FEDERAL COURT OF AUSTRALIA

Jadwan Pty Ltd v Rae & Partners (A Firm) (No 4) [2018] FCA 968

ORDERS

THE COURT ORDERS THAT:

1.    The application as against each Respondent be dismissed.

2.    The Applicant pay the costs of the First, Second, Third, Fourth and Fifth Respondents as assessed or agreed.

3.    The Respondents have liberty to apply for costs to be awarded on other than a party and party basis within 28 days from the date of this order.

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

REASONS FOR JUDGMENT

Table of contents

KERR J:

1.    INTRODUCTION

1    This matter has had a long history. The current proceedings were commenced in the Supreme Court of Tasmania by a writ filed on 3 February 2003.

2    It is unnecessary to detail the narrative of the matter in the Supreme Court. It is enough for these introductory purposes to note that the proceedings were beset by delays punctuated by interlocutory applications. On 12 August 2016, more than 13 years after the writ was filed, Brett J made an order pursuant to s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (the Cross-vesting Act) that the proceeding be transferred to the Federal Court of Australia.

3    This Court has jurisdiction with respect to any matter arising under Commonwealth law within the meaning of s 39B(1A) of the Judiciary Act 1903 (Cth). Having regard to the not merely colourable relationship between the asserted liability of Jadwan’s lawyers for negligence and the respective provisions of the National Health Act 1953 (Cth) (the National Health Act), the Aged Care Act 1997 (Cth) (the Aged Care Act) and the Aged Care (Consequential Provisions) Act 1997 (Cth) (the Consequential Provisions Act), and having been informed by counsel of the background to the matter, I was satisfied that Brett J’s order was properly made pursuant to s 5(1)(b)(iii) of the Cross-vesting Act and that this Court had jurisdiction to accept this transfer. I remain of that view.

4    The trial of the matter took place over four weeks (5-28 July 2017). Having regard to conflicting obligations of senior counsel, the Court heard final submissions on 14 and 15 November 2017.

2.    CASE OVERVIEW

5    Derwent Court Nursing Home (Derwent Court) is a Victorian era, heritage listed, two-story grand home to which a ground level extension was added. It is located only a short distance from central Hobart. From 1984 until mid-1997 Jadwan Pty Ltd (Jadwan) owned and operated Derwent Court as a nursing home. It received subsidies from the Commonwealth for its residents. In 1997 its Commonwealth approval as a nursing home was revoked. It thereupon became ineligible to receive subsidies for resident care. Derwent Court’s residents were relocated to other nursing homes and it ceased to provide nursing home care. It has not since operated as a nursing home.

6    Jadwan is a corporate trustee. It is the trustee of the J.G. & J.I. Alexander Family Trust. Its directors are, and at all relevant times were, members of the Alexander family: Mr Jeff Alexander (now deceased); Mrs Joan Alexander; Ms Julie Alexander and Mr Wayne Alexander. Jadwan had purchased Derwent Court to operate as a nursing home. It remains the owner of Derwent Court which it now leases to a third party unconnected to these proceedings.

7    Derwent Court’s resident mix had included a high proportion of vulnerable persons with dementia. Most were accommodated in shared rooms, the largest of which accommodated seven residents. Non-ambulant residents were, until the events described below occurred, accommodated upstairs on the second floor.

8    In its Second Further Amended Statement of Claim Jadwan advances claims in negligence against three Tasmanian firms of legal practitioners; the First, Second and Third Respondents, and the executrix of the estate of a Melbourne based solicitor Mr John Hogan; the Fourth Respondent.

9    The liability of each of those Respondents is said by Jadwan to have arisen by reason of their respective failure as solicitors to advise their client to take any action in respect of the decision or purported decision made by a delegate of the then Minister for Family Services (the Minister) pursuant to s 44(2) of the National Health Act on 6 August 1997 to revoke Derwent Court’s approval as a nursing home under that Act.

