FEDERAL COURT OF AUSTRALIA

Australian Nursing Federation v Alcheringa Hostel Incorporated

[2004] FCA 375

INDUSTRIAL LAW – freedom of association– whether respondent bound by an Award –respondent admitting to breaches of s 298K(1) of Workplace Relations Act 1996 (Cth) – determination of penalty to be imposed on respondent pursuant to s 198U(1) – whether contravention of s 298K(1) in respect of several employees constitutes a single offence – application of ‘totality principle’ – factors to be considered in determining quantum of penalty.

PRACTICE AND PROCEDURE – whether Court has jurisdiction pursuant to s 32 of Federal Court Act 1976 (Cth) to declare effect of State law – whether issue is an ‘associated matter’ – whether Court has discretion to exercise jurisdiction over an ‘associated matter’ – power to make declarations under s 21(1) of Federal Court Act – exercise of discretion to grant declaratory relief – circumstances militating against injunction to restrain future breaches.

STATUTORY INTERPRETATION - principles of statutory interpretation – purposive approach – limitations on purposive approach – history of residential aged care industry – practical considerations arising out of a particular interpretation – inclusive and exhaustive definitions – use of words “means” and “includes”.

DRUGS, POISONS & CONTROLLED SUBSTANCES – whether the respondent, which conducts a residential aged care facility, is a ‘health service’ within the meaning of the Drugs, Poisons and Controlled Substances Regulations 1995 (Vic) – interpretation of meaning of ‘health service’ pursuant to subreg 4(1).

Workplace Relations Act 1996 (Cth) ss 298K(1), 298L(1)(a), (h), (i), (j) and (l), s 298T and 298U

Federal Court of Australia Act 1976 (Cth) ss 21, 23 & 32

Drugs, Poisons and Controlled Substances Act 1981 (Vic) s 129

Aged Care Act 1997 (Cth)

Interpretation of Legislation Act 1984 (Vic) s 35(a)

Drugs, Poisons and Controlled Substances Regulations 1995 (Vic) regs 4(1), 45 and 47

The Australian Commonwealth Shipping Board v Federated Seamen’s union of Australasia (1925) 35 CLR 462

Nicol v Parr (1985) 11 IR 141

Community and Public Sector Union v Telstra Corp Ltd (2001) 108 IR 228

Australia v Geraldton Port Authority (No 2) (2000) 94 IR 404

Beckwith v The Queen (1976) 12 ALR 333

Burnie Port Corporation v Maritime Union of Australia (2000) 104 FCR 440

Finance Sector Union of Australia v Australia & New Zealand Banking Group Ltd [2002] FCA 1035

Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v DMG Industries Pty Ltd [2000] FCA 1492

Re Wakim; Ex parte McNally (1999) 198 CLR 511

Telstra Corporation Ltd v Hurstville City Council (2000) 105 FCR 322

Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559

Mills v Meeking (1990) 169 CLR 214

Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249

Metropolitan Gas Co v The Federated Gas Employees Industrial Union (1924) 35 CLR 449

Gill v Donald Humberstone & Co Ltd [1963] 3 All ER 180

Melbourne Pathology Pty Ltd v Minister for Human Services and Health (1996) 40 ALD 565

YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395

Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310

Favelle Mort Ltd v Murray (1976) 133 CLR 580

Cohns Industries v Deputy Federal Commission of Taxation (1979) 24 ALR 658

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Hepples v Commissioner of Taxation (1990) 22 FCR 1

Thomas v Ferguson Transformers Pty Ltd [1979] 1 NSWLR 216

Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1980) 145 CLR 625

Bond v Sulan (1990) 26 FCR 580

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564

AUSTRALIAN NURSING FEDERATION,  LORNA COOKE,  LEANNE EASTON,

NORMA EVERETT, MAXINE HARROP, LYNETTE HARVEY, CHRIS HIGGS, SALLY HIGGS, JENNIFER WOLFE  v  ALCHERINGA HOSTEL INCORPORATED ABN 74 874 082 136  with NURSES BOARD OF VICTORIA and SECRETARY OF THE DEPARTMENT OF HUMAN SERVICES, VICTORIA intervening.

V 251 of 2003

RYAN J

6 APRIL 2004

MELBOURNE

THE COURT DECLARES that for the purposes of subreg 4(1) of theDrugs, Poisons and Controlled Substances Regulations 1995 (Vic) the respondent Alcheringa Hostel Incorporated is a “health service” AND

THE COURT ORDERS THAT:

1.         A penalty of $3,400 be imposed on the respondent in respect of its breaches of s 298K(1) of the Workplace Relations Act 1996 (Cth).

2.         The penalty described in paragraph 1 of this Order be paid by the respondent to the first applicant.

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

REASONS FOR JUDGMENT

Introduction

1                     This matter arises out of an application by the Australian Nursing Federation (“ANF”), and eight other individual applicants, under s 298T of the Workplace Relations Act 1996 (Cth) (“WR Act”), ss 21, 23 and 32 of the Federal Court of Australia Act 1976 (Cth) and in the accrued jurisdiction of the Court. 

2                     The application is made in relation to the termination of employment of the individual applicants by the respondent, Alcheringa Hostel Incorporated (“Alcheringa”).  The applicants seek various orders, injunctions and declarations by way of relief for alleged breaches of Pt XA of the WR Act, which deals with freedom of association, as well as in relation to the administration of medication under the Drugs, Poisons and Controlled Substances Act 1981 (Vic) (“the Drugs Act”) and the Drugs, Poisons and Controlled Substances Regulations 1995 (Vic) (“Drugs Regulations”).

3                     Both the Nurses Board of Victoria (“Nurses Board”) and the Victorian Department of Human Services (“Department”) have been granted leave to intervene in this matter.

Background

4                     Alcheringa is a residential aged care facility that operates under the Aged Care Act 1997 (Cth) (“AC Act”).  Before detailing the background facts, it is useful to summarise briefly some of the recent changes affecting the residential aged care industry.

Residential aged care industry

5                     Before 1997, a distinction was drawn between two types of residential aged care facilities; “nursing homes” and “hostels”.  Nursing homes were regulated by the National Health Act 1954 (Cth) and traditionally cared for aged persons who required a high level of nursing care.  Hostels were regulated by the Aged or Disabled Persons Homes Act 1954 (Cth) and traditionally catered for persons for whom a generally lower level of nursing care was appropriate.  Hostels, therefore, were unable to care for residents who, from the outset, required a high level of nursing, or who came, with advancing years, to need a higher level of care than had been appropriate when they first went into residence.

6                     In 1997, provisions for the regulation and funding of nursing homes and hostels were consolidated in one Act, the AC Act.  The AC Act removed the distinction between hostels and nursing homes, providing instead for minimum standards to be observed by residential aged care facilities generally.  As a result of this change, it is now possible for a residential aged care facility to provide care to residents who variously require either a high or low level of care.  This has further been facilitated by the Commonwealth Government’s policy, adopted in October 1997, of ‘ageing in place’.  This policy enables a person to remain in a facility, to which he or she was initially admitted as a low care resident, after the person has come to need a higher level of care.  Before 1997, such a resident would have been forced to move from a hostel to a nursing home.

Alcheringa

7                     Alcheringa, is a residential aged care facility situated at Swan Hill in Victoria.  It is a non-profit organisation which obtains its operating income from a combination of a fixed percentage of its residents’ pensions and funding from the Commonwealth Government.  Each of it 74 residents occupies his or her own room. 

8                     Most of Alcheringa’s residents require what are called low levels of care, but some require high levels of care.  There is some uncertainty as to exactly how many residents are classified as ‘high care’.  In an affidavit sworn 17 April 2003, Ian Fisher, the Temporary General Manager of Alcheringa, deposed that “some 18 residents fall within the definition of high care under the Act”.  However, in its amended particulars of defence filed on 16 July 2003, Alcheringa pleaded that 15 residents were classified as ‘high care’.  On the other hand, Paul Gilbert, an industrial officer with the ANF, deposed in an affidavit of 15 April 2003 that “I am informed by staff and believe that at least 17 [residents] are classified as High Care”.  I do not regard that disparity in the evidence about numbers as significant because it is likely that the number of high care residents fluctuates from time to time.  I shall proceed on the basis that during the relevant periods between 20% and 25% of Alcheringa’s residents have required high levels of care.

