriate orders for relief.

3.    If the parties agree on appropriate orders for costs, and (if applicable) on any lump sum figures for costs, they are to file a joint minute of proposed orders no later than 4 pm on 9 March 2018.

4.    In the absence of any joint proposed orders pursuant to paragraph 2 of these orders, no later than 4 pm on 16 March 2018, the parties are to file and serve submissions, limited to five pages, on appropriate orders for costs, including whether any costs orders should be made by way of a lump sum and if so, how that lump sum should be determined.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MORTIMER J:

1    This proceeding gives rise to important questions about the correct construction and operation of the Aged Care Act 1997 (Cth) and its associated regulatory instruments. As a corollary, it also gives rise to important questions about what the legislative scheme as a whole does not regulate and what may be left to the realm of private law.

2    These questions arise because of a charge imposed by Regis, on certain (but not all) individuals who receive care in the aged care facilities it operates across a number of locations throughout Australia. Regis describes this charge as an “asset replacement charge” and identifies the purpose of the charge as being to “fund reinstatements of fixtures, fittings and infrastructure, rebuilding and construction of, or at, Regis’s residential care facilities across Australia”. Adopting Regis’ abbreviation, I shall call the charge “the ARC” throughout these reasons.

3    Regis’ purpose in bringing this proceeding is to have the Court declare that the ARC is a charge it can lawfully impose without contravening the Aged Care Act or its associated regulatory instruments. It seeks declaratory relief, the purpose of which is to put beyond doubt, in respect of the Secretary’s administration of the regulatory scheme and any apprehended adverse action against Regis, the lawfulness of levying the ARC. The respondent, the Secretary, contends Regis cannot lawfully impose the ARC while it remains as an approved provider and under the regulation of the Aged Care Act. The Secretary did not challenge the jurisdiction of this Court to grant the declaratory relief sought. Principally because of the real prospect of regulatory action against Regis in relation to the imposition of the charge, and the steps already taken by the respondent in that regard, I am satisfied that, in the circumstances of this proceeding, the relief sought would not be hypothetical and there is a justiciable controversy between the parties: see CGU Insurance Ltd v Blakeley [2016] HCA 2; 259 CLR 339 at 373 [102] (Nettle J), and the authorities there referred to. The respondent did not submit there was no justiciable controversy.

4    For the reasons set out below, in my opinion the ARC is inconsistent with the scheme established by the Aged Care Act and its associated regulatory instruments. I consider it is prohibited by the terms of s 56-1 of the Act. The appropriate terms of any declaratory relief to reflect the Court’s conclusion will be a matter on which I will give the parties an opportunity to make submissions.

Background

5    There are, in fact, three applicants in the proceeding. They are all subsidiaries of Regis Healthcare Ltd, an ASX-listed company. Each is an approved provider under the Aged Care Act. The applicants refer to themselves in the filed documents by the collective term “Regis”. I will adopt that term in my reasons.

6    There is no real factual dispute between the parties in this proceeding. What I set out below is taken from the statement of agreed facts filed in this proceeding and admitted pursuant to s  191 of the Evidence Act 1995 (Cth), and the limited affidavit evidence which was read on behalf of Regis, which the Secretary does not dispute. The bulk of the affidavit evidence that was filed was not read by Regis, after I had raised with the parties, and in particular Regis, whether it was necessary.

7    All individuals coming into care in Regis’ facilities since 1 May 2016 have been asked to sign an agreement, which includes an agreement to pay the ARC. Regis’ purpose in charging the ARC is expressed in the evidence as being to:

…fund renovations, refurbishments and reinstatements of fixtures, fittings, and infrastructure, rebuilding and construction of or at Regis facilities across Australia.

8    Regis accepts that the ARC is a charge relating to future activities, and is not a charge for services or works from which the person who is asked to pay the charge is likely to derive any personal benefit. Indeed, as I discuss in more detail below, Regis expressly disavowed the proposition that the ARC could fit within the terms of s 56-1(e) of the Aged Care Act, which concerns additional payments relating to care or services.

9    Regis read into evidence the following description of how the ARC is used, from the affidavit of Ross Johnston, affirmed on 16 June 2017, at [4]:

Each year, the Applicants incur substantial and regular capital expenditure (capex) on the:

(a)    construction of new residential facilities ("greenfield" developments);

(b)    rebuilding or extension of existing residential facilities ("brownfield" developments); and

(c)    renovation, refurbishment and replacement of infrastructure, fixtures and fittings across the existing residential facilities (replacement capex),

(collectively, Development and Upgrade Capex). The Applicants use the revenue collected from the Asset Replacement Charge (ARC) to fund Development and Upgrade Capex. The Development and Upgrade Capex is part of the total capital expenditure of the Applicants.

10    Regis then read into evidence [31] of the affidavit affirmed on 16 June 2017 by Mr Johnston, in which he deposed:

The moneys received from a care recipient for the ARC are used by the Applicants to fund Development and Upgrade Capex across the Applicants' residential facilities after the conclusion of that care recipient's residency. Accordingly, they are not used:

(a)    to provide accommodation to the care recipient;

(b)    for the maintenance of building and grounds used by a care recipient to address normal wear and tear during the normal economic life of the buildings and grounds;

(c)    to provide any of the care or services that are the responsibility of an approved provider to provide pursuant to section 54-1(1)(a) of the Aged Care Act 1997 and section 7(1) of, and Schedule 1 to, the Quality and Care Principles 2014; or

(d)    to provide personal care and/or nursing care to the care recipient.

11    The ARC accrues as a fixed daily amount (between $16.69 and $17.98), increasing by 1.5% on 1 February each year. It is calculated daily for a maximum period of 30 months from the date of a person’s admission. Thus, the ARC is capped at a maximum of 30 months’ daily payments for each individual. It is not payable until the “permanent discharge” of a person from the facility which, in reality, will often be an alternative way of describing the death of a person. If the person has paid what is now called in the legislative scheme a “refundable deposit”, then the amount of the ARC will be deducted from the refundable deposit.

12    On approximate calculations, and averaging out the daily rate of the ARC, it would appear that — as an example — for each individual, the ARC amounts to a maximum of about $15,000 (taking a person who became a resident in February 2017 and who stayed for 30 months or longer).

13    The ARC is, I infer, unilaterally set by Regis. A term requiring payment of the ARC forms part of the written residential care agreement between an individual and Regis. An example of the standard form of agreement, containing the term, was in evidence, and the precise text was also an agreed fact. The term provides:

7    Asset Replacement Charge (ARC)

(a)    You agree to pay the Asset Replacement Charge (“ARC”) at the time you depart the facility permanently as set out below.

(b)    The ARC amount will accrue daily as set out in clause 7(c) for a period of 30 months. We will provide to you a final invoice that sets out the ARC amount payable and the amount outstanding on your departure from the facility. You agree that this final invoice satisfies any obligation we may have to provide an itemised account.

(c)    The daily amount of the ARC is subject to increases of 1.5% bi-annually throughout the ARC Term as outlined in the table below:

(d)    If you have paid a refundable deposit, the ARC will be deducted from the refundable deposit balance in accordance with clause 25 on your permanent departure from the facility.

(e)    If you have not paid a refundable deposit or if your refundable deposit balance is insufficient to cover the full cost of the ARC then you, or your estate, must pay the outstanding amount of the ARC within 14 days from the date of the invoice we send to you.

(f)    If you are a supported resident you are not required to pay the ARC.

(g)    This clause 7 survives the termination of this Agreement.

(h)    The ARC funds renovations, refurbishments and reinstatements of fixtures, fittings, and infrastructure, rebuilding and construction of or at our facilities across Australia. It is not a refundable deposit and it is not a payment for your room or any care and service specified in Annexure A.

14    There is no evidence to suggest payment of the ARC is negotiable, or that its rates are negotiable. It is, in effect, a condition of the acceptance by Regis of any individual into one of its care facilities. The exception to this is an individual who is a “fully supported resident” or admitted for respite. A “fully support resident” is, in substance, a resident of an aged care facility who has their accommodation costs covered in total by the Australian Government because of their financial circumstances as can occur under s 52F-3(1)(d). An individual admitted for respite is a person who is admitted to an aged care service on a short-term basis. Regis does not require those individuals to agree to pay the ARC before admission to Regis’ aged care facilities, although on its arguments, it could do so.