10    Jadwan, inter alia, asserts that actions taken by the Commonwealth in accordance with that purported decision resulted in Jadwan losing its entitlement to Commonwealth funding for the residents of Derwent Court and prevented it transitioning to become an approved provider of aged care services on the coming into force of the Aged Care Act.

11    The First, Second and Third Respondents are proceeded against on the basis that they were each, sequentially in time, retained by Jadwan as its solicitors. The First Respondent was retained on 7 February 1997 when its then employee solicitor, Mr Stephen Wicks, accepted Jadwan’s instructions. Mr Wicks was later re-engaged by Jadwan when he, in turn, became an employee of the Second (as from 2 July 1997) and Third (as from 13 September 1997) Respondents.

12    Mr Hogan, whose executrix is the Fourth Respondent, was a Melbourne based solicitor. He was engaged on 28 July 1997 by Jadwan on the basis that he possessed specialist skills in relation to the law applying to the regulation of nursing homes.

13    Jadwan alleges that, in summary, but for the First, Second, Third and Fourth Respondents each failing in their respective duties as solicitors, they would have identified the significance of the terms of both the Aged Care Act and the Consequential Provisions Act. Had they not failed in their respective duties Jadwan contends that they each would have advised Jadwan of the urgent necessity of it, inter alia, seeking an injunction to set aside the Minister’s decision to revoke Derwent Court’s approval so as not to forfeit Jadwan’s entitlement to transition as an approved provider in respect of Derwent Court on 1 October 1997. Jadwan would have given instructions in accordance with that advice. An injunction would have been granted.

14    Jadwan further alleges that had the First, Second, Third and Fourth Respondents not failed in their respective duties they would have advised Jadwan that it needed to ensure that at least one Commonwealth funded resident would need to remain at the nursing home until 1 October 1997 to prevent Jadwan forfeiting its entitlement to become an approved operator of Derwent Court beyond that date. It asserts that Jadwan could and would have taken that action.

15    Jadwan alleges that a barrister briefed by Mr Wicks to advise and act for Jadwan also failed to provide it with competent advice. Jadwan pleads that it had intended to join that barrister, Mr David Porter QC, as a respondent to these proceedings. He would have become a party to these proceedings but for the negligence of the Fifth Respondent. The Fifth Respondent had failed to ensure Jadwan’s writ was served on Mr Porter before it expired.

16    Jadwan posits that a grant of an injunction coupled with Jadwan taking steps to ensure that at least one resident remained at Derwent Court would have enabled it to continue to operate its nursing home business, or, on Jadwan’s worst case scenario, permitted it to have sold its bed licences to another operator.

17    Because it was not provided with competent advice and did not take those actions, Jadwan had suffered the loss of its chance to obtain those outcomes. It was entitled to be compensated for that loss by an award of damages. Damages were to be assessed on the basis that Jadwan would have taken advantage of the most commercially advantageous of the options that the evidence would establish Jadwan had been willing to pursue and were practically available to it.

18    On behalf of Jadwan its counsel, Mr Pearce SC, advanced three “scenarios” for the Court to establish the value of Jadwan’s lost chance.

19    The first of those scenarios was that if Jadwan had been given competent advice, it would have sought and obtained an injunction in the Federal Court of Australia in 1997 staying the operation of the decision revoking Jadwan’s accreditation as an approved provider of nursing home care pursuant to s 44(2) of the National Health Act (the revocation decision) and, in due course, orders setting it aside. Jadwan would have continued to operate its nursing home at Derwent Court until 1 October 1997 when it would have transitioned to become an approved operator of Derwent Court under the Aged Care Act. Jadwan would have continued to operate Derwent Court (with necessary improvements as required to meet the higher standards of care under that Act) with an ongoing entitlement to Commonwealth funding for 51 residents from then onwards to the present.