9                     The high care residents need a high level of care and support in daily living.  This includes assistance with hygiene (i.e.  washing and toileting), dressing, eating, assistance with mobility and taking medication, and monitoring health (e.g. taking blood pressure and blood sugar levels and wound dressing).  Many high care residents suffer from dementia alone or in conjunction with conditions such as diabetes, high blood pressure, asthma and arthritis.  Conversely, the low care patients have a higher level of independence.  While they still require assistance with various aspects of daily living, it is not as intensive or frequent as that needed by high care patients. 

10                  As at 6 April 2003, Alcheringa employed, amongst others, seven nurses who were registered in Division 1 of the Register of Nurses kept by the Nurses Board pursuant to the Nurses Act 1993 (Vic).  These are referred to as ‘Division 1 nurses’.  Alcheringa also employed thirteen nurses registered under Division 2 of the Register (“Division 2 nurses”) and nineteen personal care workers (“PCWs”).  PCWs are not registered with the Nurses Board.  The eight individual applicants in this matter are all Division 2 nurses and all members of the ANF. 

Restructure of Alcheringa

11                  According to affidavits of Mr Fisher, Alcheringa has, in the last few years, experienced financial difficulties and has found it hard to maintain accreditation.  For the financial year ending on 30 June 2001, Alcheringa lost $306,790 and for the financial year ending on 30 June 2002, it recorded a loss of $822,225.  The unaudited loss to 1 July 2003 was approximately $840,000.  Furthermore, in August 2000, Alcheringa had received a report from the Aged Care Standards and Accreditation Agency Ltd, which was critical of Alcheringa’s practices in the handling and administration of medication for residents.

12                  In response to these difficulties, Alcheringa, in or about September 2002, engaged the services of a consultant, Viney Consultants, to undertake a review of its operations and to make recommendations to the Board of Management (“Board”).  The report by Viney Consultants (“Viney Report”) was provided to Alcheringa in November 2002.  The Viney Report included recommendations, amongst others, in relation to the nursing and personal care staffing structure.  One recommendation was that ‘Division 2 nurses’ be removed from the Alcheringa staff.

13                  It seems that, in February 2003, the Board adopted the recommendations of the Viney Report.  The Board determined to restructure the nursing staff so that four ‘Division 1 nurses’ would be made redundant and all of the ‘Division 2 nurses’ would be reclassified as PCWs.  Alcheringa claims that the decision to reclassify the ‘Division 2 nurses’ as PCWs was taken to allow those nurses to administer medication to residents.   This would, it was said on behalf of Alcheringa, increase efficiency and reduce costs.  Previously, Division 2 nurses had refused to administer medication to patients.  The reasons for that refusal and how a reclassification was seen as allowing the nurses in question to administer medication is discussed further below. 

14                  On 4 March 2003, Alcheringa wrote to its Division 2 nurses, informing them that “all Division 2 nurses will be reclassified as Personal Care Assistant position.” The letter attached a position description for a Personal Care Assistant, a Restructure Impact Statement (“RIS”), which outlined the proposed changes arising from the Viney Report and a copy of a new roster.  The letter informed the applicants that the new roster would be implemented on 31 March 2003.  It appears that the expressions ‘Personal Care Assistants’ and ‘PCWs’ were used interchangeably and continued to be so used throughout the events that happened.

Consultation with ANF

15                  On 5 March 2003, Alcheringa wrote to the ANF advising it of the proposed restructure of the nursing staff and enclosing a copy of the RIS.  On 6 March 2003, the ANF wrote to Alcheringa requesting that a working party be established to consider the changes proposed by the RIS.  Alcheringa agreed to a meeting with the ANF which took place on 18 March 2003.  However, the meeting failed to result in any agreement. 

16                  The ANF was very concerned about the proposal to reclassify the Division 2 nurses as PCWs, particularly that part which required the reclassified employees to administer medication to patients.  In the first place, the proposal was seen to contravene the policy of the Nurses Board that Division 2 nurses lack the training to administer medication safely and should not do so.  The view was apparently taken by Alcheringa that if a person, like a PCW, were not registered as a Division 2 nurse, he or she would not fall under the purview of the Nurses Board and could disregard any policy or directive of the Nurses Board against administering medication.  Secondly, in the ANF’s view, the Drugs Regulations require that those managing a ‘health service’, as defined, should take all reasonable steps to ensure that prescription medicines are only administered by, relevantly, Division 1 nurses.  The ANF contended that Alcheringa is a ‘health service’ within the meaning of the Drugs Regulations and, as such, should not direct anyone other than a Division 1 nurse to administer medications.

17                  On 20 March 2003, the ANF wrote to Alcheringa requesting it to delay the introduction of the restructure.  On the same day, Alcheringa wrote to its ‘Division 2 nurses’ advising them that they were to be reclassified as PCWs from 31 March 2003.  So far as is relevant the letter recited;

‘As advised in our letter of 4th March 2003 we have reclassified your position effective from 31st March 2003.  To ensure continuity of care and adequate staff levels from 31st March, 2003, we seek your agreement that you are willing to accept the Personal Care Worker position offered in accordance with the role and responsibilities of the job description of a Personal Care Worker including the administration of medications.

Your written response to this request is sought by 27th March, 2003 so that rosters may be finalised for 31st March, 2003. 

Should you choose not to accept this position, your position of Division 2 Nurse will be redundant, and accordingly your employment will cease as of the 30th March 2003 and you will be paid a redundancy package.’

18                  On 21 March 2003, ANF received a letter from Claire Dewan & Associates, who were employee relations consultants retained by Alcheringa.  The letter advised that the proposed changes arising out of the restructure would be implemented as proposed on 31 March 2003.

Proceedings in the Australian Industrial Relations Commission

19                  On 24 March 2003, the ANF instituted proceedings in the Australian Industrial Relations Commission (“Commission”) under s 99 of the WR Act.  The matter was heard by the Commission on 25 and 26 March 2003.  During the course of submissions, the ANF expressed the concerns about ‘Division 2 nurses’ administering medication which are discussed at [16] of these reasons.  On 26 March 2003, Alcheringa agreed to defer for one week the implementation of its restructure.  The hearing before the Commission was adjourned until 1 April 2003. 

20                  On 27 March 2003, Alcheringa and the ANF met again to discuss the dispute but no resolution was reached.  Alcheringa advised the ANF that the proposed restructure of the nursing staff would proceed.

21                  On 1 April 2003, the hearing in the Commission resumed and the ANF raised a new concern in relation to Division 2 nurses administering medication.  It submitted that any direction to a Division 2 nurse to administer medications would be in breach of clause 57 of the Nurses (Victorian Health Services) Award 1992 (“Nurses Award”).  Clause 57 of the Nurses Award contains these relevant sub-clauses;

‘57.1    An employer may direct an employee to carry out such duties as are within the limits of the employee’s skill, competence and training consistent with the classification structure of this part, provided that such duties are not designed to promote deskilling.

… … …

57.3     No employee shall be required to work beyond his/her relevant career stream except where practical circumstances otherwise require.

57.4     Any direction issued by the employer pursuant to the above shall be consistent with the employer’s responsibilities to provide a safe and healthy working environment.’

22                  It appears that this was the first occasion on which it was contended that requiring Division 2 nurses to administer medication would be a breach of the Nurses Award.  This is supported by Mr Fisher’s evidence at the hearing, where he deposed that he had not considered clause 57 of the Nurses Award until the Commission hearing. 

23                  At this point it is appropriate to digress briefly to consider whether Alcheringa was bound by the Nurses Award at all.  The applicants submitted that the employees at Alcheringa were entitled to the benefits of the Nurses Award by virtue of its being a respondent to the Nurses (Victorian Health Services) (Roping-In No. 2) Award 2000 (“Roping-in-Award”).  Clause 8 of the Roping-in-Award provides that “The salaries, allowances and other terms and conditions of employment of employees to whose employment this award applies, shall be those provided for in the parent award as defined in clause 7 of this award.”  Clause 7 provides that “The term parent award in this award shall mean the Nurses (Victorian Health Services) Award 1992.”  For Alcheringa, it was submitted that it is not a respondent to the Roping-in-Award because Schedule A of the Roping-in-Award, which lists the respondents to the Roping-in-Award, refers to ‘Alcheringa Hostel for the Aged’ located at 44 Rutherford Street, Swan Hill, 3585.  On the other hand, the respondent to the present application is “Alcheringa Hostel Incorporated”.