15    The evidence, and the agreed facts, outlined an exchange of correspondence between Regis and the Department, concerning the levying of the ARC, dating back to November 2016. The correspondence appears on the evidence to have been prompted by a statement on the Department’s website, cautioning that in its view such fees were not authorised by the legislative scheme. The website statement read, relevantly, as follows:

The department considers that ‘capital refurbishment fees’, ‘asset replacement contributions’ and similar fees would not be supported by the legislation where the fee does not provide a direct benefit to the individual or the resident cannot take up or make use of the services, or where the activities or services subject to the fee are part of the normal operation of an aged care home and fall within the scope of specified care and services.

16    The Department issued notices to Regis under s 9-2 of the Aged Care Act, stating that the purpose of the notices was to “enable the Department to understand the purpose of the fees and charges and their application within the Act”. Section 9-2 empowers the Secretary to seek information relevant to a person’s “suitability to be an approved provider”. Suitability is a mandatory precondition to a corporation or person being approved as a provider of aged care under the Aged Care Act: see s 8-1(1)(c). Regis responded to the notices, and there was a meeting between the parties in April 2017.

17    These proceedings were issued as a consequence of the failure to reach an agreed position on the ability of Regis to levy the ARC and remain compliant, in the opinion of the Secretary and the Department, with the legislative scheme of the Aged Care Act.

Resolution

18    I examine first the legislative scheme, making some findings on the parties’ submissions as I do so. I then turn to the various contentions and issues which have led me to conclude the ARC is inconsistent with, and prohibited by, the Aged Care Act.

The legislative scheme

19    An issue such as the one posed in this proceeding calls, more than usual, for an analysis of the relevant legislative scheme as a whole. Both parties’ contentions depended on implications being drawn from the scheme, rather than constructional choices as to the meaning of individual provisions, although there are some of those choices to be made as well. Determining which, if any, implications should be drawn from a legislative scheme requires careful attention to the structure of the scheme, its objects and purposes, as well as to the text in relevant parts of the scheme. The Aged Care Act enacts a complex scheme, which turns on the provision of subsidies by the Commonwealth to providers of aged care. As the respondent noted, there is nothing to prevent any person or corporation providing private aged care for individuals on a paid contractual basis, but without subsidies it would be an expensive and difficult undertaking, to say the least. In all practical senses, the provision of subsidies means that the overwhelming majority of Australians in aged care live in facilities regulated by the Aged Care Act.

20    In return for the receipt of a variety of subsidies for providing aged care, persons and corporations submit to close and specific regulation of who can become a provider of aged care, the manner in which they provide aged care to members of the Australian community and the standards to which that care must be provided. Providers also submit to a range of regulations concerning what they may charge people for the provision of aged care. Whether the scheme is exhaustive as to fees and charges is central to the outcome of the proceeding. The scheme also provides for a range of grants to be available to providers of aged care: the grants regime under Ch 5 of the Act is not relevant to the issues in this proceeding, and I do not discuss it any further.

21    The Act implements a regulatory structure consisting, broadly, of direct regulation through the Act itself and regulation through a series of legislative instruments called “Principles” and “Standards”. Compliance with these Principles and Standards is sought to be achieved by making compliance a statutory obligation, as part of an approved provider’s “responsibilities”. These responsibilities are set out in Ch 4 of the Act, specifically in s 54-1.

22    In addition, Principles are a mechanism for establishing eligibility criteria for individuals seeking aged care: see for example the “Approval of Care Recipients Principles” referred to in s 19-2. Principles are also used as the framework for important decisions under the Act applicable to all approved providers: see for example the Allocation Principles in s 11-2 of the Act. The power to make Principles is conferred by s 96-1 of the Act.

23    The structure of the Act is as follows. After an introductory section and overview (to which I return below), the Act deals first with matters relating to the payment of subsidies, including how a person becomes an approved provider of aged care and so eligible for the payment of subsidy and an allocation of places (Ch 2). This Chapter also deals with the classification of care recipients into different categories, according to the level of care the care recipient needs, relative to the needs of other care recipients: see s 25-1.

24    Chapter 2 also deals with the ability of approved providers to charge higher fees to some residents, where the approved provider has “extra service status” and has been allocated “extra service places”. These places are dealt with in Pt 2.5 of Ch 2 and are places where residential care “involve[s] providing a significantly higher standard of accommodation, food and services to care recipients”: see s 30-1.

25    Chapter 3 deals with the payment of subsidies. Some emphasis was placed on this Chapter, and it is appropriate to set out the statutory description of the Chapter, contained in s 40-1.

40-1 What this Chapter is about

The Commonwealth pays *subsidies under this Chapter to approved providers for *aged care that has been provided. These subsidies are:

•    *residential care subsidy (see Part 3.1);

•    *home care subsidy (see Part 3.2);

•    *flexible care subsidy (see Part 3.3).

A number of approvals and other decisions may need to have been made under Chapter 2 before a particular kind of payment can be made (see section 5‑2). For example, an approved provider can only receive subsidy for providing residential care or flexible care in respect of which a *place has been allocated. Receipt of payments under this Chapter gives rise to certain responsibilities, that are dealt with in Chapter 4.

26    The definition of “residential care” is relevant to the parties’ respective contentions:

41‑3 Meaning of residential care

(1)    Residential care is personal care or nursing care, or both personal care and nursing care, that:

(a)    is provided to a person in a residential facility in which the person is also provided with accommodation that includes:

(i)    appropriate staffing to meet the nursing and personal care needs of the person; and

(ii)    meals and cleaning services; and

(iii)    furnishings, furniture and equipment for the provision of that care and accommodation; and

(b)    meets any other requirements specified in the Subsidy Principles.

(2)    However, residential care does not include any of the following:

(a)    care provided to a person in the person’s private home;

(b)    care provided in a hospital or in a psychiatric facility;

(c)    care provided in a facility that primarily provides care to people who are not frail and aged;

(d)    care that is specified in the Subsidy Principles not to be residential care.

27    The word “care” is a defined term, but the term “care needs” is not. However, the Quality of Care Principles 2014 set out various lists of “care and services” that must be provided by residential care services to all care recipients who need them: see Sch 1. A residential care service operated by an approved provider must be accredited: see s 42-4. This scheme regulates not only who provides aged care, but to whom, and where it is provided.

28    There is a detailed set of prescriptions in Div 44 of Ch 3 concerning how residential care subsidies are calculated. Whatever the level of subsidy (largely depending on the particular resident and her or his needs), the payment is on a per resident basis: that is, the measure chosen by the legislative scheme is a payment per individual resident. There are some specified circumstances in which reductions in subsidies will occur – for example, where a resident has receive compensation for her or his ongoing care through a judgment or legal settlement (s 44-20). Division 44 also contains extensive provision for means testing of residents as part of the calculation of payable subsidy. There are provisions for the payment of a range of subsidy “supplements” in respect of individual residents, if the statutory requirements are met (for example, there is a hardship supplement – s 44-31 – where the Secretary “is satisfied that paying a daily amount of resident fees of more than the amount specified in the determination would cause the care recipient financial hardship”). There are other forms of subsidies for which Div 44 provides, (home care and flexible care subsidies for example): they are not relevant to the present issues because they do not involve the payment for the provision of residential care on a full-time basis, which is the circumstance in which the ARC is payable.

29    Chapter 3A deals with fees and payments and, unsurprisingly given the nature of the ARC, is a part of the Act on which considerable reliance was placed by the parties. Section 52A-1 sets out the legislature’s summary of what Ch 3A is about:

52A‑1 What this Chapter is about

Care recipients contribute to the cost of their care by paying resident fees or home care fees (see Part 3A.1).

Care recipients may pay for, or contribute to the cost of, accommodation provided with residential care or eligible flexible care by paying an *accommodation payment or an *accommodation contribution (see Part 3A.2).

Accommodation payments or accommodation contributions may be paid by:

•    *daily payments; or

•    *refundable deposit; or

•    a combination of refundable deposit and daily payments.

Rules for managing refundable deposits, *accommodation bonds and *entry contributions are set out in Part 3A.3. Accommodation bonds and entry contributions are paid under the Aged Care (Transitional Provisions) Act 1997.

30    The respondent directs attention to the description of what resident fees and accommodation payments are expressed to be for: namely, a payment for residents’ own care (“their care”) and accommodation (“their accommodation”). The respondent makes a similar textual point about other provisions such as s 52A-1, s 52E-1 and in s 3A-3.

31    Aside from “home care fees”, which are not relevant to the construction question, the two principal kinds of payments for which Ch 3A provides, in relation to people who are in residential care, are “resident fees” and “accommodation contributions”.