20    Jadwan ultimately abandoned reliance on that scenario. On 14 August 2017 its solicitor wrote to the Court and to the Respondents as follows:

The Applicant’s case for damages was opened at trial on the basis of 3 alternative hypothetical scenarios if Derwent Court’s approval as a nursing home had not been revoked, or if the revocation had been suspended or set aside, as follows:

A.    that Jadwan would have continued to operate a nursing home in the existing building;

B.    that Jadwan would have built a new 51 bed facility on a greenfield site in Hobart and operated the nursing home there;

C.    that Jadwan would have sold its 51 bed licences in late 1997.

In light of the evidence at trial, we are now instructed to abandon scenario A above.

21    Jadwan’s second scenario was that had it received competent advice, the company would have continued to operate Derwent Court and become an approved operator under the Aged Care Act but it would have continued to operate Derwent Court as a nursing home only for a transitional period. During that transitional period it would have purchased land and invested to construct a new nursing home to replace Derwent Court. Jadwan had both the financial capacity and will to undertake such an investment. It would have constructed a modern 51 bed facility on a greenfield site in or around Hobart. Once those new facilities were available Jadwan would have ceased to operate Derwent Court as a nursing home but would have continued as an approved provider of nursing home services from its new premises with an ongoing entitlement to Commonwealth funding for its 51 residents.

22    Jadwan’s third scenario, not then pleaded but identified in Mr Pearce’s opening, was advanced against the contingency that the Court might be unpersuaded of the viability of its preferred scenarios. Jadwan’s third scenario posits that had it been provided with competent advice it would have obtained an injunction to stay the revocation decision. Having secured such an injunction it would have “got out” of the nursing care industry in Tasmania. However, its exit then would have been on more advantageous terms. Nursing home bed licences had marketable value. If Derwent Court’s approval as a nursing home had remained in place the Commonwealth would have permitted Jadwan to sell, and it would have been able to have sold Derwent Court’s 51 bed licences.

23    Jadwan proceeds against the Fifth Respondent for the loss of its chance to have joined Mr Porter directly in these proceedings. It asks the Court to value that lost chance on the basis that but for the negligence of the Fifth Respondent, Jadwan would have obtained judgment for damages against Mr Porter on the same premise as it pleads against its former solicitors. There should be no discount to that amount for the uncertainty of that hypothetical litigation – while not a party the evidence in these proceedings would entitle the Court to find Mr Porter’s responsibility for having caused Jadwan to lose the chance to secure a better outcome as identified in its three scenarios had been clearly established.

24    Also pleaded against each save the Fourth Respondent is a contention that the lawyers who had acted for Jadwan were negligent in failing to advise Jadwan that it had grounds to and should challenge the Commonwealth’s earlier decision made on 3 February 1997 to impose financial sanctions on Derwent Court pursuant to s 45E of the National Heath Act (referred to by counsel as the “sanctions decision”). As a result of those sanctions Jadwan had been denied entitlement to claim payments from the Commonwealth in respect of any new resident admitted to Derwent Court after the date of that decision.

25    That pleading, as a distinct basis of liability, was given little attention in the course of the trial. Nonetheless at [166] to [168] of Mr Pearce’s closing written submissions, the Applicant pressed the Court to make findings that Mr Wicks and Mr Porter had breached their respective duties to Jadwan by failing to advise or act in respect to the earlier sanctions decision in addition to, or in the alternative of, the case Jadwan had advanced regarding its legal advisers’ alleged breaches of duty to act or advise in respect of the revocation decision and that Jadwan had suffered loss sounding in damages for that reason.

26    For reasons the Court provides it is satisfied that Jadwan cannot establish those propositions.

3.    SUMMARY OF FINDINGS

27    The Court sets out its reasons later. Because they are lengthy, it is convenient to summarise the conclusions it has reached before turning to the details. The summary is included as guidance – it omits reasoning and is not intended as independent findings.

28    Mr Wicks was a relatively young and inexperienced lawyer at the time he was retained by Jadwan after Derwent Court had been sanctioned by the Commonwealth and Jadwan had been warned that Derwent Court’s approval as a nursing home might be revoked unless it took necessary remedial actions. Mr Wicks lacked the experience appropriate for undertaking what became a challenging task. As an employed solicitor Mr Wicks’ employers were vicariously liable for any losses caused by his negligence.