24                  It is well established that, in determining party respondency to an award, it is necessary to examine who was the intended party to the award, and not concentrate on whether the intended party has been named accurately as a respondent to that award;  (see The Australian Commonwealth Shipping Board v Federated Seamen’s Union of Australasia (1925) 35 CLR 462, at 493, and Nicol v Parr (1985) 11 IR 141 at 142).  I am satisfied in this case that it was intended that the employing entity, Alcheringa Hostel Incorporated, should be a respondent to the Roping-in-Award, rather than Alcheringa Hostel for the Aged.  The fact that the name in Schedule A was a loose and inaccurate designation of the respondent does not detract from the intention which I have found and which is evidenced by the distinctive name ‘Alcheringa’ and the fact that the address of the employer named in Schedule A is that of the respondent in the present proceedings. 

Termination of employment

25                  On 3 April 2003, each of the applicants sent to Alcheringa a standard form letter which embodied an agreement to reclassification as a PCW but only under “extreme duress”.  The letter recited;

‘I have been advised that I must accept reclassification at Alcheringa as a Personal Care Worker.  Further that, accepting reclassification as a PCW, I am required to administer medications to residents of Alcheringa.  If I choose not to accept the reclassification to PCW and the duties, I will be made redundant. 

I advise that I do not consider my position redundant as the work I perform will continue to be performed.  As you, in your Acting CEO capacity and as CEO of Swan Hill Hospital, are the only employer of nurses in the Swan Hill district I cannot simply look for work elsewhere. 

It is with reluctance and under extreme duress that I accept this reclassification.  The consequences of your direction may leave me exposed to both professional and legal consequences.  The ANF will act on my behalf to pursue these issues.  I also accept the reclassification without prejudice to my rights pursuant to the Nurses (Victorian Health Services) Award 2000 or the Nurses (Victorian Health Services) (Roping-In No 2) Award 2000 and the ANF & HSUA Alcheringa Hostel Enterprise Agreement 2002-2005.’

26                  On 7 April 2003, each of the applicants was provided with a memorandum from Alcheringa outlining her role in administering medications.  The memorandum stipulated that “Effective Monday 7th April 2003, the administration of medication, including instillation of eye drops, application of prescribed ointments, plus the giving of nurse initiated medications and PRN medications is to be done only by the Registered Nurse Division One and the Personal Care Assistants.”

27                  On 8 April 2003, the ANF wrote to Alcheringa in relation to the memorandum of the previous day.  Amongst other things, the letter reiterated the concerns of the ANF and its members about the requirement for the applicants to administer medication.  On the same day, Claire Dewan & Associates issued a document entitled ‘Bulletin No.  106’ (“Bulletin”) to its clients, presumably including Alcheringa.  The Bulletin, while not specifically mentioning Alcheringa, discussed the administering of medications by Division 2 nurses, an issue said to have arisen “as a result of a situation which faced one of our clients”.  The Bulletin included these relevant passages;

‘The importance of this case lies in the position taken by the ANF on two issues.  The first issue is the contention that a hostel is a "nursing service" and should be covered by the Drugs, Poisons and Controlled Substances Act, meaning that only a Division 1, 3 or 4 Nurse would be able to administer scheduled drugs, although this was not subsequently pressed in the case. 

The major issue was the contention by the ANF that an Employer was not able to employ a Division 2 Nurse as a PCW, and to do so would be a breach of the Nurses (Victorian Health Services) Award (The Award).  I will not detail the basis of the claim but that is what is claimed.  Therefore, their position is that a Division 2 Nurse cannot administer medication in hostels because the NBV [Nurses Board of Victoria] says so, and an employer cannot employ Division 2 Nurses as PCW's because it's a breach of the Award.

… … …

On the basis of the stance adopted by the ANF, and without having the matter tested in a Federal Court, it would seem that an organisation is not able to employ a Division 2 Nurse in any capacity where they are required to administer medication without being at risk of being taken to Federal Court for a breach of the Award.  This would be an extremely expensive exercise, no matter what the result.  If an employer was in fact found to be in breach of the award, additional penalties would apply. 

It has always been our view that an employer is able to employ Registered Nurses as PCW's or other classifications, without being in breach of the Award.  However, can any organisation afford to be the guinea pig?’

28                  On 9 April 2003, Alcheringa wrote to the ANF, responding to the ANF’s letter of the previous day.  In its letter, Alcheringa confirmed that it did not accept the ANF’s position in relation to the administering of medication and continued;

‘Again we state we do not accept the A.N.F's  position in relation to your members participating in medication administration for Alcheringa Hostel residents. 

At this stage we are considering whether we can accept the letters from Division 2 staff and what alternative action is available to the Hostel.  In the meantime we have instructed Division 2 Nurses not to participate in medication administration as we do not wish to expose Alcheringa Hostel to your threat to take the organisation to the Federal Court for a breach of the Nurses Award.’

29                  On 11 April 2003, a meeting was held at Alcheringa between the Division 2 nurses and Mr Fisher.  For various reasons, not all of the Division 2 nurses attended the meeting at which Mr Fisher informed the Division 2 nurses that their employment was terminated effective immediately.  On the same day, Alcheringa sent a letter to its Division 2 nurses which contained these relevant passages;

‘The ANF have made it clear that they believe that Alcheringa will be in breach of the Nurses (Victorian Health Services) Award 2000 if we employ registered Division 2 Nurses in the role of PCW and require them to administer medication.  The ANF have made it clear that if we in fact proceed to do so we are under threat of being taken to the Federal Court charged with being in breach of the Award.  This could lead to the imposition of one or more penalties of up to $10,000 if we were found to be in breach of the Award.

Alcheringa’s primary duty of care is to the residents, and we must be able to guarantee that they will receive all the medications they require.  We are not able to sustain Personal Care staff who cannot provide that service.  On the other hand, we have a duty to protect Alcheringa’s interests in relation to its legal obligations.

… … …

It is clear that the ANF do not accept the Viney Report recommendations, and the letter received from all Division 2 Nurses does not in our view, constitute acceptance of our employment offer.  The wording of the letters in fact indicate that should the staff be employed they would be working under duress which does not indicate that the working relationship would be successful.  Further, there appears to be an implied threat that the matter will continue to be pursued by the ANF on those people’s behalf.  Again, this reflects the fact that ANF have indicated that they may choose to take the matter to Federal Court.

Under all these circumstances Alcheringa withdraws any and all offers of employment made to you specifically as a Personal Care Worker while you hold a current registration with the Nurses Board of Victoria.  Your position as a Division 2 Nurse will become redundant as of 11^th April 2003, and your employment terminated as a consequence…’

Legal proceedings

30                  On 15 April 2003, the ANF and the individual applicants filed an application in this Court seeking orders under s 298U of the WR Act in relation to a breach of s 298K.  On 17 April 2003, North J made an interlocutory order reinstating the individual applicants in their employment and restraining Alcheringa from directing them to administer medications to any resident of Alcheringa.  Since the reinstatement of the applicants, medications have been administered by the PCWs, as well as by the Division 1 nurses.

31                  The applicants now seek a number of orders from this Court which fall into two main categories:  those related to a breach of the freedom of association provisions in Pt XA of the WR Act and those concerned with the effect of the Drugs Act and Drugs Regulations on the administering of medication.

Freedom of association

32                  Section 298K(1) of the WR Act provides that;

‘An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:

(a)       dismiss an employee;

(b)       injure an employee in his or her employment;

(c)        alter the position of an employee to the employee’s prejudice;

(d)       refuse to employ another person;

(e)        discriminate against another person in the terms or conditions on which the employer offers to employ the other person’

Section 298L(1) provides, so far as is relevant for present purposes;

‘Conduct referred to in subsection 298K(1) or (2) is for a prohibited reason if it is carried out because the employee, independent contractor or other person concerned:

(a)       is, has been, proposes to become or has at any time proposed to become an officer, delegate or member of an industrial association; or

… … …

(h)       is entitled to the benefit of an industrial instrument or an order of an industrial body; or

(i)        has made or proposes to make any inquiry or complaint to a person or body having the capacity under an industrial law to seek:

(i)         compliance with that law;

(ii)        the observance of a person’s rights under an industrial instrument; or

(j)        has participated in, proposes to participate in or has at any time proposed to participate in a proceeding under an industrial law; or

… … …

(l)        in the case of an employee, or an independent contractor, who is a member of an industrial association that is seeking better industrial conditions is dissatisfied with his or her conditions; or’

            The relevant provisions of s 298U are;

‘In respect of conduct in contravention of this Part, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders:

(a)       an order imposing on a person or industrial association whose conduct contravened or is contravening the provision in question a penalty of not more than:

(i)         in the case of a body corporate - $10,000; or

… … …

(e)        injunctions (including interim injunctions), and any other orders, that the Court thinks necessary to stop the conduct or remedy its effects; or

(f)        any other consequential orders.’ 