32    Section 52C-2(1) provides a description of resident fees:

Fees charged to a care recipient for, or in connection with, residential care provided to the care recipient through a residential care service are resident fees.

33    The respondent again emphasises that the focus of these provisions is on payment for services rendered “to” the care recipient, not payments for future services. Regis does not disagree: these sorts of textual indications are also relied on by Regis to contend that the scheme does not seek to touch, or reach, payments such as the ARC.

34    By s 52C-2(2) there are express caps placed on the amount that an approved provider can charge by way of resident fees. The caps operate by reference first, to the “maximum daily amount” worked out in accordance with s 52C-3, and second by reference to amounts specified or worked out in accordance with (and therefore allowed to be charged) in the Fees and Payments Principles 2014 (No. 2). By s 52C-2(2)(a) the resident fee “must not exceed” the sum of fees permitted in accordance with these two sources of authorisation. The remainder of s 52C-2 imposes other restrictions on the circumstances in which fees may be charged – only one month in advance, no payments for periods prior to entry into residential care – and provides for refunds of fees that were paid in advance in the event that a resident dies or leaves residential care.

35    The terms of the cap imposed under the Act by s 52C-3 assume some significance. That provision sets out the “steps” in making a calculation of the resident fee. Although only Step 5 is of present relevance, I reproduce the entire set of steps so the context is clear:

Resident fee calculator

Step 1.    Work out the *standard resident contribution for the care recipient using section 52C‑4.

Step 2.    Add the compensation payment fee (if any) for the care recipient for the day in question (see subsection (2)).

Step 3.    Add the means tested care fee (if any) for the care recipient for that day (see subsection (3)).

Step 4.    Subtract the amount of any hardship supplement applicable to the care recipient for the day in question under section 44‑30.

Step 5.    Add any other amounts agreed between the care recipient and the approved provider in accordance with the Fees and Payments Principles.

Step 6.    If, on the day in question, the *place in respect of which residential care is provided to the care recipient has *extra service status, add the extra service fee in respect of the place.

The result is the maximum daily amount of resident fees for the care recipient.

36    Division 52E of Ch 3A deals with accommodation contributions. Previously, the Act provided for the payment of “accommodation bonds”. The present scheme in Ch 3A was introduced in 2013 by the Aged Care (Living Longer Living Better) Act 2013 (Cth), which as Regis submitted contained some major reforms to the legislative scheme.

37    Regis submitted, and I accept, that s 96-1 (the Principle making power) was amended by the 2013 amendments to empower the Secretary to make Fees and Payments Principles, reflecting the introduction of Ch 3A into the scheme. The Quality of Care Principles and the User Rights Principles 2014 (each of some relevance to the construction arguments) were also remade in 2014 following the 2013 legislative changes.

38    Section 52F-1 obliges an approved provider to offer to a person, prior to the person entering residential care, an “accommodation agreement”, and to enter into an accommodation agreement either before, or within 28 days after, the person enters the residential care service: s 52F-2(1). An accommodation agreement is defined in the Dictionary to mean an agreement that meets the requirements of s 52F-3, its general purpose being to address matters concerned with the accommodation payment and refundable accommodation deposits. Section 52F-3 sets out a number of matters which must be dealt with in the agreement for it to meet the definition of an accommodation agreement. There was no dispute between the parties that an accommodation agreement is usually incorporated into a resident agreement to form one contractual document. It is not in dispute between the parties that the pro forma agreement in evidence, which also contains the disputed cl 7, is otherwise an agreement which meets the requirements of being a resident agreement and an accommodation agreement.

39    This is, I consider, a not insignificant point. The agreement by which Regis seeks to impose, and have a prospective care recipient agree to pay, the ARC is one and the same agreement as the agreement required by the legislative scheme.

40    Accommodation agreements are required by s 52F-3 to set out whether a person will pay an accommodation payment (for example, to cover the costs for all of her or his care) or make an accommodation contribution (a sum towards payment for all of her or his care), the latter being a means tested option.

41    The Secretary has the power to reduce the accommodation payment or contribution of an individual to nil, for example in circumstances of financial hardship: see s 52F-3(d), read with s 52K-1. Powers such as this have a direct effect on the contractual freedoms of the approved provider and the prospective aged care recipient.

42    Care recipients may elect to pay their accommodation payment or contribution by way of daily payments, or by way of a combination of a refundable deposit and daily payments: see s 52F-3(e). Accommodation agreements must reflect that they have that choice, with the choice to be made within 28 days of the date of entering an aged care facility. A person cannot be forced by an approved provider to choose how she or he will pay before entering an aged care facility: s 52F-4. Thus, these provisions not only prescribe what an agreement must contain, but what it must not, and at times they extend to proscribing contractual conduct on behalf of approved providers.

43    Division 52G then regulates the way approved providers can charge for accommodation payments and accommodation contributions, including by providing for ministerial determinations of maximum amounts for each kind of payment: see, for example s 52G-3. Again, the scheme intends the executive to be able to affect the contractual relationship between the parties by capping accommodation charges that approved providers can ask prospective residents to pay.

44    The remainder of s 52F-3 prescribes in considerable detail what an accommodation agreement must contain in relation to each of an accommodation payment and an accommodation contribution.

45    The provisions about the payment, and return, of refundable deposits should be mentioned. That is because it is part of the respondent’s contextual argument that approved providers are able to draw on the funds held on account of residents’ refundable deposits for the purposes of building and infrastructure works (and other purposes), where those works are not directly related to the care of any individual resident: see s 52J-6. Regis did not dispute that these funds were such a source: it simply contended they were not the only source. Refundable deposits are a flexible way (including after a person has entered an aged care facility) of adjusting the amount a person may need to pay by way of a daily payment (without altering the total sum payable): see s 52J-2. Approved providers are prohibited by s 52J-5 from accepting refundable deposits which, in the circumstances specified, would leave a person with assets below the “minimum permissible asset value” set by the statute. In other words, this is a provision designed to prevent approved providers from encouraging, or requiring, aged care residents to provide such large lump sums that their asset base is unduly depleted. It should be borne in mind this restriction is imposed, as the respondent contended, in circumstances where approved providers have access to refundable deposits for capital works and improvement purposes. Provisions such as s 52J-5 are designed to preclude approved providers requiring too great a lump sum from people, so the approved providers can use the money in the meantime.

46    The respondent submits, correctly in my opinion, that this feature of the scheme reflects a legislative intention that prospective and current residential care recipients not be required to pay more than they can afford by way of a lump sum. Again, Regis submits the Parliament has clearly identified the circumstances in which it will impose those restrictions, and has – in this case – limited those circumstances to refundable deposits. The ARC forms no part of the refundable deposit amount paid by any individual care recipient, although Regis submits it is not precluded by the Act from deducting the ARC from a refundable deposit if a care recipient agrees. That submission of course is premised on the ARC being a permissible charge or fee. Regis also calls in aid the text of the scheme in relation to refundable deposits. It submits that Div 52J, and s 52J-7 in particular, is one example of where the legislative scheme expressly contemplates an approved provider may, through a contractual agreement with a residential care recipient, be paid sums of money by that recipient over and above what is regulated under the Act by way of residents’ fees and accommodation payments or contributions. Section 52J-7 concerns the ways in which a refundable deposit may be used, not the “income derived” from such a sum (that is, as I have noted, dealt with in s 52J-6). It provides only two ways in which sums may be deducted, and by s 52J-7(3), prohibits any other deductions:

52J‑7 Amounts to be deducted from refundable deposits

(1)    An approved provider must deduct a *daily payment from a *refundable deposit paid by a person if:

(a)    the person has requested the deduction in writing; and

(b)    the daily payment is payable by the person.

(2)    An approved provider may deduct the following from a *refundable deposit paid by a person:

(a)    the amounts specified in the Fees and Payments Principles that may be deducted when the person leaves the service;

(b)    any amounts that the person has agreed in writing may be deducted;

(c)    such other amounts (if any) as are specified in the Fees and Payments Principles.

(3)    The approved provider must not deduct any other amount from a *refundable deposit.

47    Regis relies on para 2(b), and its textual width, to submit that this provision is an example of the way in which the legislative scheme preserves contractual freedom between an approved provider and a residential care recipient. Consistently with some of the extrinsic material introducing Ch 3A, Regis submits this provision is an example of the legislature’s intention (at least, after the 2013 amendments) to enact a scheme which gave residential care recipients more informed choices. Regis relied on passages from the Minister’s second reading speech, such as the following:

Getting the right aged care will no longer be left to chance. People will be able to get the aged care they want and need, no matter where they live and what their financial means.

