FEDERAL COURT OF AUSTRALIA

Jadwan Pty Ltd v Secretary, Commonwealth Department of

Health & Aged Care [2002] FCA 1052

ADMINISTRATIVE LAW – application for declaratory relief – approval of nursing home under National Health Act 1953 (Cth) revoked by Minister for Health & Aged Care – nursing home patients removed pursuant to Minister’s decision – whether orders setting aside Minister’s decision operated from the date of the decision or the date of the orders – status of applicant under the Aged Care Act 1997 (Cth) – operation of transitional provisions in Aged Care (Consequential Provisions) Act 1997 (Cth) – whether the transitional provisions required a Commonwealth benefit to be payable in fact or payable in law – whether removal of nursing home patients unlawful – whether lapse of applicant’s status as approved provider is a reason to refuse relief.

Judiciary Act 1903 (Cth), s 39B(1)(c)

National Health Act 1953 (Cth), ss 4, 40AA, 44, 45D, 45E, 46A, 47A

Aged Care Act 1997 (Cth) ss 1-2, 7-1, 8-2(1), 10-2(1), (3), (4), 11-1, 13-1, 14-1, 42-1

Aged Care (Consequential Provisions) Act 1997 (Cth) ss 7(1)(a), 20(1)(a)

Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5(1)(b), 16(1)(a), (c)

National Health Regulations 1954 (Cth)

Jadwan v Minister for Health and Family Services [1998] FCA 715, referred to

Minister for Health and Family Services v Jadwan Pty Ltd (1998) 89 FCR 478, considered

Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253, followed

JADWAN PTY LTD v SECRETARY OF THE COMMONWEALTH DEPARTMENT OF HEALTH AND AGED CARE (FORMERLY THE COMMONWEALTH DEPARTMENT OF HEALTH AND FAMILY SERVICES) and MINISTER FOR HEALTH AND AGED CARE (FORMERLY MINISTER FOR HEALTH AND FAMILY SERVICES)

V 178 OF 2001

NORTH J

23 AUGUST 2002

MELBOURNE

THE COURT ORDERS THAT:

1.                              The Minister for Health and Aged Care (formerly the Minister for Health and Family Services) is added as the second respondent.

2.                              Leave to the applicant to amend its application by adding:

5A.           An order that the second respondent’s actions in removing, or arranging or coordinating the removal of, patients from Derwent Court Nursing Home, were unlawful.

5B.           An order that there be liberty to apply in respect of the implementation or the carrying out of any declaration or order that the Court may make.

3.                              The application is dismissed.

4.                              The applicant pay the respondents’ costs of and incidental to the appeal.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is an application brought by Jadwan Pty Ltd (Jadwan) under s 39B(1)(c) of the Judiciary Act 1903 (Cth).  The proceeding involves the meaning of legislation governing the provision of aged care in nursing homes. 

2                     Jadwan was the proprietor of the Derwent Court Nursing Home in Dynnyrne, a suburb of Hobart.  Prior to 1 October 1997, its activities, as nursing home proprietor, were regulated by the National Health Act 1953 (Cth) (NHA).  On 1 October 1997, the Aged Care Act 1997 (Cth) (ACA) commenced operation, and took over the function of regulating the provision of aged care.  The transition from the NHA to the ACA was provided for by the Aged Care (Consequential Provisions) Act 1997 (Cth) (CPA).

3                     The first respondent (the Secretary) has responsibilities in the administration of the ACA.  In discharge of those responsibilities, the Secretary has taken the position that Jadwan is not entitled to provide aged care services, because Jadwan’s status under the NHA was not, in all the circumstances, transferred for the purposes of the ACA by operation of the CPA.  By an amended application filed on 31 August 2001, Jadwan sought to amend its application by, inter alia, adding the Minister for Health and Aged Care (formerly the Minister for Health and Family Services) (the Minister) as the second respondent.  The Minister had certain relevant responsibilities under the NHA, and there was argument about the discharge of those duties.  The Minister was represented by the same counsel as represented the Secretary.  It is therefore appropriate that the Minister be joined as the second respondent.  An understanding of the arguments raised in the proceedings depends upon certain provisions of the NHA, the ACA, and the CPA.  Those provisions are now explained and set out.