29    Having regard to the evidence concerning his instructions, the timing of events and the relationship between the parties, I have concluded that the Applicant fails to prove that Mr Wicks had the duties Jadwan has pleaded during the period he was employed by the First Respondent.

30    By contrast I have concluded that Mr Wicks became subject to those duties after becoming an employee of the Second Respondent. In breach of his duty Mr Wicks failed to exercise reasonable care and skill in providing legal advice to Jadwan after it had been given notice by a delegate of the Minister, Ms Jane Halton, of her intention to revoke Derwent Court’s approval as a nursing home. However I am not satisfied that such failure on his part caused Jadwan to lose a chance to have continued its business at Derwent Court while it built a new 51 bed facility on a greenfield site in Hobart and then operated the nursing home in those new premises or to have sold its 51 bed licences in late 1997.

31    The evidence before the Court establishes that, in the circumstances then facing Jadwan, its directors had no intention of continuing to operate a nursing home at Derwent Court while building on a greenfield site. Jadwan’s directors had repeatedly shown reluctance to commit to any new expenditure to improve Derwent Court unless guaranteed future funding. Jadwan had already made a decision to “get out” of operating Derwent Court. It knew that the Commonwealth officials responsible for the regulation of nursing homes had exhausted their patience with Jadwan’s management of Derwent Court. The Department of Health and Family Services (the Department) had concerns including, but not limited to, the risk that fire posed to Derwent Court’s residents. Jadwan knew the Tasmanian Fire Service had “gone sour” on the idea of allowing Jadwan to continue to operate Derwent Court as a nursing home without expensive major works while it built new premises. Even assuming Derwent Court might have taken steps to obtain the benefit of the Consequential Provisions Act I am satisfied that Jadwan’s directors would not have committed to the large capital expenditure involved in buying land and building a new nursing home. In the findings I have made, Jadwan would have had to operate Derwent Court with fewer residents than financially viable for the period it would have taken them to construct any new premises, without an assurance from the Department that it would be able to maintain its approval under the higher standards that would be required by the Aged Care Act. I am satisfied no such assurance would have been forthcoming.

32    I am satisfied that the Commonwealth would have been unfavourably disposed to Jadwan continuing to accommodate nursing home residents at Derwent Court on any ongoing basis. Having regard to what Jadwan knew about the challenges it was facing and the cost and time it would take to build new premises, even if Jadwan had received the advice Jadwan pleads Mr Wicks should have provided it with, I have concluded that Jadwan would not have pursued that course and would have continued to focus upon getting out of Derwent Court with, if possible, Commonwealth approval for it to sell its bed licences.

33    It is uncontentious that there was a market for such bed licences, subject to Commonwealth approval. Jadwan had been offered a window of 48 hours as its last chance to sell the licences but it had been unable to take advantage of that opportunity.

34    By the time Mr Wicks’ instructions evolved to oblige him to give Jadwan the advice he ought to have, but failed to, it was already too late for any legal proceedings that Jadwan might have brought as a “tactic” to be effective to influence the Department to yield to that request.

35    Jadwan, on its own initiative and without legal advice, had already sought and obtained a commitment from the Commonwealth that it would meet the cost of redundancies for Jadwan’s employees at Derwent Court. Jadwan had dismissed all of Derwent Court’s nursing home staff. It had accepted that Derwent Court’s residents had to be relocated.

36    A more than token challenge to the Department’s action in revoking Derwent Court’s approval as a nursing home as might have put pressure on the Commonwealth to allow Jadwan to sell its bed licences would have had to be accompanied by resolve on Jadwan’s part to continue to provide nursing home care for such of Derwent Court’s already diminished number of remaining residents as it could persuade not to leave. Doing so would put at risk the Commonwealth’s undertaking to fund Derwent Court’s redundancy payments.