People will have more choice, more control, more support and more independence. They will be helped to stay in their own home for as long as they possibly can and will have better access to residential care should they need it.

…

Older Australians will be able to make more informed decisions knowing the aged-care services that are available, the fees they may be expected to pay, and the quality of services they can expect to receive.

…

We are supporting aged-care providers to deliver the quantity, the quality and the diversity of care that we need now and that we are going to require even more of into the future.

...

The changes included in the Aged Care (Living Longer Living Better) Bill 2013 and related bills implement reforms in four key areas:

•    reforms that focus on end-to-end aged care;

•    reforms that provide greater choice and control for consumers;

•    reforms that provide more sustainable and modernised financing arrangements; and

•    reforms that ensure independent advice and oversight to support the changes.

…

48    The caution with which courts should approach extrinsic material as a tool in ascertaining the proper construction of a provision in a statute, especially second reading speeches, is well established: Re Bolton; Ex parte Beane (1987) HCA 12; 162 CLR 514 at [518] (Mason CJ, Wilson and Dawson JJ); Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; 239 CLR 27 at [47] (Hayne, Heydon, Crennan and Kiefel JJ); Saeed v Minister for Immigration and Citizenship [2010] HCA 23; 241 CLR 252 at [33] (French CJ and Gummow, Hayne, Crennan and Kiefel JJ).

49    Even if I were actively to consider the Minister’s words in determining whether there was or was not a prohibition of the kind the respondent contends, or whether the Act contains no such prohibition and impliedly allows for a payment such as the ARC to be charged (as Regis contends), I do not consider them of any assistance in determining which contention should be accepted. The use of the word “choice”, in context, directs attention to those features of the scheme that widen the options for aged care – for example, home based care and subsidies payable for it. There is an element of choice in allowing a person to agree to have payments for care deducted from her or his refundable deposit, rather than having to find the money separately – that is the preferable construction for s 52J-7(2)(b). Use of the word “choice” in this context suggests a decision between options in the light of what might be most appropriate for a person’s aged care, bearing in mind that it may be the case that it is not the older individual who is making these “choices”, but her or his family. Similarly with the concept of “control”. For the reasons I set out in the next paragraph, Regis’ insistence that its prospective residents pay the ARC is neither an incident of choice, nor an incident of control, for “consumers”.

50    I do not find Regis’ reliance on the notion of contractual freedom persuasive. I do not consider that the ARC has anything to do with contractual freedom. It is an additional price extracted by Regis from all who wish to enter one of its facilities (subject to the exception I have mentioned in [14] above). It is imposed as an integral part of any entry by a person to one of Regis’ facilities, on a “take it or leave it” basis. It is not a fee from which the individual resident derives any benefit: it does not secure for the resident better living conditions, additional services or (for example) more one-on-one care. Being of no benefit to the individual resident, it is difficult to conceive how this fee plays any part in the choice of which aged care facility to enter, or what level of care and service to seek, other than as a deterrent, or as simply the “price” a person accepts she or he must pay if she or he otherwise chooses to enter one of Regis’ facilities.

51    Division 52M of Pt 3A.3 deals with prudential requirements for the management of refundable deposits and is contended to be of relevance to the construction question. The Fees and Payments Principles are, by s 52M-1, intended to deal with the protection of residents’ funds which have been paid to approved providers, in the form of refundable deposits, accommodation bond balances and entry contribution balances (the latter two being from earlier regimes). Regis submitted, and the respondent did not dispute, that the Minister determines the maximum refundable deposit amount under s 52G-3, unless the approved provider obtains approval of the Aged Care Pricing Commissioner to charge a higher amount: s 52G-4. The current maximum amount determined by the Minister is $550,000.

52    The respondent relies on the prohibition in s 52N-1, restricting the use of refundable deposits to “permitted uses”. This includes certain capital expenditure, if it is permitted by the Fees and Payments Principles: see s 52N-1(2)(a), and also (g). The respondent’s point, which I accept has force, is that the scheme carefully regulates how approved providers may use the funds they receive from residents, which have been paid in respect of the care of residents. Where the scheme contemplates expenditure of funds received from residents on matters other than their own care, it carefully delineates the circumstances in which that can occur.

53    It would seem, by reason of the terms of s 52J-6, that “income derived” from refundable deposits, is not subject to close regulation by the scheme, in contrast to the refundable deposits themselves, the use of which is strictly regulated. Rather, if a refundable deposit has been invested (as the terms of s 52N-1(2) expressly contemplate), then the approved provider is entitled to keep, and use, any additional income generated.

54    The seriousness with which contraventions of these restrictions are viewed by the Parliament is evident in the creation of the offences in s 52N-2.

55    Chapter 4 deals with the “responsibilities” of approved providers and contains the second of the two provisions upon which both parties concentrated in their submissions (the first being s 52J-7). Once again, it is helpful to set out the statutory explanation of the Chapter:

53‑1 What this Chapter is about

Approved providers have responsibilities in relation to *aged care they provide through their *aged care services. These responsibilities relate to:

•    the quality of care they provide (see Part 4.1);

•    user rights for the people to whom the care is provided (see Part 4.2);

•    accountability for the care that is provided, and the basic suitability of their *key personnel (see Part 4.3).

Sanctions may be imposed under Part 4.4 on approved providers who do not meet their responsibilities.

Note:    The responsibilities of an approved provider in respect of an *aged care service cover all the care recipients in the service who are approved under Part 2.3 as recipients of the type of *aged care provided through the service, as well as those in respect of whom a subsidy is payable.

56    Section 53-2 should also be noted. There are other provisions in the Aged Care Act to similar effect. It provides:

53‑2 Failure to meet responsibilities does not have consequences apart from under this Act

(1)    If:

(a)    an approved provider fails to meet a responsibility under this Chapter; and

(b)    the failure does not give rise to an offence;

the failure has no consequences under any law other than this Act.

(2)    However, if the act or omission that constitutes that failure also constitutes a breach of an obligation under another law, this section does not affect the operation of any law in relation to that breach of obligation.

57    Sub-section (2) would appear to preserve, amongst other things, the availability of actions in contract by residents. This may provide some limited support for Regis’ contentions.

58    The Chapter is then divided up into various categories of provider responsibilities, namely responsibilities:

(1)    under Pt 4.1 as to the quality of care they provide (See also certain of the Quality of Care Principles that regulate this aspect of providers’ responsibilities);

(2)    under Pt 4.2 as to respecting and abiding the rights of “users” of aged care services (this extends beyond care recipients and applies, in some circumstances to their families and persons acting for them:: see the User Rights Principles), and then as to their “general responsibilities” in s 56-1.

59    It is this latter provision on which considerable emphasis was placed in submissions. The section is lengthy, but it should be set out.

56‑1 Responsibilities of approved providers—residential care

The responsibilities of an approved provider in relation to a care recipient to whom the approved provider provides, or is to provide, residential care are as follows:

(a)    if the care recipient is not a *continuing care recipient:

(i)    to charge no more for provision of the care and services that it is the approved provider’s responsibility to provide under paragraph 54‑1(1)(a) than the amount permitted under Division 52C; and

(ii)    to comply with the other rules relating to resident fees set out in section 52C‑2; and

(iii)    to comply with the requirements of Part 3A.2 in relation to any *accommodation payment or *accommodation contribution charged to the care recipient;

(b)    if the care recipient is a continuing care recipient:

(i)    to charge no more for provision of the care and services that it is the approved provider’s responsibility to provide under paragraph 54‑1(1)(a) than the amount permitted under Division 58 of the Aged Care (Transitional Provisions) Act 1997; and

(ii)    to comply with the other rules relating to resident fees set out in section 58‑1 of the Aged Care (Transitional Provisions) Act 1997; and

(iii)    to comply with Division 57 of the Aged Care (Transitional Provisions) Act 1997 in relation to any *accommodation bond, and Division 57A of that Act in relation to any *accommodation charge, charged to the care recipient

(c)    in relation to an *entry contribution given or loaned under a *formal agreement binding the approved provider and the care recipient—to comply with the requirements of:

(i)    the Prudential Standards made under section 52M‑1; and

(ii)    the Aged Care (Transitional Provisions) Principles made under the Aged Care (Transitional Provisions) Act 1997;