33                  The applicants allege that Alcheringa contravened s 298K(1) by terminating the employment of eight Division 2 nurses for various reasons prohibited respectively by s 298L(1), specifically, paragraphs 298L(1)(a), (h), (i), (j) and (l).  The applicants seek the following remedies;

(a)        a declaration that the termination of the employment of the Division 2 nurses contravened s 298K(1) because it amounted to conduct prohibited by one or more of paragraphs 298L(1)(a), (h), (i), (j) and (l);

(b)        an order reinstating the applicants;

(c)        an injunction restraining Alcheringa from future breaches of Pt XA of the WR Act;  and

(d)        the imposition of a penalty on Alcheringa for the contraventions of Pt XA of the WR Act, and an order that the penalty be paid to the ANF.

34                  Alcheringa, in its defence, admitted conduct in breach of s 298K(1) of the WR Act for the prohibited reasons contained in s 298L(1)(a), (h), (i), (j) and (l) in relation to each of the eight Division 2 nurses.  Further, it was intimated on behalf of Alcheringa during the hearing that it would not oppose a permanent order for reinstatement of the individual applicants or an order for payment to the ANF of any penalty which the Court might see fit to impose.  Therefore, the only issues remaining to be resolved under this head are the amount of any penalty to be imposed on Alcheringa and whether an injunction should be granted restraining future conduct by Alcheringa in breach of Pt XA of the WR Act.

Quantum of the penalty

35                  In determining the penalty to be imposed on Alcheringa pursuant to s 298U(a), it is first necessary to consider whether the various offences admitted by Alcheringa should be treated as a single contravention of the freedom of association provisions, or rather as multiple contraventions.  This issue has been considered recently by this Court in Community and Public Sector Union v Telstra Corp Ltd (2001) 108 IR 228, where Finkelstein J observed, at 228-229;

‘Now it is necessary to decide what penalty, if any, should be imposed.  In this regard it is necessary to deal with some preliminary matters.  The first issue concerns the number of contraventions that have occurred.  A single act, the sending of the email, caused the position of Telstra’s employees to be altered to their prejudice.  However, a number of employees were relevantly prejudiced.  Telstra says that there is but one contravention, and the unions submit to the contrary.

The position is covered by authority.  The principal case is Maritime Union ofAustralia v Geraldton Port Authority (No 2) (2000) 94 IR 404.  There it was argued that where a single act has an impact on more than one employee in a manner proscribed by s298K, the single act does not result in numerous contraventions of s298K.  R D Nicholson J rejected this argument.  He said that an examination of the relevant provision showed that the proscribed conduct is not addressed to employees generally, but to the particular position of a particular employee.  Accordingly R D Nicholson J held there was a contravention in respect of each employee who was treated in a proscribed manner.  See also Automotive, Food, Engineering, Printing and Kindred Industries Union v DMG Industries Pty Ltd (2000) 102 IR 175, where Marshall J arrived at the same conclusion.’

36                  In Geraldton Port Authority (cited above), R D Nicholson J, in considering s 298U(a), held, at 413, that ‘ultimately the Court is required to fix a penalty for each particular offence.’ While Telstra Corp and Geraldton Port Authority referred to s 298K(1)(c) of the WR Act, in my view, the principles enunciated in these decisions apply equally to s 298K(1)(a).  In both sections, the proscribed conduct is not described as directed to employees generally, but is cast in terms that it will impinge on ‘an employee’. 

37                  In applying the principles explained in Telstra and Geraldton Port Authority, it is also important to recognise that the conduct in those cases, although directed at numerous employees, involved only a single contravention of s 298K(1) in respect of each employee.  The facts in this case are different.  As well as involving several employees, there have also been multiple contraventions of s 298K(1) in respect of each employee.  As discussed above, Alcheringa has admitted conduct in contravention of s 298K(1) for five separate prohibited reasons in relation to each employee.  The critical question is whether the contravention in relation to each employee for each of the five reasons is to be regarded as constituting separate offences or, rather, a single offence for each employee.  In my view, the language of ss 298K(1) and 298L(1) favours a construction whereby a single act, if committed for one of the prohibited reasons enumerated in s 298L or a combination of more than one of those reasons, constitutes a single contravention of s 298K(1). 

38                  I favour this construction because s 298K(1) is the sub-section which creates the offence which is constituted by one or other of the five discrete actual or threatened items of conduct identified in par (a), (b), (c), (d) and (e) of that sub-section.  None of those items of conduct specified in s 298K(1), as I perceive it, is capable of being engaged in at one and the same time in respect of the same employee or other person.  Sub-section 298K(1) recognises that each identified item of conduct may be engaged in for a complex of reasons and makes it a condition of the commission of the offence that the complex of reasons “include a prohibited reason.”  Had it been intended that two or more separate contraventions would occur if it were identified that a single item of proscribed conduct had been engaged in for two or more prohibited reasons, it would have been relatively easy for the framers of the legislation to have said so.  Sub-section 298K(1) takes its place as part of a regime of penal provisions and any ambiguity of the kind discussed above should, at least as a “last resort”, be resolved in favour of a defendant;  see Beckwith v The Queen (1976) 12 ALR 333 per Gibbs J at 339.  Moreover, it is to be borne in mind that s 298V creates a rebuttable presumption, if it is alleged that conduct was, or is being, carried out for a particular prohibited reason, that it was actuated by that reason.  I am reluctant, in the absence of intractable language pointing to a different construction, to impute to the legislature an intention that a defendant should be liable to a separate penalty for each failure to negative one of several alleged reasons for a single item of conduct. 

39                  The conclusion which I have just reached makes it unnecessary to resolve an issue related to Ms Sally Higgs, the eighth respondent.  The evidence establishes that, at the time of the contraventions by Alcheringa, Ms Higgs was not a registered nurse.  Mr Turner, of Counsel for the respondent, submitted that, as Ms Higgs was not a registered nurse at the time of the contraventions, she was not covered by the Roping-in-Award and therefore not entitled to the benefits of the Nurses Award (see cl 8 of the Roping-in Award set out at [23] of these reasons).  As a result, Mr Turner submitted, Ms Higgs could not claim that Alcheringa had dismissed her for two of the prohibited reasons, specifically ss 298L(1)(h) and (i).

40                  Had the prohibited reason in respect of Ms Higgs been confined to that specified in s 298L(1)(h), I would have accepted that the analysis urged by Mr Turner exculpated Alcheringa of a contravention of s 298K(1) in respect of her.  Ms Higgs was not, at the time of her dismissal, entitled to the benefits of the Roping-in-Award nor the Nurses Award, which were the applicable industrial instruments.  Ms Higgs could not, therefore, have been dismissed by reason of her entitlement to the benefit of an industrial instrument (see Burnie Port Corporation v Maritime Union of Australia (2000) 104 FCR 440, at 445). 

41                  However, with one exception, it is not disputed that Alcheringa has failed to discharge its onus of proving that its conduct in respect of Ms Higgs was not at least partly actuated by the other alleged reasons prohibited under s 298L(1).  The exception was in relation to the prohibited reason described in s 298L(1)(i) as to which Mr Turner submitted that, as Ms Higgs was not entitled to the benefit of the Roping-in-Award, she could not have made a complaint seeking compliance with that award.  I am not persuaded by this submission.  Unlike s 298L(1)(h), s 298L(1)(i) does not require, in its terms, that the employee the subject of the proscribed conduct be entitled to the benefit of an industrial instrument.  Rather, it requires, for present purposes, that the employee have made an enquiry or complaint to a body having a capacity under an industrial law to seek either compliance with that law or the observance of a person’s rights under an industrial instrument.  It may be that an employee, having made such an enquiry or a complaint to a union, is subsequently informed that the employer is not required to comply with a particular law or the employee has no rights under an industrial instrument.  Nevertheless, the employee will still have made that complaint or enquiry and thus would come within the scope of s 298L(1)(i).  Indeed, the presence in s 298L(1)(i) of the phrase “the observance of a person’s rights” (emphasis added) suggests that the enquiry or complaint made by the employee need not necessarily be about that employee’s own rights under an industrial instrument.  As already indicated, I am not required in the circumstances of the present case to decide whether s 298L(1)(i) is to be read this broadly.  However, in my view, it is not necessary for Ms Higgs to establish an existing entitlement to the benefit of an industrial instrument for her dismissal to be presumed to have occurred because of the prohibited reason set out in s 298L(1)(i). 