37    The unimpaired market value of 51 bed licences in Tasmania at the relevant time was in the order of $612,000. The amount the Commonwealth had undertaken to meet as the cost of redundancies was of the same order. I have found that Jadwan would not have pursued a strategy inconsistent with accepting Commonwealth funding for staff redundancies which could not guarantee it (even if successful) anything more than a roughly equivalent return.

38    For that reason Mr Wicks’ failure to provide the advice he ought to have in the period he was an employee of the Second Respondent did not cause Jadwan to lose a chance of selling its bed licences.

39    I have concluded that Jadwan did not lose a chance to recover its position after Mr Wicks was in turn employed by the Third Respondent.

40    The Fourth Respondent was a Melbourne based solicitor (now deceased). He was identified by Jadwan as having specialist skills in relation to the law applying to the regulation of nursing homes. The Fourth Respondent was retained by Jadwan only after the revocation decision had been made – and only on a limited basis that he would advise as to how Jadwan might sell its bed licences. The advice he provided Jadwan and Mr Wicks (then an employee of the Second Respondent) was to seek an injunction. His advice was accepted. His retainer as a consultant was then terminated. He was not further consulted. Only after his retainer had come to an end did Jadwan act on Mr Wicks’ advice that proceedings for an injunction pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) were not required. I have concluded that Jadwan has not established its cause of action against the Fourth Respondent.

41    The Fifth Respondent was a firm of solicitors. It does not dispute that it was negligent in failing to serve a writ on Mr Porter in time. Mr Porter is absent from these proceedings because of that negligence. The Fifth Respondent therefore accepts that if Mr Porter was himself negligent and Jadwan can establish that his negligence caused it to lose a chance to have successfully brought proceedings against him then, to the extent that loss can be valued, the Fifth Respondent is liable to Jadwan in damages. However Jadwan has not established that Mr Porter failed to exercise reasonable care and skill as counsel briefed to provide legal advice to it. I reject that I am entitled to find on the balance of probabilities that Mr Porter gave Mr Wicks advice that an injunction need not be pursued. For that and other reasons the Court rejects that it should find that the admitted negligence of the Fifth Respondent in failing to serve Mr Porter before the writ became stale caused Jadwan to lose the chance to have obtained a judgment sounding in damages against Mr Porter.

4.    BACKGROUND

42    The Court’s reasons require an understanding of this matter’s complex earlier history, including previous litigation Jadwan had unsuccessfully undertaken. Before turning to the evidence as it relates specifically to the matters in dispute in these proceedings, I set out an uncontentious survey of that background.

43    In 1984 Jadwan sought and obtained Commonwealth approval pursuant to the National Health Act to operate Derwent Court to provide accommodation for 51 nursing home residents. As Derwent Court’s proprietor, Jadwan received a subsidy from the Commonwealth for each of its residents’ care. Most of Derwent Court’s residents were frail aged persons with high dependency needs. Many suffered dementia. A considerable number were non-ambulant. Others required assistance with their mobility.

44    Few, if any, of the residents accommodated at Derwent Court had sufficient financial means to meet, unassisted, the full costs of their nursing home care. Jadwan’s ongoing economic viability as the operator of Derwent Court accordingly was dependent upon it retaining Commonwealth funding for its residents.

45    I adopt the following summary of the law as then applicable to the operation and funding of nursing homes from the reasons of North J in Jadwan Pty Ltd v Secretary, Commonwealth Department of Health & Aged Care [2002] FCA 1052; (2002) 71 ALD 520 (Jadwan No 3) at [4]:

The general scheme under the [National Health Act] 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 consequences 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 respect 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.”

46    In common with all approved nursing homes, Derwent Court was the subject of semi-regular inspections by Standards Monitoring Teams regarding the quality of the care provided. The standards that approved nursing homes were required to meet were those determined under s 45D of the National Health Act:

Standards for nursing home care

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

47    Jadwan, as the operator of Derwent Court, had struggled to ensure it met those standards prior to the events at the centre of these proceedings.