National Health Act

4                     The general scheme under the NHA was that a person could seek an approval in respect of premises to be used for the conduct of a nursing home.  The approval was subject to conditions imposed by the statute, including a limitation on the number of beds that could be provided, and a condition that the nursing home would comply with the standards determined by the Minister.  The proprietor of the nursing home was entitled to receive a benefit paid by the Commonwealth in respect of approved nursing home care provided to residents.  There were sanctions applicable in the event that the conditions attaching to the approval were not met.  One sanction was that the Minister could make a declaration of non-compliance.  The consequence of making such a declaration was that the Commonwealth benefit was not payable in respect of persons admitted after the date of the declaration.  A more severe sanction was the revocation of the approval.  This general scheme can be seen in the following relevant provisions:

“40AA (1)       The proprietor of a nursing home may apply, in the authorized form, for approval of the premises occupied by the nursing home as an approved nursing home.

…

(6)   The approval of premises as an approved nursing home is subject to the following conditions:

(a)       a condition that the number of beds available in the nursing home for qualified nursing home patients … will not at any time exceed such number of beds as is determined from time to time by the Minister as the approved number of beds in relation to the nursing home.

…

(ck)      a condition that the nursing home care provided in the nursing home satisfies the standards determined under section 45D;

…

45D     The Minister may, by written notice, determine standards to be observed in the provision of nursing home care in approved nursing homes.

…

47A (1)            Subject to this Part, Part VC and Part VD, the proprietor of an approved nursing home in respect of which this section applies is entitled to receive benefit in resect of each approved nursing home patient in the home for each day on which the patient receives nursing home care in the home.

…

46A     …a person is an approved nursing home patient on a day if:

(a)               the person is a qualified nursing home patient on that day;

4          … ‘qualified nursing home patient’ means a person who occupies a bed in an approved nursing home for the purpose of nursing home care, …

…

45E     (1)        If the nursing home care provided in an approved nursing home does not satisfy the standards determined under section 45D, the Minister may, by written notice served on the proprietor of the nursing home, declare that the home does not satisfy those standards.

(2)       Where a declaration is in force under subsection (1), the Minister may, by written notice served on the proprietor of the nursing home, determine that, while the declaration remains in force, Commonwealth benefit is not payable to the proprietor of the nursing home in respect of a patient admitted to the nursing home after the making of the determination.

…

44        (1)        The Minister may, at any time, review the approval of a nursing home under this Part.

(2)               If the Minister considers that:

…

(b)       a condition applicable to the approved nursing home has not been complied with;

the Minister may vary the nature of the approval or revoke or suspend the approval as the Minister considers justified in the circumstances of the case.

(2A)     The Minister may give the proprietor of the approved nursing home written notice of his or her intention to vary the nature of the approval or revoke or suspend the approval as the case may be.”

Aged care Act

5                     Unlike the NHA, which provided for the approval of premises as a nursing home, the ACA provides for a person to be approved as a provider of aged care.  An approved provider is entitled to apply for an allocation of places to provide aged care.  An approved provider can only receive a subsidy in respect of allocated places.  The Secretary is to determine applications for the allocation of places.  The relevant provisions which achieve these results are as follows: 

“Part 2.1 – Approval of providers

7-1  Providers of aged care must be approved to receive subsidy

Payments of subsidy cannot be made under Chapter 3 to a person for providing aged care unless the person is approved under this Part as a provider of aged care …

…

8-2  Applications for approval

(1)               A person may apply in writing to the Secretary to be approved as a provider of aged care.

…

Part 2.2 – Allocation of places

11-1 What this Part is about

An approved provider can only receive subsidy under Chapter 3 for providing aged care in respect of which a place has been allocated.  The Commonwealth plans the distribution between regions of the available places in respect of the types of subsidies.  It then invites applications and allocates the places to approved providers.

…

13-1Applications for allocations of places

A person may apply in writing for an allocation of places.

…

14-1Allocations of places

(1)   The Secretary may allocate places, in respect of a particular type of subsidy under Chapter 3, to a person to provide aged care services for a region, but only if the person is an approved provider.

…

42-1         Eligibility for residential care subsidy

(1)               An approved provider is eligible for residential care subsidy in respect of a day if the Secretary is satisfied that, during that day:

(a)               the approved provider holds an allocation of places for residential care subsidy that is in force under Part 2.1 (not being a provisional allocation); and

(b)               the approved provider provides residential care to a care recipient in respect of whom an approval is in force under Part 2-3 as a recipient of residential care;”

Aged care (consequential provisions) act

6                     The transitional provisions reflect the general policy that a proprietor of a nursing home under the NHA would become an approved provider under the ACA.  This transfer of status is not automatic, but is subject to a fulfilment of certain conditions.  There is controversy in this case about those conditions, which are set out in the provisions below.