42                  As already indicated, I hold that Alcheringa’s admitted breaches of s 298K(1) involved a single contravention of s 298K(1) in respect of each of the eight individual applications.  As each contravention attracts a maximum penalty of $10,000 (see s 298U(a)), the total of the available maximum penalties which could be imposed on Alcheringa is $80,000. 

43                  It next becomes necessary to consider whether I should apply what is referred to as the ‘totality principle’ in determining the quantum of the penalty.  The totality principle was described by Finkelstein J in Telstra (supra) at 230, as follows;

‘The next matter, which logically follows from the last, but is not properly described as a preliminary matter, is the totality principle.  The principle is that in imposing a penalty for a number of offences it is necessary to ensure that the penalties in aggregate are just and appropriate.  One way the totality principle can be given effect is to determine what is an appropriate total penalty and then divide that penalty by the number of offences to produce a penalty for each separate offence…thus it will be necessary to resolve upon the appropriate total penalty, dividing that penalty by the number of individual contraventions and record that amount as the penalty for each contravention, whether or not the sum produced might be regarded as an inappropriate individual penalty.’

This principle was applied by Wilcox J in Finance Sector Union of Australia v Australia & New Zealand Banking Group Ltd [2002] FCA 1035, at [2]-[3]. 

44                  Although the conduct amounting to breaches of the freedom of association provisions by Alcheringa related to eight separate employees and occurred for various prohibited reasons, I regard what I have held to be the eight contraventions as having occurred as part of a single course of conduct attracting the application of the totality principle.  I must therefore determine what is an appropriate total penalty.  A helpful starting point in this exercise is provided by these observations of Branson J in Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231, at 232 [7]-[8];

‘… the [Workplace Relations] Act gives no explicit guidance as to the circumstances in which an order imposing a penalty under s 298U of the Act will be appropriate or as to the circumstances in which a penalty of or near the maximum, or alternatively of a lesser amount, may be called for.  The Court is simply directed to consider what is appropriate in all the circumstances of the case. 

The following matters, which are not intended to comprise an exhaustive list, seem to me to be considerations to which the Court may appropriately have regard in determining whether particular conduct calls for the imposition of a penalty, and assuming that it does, the amount of the penalty:

(a)               The circumstances in which the relevant conduct took place (including whether the conduct was undertaken in deliberate defiance or disregard of the Act). 

(b)               Whether the respondent has previously been found to have engaged in conduct in contravention of Pt XA of the Act. 

(c)               Where more than one contravention of Pt XA as above is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct. 

(d)               The consequences of the conduct found to be in contravention of Pt XA as above of the Act. 

(e)               The need, in the circumstances, for the protection of industrial freedom of association. 

(f)                The need, in the circumstances, for deterrence.’

These considerations were applied by Marshall J in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v DMG Industries Pty Ltd [2000] FCA 1492. 

45                  In weighing the submissions on behalf of the applicant and the respondent on the amount of any penalty, I have had regard to the following matters;

(a)               The consequences of Alcheringa’s conduct were serious and affected the Division 2 nurses in a significant way.  Each of the Division 2 nurses was dismissed from her employment, which would have been distressing both financially and personally, particularly in circumstances where the only other employer of nurses in the Swan Hill District is the Swan Hill Hospital, of which Mr Fisher is also the chief executive officer.  However, I am also mindful that the consequences to the Division 2 nurses were mitigated somewhat by the provision of termination benefits and the reinstatement of the nurses within one week of the termination (whereupon the termination benefits were repaid) without loss of pay or accrued entitlements. 

(b)               This is the first contravention by Alcheringa of Pt XA of the WR Act. 

(c)               I am satisfied that Mr Fisher, who at all times acted on behalf of Alcheringa, did not decide on the relevant conduct in deliberate defiance or disregard of the WR Act.  I accept his evidence that the decision to reclassify, and ultimately dismiss, the Division 2 nurses was dictated by the need to reduce Alcheringa’s operating costs.  I have not overlooked the fact that a significant reason for the dismissal was the intimation by the ANF that it would initiate proceedings in this Court for breach of an award.  This is supported by the letter sent to the ANF by Alcheringa on 9 April 2004 (see [28] of these reasons) and the letter of termination sent to the Division 2 nurses on 11 April 2003 (see [29] of these reasons).  Nevertheless, I accept that Mr Fisher did not believe or understand that the conduct on which he had determined would be in breach of the freedom of association provisions in the WR Act.  Of course, absence of such a belief or understanding is no defence but it does bear on whether Alcheringa’s conduct was in deliberate disregard or defiance of the Act.  That consideration, however, loses some force when it is remembered that the decision to dismiss the Division 2 nurses was a calculated one, taken pursuant to advice received from employee relations specialists on what they regarded as an appropriate industrial strategy.  

(d)               Alcheringa admitted in its pleadings that it had contravened the freedom of association provisions.  I do not regard that admission as bearing, as Mr Turner submitted, on the likelihood of Alcheringa’s re-offending.  However, I consider that it should be allowed some weight on the quantum of the penalty as it significantly reduced the time which the Court had to devote to the application with a consequent saving of costs incurred by the applicants.

(e)               The contraventions of the freedom of association provisions were very serious.  They affected eight employees and involved dismissal, which is certainly at the graver end of the spectrum of conduct proscribed by s 298K(1).  Accordingly, the need for the penalty in this case to act as a deterrent is strong.  The importance of deterrence as a factor in fixing a penalty for a breach of the freedom of association provisions was discussed by Finkelstein J in Telstra (supra), where his Honour said, at [9];

‘On the other hand, the basic objective of punishment should be to enhance social welfare by minimising the net social cost of wrongdoing.  This is achieved by deterrence.  Here I speak not only of specific deterrence but also general deterrence.  In a case such as the present, that may be of some importance.  The reason is that Telstra submits that there is no need to impose any penalty because it will not offend again.  That may be true.  But even if there be no need for specific deterrence, there will be occasions where general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct: R v Thompson (1975) 11 SASR 217.  It is also important to remember that proscribed conduct is often engaged in because it is profitable, or will enhance the profitability of the company.  To deter conduct engaged in with that purpose, any penalty imposed must have the potential to render the conduct unprofitable.’

In this case, I attach little or no significant to the deterrent effect of any penalty on Alcheringa itself.  However, the need generally to deter and warn other employees against engaging in similar conduct remains important and does, in my view, bear on the amount at which the penalty should be fixed.

(f)                 Alcheringa is a community-based, non-profit organisation that has been in difficult financial straits for the last few years.  It did not seek to reduce labour costs so as to increase the wealth of itself or any shareholders.  Rather, it acted on a perception, real or otherwise, that it was essential for its financial survival for medication to be administered by persons other than Division 1 nurses.  I have also borne in mind that a heavy financial penalty will divert already scarce resources from Alcheringa’s residents and the community it serves.

46                  After weighing all these matters, in conjunction with the totality principle, I consider that the total penalty to be imposed should be $3,200 or $400 for each of the eight contraventions which I have held have been established.  I shall order that each penalty be paid to the ANF. 

Administration of medication

47                  The applicants seek a declaration in the accrued jurisdiction of the Court that Alcheringa is a ‘health service’ within the meaning of the Drugs Regulations and an injunction restraining Alcheringa from directing the applicants to administer certain medications.

Jurisdiction

48                  The respondent objected to the Court’s determining whether Alcheringa is a ‘health service’ within the meaning of the Drugs Regulations on the ground that those regulations are part of State law, the interpretation of which is not within the jurisdiction of this Court. 