48    In 1991 Derwent Court had been identified by the Commonwealth as a “home of concern”. In response Jadwan had made certain improvements. In 1993 that designation had been lifted. Notwithstanding, reports of subsequent Standards Monitoring Teams had continued to refer to aspects of Derwent Court’s provision of aged care services as requiring “action” or “urgent action” if the nursing home was to fully meet Commonwealth standards.

49    However, it would be misleading to suggest that there was nothing in Derwent Court’s past history in its favour. There is evidence in Jadwan’s business records that Derwent Court not infrequently had been sent unsolicited expressions of gratitude from relatives of residents thanking it and its nursing staff for the kindness and care their elderly relatives had received. In these proceedings there was evidence from a retired general practitioner, Dr Timmins, that in the period prior to Derwent Court’s revocation of approval as a nursing home he had had around 20 residents of Derwent Court as his patients. He had made routine weekly ward rounds attending those of his patients that Derwent Court had identified as needing to be seen. Dr Timmins gave evidence that:

My impression of the nursing care was that it was excellent. I don’t remember a single major problem with any of the nurses being [sic] not providing care or being oddities in the system.

(transcript p 770 line 46 – p 771 line 2)

50    However in cross-examination Dr Timmins accepted that he had no recall of ever having been told that Derwent Court had been classified as a home of concern between 1991 and 1993. Nor could he recall being informed of the difficulties Derwent Court had had with the Commonwealth from that time to its closure. However, in response to a question regarding sanctions having been imposed resulting in Derwent Court having been unable to accept new residents as from February 1997, Dr Timmins’ evidence was that he guessed that he might have heard of that at some stage. He conceded that the views he had formed in relation to the quality of care at Derwent Court were the result purely of his personal observations. He accepted that he had not been familiar with the Commonwealth standards applicable to nursing homes in 1997 (transcript p 777 line 25 – p 778 line 31).

51    Notwithstanding Dr Timmins’ positive impressions, from mid-1996 Jadwan confronted growing pressure to satisfy the Commonwealth that the care it provided at Derwent Court met the required care standards as would entitle it to retain Commonwealth funding for its residents.

52    On 6 and 7 August 1996 a Standards Monitoring Team visited Derwent Court. Its draft report made a number of highly adverse findings regarding the standard of care provided. It recommended that sanctions pursuant to s 45E of the National Heath Act be imposed on Derwent Court. The effect of such sanctions, if imposed, would be that while Jadwan could continue to receive funding for existing residents, no Commonwealth funding would be available for any new residents unless and until those sanctions were lifted.

53    On 6 September 1996 Jadwan was provided with a draft statement of the report and was notified that sanctions might be imposed.

54    At Jadwan’s request (Ex A1 pp 1186-1190), a Standards Review Panel (SRP-1) was constituted (or purportedly constituted) to review the recommendation of the Standards Monitoring Team that sanctions under s 45E(1) be imposed. The SRP-1 visited Derwent Court on 10-14 November 1996. Its report, dated 2 December 1996, went well beyond endorsing the conclusions of the Standards Monitoring Team. The report of the SRP-1 recommended that Derwent Court urgently be closed.

55    A significant reason referred to by the SRP-1 as justifying its recommendation that it was urgent that Derwent Court’s approval as a nursing home be revoked was the home’s inadequate fire safety measures and the associated risk to its residents. The SRP-1’s report acknowledged that earlier inspections of Derwent Court had not identified fire safety as an issue requiring urgent action. However, it concluded, the explanation for the absence of any prior attention to fire safety was that previous inspections had been conducted on a flawed understanding of the meaning of an approval given to Jadwan by the Tasmanian Fire Service (the TFS) in 1989. In 1989 the TFS had authorised Jadwan to accommodate residents on the upper floor of Derwent Court. The SRP-1 concluded that that authorisation had not involved any assessment of the actual risk to resident safety and that the TFS documentation “did not have the effect of [an] overall fire clearance, or approval from the fire service to locate frail and non ambulant resident [sic] on the upper floor” (Ex A1 p 1249).