7                     Further, the general thrust of the CPA was that the number of beds approved under the NHA would become the places allocated to the approved provider under the ACA.  The relevant provisions are:

“7        Approved operators and proprietors

(1)               A person who was an approved operator (within the meaning of Part V of the 1953 Act), or the proprietor (within the meaning of the 1953 Act) of an approved nursing home, immediately before the commencement day is taken, for the purposes of the new Act, to be an approved provider if either of the following applies:

(a)               a Commonwealth benefit (within the meaning of Part V of the 1953 Act) is or was payable to the person in respect of an approved nursing home patient, within the meaning of section 4 of the 1953 Act, for nursing home care received by the patient on the day before the commencement day;

            …

20        Approvals of nursing homes

(1)               Subject to subsection (5), if an approval of premises as an approved nursing home under section 40AA of the 1953 Act was in force immediately before the commencement day, for the purposes of the new Act:

(a)               the Secretary is taken, on that day, to have allocated under section 14-1 of the new Act, to the proprietor (within the meaning of the 1953 Act) of the nursing home, a number of places equal to the number of beds to which the approval related immediately before that day;”

8                     The commencement date is 1 October 1997 (s 1-2 of the ACA).

background

9                     In 1984, Jadwan purchased Derwent Court nursing home, which is a Victorian-era residence.  Derwent Court was an approved nursing home under s 40AA of the NHA.  The approval was subject to the condition under s 40AA(6) limiting the number of beds available for nursing home patients to fifty-one.

10                  In September 1996, the Minister took action over the alleged failure of Jadwan to meet the required standards in the provision of care.  There was considerable litigation over the issue, and it is chronicled in the judgment of the Full Court in Minister for Health and Family Services v Jadwan Pty Ltd (1998) 89 FCR 478 at 484-8.  Further reference to that decision will be made shortly.  As the details of the actions taken prior to July 1997 are not directly relevant to this proceeding, attention will be focused on the events in and after July 1997.

11                  On 20 July 1997, the Minister’s delegate notified Jadwan under s 44(2A) of the NHA of her intention to revoke her approval of Derwent Court as a nursing home on the ground that the nursing home care provider failed to meet the required standards. 

12                  On 23 July 1997, the Department of Health and Family Services began to co-ordinate the transfer of residents to other approved nursing homes in Tasmania.  The result was that within several days there were no residents in Derwent Court, and the nursing home has remained empty ever since. 

13                  On 6 August 1997, a delegate of the Minister acting under s 44 of the NHA revoked the approval of Jadwan to operate Derwent Court as a nursing home. 

14                  On 1 September 1997, Jadwan sought reconsideration by the Minister of the revocation decision under s 105AAB(2) of the NHA.  The reconsideration was unsuccessful and, on 13 October 1997, the Minister affirmed the revocation of the approval.  On 7 November 1997, Jadwan applied to the Administrative Appeals Tribunal (the Tribunal) for review of the decision under s 105AAB(7) of the NHA. 

15                  On 21 January 1998, Jadwan filed an application in this Court seeking review of the revocation decision under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) on the ground, inter alia, that the Standards Review Panel (the panel) which advised the Minister in making the decision was not properly constituted under the National Health Regulations 1954 (Cth) (NHR).  On 19 June 1998, Heerey J allowed Jadwan’s application in Jadwan v Minister for Health and Family Services [1998] FCA 715.

The proceeding before heerey j

16                  Section 45E(10) of the NHA provided that the Minister may not make a declaration of non-compliance with the standards determined in accordance with s 45D of the NHA unless a panel had been established.  On the other hand, the Minister could revoke an approval under s 44 without establishing a panel. 

17                  In this case, the Minister did establish a panel before making the revocation decision. 

18                  The NHR governed the establishment of panels and prescribed the number of persons required to constitute a panel.  They also specified the qualifications necessary for panel members.  His Honour found that one member of the panel did not possess the required qualification.  Further, his Honour found that only three people were appointed to the panel whilst the NHR required the panel, to consist of five people. 

19                  His Honour also found that the Minister (through her delegate) relied upon the views of the panel as a basis for the revocation of the approval.

20                  Section 5(1)(b) of the ADJR Act allows for review of a decision on the ground that “procedures that were required by law to be observed in connection with the making of the decision were not observed”. 

21                  His Honour said at 10:

“It can properly be said in my opinion that the procedures required to be followed in relation to the constitution and functioning of a Panel are procedures ‘in connection with’ the Minister’s decision to revoke approval for Derwent Court.  While a Panel report is not a necessary precondition to the Minister’s decision to revoke, once that route was selected it became something which related to, or had a ‘connection with’ the Minister’s decision to revoke approval.  When the Minister chose to use the Panel procedure she was ‘required by law’ to use a Panel constituted in accordance with the Regulations and to follow the procedure therein prescribed.”