49                  In addition to its original and appellate jurisdiction, this Court’s jurisdiction embraces, to the extent permitted by the Constitution, “matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked”:  s 32 of the Federal Court of Australia Act 1976.  The accrued jurisdiction of the Federal Court has been discussed by Gummow and Hayne JJ in Re Wakim; Ex parte McNally (1999) 198 CLR 511, where their Honours said, at 583-4;

‘It must now be regarded as established that the jurisdiction of a federal court having jurisdiction in a matter arising under a law made by the parliament is not “restricted to the determination of the federal claim or cause of action in the proceeding, but extend[s] beyond that to the litigious or justiciable controversy between parties of which the federal claim or cause of action forms part.  …’

Their Honours continued, at 585 (footnotes omitted);

‘The central task is to identify the justiciable controversy.  In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.

In Fencott it was said that "in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter." The references to "impression" and "practical judgment" cannot be understood, however, as stating a test that is to be applied.  Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete.  Necessarily, then, the question will have to be decided on limited information.  But the question is not at large.  What is a single controversy "depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships".  There is but a single matter if different claims arise out of "common transactions and facts" or "a common substratum of facts", notwithstanding that the facts upon which the claims depend "do not wholly coincide".  So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination.  Conversely, claims which are "completely disparate", "completely separate and distinct" or "distinct and unrelated" are not part of the same matter.’

50                  Mr Niall of Counsel for the applicants submitted that, in this matter, the substratum of facts which gives rise to the two aspects of the proceedings is common, being the facts surrounding the implementation of the restructure and the resistance by the Division 2 nurses to their reclassification as PCWs.  Accordingly, it was submitted, the contraventions of the freedom of associated provisions in the WR Act and the applications for declarations and injunctions pursuant to the Drugs Act and Drugs Regulations arose out of one justiciable controversy.  I agree with that submission.  Alcheringa admitted that it had dismissed the Division 2 nurses in contravention of s 298K(1) for a number of prohibited reasons set out in s 298L(1).  Collectively, those reasons were related to, or arose out of, the resistance by the Division 2 nurses and the ANF to any direction given to them by Alcheringa to administer medications.  The reason for this resistance was attributable to a number of factors, one of which was the belief by the ANF that such a direction was in contravention of reg 45 of the Drugs Regulations.  Alcheringa, in turn, argued that no such contravention could occur because it was not bound by reg 45.  The contravention of s 298K(1) is therefore inextricably bound up with the resolution of whether reg 45 applies to Alcheringa and was, in the words of Gummow and Hayne JJ in Wakim, a single “justiciable” controversy arising out of a “common substratum of facts”. 

51                  Mr Turner submitted that even if I were to hold that the issues arising under the Drugs Resolutions constituted an “associated matter” for the purposes of s 32, I should exercise my discretion not to determine that issue.  Support for the existence of such a discretion was said to be found in Telstra Corporation Ltd v Hurstville City Council (2000) 105 FCR 322, where Wilcox J observed, at 378 [223]:

‘This Court undoubtedly has a discretion as to whether or not it should determine an issue arising under State law that comes to the Court as part of its accrued jurisdiction: see Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 457-458 (Barwick CJ) and Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 at 294-295 (Mason, Brennan and Deane JJ).  In Philip Morris Barwick CJ commented:

“ ...  there would need to be very good reasons why a court which could resolve the whole matter should refuse or fail to do so.  Generally speaking, one would expect that a court, once its federal jurisdiction is excited or attracted, would proceed to resolve the whole matter ...”

That general approach was endorsed in Stack.’

52                  Mr Niall submitted that his Honour’s focus on a discretion was inconsistent with the observations of Gummow and Hayne JJ in Re Wakim where, after referring to Philip Morris and Stack, their Honours observed, at 588 [149];

‘…There may be some difficulty in analysing the question as one of "discretion".  It is not clear what principles or criteria would inform the exercise of a discretion of this kind.  It may be that the better view is that the references to "discretion" are not intended to convey more than that difficult questions of fact and degree will arise in such issues - questions about which reasonable minds may well differ.  It is, however, not necessary to decide what is meant by the references to discretion in this context.’

Those observations were referred to by Gleeson CJ, Gaudron and Gummow JJ in Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559, where it was pointed out, at 585 [52];

‘Ordinarily, questions of abuse of process, forum non conveniens and the like aside, jurisdiction conferred upon a court is to be exercised’. (footnotes omitted)

53                  It is unnecessary, in the present case, to reach a concluded view on whether or not the exercise of jurisdiction in relation to an “associated matter” pursuant to s 32 of the Federal Court Act is discretionary because, if it is, I cannot discern any cogent reason for not resolving the issue between the parties as to the application of the Drugs Regulations.  Whether Alcheringa is bound by reg 45 of the Drugs Regulations is of fundamental importance to the manner in which Alcheringa is required to care for its residents and to the scope of the duties that Division 2 nurses employed by Alcheringa may be called upon to perform. 

54                  For the reasons which I have endeavoured to explain, the issues in relation to the Drugs Regulations constitute an “associated matter” for the purpose of s 32 of the Federal Court Act and, accordingly,this Court has jurisdiction to determine them. 

Does reg 45 of the Drugs Regulations apply to Alcheringa?

55                  Regulation 45 of the Drugs Regulations provides that;

‘(1)      A person who is responsible for the management of a health service must take all reasonable steps to ensure that the administration of a drug of dependence, a Schedule 4 poison, Schedule 8 poison or Schedule 9 poison by or in that health service is carried out only by a medical practitioner, pharmacist, dentist or nurse in accordance with these Regulations.

(2)       Sub-regulation (1) does not apply to a person who provides a health service and is the holder of a permit or warrant issued under the Act or these Regulations.”

56                  Subregulation 4(1) contains a number of definitions, which, relevantly to these proceedings, include;

‘“health service” means ambulance, dental, medical, nursing (including nursing homes), pharmaceutical or surgical services;

………

“nurse” means a person registered in Division 1, Division 3 or Division 4 of the register of nurses established under the Nurses Act 1993.’

57                  Whether reg 45 applies to Alcheringa turns solely on whether Alcheringa is a “health service” as defined in subreg 4(1).  As will be seen, there were conflicting contentions at the hearing and in written submissions about the concept of a “health service”.  In the apparent absence of authority on the interpretation of that expression, it is necessary to resort to general principles of statutory construction. 

58                  Section 35(a) of the Interpretation of Legislation Act 1984 (Vic) provides that, in the interpretation of a provision of an Act or subordinate instrument, “a construction that would promote the purpose or object underlining the Act or subordinate instrument (whether or not that purpose or object is expressly stated in the Act or subordinate instrument) shall be preferred to a construction that would not promote that purpose or object.”  The effect of the purposive approach prescribed by s 35(a) was discussed by Dawson J in Mills v Meeking (1990) 169 CLR 214, where his Honour said, at 235;

‘The approach required by s 35 needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction.  Reference to the purposes may reveal that the draftsman has inadvertently overlooked something which he would have dealt with had his attention been drawn to it and if it is possible as a matter of construction to repair the defect, then this must be done.’

59                  Resort to the purposive approach has been constrained to some extent by later observations of the High Court in Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249, where Dawson, Toohey and Gaudron JJ pointed out, at 262;

‘The choice directed by s 35(a) of the Interpretation of Legislation Act is not as to the construction which "will best achieve" the object of the Act.  Rather, it is a limited choice between "a construction that would promote the purpose or object [of the Act]" and one "that would not promote that purpose or object".’

60                  In determining the purpose or object of the Drugs Regulations, it is necessary to consider each relevant provision of the Drugs Act and the Drugs Regulations as a whole “not as if it were entirely divorced from its context, but as part of the whole instrument”:  Metropolitan Gas Co v The Federated Gas Employees Industrial Union (1924) 35 CLR 449 per Isaacs and Rich JJ, at 455. 

61                  The Drugs Act does not have an express purpose or objects provision.  An examination of its structure and provisions reveals that it deals with, amongst others;

(a)                regulating the manufacture and sale of certain types of drugs (Pt 2, Div 8);

(b)               restricting the classes of persons who can administer certain types of drugs (Pt 2, Div 10);

(c)                creating a licensing and recording system (Pt 2, Div 4);

(d)               making specific provision for heroin, cannabis and “deleterious substances” (Pts 3, 4 and 4A); and

(e)                dealing with the possession, trafficking, cultivation and use of a drug of dependence  (Pt 5).

62                  Section 129 of the Act specifically authorises the making of the Regulations by providing;

‘For the purpose of preventing the improper use of drugs of dependence and schedule 1 poisons, schedule 4 poisons, schedule 8 poisons, and schedule 9 poisons or any preparation of them or any of them the Governor-in-Council may make regulations for or with respect to or controlling the manufacture, sale, possession, administration, use, supply and storage of those substances … .’