56    On 3 February 1997 Mr Stephen Dellar of the Commonwealth Department of Health and Human Services sent Jadwan a letter giving it notice that a declaration had been made under s 45E(1) of the National Health Act that Commonwealth subsidies would not be payable with respect to new residents (the sanctions decision) (Ex A1 pp 1270-1293).

57    Mr Dellar advised that Jadwan had three days to show cause why its approval to operate Derwent Court as a nursing home should not be revoked.

58    Jadwan replied on 6 February 1997 in the following terms:

I am responding to the requirement in accordance with Section 44(2A) of the National Health Act 1953 to show cause why Approval of Derwent Court Nursing Home should not be revoked.

I understand that cause must be shown in relation to fire safety and satisfying other standards.

In relation to fire safety, on behalf of Jadwan Pty Ltd I give the undertaking to complete the works listed below. The undertaking is given after consideration of the Kerr Lewit Clark and Kidd Report dated 4 February 1997, and the Survey Report following the Tasmania Fire Service fire safety inspection on 4 February 1997.

From the Tasmania Fire Service Survey Report the following works will be completed as soon as practicable and include all items marked ‘Requirements’ in the Report:

1.    100% test of all detectors.

2.    Upgrade the Fire Indicator Panel Documentation.

3.    Sound pressure test of warning devices.

4.    All fire doors to be fitted with smoke seals.

5.    Hole in smoke wall to be repaired.

6.    Areas where services may have penetrated fire or smoke walls to be checked for compliance.

7.    Inspection of emergency lighting system by a qualified person.

8.    Existing self-luminous exit signs to be replaced with illuminated signs.

9.    Relocate the hose reel to comply with the spindle height required.

10.    Replace fire extinguishers as recommended.

11.    Relocate fire blanket in kitchen to a recommended position.

12.    Install a hose reel on the first floor at the front of the building.

13.    Material stored in the undercroft to be reduced.

14.    Inflammable material at the rear of the building to be removed.

15.    Review of smoke detectors in living areas.

16.    Installation of break glass alarms in liaison with Tasmania Fire Service.

The Kerr Lewit Clark and Kidd Report and Tasmania Fire Service Survey Report (Item 5) recommend either smoke or fire isolation (as appropriate) of the open stairs from the foyer. Pending clarification from both advisers, recommendations will be effected.

From the Kerr Lewit Clark and Kidd Report, these works will be completed without delay:

Cupboard in Sick Bay to be relocated, providing a further exit.

Fire Evacuation Procedures to be revised to include:

•    Distinction between evacuation of building and evacuation to a fire protected area.

•    Clarification of assembly areas for upstairs occupants and those downstairs.

•    A procedure for evacuation of first floor occupants with respect to fire on ground floor.

All works to be carried out in liaison with Tasmania Fire Service.

The Directors are seriously considering the installation of a sprinkler system. It has not been possible, since receiving the Tasmania Fire Service Report last night, to gain the information necessary to make a decision. There are other considerations to this decision and I seek an early opportunity to discuss the matter in full with you.

With regards to the non-compliance of standards under Section 45D of the National Health Act 1953, the Director of Nursing and I undertake to thoroughly review all standards and seek outside assistance in our endeavours to satisfy the standards. Detailed information on the plans to achieve this outcome will be supplied within 28 days of any deferral of revocation of Approval.

The Directors believe the foregoing is proof of a genuine effort to satisfy the Department, and is a basis for deferral of the revocation of Approval.

(Ex A1 pp 1389-1392)

The letter was sent under the signature of Mr Jeff Alexander, one of Jadwan’s directors.

59    The evidence does not disclose whether the Commonwealth replied formally to that correspondence but it is uncontentious that the outcome was that Jadwan’s response was sufficient to stave off the immediate revocation of Derwent Court’s approval.