22                  His Honour held that the failure was sufficiently serious to invalidate the decision of the Minister.  As a result, the following orders were made:

“1.       The application is allowed.

2.         Declare that the decision of the respondent on 6 August 1997 to revoke the approval of the Derwent Court Nursing Home is void.

3.         The respondent pay the applicant’s costs of the application, including reserved costs.”  [emphasis added]

the appeal

23                  The Minister instituted an appeal against the decision of Heerey J.  The Minister conceded on the appeal that there had been a failure to comply with the NHR relating to the number of persons on the panel, and the qualification of one of the members.  She argued, however, that these failures did not fall within s 5(1)(b) of the ADJR Act.  The Full Court (Burchett, Drummond and Sackville JJ) accepted this argument.  In Minister for Health and Family Services v Jadwan at 494 the court said:

“It follows from what has been said that the Minister’s delegate was neither bound nor entitled to direct a Standards Review Panel to review the nursing home care provided by Derwent Court for purposes not connected with the exercise or possible exercise of the powers conferred by s 45E.  The direction given on 1 May 1997 accordingly was not authorised by the National Health Act or the National Health Regulations.  In substance, what happened in the present case was that the delegate mistakenly assumed that a Panel could be directed to prepare a report under reg 26 for purposes unconnected with the proposed exercise of powers under s 45E. 

The mere fact that the delegate mistakenly assumed that such directions could be given to a Panel, does not mean that there was a failure to observe procedures that were required by law to be observed in connection with the making of the revocation decision. …But there could be no contravention of s 5(1)(b) in this case unless the delegate failed to observe procedures she was required to observe in connection with the decision to revoke Derwent Court’s approval.

Neither the National Health Act nor the National Health Regulations required that a Panel should be established and should make a valid report before a decision to revoke Derwent Court’s approval could be made. …The failure to establish a Panel in accordance with the National Health Regulations did not constitute a failure to observe any procedure required by law in connection with the revocation decision.  Whatever other consequences might flow from the delegate’s reliance on an improperly constituted Panel, the ground of review specified in s 5(1)(b) is not made out.”

24                  Acceptance of this argument, however, did not lead to the appeal being allowed, because the Full Court permitted Jadwan, without opposition from the Minister, to amend its original application to allege that the revocation was an improper exercise of the power conferred by s 44 of the NHA.  This ground was argued on two bases.  First, it was contended that the Minister took an irrelevant consideration into account, in that the Minister treated the document produced by the panel as if it were a report of a panel properly constituted under the NHR.  Second, it was contended that the Minister failed to take a relevant consideration into account, in that the Minister failed to take into account the fact that the document produced by the panel was not a report of a panel properly constituted under the NHR.  The court accepted these contentions at 495-6 as follows:

“In fact, the delegate relied heavily on the findings of the second Panel when making the revocation decision. She repeatedly referred to the confirmation by the second Panel of findings made by a Standards Monitoring Team, that urgent action was required to ensure that Derwent Court achieved compliance with the relevant standards. The delegate also expressly accepted the findings of the second Panel, and did so without close analysis of its reasoning or of the nature of its investigations.

The delegate took this course because she assumed that the second Panel had been validly appointed under the National Health Regulations. So much appears from the definition of ‘second Panel’ in her reasons. There is nothing in the reasons to suggest that the delegate adverted to the possibility that the Panel had not been validly constituted under the National Health Regulations. It is an obvious and, indeed, almost inescapable inference that the delegate gave weight to the Panel's confirmation of adverse findings precisely because she thought that it had been validly appointed under the National Health Regulations and that it had conducted its inquiries pursuant to the authority conferred by the National Health Regulations. The delegate did not treat the Panel's findings as simply made by three individuals having no authority under the National Health Act or National Health Regulations and lacking, as a Panel, the full range of qualifications a validly constituted Panel would have had.

…

It is, perhaps, arguable as to whether the case should be characterised as one whereby the delegate took into account an irrelevant consideration (treating the findings of the Panel as having been made by a properly constituted Panel) or as one in which the delegate failed to take into account a relevant consideration (that the findings upon which she relied so heavily were not made by a properly constituted Panel, but by three individuals having no authority under the National Health Act or National Health Regulations). We think the former view is preferable, since the delegate was not entitled, as a matter of construction of the Act, to treat the findings of the Panel in the way in which she did. In any event, subject to the issue of materiality considered below, the revocation decision constituted an improper exercise of the power conferred by s 44 of the National Health Act. For the reasons that have been given, the flaw in the revocation decision was not cured by the reconsideration decision.