(d)    to charge no more than the amount permitted under the Fees and Payments Principles by way of a booking fee for *respite care;

(e)    to charge no more for any other care or services than an amount agreed beforehand with the care recipient, and to give the care recipient an itemised account of the other care or services;

(f)    to provide such security of tenure for the care recipient’s *place in the service as is specified in the User Rights Principles;

(g)    to comply with the requirements of Division 36 in relation to *extra service agreements;

(ga)    to comply with the requirements of Part 3A.3 in relation to managing *refundable deposits, accommodation bonds and entry contributions;

(h)    to offer to enter into a *resident agreement with the care recipient, and, if the care recipient wishes, to enter into such an agreement;

(i)    to comply with the requirements of Division 62 in relation to *personal information relating to the care recipient;

(j)    to comply with the requirements of section 56‑4 in relation to resolution of complaints;

(k)    to allow people acting for care recipients to have such access to the service as is specified in the User Rights Principles;

(l)    to allow people acting for bodies that have been paid *advocacy grants under Part 5.5, or *community visitors grants under Part 5.6, to have such access to the service as is specified in the User Rights Principles;

(m)    not to act in a way which is inconsistent with any rights and responsibilities of care recipients that are specified in the User Rights Principles;

(n)    such other responsibilities as are specified in the Fees and Payments Principles and the User Rights Principles.

60    A “continuing care recipient” is a person who entered care after 1 July 2014: namely, when the 2013 amendments took effect. These are the only people who are required to pay the ARC.

61    The respondent submits that the first part of the provision makes it clear that the entire provision concerns responsibilities of providers in providing residential care. Section 41-3 defines residential care:

41‑3 Meaning of residential care

(1)    Residential care is personal care or nursing care, or both personal care and nursing care, that:

(a)    is provided to a person in a residential facility in which the person is also provided with accommodation that includes:

(i)    appropriate staffing to meet the nursing and personal care needs of the person; and

(ii)    meals and cleaning services; and

(iii)    furnishings, furniture and equipment for the provision of that care and accommodation; and

(b)    meets any other requirements specified in the Subsidy Principles.

(2)    However, residential care does not include any of the following:

(a)    care provided to a person in the person’s private home;

(b)    care provided in a hospital or in a psychiatric facility;

(c)    care provided in a facility that primarily provides care to people who are not frail and aged;

(d)    care that is specified in the Subsidy Principles not to be residential care.

62    It is apparent from this definition that not only does s 41-3 explain what is meant by “care” but also by the use of the term “residential”, it explains where that care is delivered, and types of care delivered in places which will not fall within the meaning of “residential care”. As such, it is squarely aimed at the care provided to people such as that provided by Regis at its facilities which are the subject of this proceeding.

63    These are, as the heading to Div 56 as well as its content suggests, the responsibilities of approved providers in relation to “user rights”. In other words, the statute is seeking by this provision to identify all the aspects of the relationship between an approved provider and care recipients with which the statute is concerned. That relationship includes a contractual relationship, but is not limited to that. An approved provider’s responsibilities in relation to user rights reflect other legal relationships, such as duty of care and prudential obligations and protection of a resident’s privacy and confidentiality.

64    The scheme is thus intended to comprehend many aspects of the relationship between an approved provider and the individual to whom residential care is provided, beyond the contractual. I accept it is not intended to be exhaustive, otherwise provisions such as s 52F-7 and s 53-2 would be unnecessary. I need not decide exactly what is left outside s 56-1. It suffices to say, for the reasons I explain, that I consider the Act, and the terms of s 56-1, intend to be exhaustive of the fees which can be levied or charged to persons who become recipients of residential care. Amongst the other reasons I set out, that is because the legislative scheme expressly ties the receipt of subsidy to the imposition of these responsibilities. Section 56-5 illustrates this proposition:

56‑5 Extent to which responsibilities apply

The responsibilities under this Division apply in relation to matters concerning any person to whom the approved provider provides, or is to provide, care through an *aged care service only if:

(a)    *subsidy is payable for the provision of care to that person; or

(b)    both:

(i)    the approved provider is approved in respect of the aged care service through which the person is provided, or to be provided, with *aged care and for the type of aged care provided, or to be provided, to the person; and

(ii)    the person is approved under Part 2.3 as a recipient of the type of aged care provided, or to be provided, through the service.

65    The link, constantly made in the scheme, is between the provision of subsidy, and control of the conduct of those who provide aged care: that is, provision of public funds for the supply of aged care services to members of the Australian community, in return for the observance of the restrictions the parliament has seen fit to impose. Key amongst them, and more so after the 2013 amendments, are restrictions on the fees that can be charged to recipients of aged care.

66    The scheme sets out other suites of “responsibilities” of approved providers: see for example s 63-1, relating to accountability responsibilities. Section 63-1(2) is in similar terms to s 56-5. Div 63 also contains a range of other responsibilities imposed on approved providers.

67    All of these responsibilities are enforced, or are enforceable, through the sanctions regime contained in Pt 4.4 of the Act. It is not necessary to describe Pt 4.4 in any detail: it suffices to note that the sanctions regime (which can result in the loss of approved provider status and therefore the loss of subsidy payments) demonstrates that Parliament intends the responsibilities imposed on approved providers to be observed, and for subsidies only to be payable to those providers who do observe them.

68    Chapter 5 of the Act deals with grants. All that need be noted about this Chapter is that included within the scheme for the making of grants, are provisions empowering the Secretary to make grants to approved providers (see s 72-1) for “capital works costs”, which are defined in s 70-3:

70‑3 Meaning of capital works costs

(1)    The capital works costs relating to residential care include, but are not limited to, the following:

(a)    the cost of acquiring land on which are, or are to be built, the premises needed for providing that care;

(b)    the cost of acquiring, erecting, altering or extending those premises;

(c)    the cost of acquiring furniture, fittings or equipment for those premises;

(d)    the cost of altering or installing furniture, fittings or equipment on those premises.

(2)    However, if:

(a)    those premises are, or will be, part of larger premises; and

(b)    another part of the larger premises is not, or will not be, connected with the provision of residential care;

any costs that the Secretary is satisfied are attributable to the other part of the larger premises are taken not to be capital works costs relating to the residential care in question.

69    Thus, aside from access to the use of refundable deposits, approved providers also have access to the grants scheme for capital works.

70    Chapter 6 deals with a number of matters collected under the heading of “Administration”, including reconsideration and review of decisions made under the Act, record keeping, recovery of overpayments and complaints.

71    Chapter 7 need only be noted as the location of the Principles making power in s 96-1, to which I have already referred.

72    The only other provision in this Chapter which should be noted is s 96-5, which provides for a person “representing” a care recipient to enter into an agreement on behalf of a care recipient, where the care recipient, because of any physical incapacity or mental impairment, is unable to enter into the agreement. I referred to this situation earlier in these reasons: the presence of s 96-5 is a legislative recognition of the not uncommon real-life circumstance that those people entering aged care may lack capacity to contract on their own behalf.

73    The Aged Care Act adopts a flexible approach to that situation, requiring only that there be someone who “represents” the care recipient. The agreement is still made on behalf of the care recipient and, it would appear, the care recipient is the person who remains liable for any fees or charges under the agreement. That would include the ARC. Thus, in relation to Regis’ contentions about freedom of contract, and choice, the reality recognised by s 96-5 is that people entering aged care facilities may not, themselves, be making a choice at all.

The User Rights Principles

74    Of all the Principles, it was the terms of parts of these Principles on which Regis in particular placed some reliance.

75    The URP deal with the responsibilities of approved providers of residential care services (Pt 2), home care services (Pt 3) and flexible care services (Pt 3A). There are also some miscellaneous and transitional provisions. Attached as schedules to the URP are the Charters of care recipients’ rights for residential care, home care and “short term restorative care”; the latter being, like home care, a kind of care not in issue in this proceeding.

76    The function of Pts 2, 3 and 3A of the URP is, as the text of the Aged Care Act states, to supplement the Aged Care Act in terms of providing additional prescriptions or requirements for the “responsibilities” with which they deal. This includes, for example, incorporating the Charter of care recipients’ rights into the responsibilities of an approved provider: see s 9 of the URP.

77    Section 15 of the URP was relied on by both parties. In addition to the matters dealt with in s 59-1(1), it prescribes certain terms which must be contained in a resident agreement, and provides:

15 Provisions of resident agreement

(1)    For paragraph 59‑1(2)(c) of the Act, this section specifies provisions that a resident agreement between a care recipient and an approved provider must contain.