63                  Regulation 1 of the Drugs Regulations stipulates, as far as is relevant;

‘The objectives of these Regulations are to-

(a)        facilitate and enhance the orderly sale, supply, prescribing, administration, dispensing and use of drugs, poisons and controlled substances by health professionals, authorised persons, licensed or permitted persons and the general public; and

(b)        implement national recommendations regarding the advertising, sale, supply, use, packaging and labelling of drugs, poisons and controlled substances …’

64                  It is apparent that the Drugs Act and the Drugs Regulations seek to create a framework for the regulation of the maintenance, sale, administration, possession, use, supply, distribution and storage of drugs of dependence and various other poisons.  In my view, one of the primary purposes of this framework is the protection of the public.  An example of a protective mechanism is found in reg 45 itself which restricts the classes of persons who may administer various types of poisons and drugs of dependence.  That regulation attempts to protect members of the public in a “health service” by requiring that the medication be administered by persons such as medical practitioners, pharmacists, dentists or nurses, who are trained and qualified to do so safely. 

65                  It has been submitted on behalf of the Department that, in addition to regulating certain conduct in relation to drugs of dependence and various poisons, the Regulations recognise the role of the public as well as professionally qualified persons in administering medication.  For example, reg 47 acknowledges that there can be self-administration, albeit with certain restrictions.  Further, reg 45 itself does not apply to all “health services”, as it exempts from compliance with reg 45(1) a person who provides a health service on condition that such person holds a permit or warrant issued under the Drugs Act or Drugs Regulations.  I agree with this submission.  The protective nature of the Drugs Act and Drugs Regulations is mitigated by the recognition that members of the public can administer medications to themselves in certain circumstances. 

66                  Nevertheless, in my view, the protective purpose of the legislation favours a broader construction of “health service” over one that unnecessarily or artificially excludes institutions from the definition of a “health service”. 

67                  The Department submitted that, in resolving any ambiguity in the Drugs Regulations, the Court ought also have regard to the history of the provisions and their application to the aged care industry.  The Drugs, Poisons and Controlled Substances Regulations 1985, which were repealed by the existing Drugs Regulations, drew a clear distinction between a hostel and a nursing home.  By including in the definition of a “health service” in the Drugs Regulations the words “including a nursing home”, the Department contended, the Drugs Regulations were framed to preserve this distinction.  The Department accepts that the aged care industry has changed with the enactment of the AC Act and the distinction between nursing homes and hostels has been replaced by a distinction between higher and lower levels of care.  These changes are discussed above at [5]-[6] of these reasons.  However, the Department argues that general usage in the industry continues to recognise the distinction between a hostel and a nursing home.  This argument was supported by the submission of Mr Turner, who referred to various pieces of existing Commonwealth legislation which maintain the distinction between nursing homes and hostels;  see for example s 2 of the Aged or Disabled Persons Care Act 1954 (Cth) and s 3 of the Aged Care (Consequential Provisions) Act 1997(Cth)).  Mr Niall conceded that there is still a technical distinction between a hostel and a nursing home but contended that, in light of the new statutory regime governing the residential aged care industry, the term “nursing home” no longer has any practical significance. 

68                  I accept that the continuing existence of a technical distinction between a nursing home and a hostel can be traced to the time when the Drugs Regulations were enacted in 1995, well before the AC Act, in effect, abolished the practical distinction between nursing homes and hostels.  Nevertheless, I am not persuaded that the distinction assists in the construction of the definition of a “health service” in subreg 4(1) of the Drugs Regulations.  The mere fact that a distinction existed, or technically still exists, does not, of itself, exclude a hostel from the definition of a health service merely because a nursing home is expressly included in the definition and a hostel is not.  Even if the drafters of the Drugs Regulations intended that hostels were to be excluded from the definition of a “health service”, and this is far from clear, Alcheringa is no longer, in the nomenclature of the AC Act, a hostel.  It may have been a hostel at the time when the Drugs Regulations were enacted, but it is not one now.  Rather Alcheringa is, pursuant to the AC Act, a residential aged care facility.

69                  The Department submits that, in interpreting the Drugs Regulations, I should consider the practical consequences that will flow from a particular construction.  Support for this proposition is found in these observations of Lord Reid in Gill v Donald Humberstone & Co Ltd [1963] 3 All ER 180, at 183:

‘I find it necessary to make some general observations about the interpretation of regulations of this kind.  They are addressed to practical people skilled in a particular trade or industry, and their primary purpose is to prevent accidents by prescribing appropriate precautions … The regulations supplement but in no way supersede the ordinary common law obligations of an employer to care for the safety of his men, and they ought to be construed in the light of practical considerations, rather than by a meticulous comparison of the language of their various provisions, such as might be appropriate in construing sections of an Act of Parliament…difficulties can not always been foreseen, and it may happen that in a particular case the requirements of a regulation are unreasonable or impracticable; but, if the language is capable of more than one interpretation, we ought to discard the more natural meaning if it leads to an unreasonable result, and adopt that interpretation which leads to a reasonably practical result.’

The same approach was taken in this Court by Sundberg J in Melbourne Pathology Pty Ltd v Minister for Human Services and Health (1996) 40 ALD 565, at 581.

70                  The Department made a number of submissions on the practical consequences of an interpretation that will result in Alcheringa’s being classified as a “health service” for the purposes of the Drugs Regulations.  These centred on two consequences; the increased costs imposed on residential care facilities caused by the need to employ more nurses qualified to administer medications and the strain on the nursing workforce to supply the necessarily larger pool of qualified nurses.  This submission depends first on facts said to give rise to the alleged consequences.  Evidence of those facts was not adduced through witnesses, where it could have been tested by cross-examination.  I am therefore not prepared to find those facts.  Secondly, even if it were established as a matter of fact that a proposed interpretation had implications for the financial viability of residential aged care facilities and the nursing workforce in Victoria, these are matters properly to be addressed by Parliament and should not influence this Court in its task of statutory construction.  It remains open, as the Department itself acknowledged, for Parliament to amend the definition of “health service” to reflect what it regards as an appropriate aged care policy.  This Court is concerned solely with the narrower, non-political, question of whether Alcheringa is a “health service” within the meaning of subreg 4(1) of the Drugs Regulations as they presently stand. 

71                  A practical consideration that is relevant to the Court’s task is the removal of the distinction between nursing homes and hostels in the AC Act.  It is reasonable to impute to Parliament an intention that reg 45 was designed to apply to institutions that routinely administer drugs of dependence and various poisons.  Under the former regime, that clearly included nursing homes and, given the nature of their patients, probably did not include hostels.  However, an institution that was previously classified as a hostel may now, due to the principles of “aging in place”, (described at [6] of these reasons) be required to administer medications caught by the Drugs Regulations.  Indeed, the evidence in this case reveals that 20 to 25 per cent of Alcheringa’s residents have been classified as high care patients who require assistance in the administration of their medications.  A practical consequence of restricting a “health service”, in this context, to a nursing home, is that another institution which, irrespective of the label attached to it, administers medications, would not be regulated by reg 45.

72                  Much was made by the parties of the inclusion in the definition of a “health service” of the phrase “including nursing homes”.  On behalf of Alcheringa and the Department, it was submitted that the insertion of the phrase “including nursing homes” extends the definition of “nursing service” to a “nursing home”.  However, the absence of a specific reference to “hostel”, the argument continues, reflects an intention by Parliament to exclude hostels from the definition of a “nursing service”.  Mr Turner of Counsel for Alcheringa took this submission further by arguing that a “nursing service” is exclusively confined to a “nursing home”.  It follows, so the argument went, that, as Alcheringa is a hostel, it cannot be a “health service” for the purposes of subsubreg 4(1).  Conversely, Mr Niall submitted that the phrase “including nursing homes” should be read as “including, but not limited, to nursing homes” and that the issue of whether Alcheringa is a “health service” is simply a question of fact.

73                  The applicants conceded in submissions that, in some contexts, an inclusive definition may be exhaustive (see YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395).  On this construction, the use of the term “including nursing homes” would be exhaustive so that a nursing service would mean a nursing home and would not include any other service or institution which might, in its ordinary meaning fall within the definition of a nursing service.  However, the applicants submitted that there is no rule of construction that requires inclusive words to be read as exclusive of any other elements that are not expressly included in the definition.  Support for this proposition is found in Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310, at 330 and Favelle Mort Ltd v Murray (1976) 133 CLR 580, at 588-589 per Barwick CJ.