Finally, Mr Bell [counsel for the Minister] argued that, even if the delegate had taken into account irrelevant considerations, it was not conduct that gave rise to an entitlement to judicial review. In our view, this is not a case in which the factor taken into account was so insignificant that it could not have materially affected the decision: cf Peko-Wallsend at 41 per Mason J; Otter Gold Mines Ltd v Australian Securities Commission (1997) 26 AAR 99 at 109-110; 15 ACLC 1732 at 1741 per Merkel J. The findings of the second Panel were plainly given weight, at least in part, because the delegate thought it had been validly established and had acted pursuant to a valid direction. It is not possible to say what conclusion the delegate might have reached, or even if the three individuals would have been appointed to advise her, had the true position been appreciated prior to the revocation decision. Similarly, it is not possible to say what effect an appreciation of the true position would have had on the reconsideration decision.

It follows that the respondent has made out its case that the making of the revocation decision was an improper exercise of the power conferred by s 44 of the National Health Act, as was the making of the reconsideration decision.”

25                  The court concluded at 497 as follows:

“Conclusion

The Minister has made good the only ground of appeal that was pressed, namely that the cancellation decision of 6 August 1997 and the reconsideration decision of 13 October 1997 did not involve a failure to observe procedures required by law to be observed in connection with the making of the decisions. However, the respondent has succeeded on the ground in respect of which it received leave to amend its application. That is, it has established that the making of the cancellation decision was an improper exercise of the power conferred by s 44 of the National Health Actin that the Minister took into account an irrelevant consideration.

The trial judge made a declaration that the revocation decision of 6 August 1997 was void. Having regard to the ground on which the respondent has now succeeded, we think that the appropriate orders are as follows:

1.         Appeal allowed in part.

2.         Set aside order 2 of the orders made by the trial judge on 19 June 1998.

3.         In substitution for order 2, set aside the decision of the Minister, made on 6 August 1997, to revoke the approval of the Derwent Court Nursing Home.

The respondent has succeeded on a ground not raised before the trial judge and only raised belatedly on the appeal. The Minister succeeded on the only ground in the notice of appeal that was pressed. In these circumstances, the appellant should pay half the respondent’s costs of the appeal. The costs order made by the trial judge should stand.”  [emphasis added]

26                  Following the appeal, Jadwan attempted to commence negotiations about the reopening of the nursing home.  It made representations to the Department that it was an approved provider entitled to an allocation of fifty-one places by operation of the CPA.  In a letter dated 10 June 1999, the legal adviser to the Secretary took the position that Jadwan did not fall within s 7(1) of the CPA because the case did not satisfy the conditions in subsections (a) or (b).  That stalemate caused Jadwan, on 9 March 2001, to file the application now before the Court. 

the relief sought

27                  The relief sought by Jadwan in the original application filed on 9 March 2001, was as follows:  

“1.       A declaration that, by operation of section 7(1) of the Aged Care (Consequential Provisions) Act 1997, the applicant is taken to be an approved provider of aged care, within the meaning of the Aged Care Act 1997.

2.             Alternatively, a declaration that, as a consequence of the decision of the Full Federal Court in Minister for Health and Family Services v Jadwan Pty Ltd (1998) 98 FCR 478, the applicant is deemed to be an approved provider of aged care, within the meaning of the Aged Care Act 1997.

3.             A declaration that, by operation of section 20(1) of the Aged Care (Consequential Provisions) Act 1997, the [first] respondent is taken to have allocated to the applicant 51 places for the provision of residential care under section 14-1 of the Aged Care Act 1997. 

4.             Alternatively, a declaration that, as a consequence of the decision of the Full Federal Court in Minister for Health and Family Services v Jadwan Pty Ltd  (1998) 98 FCR 478, the [first] respondent is deemed to have allocated to the applicant 51 places for the provision of residential care under section 14-1 of the Aged Care Act 1997.

5.             An order that the [first] respondent allocate to the applicant 51 places for the provision of residential care services.

6.             Such further or other orders as the Court considers to give effect to the declarations and orders sought by the applicant.”

28                  In an amended application filed on 31 August 2001, Jadwan sought to add the following claims: 

“5A.    An order that the second respondent’s actions in removing, or arranging or coordinating the removal of, patients from Derwent Court Nursing Home, were unlawful.

5B.      An order that there be liberty to apply in respect of the implementation or the carrying out of any declaration or order that the Court may make.”

Consideration

The effect of the orders of the Full court

29                  Under s 7 of the CPA, the transition of status from the NHA to the ACA depended on the approval of a nursing home having been in existence on 30 September 1997, that is to say, the day before the commencement of the ACA.  Under s 20 of the CPA the transfer of approved beds under the NHA into an allocation of places under the ACA also depended upon the approval of a nursing home having been in existence on 30 September 1997.