(2)    A resident agreement must provide that if, within 14 days after signing, the care recipient notifies the provider, in writing, that the care recipient wishes to withdraw from the agreement:

(a)    the agreement has no effect; and

(b)    the care recipient is liable for the fees and charges payable for any period when the care recipient was provided with care through the residential care service under the agreement; and

(c)    the provider is liable to refund any other amount paid by the care recipient under the agreement.

(3)    A resident agreement must provide:

(a)    that the agreement may be varied:

(i)    by the approved provider, if the variation is necessary to implement the A New Tax System (Goods and Services Tax) Act 1999; or

(ii)    in any other case, by mutual consent, following adequate consultation, between the care recipient and the approved provider; and

(b)    that the agreement must not be varied under subparagraph (a)(i) by the provider unless the provider has given reasonable notice in writing about the variation to the care recipient; and

(c)    that the agreement must not be varied in a way that is inconsistent with the A New Tax System (Goods and Services Tax) Act 1999, the Aged Care Act 1997 or the Extra Service Principles 2014.

(4)    A resident agreement must provide that the care recipient has a right to occupy a place at the residential care service:

(a)    beginning on the day the agreement takes effect or a later day stated in the agreement; and

(b)    for the period stated in the agreement or for the remainder of the care recipient’s lifetime.

(5)    A resident agreement must include any other matters negotiated between the approved provider and the care recipient.

Note:    A resident agreement may incorporate the terms of other agreements, including any of the following:

(a)    an extra service agreement (see subsection 36‑1(2) of the Act);

(b)    an accommodation agreement (see section 52F‑6 of the Act);

(c)    an accommodation bond agreement (see section 57‑10 of the Aged Care (Transitional Provisions) Act 1997);

(d)    an accommodation charge agreement (see section 57A‑4 of the Aged Care (Transitional Provisions) Act 1997).

(6)    A resident agreement must be expressed in plain language and be readily understandable by the care recipient.

78    The parties’ submissions, especially those of Regis, focussed on s 15(5).

79    Regis submitted that s 15(5) acknowledges “that the matters that may be provided for in a resident agreement are negotiable between the approved provider and the care recipient” and that s 15(5), “affirms” that agreement(s) between approved provider and care recipient may be freely negotiated.

80    I do not accept that s 15(5) has the broad effect for which Regis contends. By s 56-1(h), an approved provider must offer to enter into a resident agreement with a prospective care recipient and if that person wishes to do so, must enter into such an agreement with the person. The resident agreement must meet the requirements of s 59-1 and, by s 59-1(2), any requirements in the URP.

81    When there is to be a resident agreement, the function of s 15(5) is to require it to contain the whole agreement between the parties. Section 15(5) precludes the existence of several separate agreements between an approved provider and a recipient of residential care. Consistently with one of the objectives of the scheme, evident from many provisions, to make the arrangement intelligible and understandable to care recipients and their families, and to assist them to make informed choices about care, the effect of s 15(5) is to ensure that all of the parties’ contractual rights and obligations are located in one document.

82    I do not consider s 15(5) indicates any greater legislative intention than this. It may well be that it also contemplates there will be other matters negotiated and agreed between a care recipient and an approved provider, relating to the care of, and accommodation for, the person, which are not expressly the subject of a provision in the Act or in any of the Principles. An example (taken from Regis’ standard form agreement) might be whether a resident wishes to have a private phone line in her or his room. If that is the case, s 15(5) would also require those matters to be contained in the resident agreement. To state that is not to see s 15(5) – a single clause in one of many subordinate instruments to the Act – as opening the gateway to a raft of additional fees and charges to be imposed by approved providers as a condition of their agreement to receive a person into their aged care facility.

Objects and purposes

83    Finally, rather than first, having described the legislative scheme, it is appropriate now to return to the objects and purposes of the Act, as they are set out in s 2-1. They are:

2‑1 The objects of this Act

(1)    The objects of this Act are as follows:

(a)    to provide for funding of *aged care that takes account of:

(i)    the quality of the care; and

(ii)    the *type of care and level of care provided; and

(iii)    the need to ensure access to care that is affordable by, and appropriate to the needs of, people who require it; and

(iv)    appropriate outcomes for recipients of the care; and

(v)    accountability of the providers of the care for the funding and for the outcomes for recipients;

(b)    to promote a high quality of care and accommodation for the recipients of *aged care services that meets the needs of individuals;

(c)    to protect the health and well‑being of the recipients of aged care services;

(d)    to ensure that aged care services are targeted towards the people with the greatest needs for those services;

(e)    to facilitate access to aged care services by those who need them, regardless of race, culture, language, gender, economic circumstance or geographic location;

(f)    to provide respite for families, and others, who care for older people;

(g)    to encourage diverse, flexible and responsive aged care services that:

(i)    are appropriate to meet the needs of the recipients of those services and the carers of those recipients; and

(ii)    facilitate the independence of, and choice available to, those recipients and carers;

(h)    to help those recipients to enjoy the same rights as all other people in Australia;

(i)    to plan effectively for the delivery of aged care services that:

(i)    promote the targeting of services to areas of the greatest need and people with the greatest need; and

(ii)    avoid duplication of those services; and

(iii)    improve the integration of the planning and delivery of aged care services with the planning and delivery of related health and community services;

(j)    to promote ageing in place through the linking of care and support services to the places where older people prefer to live.

(2)    In construing the objects, due regard must be had to:

(a)    the limited resources available to support services and programs under this Act; and

(b)    the need to consider equity and merit in accessing those resources.

84    Despite the significance of the 2013 amendments, the objects of the Act were not amended. As Regis submitted, they have remained in the same form since the enactment of the Act.

85    Regis submits the legislative recognition approved providers may impose, and prospective care recipients may agree to pay, the ARC, conforms to the objects and purposes of the Act (and the 2013 amendments) “to enhance care recipients’ choice and to encourage diverse and high quality aged care services that are responsive to individual needs and preferences.”

86    I fail to see how a construction of the Aged Care Act which concludes that approved providers may charge additional fees, disconnected from the delivery of residential care to an individual, so long as prospective care recipients agree to pay them, does any such thing. The Aged Care Act itself encourages diverse and high quality aged care. The Aged Care Act itself encourages, and requires, informed choices. The imposition of a fee for modifications and improvements to a facility in the future, that is not intended to benefit the person who pays the fee, enhances only the financial standing and asset base of the approved provider, and is financially detrimental to the care recipient.

87    In my opinion, the Act’s objects emphasise equity and access to aged care services for members of the Australian community, as the respondent submitted. Affordability is an express objective. The targeting of services to those of greatest need is also an express objective. The object in s 2-1(1)(g), which is the one emphasised by Regis, does not pull in any different direction. At the macro level, objectives such as choice, especially after the 2013 amendments, are achieved in the scheme though home care services and flexible care services. At the micro level, they are achieved through prescriptions such as those in s 10 of the URP, imposing restrictions on when and how an approved provider can move a resident out of a particular room.

88    The unilateral imposition of a fee such as the ARC by an approved provider, as a condition of that approved provider being prepared to enter into a resident agreement, does not enhance choice for the person. It inhibits choice. It renders that facility unavailable to the person unless she or he agrees to pay the extra fee demanded. It diminishes flexibility because it adds a “non-negotiable”, additional component, to the factors a person and her or his family must weigh up when deciding which facility is suitable, and which is affordable. It is certainly not “responsive” to aged care, as it avowedly has no connection with the provision of residential care to the individual who is asked to pay the fee.

89    Construing the objects by reference to the factors set out in s 2-1(2) does not improve the argument of Regis. There is no aspect of the constructional choice which calls for an expanded interpretation of the objects in s 2-1(1) to permit the ARC so as to avoid stretching or straining federal resources. The presence or absence of an ability to charge a fee such as the ARC has no discernible impact on the resources of the Commonwealth, although it certainly deprives approved providers of a separate, unregulated income stream, on Regis’ argument by the terms of the Act.

Issues arising from the parties’ arguments

Policy and intention

90    In [6] of its reply submissions, Regis relies on the observations of Mahoney J in Tullamore Bowling & Citizens Club Ltd v Lander [1984] 2 NSWLR 32 at 52G-53F. The substance of his Honour’s observations cannot be doubted. The exercise of legislative power is a means by which policy may be implemented, and in any construction exercise, the Court is concerned with the expression of the will of the legislature as enacted, rather than in the policy that may have sat behind the enactment. That is why caution must be exercised with extrinsic material as part of any constructional choice. While embracing what Mahoney J said on the one hand, on the other Regis urged the Court to approach the construction of the Act through the prism of extrinsic material, which is not consistent with the approach Mahoney J espoused.