74                  In my view, the use of the words “including nursing homes” in the definition of “health service” in subreg 4(1) should not be taken to be so exhaustive as to exclude other services which may be comprehended by the phrase “nursing service” in accordance with its ordinary meaning.  To read the definition as exhaustive and thus limit significantly the scope of nursing services which would be caught by the definition of “health service” would be contrary to the protective purpose which I have imputed to the Drugs Regulations.  I am reinforced in this conclusion by an examination of all of the definitions in subreg 4(1), which variously utilise words “means” and “includes”.  That distinction occurs even within the definition of “health service” itself and suggests a conscious and careful distinction between the use of the words “means” and “includes” which was influential in interpreting a particular definition in Cohns Industries v Deputy Federal Commission of Taxation (1979) 24 ALR 658.

75                  The Department submitted that, if the approach contended by the applicant is correct, that is that nursing homes do not exhaust the definition of a “nursing service”, then the use of the words “including nursing homes” would be superfluous.  This would, it was argued, contradict the principle of statutory interpretation that all words are to have meaning and effect;  see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, at 382 [71].   I am not persuaded that, if the definition of nursing service be not exhaustive, the words “including nursing homes” would be superfluous.  A plausible explanation for the inclusion of this phrase is that the drafters of the Drugs Regulations acted out of an abundance of caution to ensure that nursing homes, amongst other services, were included in the definition of a nursing service.  As Gummow J noted in Hepples v Commissioner of Taxation (1990) 22 FCR 1, at 21 (emphasis added);

‘As a general proposition, the use of the expression "means and includes" indicates an exhaustive explanation of the meaning which for the purposes of the statute must be attached to the term the subject of the definition, and conveys both the idea of enlargement and exclusion: Dilworth v Commissioner of Stamps [1899] AC 99 at 105-106; YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395 at 398-399, 401-402, 405.  But, in a given context, the draftsman may have used "include" not so much to extend the ordinary meaning of the defined term as to specify as falling within the definition that which might otherwise have been in doubt: Lillyman v Pinkerton (No 2) (1982) 71 FLR 135 at 138.’

Is Alcheringa a nursing service?

76                  For reasons that I have outlined above, I am not prepared to interpret the definition of “nursing services”, as it appears within the definition of “health service” in subreg 4(1) of the Drugs Regulations, as exhaustive.  In my view, a nursing home is but one example of a nursing service.  Whether Alcheringa is such a nursing service is a question of fact and fundamental to this determination is an examination of whether nursing services are provided at Alcheringa. 

77                  In Thomas v Ferguson Transformers Pty Ltd [1979] 1 NSWLR 216, the Court of Appeal of the New South Wales Supreme Court sought to determine whether various services provided to the plaintiff amounted to “nursing services” for the purposes of s 10(2) of the Workers Compensation Act 1926 (NSW).  Mahoney JA observed, at 224 (footnote excluded);

‘The term “nursing”, according to dictionary meaning, may have a wide connotation.  The meanings given in the Shorter Oxford Dictionary for ”nurse” include “one who takes care of, looks after, or advises another” and “to wait upon, attend to (a person who is ill)”….

… In determining whether acts that are done are nursing, it will normally be necessary to look to at least two things: the nature of the acts done and the purpose for which or context in which they are done.  There may, no doubt, be some acts which, whatever their purpose, cannot constitute nursing.  But there are, in my opinion, acts which may take on the character of nursing, according to whether they are done for the appropriate purpose.  Thus, I do not doubt that a person who, by injury, has been rendered grossly defective mentally, may be seen to receive nursing from one who prepares his meals, cleans his home and duly attends to those personal needs which, due to his condition, he can not properly depend to himself: cf Minister of Health v General Committee of Royal Midlands Counties Home for Incurables, Leamington Spa.’

78                  The definition of “nursing services” in s 10(2) of the Workers Compensation Act (NSW) has also been considered by the High Court in Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1980) 145 CLR 625.  In that case, the issue was whether activities such as bed-making, cleaning, washing, laundry and cooking constituted nursing services.  Mason J, said at 682 (footnote excluded);

‘In a suitable context "nursing" may denote a wider range of activities than those undertaken by a nurse in caring for a patient who suffers from illness or injury (Wallbridge v Dorset County Council).  There, s 206 of the Public Health Act, 1936 referred to "the nursing and maintenance of a child".  Here, we have a very different context "Nursing" occurs in a setting of medical services, rendered outside a hospital, not in a context of general maintenance.  Consequently, in s 10 (2) (c) the word denotes care and attention to a patient which is designed to relieve or remedy the illness or injury from which he suffers.  The domestic assistance needed by the injured worker here stands outside this conception.’

Aickin J similarly observed, at 686;

‘I am of the opinion that on the facts of this case the domestic assistance in question does not constitute "nursing" within the definition of "Medical treatment" in s 10 of the Workers' Compensation Act, 1926 (NSW), as amended.  This is not to say that some of the activities now in question could not form part of "nursing" in a different context.  Some of them may be capable of falling within that term if they were incidental to or directly associated with "nursing" in the strict sense.  In the present case however they were not so associated.’

79                  Although the use of the term “nursing services” in Thomas and Pennant Hills arose in a different context from that of the present case, I consider that the observations just quoted provide useful guidance on the meaning to be attributed to the phrase in the Drug Regulations.

80                  I accept the evidence given on behalf of the applicants that the activities undertaken by the nurses at Alcheringa in relation to high care patients include assistance with washing and toileting, dressing, eating, taking medications, mobility and maintaining health, such as taking blood pressure and blood sugar levels and attending to wound care.  Some residents also require help with behaviour management.  In relation to the lower care patients, while they are more independent, they still require some of the care described above (although the nature and extent of this care required by lower level patients was not specifically identified in evidence).  It is apparent that many of the activities in relation to high care patients are directed to maintaining the health of the patients, many of whom are ill.  In my view, having regard to the nature of the activities and their purpose, the services provided by Alcheringa, at least to the high care patients, are nursing services.

81                  It may be that for low care patients, many, if not all, of these services are not required.  Indeed, for some low care patients, it may be that Alcheringa serves only as an accommodation facility providing no nursing services of the type described above.  However, I am satisfied that such nursing services as are provided to the high care patients, who comprise approximately 20-25 per cent of the Alcheringa’s residents, are sufficient to classify Alcheringa as a nursing service within the definition of a “health service” in subsubreg 4(1) of the Drugs Regulations. 

82                  This Court has power to grant a declaration pursuant to s 21(1) of the Federal Court Act, and for the purposes of the exercise of that power, no distinction is drawn between the accrued and primary jurisdiction of this Court:  see Bond v Sulan (1990) 26 FCR 580, at 585.  The nature of the Court’s discretion to grant declaratory relief has been discussed in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 where the High Court said, at 581-82 (footnotes excluded);

‘It is now accepted that superior courts have inherent power to grant declaratory relief.  It is a discretionary power which "[i]t is neither possible nor desirable to fetter ...  by laying down rules as to the manner of its exercise."  However, it is confined by the considerations which mark out the boundaries of judicial power.  Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions.  The person seeking relief must have "a real interest" and relief will not be granted if the question "is purely hypothetical", if relief is "claimed in relation to circumstances that [have] not occurred and might never happen" or if "the Court's declaration will produce no foreseeable consequences for the parties" .’

83                  Applying the principles enunciated in Ainsworth, I consider it appropriate to declare that Alcheringa is a “health service” for the purposes of subreg 4(1) of the Drugs Regulations. 

Injunctions

84                  The applicants also seek injunctions restraining Alcheringa from future breaches of Pt XA of the WR Act and enjoining Alcheringa from directing the Division 2 nurses to administer medications to the residents of Alcheringa.  I am prepared to assume that, having admitted to breaches of Pt XA of the WR Act, and in light of the penalty imposed by this Court for those breaches, Alcheringa will not further contravene those provisions in the respects canvassed in this matter.  Further, given the declaration that Alcheringa is a “health service” for the purposes of the Drugs Regulations, I am not prepared to depart from the assumption that Alcheringa will now comply with these regulations, specifically reg 45, while they remain in their present form.  In these circumstances, I decline to grant the injunctions sought by the applicants. 

Associate:

Dated:              6 April 2004