30                  The respondents contended that there was no approval in existence relating to Derwent Court on 30 September 1997 because the decision of the Minister to revoke the approval was in effect at that time.  The order of the Full Court setting aside the decision of the Minister, it was contended, operated from the date of the order, namely, 4 December 1998. 

31                  Jadwan contended that the approval was in existence on 30 September 1997 because the decision of the Minister was avoided from the date it was made.  The order of the Full Court operated from the date of the revocation decision, namely, 6 August 1997. 

32                  Jadwan argued that, at common law, a decision made as a result of the improper exercise of a power is a nullity.  When a court determines that a decision is made as a result of an improper exercise of power, the decision is treated as invalid from the date upon which it was made. 

33                  But the application before Heerey J, and on appeal to the Full Court, was made under the ADJR Act.  Section 16 of that Act sets out the power of the Federal Court to grant relief under the Act.  Section 16(1)(a) and (c) provide:

“16.(1)            On an application for an order of review in respect of a decision, the Federal Court may, in its discretion, make all or any of the following orders:

(a)       an order quashing or setting aside the decision, or a part of the decision, with effect from the date of the order or from such earlier or later date as the Court specifies;

…

(c)        an order declaring the rights of the parties in respect of any matter to which the decision relates;”  [emphasis added]

34                  In Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253 (Wattmaster) Sheppard and Wilcox JJ said at 256:

“Section 16(1) of the Administrative Decisions (Judicial Review) Act gives to the Court a wide discretion as to the orders appropriate to be made. The words ‘with effect from the date of the order or from such earlier or later date as the Court specifies’, in par (a), are, in our opinion, intended to do no more than to indicate that the Court has a choice from all the available possibilities: the date of the order, an earlier date or a later date. It is true that the effect of the language used is that it is unnecessary for the Court to specify a date, if it is intended that the decision will be quashed or set aside as from the date of the order, whereas specification is necessary in other cases; but specification of a particular date is, in the latter situation, in any event essential. By contrast, in the former situation, express specification is unnecessary; the relevant date appears on the face of the order itself.”

[emphasis added]

35                  Fox J agreed on this issue at 253.

36                  In the present case, Heerey J made a declaration that the revocation decision was void.  He appears to have acted under s 16(1)(c) of the ADJR Act.  The Full Court set aside that order and substituted for it an order apparently made under s 16(1)(a) of the ADJR Act that the revocation order be set aside.  The order of the Full Court did not stipulate any date from which the setting aside was to operate.  The passage from Wattmaster demonstrates that, in such an event, the setting aside operates from the date of the order. 

37                  That result is confirmed in this case by the fact that the Full Court deliberately changed the formulation of the order made by Heerey J.  The formulation by Heerey J declared that the revocation decision was void.  That form of order demonstrated an intention that the revocation decision would be avoided from the date that it was made.  The Full Court, however, directed specific attention to the form of the order.  The Full Court order set aside the revocation decision of the Minister, but expressly deleted the reference made by Heerey J that the revocation decision was void.  In the concluding paragraphs, the Full Court discussed the circumstances which caused the Court to make the order.  Although the reasoning for the change in formulation is not explicit, the discussion which led to the change recounted that Jadwan had succeeded on the appeal on grounds which were not raised before the primary judge, and which were ventilated on the appeal only by reason of an amendment allowed by the Full Court to the original application made to the primary judge.  Further, the Minister was successful on the only ground on which the appeal was instituted.  It seems likely that the Full Court regarded it as just that the revocation decision order remain in effect until the date of the decision on the appeal because Jadwan failed to raise the point on which it succeeded before the Full Court in the proceedings before the primary judge.

38                  It follows that the approval of Derwent Court as a nursing home was not in effect on 30 September 1997, and consequently the CPA did not apply to transfer the status of Jadwan from the NHA to the ACA.  Similarly, the CPA did not operate to allocate places to Jadwan under the ACA in place of the approved number of beds under the NHA. 

39                  The above reasoning means that Jadwan must fail in this application.  However, as the parties addressed further arguments to the Court, it is convenient for me to outline briefly my conclusions on those contentions.

Was a commonwealth benefit payable?

40                  Section 7(1)(a) of the CPA provided, relevantly, that there would only be a transfer of status from proprietor of an approved nursing home under the NHA to the status of an approved provider under the ACA if a Commonwealth benefit is, or was, payable to the proprietor in respect of a nursing home patient for nursing home care received by the patient on the 30 September 1997. 