91    I do not consider the respondent’s approach urges the Court to ignore the statutory text and framework of the Aged Care Act and prefer some general executive policy about whether approved providers should be able to charge additional fees. Rather, the respondent’s approach was faithful to the text of the Act, but gave what I consider to be appropriate and necessary emphasis to the overall structure and context of the legislation. That is precisely the approach the High Court continues to endorse: see Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; 239 CLR 27 at [47] (Hayne, Heydon, Crennan and Kiefel JJ):

The language which has actually been employed in the text of legislation is the surest guide to legislative intention.

92    If anything, it is Regis’ approach which asks the Court to diminish the text, framework and structure of the Act, read with its objectives, and to prefer, as its reply submissions framed it, that:

…the need to encourage private investment in residential aged care facilities, in order to incentivise the provision of more diverse and higher-quality aged care facilities, and thereby to provide care recipients with greater choice, was a policy driver of the Living Longer Living Better Act reforms in 2014.

93    Of course, inherent in this submission is a premise that the persons whom Parliament contemplates should bear the cost of incentivising “the provision of more diverse and higher-quality aged care facilities” are the aged care recipients themselves, through additional fees. Such an intention is not only not apparent in the Aged Care Act: it is antithetical to it.

94    Similarly, Regis’ reliance on the High Court’s emphasis in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at 381-382, [69]-[70] on arriving at a construction which maintains the “unity” of all provisions in a statute, assists the respondent’s argument more than Regis’. Construing this scheme as permitting additional, unilateral fees, set by the provider with the provider’s interests in mind, diminishes the unity of the scheme’s provisions, all of which are directed at equitable, accessible, affordable, carefully regulated aged care services.

What can be gleaned from the User Rights Principles

95    I have set out above my reasons for why I do not see s 15(5) of the URP as offering any support to Regis’ contentions. I construe s 15(5) as directed to other matters, as I have explained.

The “freedom of contract” argument

96    To reject the Regis’ contentions concerning the ARC is not to deny the existence of some contractual freedom as between an approved provider and a prospective recipient of residential care services. Speculating about examples of terms that an approved provider might legitimately incorporate is risky, however there are likely to be many terms which could enhance, and be consistent with, the prescriptions in the Act and the Principles.

97    As I noted above, a straightforward example can be seen in Regis’ sample contract in evidence. Clause 32 of that contract gives a resident the ability to choose to have a phone line in her or his room and to be placed on a phone plan with the aged care facility. As far as I can see, the Act does not regulate this subject matter. It is an additional service or facility which is clearly of benefit to a resident, but that the resident is left free to choose to have, or to decline.

98    I accept Regis’ submission that a resident agreement (including one that incorporates an accommodation agreement and other relevant agreements such as extra service status agreements) is quite different from an agreement the form of which is prescribed by statute (e.g Residential Tenancies Act 1997 (Vic), s 26(1); Residential Tenancies Regulations 2008 (Vic), reg 7 and Sch 1), or what Regis calls a “legislative quasi contract” such as an Enterprise Agreement under the Fair Work Act 2009 (Cth): see Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84; 222 FCR 152 at 174-182, at [88]-[90] and [97] (Jessup, Tracey and Perram JJ).

99    The scheme of the Aged Care Act does not seek to transform the nature of the agreement between an approved provider and a prospective care recipient to something which is other than contractual in nature. The provisions which preserve the operation of the general law (such as ss 52F-7, 53-2 and 59-1(3)) make that clear. However, because it has at its centre the interests of the recipients of aged care services, and because it is framed around the use of public funds to support the provision of those services, the Aged Care Act regulates in a consistently close and detailed fashion the nature of the relationship between approved provider and prospective (and actual) care recipients, so that it can confidently be said the statute is overwhelmingly the source of the core aspects of the contractual relationship. If that were not the case, the legislative scheme would fail in its protection of the (often vulnerable) recipients of aged care.

100    Rather, the ability to “agree and negotiate” as Regis put it, is significantly constrained, especially around fees and charges which can be imposed on recipients of aged care. Construing the scheme as permitting or allowing providers as part of a contractual arrangement unilaterally to insist on additional fees or charges, unrelated to the care and accommodation of the individual who pays the additional fee or charge, does not, as I have noted, enhance the choice of prospective recipients, it has the opposite effect.

101    The provisions of the Aged Care Act must be construed in the practical context in which they arise. People need, or wish, to access aged care services in a tremendous variety of circumstances. Sometimes, it is involuntary. Sometimes, it is in circumstances of great urgency. Sometimes there will be real geographic constraints on where a person needs to be cared for, because of family arrangements, but also personal preferences in terms of established networks, access to particular treating medical professionals and the like. Sometimes personal preferences in terms of the nature of a facility will be critical to the continued physical and psychological well-being of a prospective resident. There may therefore be all sorts of reasons why whatever “choice” is being exercised is constrained in a way where people are not able, as in the hypothetical private commercial context, to elect to contract elsewhere and with another party. The facility of the provider who charges an additional fee like the ARC may be the only realistic choice. Or it may be the preferred choice for all or some of the reasons I have set out in this paragraph. When a unilateral, additional fee of no benefit to the prospective resident is presented as a term of entering that facility, what may occur in reality is that the prospective resident may have no “freedom” of contract. To exercise her or his care-related choice (about the facility, location, level of care, access to medical services, family and the like) the prospective resident must agree to pay the additional (non-care related) fee. As I have noted, I see that as antithetical to the scheme, not consistent with it.

102    Regis’ reference to decisions upholding the need for “commercial certainty” (Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; 258 CLR 525) are inapposite in the context of this legislation. Resident agreements and accommodation agreements, and the other kinds of agreements contemplated by the Act, do not concern “commercial certainty”.

103    Finally, I do not accept that the decision in Willoughby Retirement Community Association v Frey [2007] NSWSC 613; 212 FLR 104 provides as much support for Regis’ contentions as Regis submits. Accepting for the purpose of my reasoning that Hall J’s construction of the former version of the URP is (a) correct and (b) applicable to the current URP, then the circumstances in Frey illustrate how the terms of a provision such as ss 52F-7, s 53-2 and 59-1(3) operate. The Aged Care Act does not deprive either an approved provider or a care recipient of a cause of action for breach of contract. That is what Frey decides, and it can be accepted to be the case. To recognise that says nothing about the scope of the terms of a contract for residential aged care services which the Aged Care Act permits, and prohibits.

Implications of Regis’ arguments, and of the ARC

104    I discuss the use of consequential reasoning as an aid to statutory construction in my reasons for judgment in Friends of Leadbeater’s Possum Inc v VicForests [2018] FCA 178 at [227]-[231]. I adopt what I have said in those paragraphs.

105    There are a number of implications which arise from Regis’ construction, some of which were identified by senior counsel for the respondent in oral submissions.

106    There are no monetary limits on the level of such additional fees and charges, nor on how many of them a provider might impose. Regis’ senior counsel submitted that the market will regulate such matters, but as I have explained above, the way in which persons who need aged care are able to select which facility they enter is not necessarily “free” in a market sense.

107    There is a real risk that those facilities with long waiting lists, which are seen as the most desirable, are likely to be the ones who can charge such additional fees, because people are – for other, legitimate reasons – very keen to enter those facilities. It is likely a two tier system would result, with the most desirable facilities charging whatever additional fees and charges their experience tells them people will pay, and other facilities being unable to do so. This destroys equity across the aged care system, rather than enhancing it.

108    On Regis’ approach, there is nothing to prevent providers identifying a range of fees for a range of purposes – for example, not for infrastructure and asset improvement as the ARC is expressed to be, but for future staff costs/training, replacement equipment and so forth. Multiple fees could be charged.

109    Further, because on Regis’ contention these fees are simply a matter of private contract, there is no accountability or supervision to ensure that the monies received under such fee arrangements are actually expended for the purposes for which they were levied. The Secretary would have no power to inquire about this, as on Regis’ argument it is a matter outside the statutory scheme.

110    Although Regis states that it currently does not (as stated in cl 7 of the Residential Agreement) charge the ARC to “supported residents” or “low-means care recipients”, on its own argument there is nothing to prevent it from doing so. That is why the respondent is correct to identify the potential for a charge such as this to “circumvent” the s 52K-1 “hardship cap”, which imposes a lower maximum accommodation payment for a care recipient for whom a hardship determination has been made. While that may not, on the facts, be the case at the moment for Regis, its arguments would mean it could do so. Its freedom of contract argument leads to the proposition that this charge could be imposed on all prospective residents.

111    Regis also contended that there was some protection against exploitation to be found in the terms of the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Schedule 2) and its unfair contracts provisions. However, in the context of a statute regulated (on Regis’ argument, at least in part) by statute, whether the contract was “unfair” would also fall to be determined by reference to the statute, which brings the argument full circle back to where it presently stands.

112    There is no basis in the structure, text and purposes of the Aged Care Act to find that Parliament intended any of these consequences could arise from the making of agreements between approved providers and prospective aged care recipients.

Is there an implied or express prohibition?

113    Regis makes the following submissions about the ARC at [94] of its written submissions:

The charging of the ARC does not contravene any of the express limits that the Act imposes:

94.1    The ARC is not a payment made by a care recipient for accommodation provided with the care recipient’s residential care, and is therefore neither a daily accommodation payment nor a daily accommodation contribution. It follows that the ARC is not subject to the maximum specified in ss 20 and 22 of the Fees and Payments Principles.

94.2    The ARC is not a charge for the provision of any of the specified care and services, nor is it a fee charged for or in connection with residential care provided to the care recipient. It is therefore not subject to the maximum daily amount specified in s 52C-3 of the Act.

114    In this way, Regis contends that the respondent’s emphasis on the purpose and character of the payments which the Aged Care Act does regulate is not to the point. This payment is in respect of a different matter entirely. As I explain below, in my opinion this differentiation in the purpose of the ARC tends against Regis, not for it.

115    I accept Regis’ general submissions that the sometime reluctance of a Court, where there is no express legislative prohibition, to imply a prohibition that interferes with the parties’ contractual rights and remedies, may be “no more than a species of the general rule of statutory construction that legislation will not be interpreted to deprive parties of basic rights at common law”: see Fitzgerald v FJ Leonhardt Pty Ltd [1997] HCA 17; 189 CLR 215 at 243 (Kirby J). I note again however, that observation was made in the context of private law, without the statutory overlay of a scheme such as the Aged Care Act. Indeed as I have attempted to show, this legislative scheme sets out to interfere, in a prescriptive way, with the contractual rights and obligations of those who provide aged care services to the Australian community and seek to be subsidised by public funds for doing so.

116    However, and in any event, this is not a case of a prohibition which only arises by implication.

117    In his development of oral argument, senior counsel for the respondent located the implied prohibition in s 56-1 of the Act and specifically in s 56-1(e). He submitted that the function of s 56-1, together with other aspects of the scheme such as the prudential requirements and other sets of “responsibilities”, forms the “quid pro quo” for the receipt of Commonwealth subsidies and other funding (for example, grants). He submitted the word “responsibilities” is intended to convey that the listed matters are burdens, restraints or constraints, and have the same kind of mandatory quality as obligations using the language of “must”. I accept that submission, especially when the sanctions provisions are considered, which is how the responsibilities are enforced. One sanction is that an approved provider can be precluded from recovering accommodation payments or accommodation contributions from a care recipient: see s 66-1(ia).

118    I accept that the prohibition against a fee of the kind levied by Regis through the ARC can be located in s 56-1 of the Act, in particular in s 56-1(e), construed in the context of the scheme as a whole, and the features to which I have referred already. In addition to the textual, contextual and purposive matters to which I have referred concerning the scheme and its various parts, the following aspects about s 56-1 itself, and s 56-1(e) in particular, lead me to that conclusion.

119    As s 55-1 (at the start of Div 55) explains, s 56-1 concerns approved providers’ general responsibilities “to users, and proposed users, of the service who are approved as care recipients of the type of aged care in question”. A failure to meet those responsibilities exposes the approved provider to the operation of the sanctions regime in Pt 4.4. The identified responsibilities are mandatory obligations. Div 56 is solely concerned with the relationship between approved providers and “users” of the three kinds of care services (residential, home and flexible).

120    The way Div 56 divides up these responsibilities is by reference to the type of care provided. That is the function of the words in the introductory part of each provision “in relation to a care recipient to whom the approved provider provides, or is to provide, [residential/home/flexible] care”. One approved provider may have three sets of obligations under Div 56 if it offers and provides all three kinds of care.

121    The nature of the relationship for the purposes of the statute will be different for each set of care recipients, as will the obligations. Yet an identical provision to s 56-1(e) appears in relation to the other two kinds of care: see s 56-2(d) and s 56-3(e). The terms of the agreements which reflect each relationship are subject to important commonalities.

122    However, what each of the operative provisions in Div 56 focuses on is the relationship between the care recipient and the approved provider: these provisions are not regulating the nature and content of the care provided – that is done elsewhere, and by the Quality of Care Principles. Rather, these provisions regulate the relationship in its contractual and financial aspects, and incorporating the “rights” conferred on users by the statute itself. Thus, I do not accept the respondent’s general submissions that s 56-1 is “about” residential care services. It is not. Residential care, like home care and flexible care, is used to delineate the kind of care recipient each provision addresses, that is all.

123    This is critical to understand. Seen in this light, it can readily be understood that Div 56 is intended, insofar as the financial aspects of the care relationship are concerned, to regulate the relationship entirely, for all three kinds of care.

124    This is also apparent from the language used. The phrase “to charge no more than” (my emphasis) appears in several places in each of the three provisions, including in (relevantly) s 56-1(e). That is the language of prohibition: an approved provider is prohibited from charging more than what is stipulated.

125    What is also critical about this phrase is the subject matter of the prohibition. The subject matter is “other care or services”, the word “other” clearly distinguishing its subject matter from the core care services to which earlier parts of s 56-1 refer (such as s 56-1(a)). The same applies to the other two provisions (s 56-2 and s 56-3). The text and structure of Div 56, read with the rest of the legislative scheme, discloses an intention that the only fees and charges that approved providers may impose on care recipients are those fees and charges made in return for the provision of care and services to the person who pays the fees and charges.

126    That is reinforced by recalling the underlying regulatory premise of the scheme: that the provision of aged care services is to be subsidised by Commonwealth funds. The subsidies are for the benefit of the recipients of the services: that this is so is evident from the subsidy provisions in Div 44 of the Act. Section 44-1 states:

Amounts of *residential care subsidy payable under Division 43 to an approved provider are worked out under this Division in respect of each residential care service. The amount in respect of a residential care service is determined by adding together amounts worked out, using the residential care subsidy calculator in section 44-2, in respect of individual care recipients in the service.

127    In return for subsidies (and the use of accommodation payments and contributions, and access to grants), approved providers are to fulfil their responsibilities. Subject to the restrictions which I have outlined, they are not precluded from charging additional sums of money for aged care they provide. What they are precluded from doing is charging recipients of care any fees which are unrelated to the care and services provided to those individuals.

128    To that extent, I consider the prohibition for which the respondent contends is to be located in s 56-1, and in s 56-1(e). It is not entirely implied because of the text of s 56-1(e) as I have explained it.

129    Regis submits (in its reply at [42]) that, in any event, Regis complies with the two conditions imposed by s 56-1(e), and the ARC is therefore consistent with this provision. The flaw in this contention is Regis’ own admission that the ARC is not a charge for “care or services” to the individual aged care resident. It cannot fit within s 56-1(e), no matter if Regis purports to comply with the two conditions that paragraph contains.

130    It will be apparent that I have not approached the constructional issues in this case as a circumstance where it is necessary for the Court to ‘read words’ into a particular provision. Accordingly, I do not accept the respondent’s reliance on Taylor v The Owners - Strata Plan no 11564 [2014] HCA 9; 253 CLR 531 at [38] is appropriate. This is not a construction question which presents a need for the addition of words into a statutory provision. Rather, it concerns choices about the scope and operation of an express provision, s 56-1(e).

Conclusion

131    Regis’ contentions are rejected. It may well still be appropriate for there to be declaratory relief, so that there is some clarity around the operation of the Act in relation to these kinds of additional fees. Alternatively, it may suffice for the application to be dismissed.

132    The parties will be given an opportunity to make submissions about the appropriate form of relief, and appropriate orders as to costs, paying heed to the Court’s practice of preferring to make lump sum orders for costs if that is practicable.

Associate:

Dated:    2 March 2018