41                  It is noteworthy that the subsection requires that a Commonwealth benefit be payable in respect of one patient.  This is so even if the proprietor had 30 or 300 persons under care on the relevant day.  As best one can gather, this requirement is likely to have been chosen for administrative convenience.  It permitted proprietors to qualify even if they had a particularly reduced number of patients under care on the 30 September 1997.  This could have occurred as a result of, for example, deaths, or, perhaps, if a large number of patients were removed from the nursing home to allow for extensive renovations to the nursing home to be undertaken. 

42                  In the exceptional circumstance that a proprietor happened to have no patients under care on 30 September 1997, the ACA would permit that proprietor to apply for approval as a provider under s 8-2(1) and for an allocation of places to be made under s 14-1(1).  If these steps were taken on 1 October 1997, or shortly thereafter, one would imagine that the Secretary would exercise the power given by the Act to preserve the pre-existing position of the proprietor.  Jadwan did not take these steps, although invited to do so by the Department. 

43                  On 30 September 1997, Jadwan had no patients at all receiving care at Derwent Court.  They had all been removed on 23 July 1997 in anticipation of the revocation decision. 

44                  Ms Mortimer, who appeared as counsel for the respondents, argued that s 7(1)(a) of the CPA required that the Commonwealth benefit be payable in fact, and no benefit was payable to Jadwan in fact because it had no patients under care.  Mr Heaton, of senior counsel who appeared with Mr Aghion for Jadwan, contended that it was sufficient if the Commonwealth benefit was payable in law to Jadwan, even if Jadwan had no patients in fact under care.  He relied upon a purposive approach to the construction of the Act.  He argued that the purpose of the CPA was to recognise the pre-existing status and rights of proprietors, and to provide for the transfer of that status and those rights without diminution or interference.  That purpose would not be served, he contended, if Jadwan was not recognised as a provider of aged care under the CPA, and was not entitled to the allocation of fifty-one places.

45                  I agree that Mr Heaton identified the general purpose of the CPA.  However, the means provided by the sections for the recognition and transfer of status are clearly expressed.  In particular specific conditions are stipulated in s 7(1) of the CPA as a prerequisite for the transfer of status.  I have already explained that the way s 7(1)(a) expresses the condition for transfer of status may reflect a concern with administrative convenience. 

46                  In my view, the subsection is concerned with the factual situation on 30 September 1997.  I accept Ms Mortimer’s construction.  The concept expressed in the subsection, namely, payment of a benefit in respect of care received by a particular patient on the day, directs attention to an actual occurrence.  The absence of all patients from Derwent Court on that date means that Jadwan did not satisfy the requirement under s 7(1)(a) of the CPA. 

47                  But even if this approach is wrong, Jadwan is unable to establish that a Commonwealth benefit was payable in law on that day. 

48                  Mr Heaton first argued that the benefit was payable in law because the revocation decision was void from the date that it was made, and that the decision had no operative effect.  I have already rejected this argument in dealing with the effect of the decision of the Full Court. 

49                  Mr Heaton then contended that even if my conclusion concerning the operation of the Full Court decision was correct, the Minister nevertheless acted unlawfully in removing the patients prior to the revocation decision.  The only reason there were no patients receiving care at Derwent Court on 30 September 1997 was because the Minister removed them, and she had no legal right to do so. 

50                  The proposed amendment to the application by which Jadwan seeks to add paragraph 5A was intended to reflect this part of Jadwan’s claim.  As the matter was fully argued I intend to allow the amendment sought.

51                  Even if there were legal basis for the argument, which I doubt, the contention fails because the evidence does not establish that the removal was unlawful.  The patients may have been removed with the consent of all parties.  It is telling that there is no evidence that Jadwan sought an injunction on the 23 July 1997, or shortly thereafter, to stop the Minister from, on its view, unlawfully destroying its business.  Indeed, Jadwan’s immediate concern was not to preserve the operating nursing home, but rather, to attempt to persuade the Minister to delay any revocation decision in order to allow Jadwan to negotiate a sale of the bed licences.  Jadwan took the first formal step to challenge the revocation decision on 1 September 1997 – about five weeks after the patients were removed.

52                  It follows from the foregoing discussion that, even if I am wrong in my conclusion that the Full Court decision operated from the date of the order, Jadwan would still fall outside s 7(1)(a) of the CPA because no Commonwealth benefit was payable to it in respect of care received by any patient on 30 September 1997. 

lapse of approval

53                  Section 10-2(1), (3) and (4) of the Aged Care Act provides:

“(1)     If an approved provider does not provide any aged care during a continuous period of 6 months, the approval lapses on the day after the end of that period.  However, any period during which the operation of this subsection is waived under subsection (3) is not to be counted towards the 6 months.

…

(3)     The Secretary may waive the operation of subsection (1) for a specified period in relation to the approved provider if:

(a)               the approved provider has applied to the Secretary, in writing, for a waiver; and

(b)               there is in force an allocation of places to the approved provider that has taken effect under section 15-1; and

(c)               the Secretary is satisfied that the approved provider intends, and will have the capacity, to provide aged care by the end of the period of the waiver.

(4)       The application for the waiver must be made at least 28 days before the end of the 6 months referred to in subsection (1).”

54                  Ms Mortimer argued that even if Jadwan qualified for a transfer of status under s 7(1)(a) of the CPA, the Court should not make the declarations sought in paragraphs one and two of the application.  Jadwan has not provided aged care since 23 July 1997 at Derwent Court, and it has not applied for a waiver referred to in s 10-2(1) of the ACA.  It is now out of time to make any such application. 

55                  I agree that, in these circumstances, it would be contrary to the provisions of the ACA to make the declaration sought in paragraphs one and two of the application. 

56                  Mr Heaton argued that the failure to transfer status, or the lapse of status, did not mean that the Court should refuse to make declarations as sought in paragraphs three and four of the application.  It would not be futile to recognise the allocation of places by that relief because the allocation could be used in due course if an approval were later obtained by Jadwan. 

57                  The requirement that a Commonwealth benefit be payable is a condition for the operation of s 7(1)(a) of the CPA, and hence, for the transfer of status to an aged care provider under the ACA.  It is not, however, Mr Heaton contended, a requirement for the allocation of places under s 20 of the CPA.  There may be an allocation of places without a transfer of status under that section.  In the same way, if there was a transfer of status to aged care provider under the ACA, but the status lapsed for failure to provide care for six months and to apply for a waiver, the allocation of places did not also lapse.  Jadwan could, at any time, apply for approval as an aged care provider under s 8 of the ACA.  If approval were granted, the places allocated would become available for immediate use. 

58                  I do not accept this reasoning.  The concept which runs through both the NHA and the ACA is that beds or places are allocated to persons who satisfy certain qualifications.  There is no conceptual separation between the allocation of places and the person to whom the allocation is made.  Thus, the allocation which is effected by operation of s 20(1) of the CPA is an allocation “under s 14-1”.  Section 14-1 of the ACA provides for the allocation of places “but only if the person is an approved provider”.  Section 20, thus, only operates to effect the allocation if the proprietor has achieved the change of status to aged care provider under the ACA.  Similarly, it is implicit in the ACA that, if an approval lapses, the allocation of places referrable to the provider ceases to exist. 

59                  Even if, contrary to my view, the allotment of places to Jadwan was initially achieved, the lapse in provider status resulted in loss of the allocated places.    It is not open to the Court to make the declarations sought in paragraphs three and four of the application.  This is not because the relief sought would be futile, but because, in the circumstances, the allocation of places has ceased to exist.

conclusion

60                  The result of these reasons is that, despite the amendments to the application being allowed, Jadwan has not demonstrated an entitlement to the relief it has sought. 

61                  The respondents also contended that Jadwan was precluded from obtaining the relief which it sought by operation of the principle of estoppel.  In the light of my conclusions it is not necessary to address these arguments.

62                  Finally, it should be observed that counsel for Jadwan claimed support for a number of arguments by reference to the demands of justice and fairness.  Mr Heaton urged the view that Jadwan had been unfairly and unjustly deprived of its right to operate the nursing home.  He contended that the scheme for transition from the NHA to the ACA had the purpose of preserving the interests of a proprietor such as Jadwan. 

63                  In the end, the issues have been resolved without resort to general notions of justice and fairness but rather to the construction of the legislation read in context and having regard to the purpose of the legislation.  However, these reasons should also record that Ms Mortimer contested that Jadwan had been unfairly or unjustly treated.  She argued that Jadwan had failed to take the steps open to it which were necessary to protect its interests.  Rather, it had sought to rely on technical arguments to steer a course away from scrutiny of the merits of the Minister’s decision to revoke the approval.  That is to say, it sought to avoid answering the merits of the Minister’s decision that it had failed to provide care to the patients at an appropriate standard.  These considerations may have been relevant to the estoppel arguments, and possibly to the question of the grant of discretionary relief.  It is not necessary for me to come to a conclusion concerning the matters, but it is appropriate to indicate that there have been two sides forcefully put to the claims of justice and fairness. 

64                  The application will be dismissed with costs.

Associate:

Dated:              23 August 2002