60    However, as might be expected, Jadwan remained under pressure to address the Commonwealth’s concerns.

61    Against that background, on 7 February 1997, Jadwan engaged a solicitor, Mr Wicks. Mr Wicks was an employee of the First Respondent. The terms of Mr Wicks’ retainer, and how he discharged or failed to discharge his duties pursuant to his retainer, are the subject of consideration later in these reasons. However it is appropriate to note that on Jadwan’s instructions Mr Wicks wrote to Mr Dellar, State Manager, Department of Health and Family Services on 12 February 1997 asking for information about how the SRP-1 had come to be appointed and “by way of observation only at this point” suggested that one of its members, a Mr Van der Schoor, by reason of his position as Executive Officer of Aged Care Tasmania Inc appeared to have had a conflict of interest (Ex A1 pp 1485-1486). On 14 February 1997 Mr Dellar replied to Mr Wicks, providing the information requested and stating he had been advised by the Chair of the SRP-1 that she was satisfied there had been no conflict of interest for any member (Ex A1 pp 1507-1508).

62    A Commonwealth Standards Monitoring Team headed by a senior interstate member then visited the nursing home on 12, 13 and 17 March 1997. Its report was even more damning than that of the SRP-1 (Ex A1 pp 1635-1668).

63    That report appears to have prompted the Commonwealth to appoint, or purport to appoint, a second Standards Review Panel (SRP-2) to advise the Minister as to whether Derwent Court’s approval as a nursing home should be revoked. The SRP-2, (excluding, I infer, having regard to Mr Wicks’ representations, Mr Van der Schoor) convened on 9 May 1997. It comprised only three members rather than five as provided by the then reg 12(1) of the National Health Regulations 1954 (Cth) (the National Health Regulations). Its members visited Derwent Court that afternoon. The report of SRP-2 dated 26 May 1997 endorsed the recommendation earlier made by the SRP-1 that Derwent Court be closed. Jadwan was informed of that outcome by letter dated 28 May 2017 (Ex A1 pp 1728-1745).

64    On 23 June 1997 the First Respondent invoiced Jadwan for the legal services Mr Wicks had up until that time provided to it.

65    On 2 July 1997 Mr Wicks commenced employment with the Second Respondent. As is evident from a note made by Mr Wicks that day, Jadwan had re-engaged him as its solicitor (Ex A1 p 4125).

66    On 7 July 1997 the Aged Care Act and the Consequential Provisions Act each received royal assent. Although they thus became laws of the Commonwealth, they did not immediately come into effect. Their date of commencement was to be fixed by Proclamation. Until then the National Heath Act continued to apply to the operation of nursing homes.

67    By a notice dated 20 July 1997 (Ex A1 pp 1911-2098), Jadwan was advised of the intention of Ms Jane Halton, First Assistant Secretary, Aged and Community Care Division, as a delegate of the Minister for Family Services for the purposes of s 44 of the National Health Act, to revoke the approval of Derwent Court under s 44(2A) of the National Health Act, 14 days after the date of that notice. Jadwan was provided with an extensive statement of Ms Halton’s reasons. On the same day the Department wrote to staff and residents of Derwent Court to inform them of the Commonwealth’s intention to revoke Derwent Court’s approval in 14 days. There is some evidence to suggest that not all of those letters were passed on to their individual addressees but nothing presently relevant turns on that.

68    Jadwan was advised of that notification on 21 July 1997. Without seeking legal advice, Mr Jeff Alexander immediately approached Mr Dellar, the Department’s senior representative in Tasmania, to advise that the cost of meeting staff redundancies would break the company. I infer he sought the Commonwealth’s agreement to meet those costs. The evidence establishes that on or before 23 July 1997 Mr Dellar provided such an undertaking.

69    On 23 July 1997 Mr Wicks wrote to Ms Halton in the following terms on Jadwan’s behalf (Ex A1 p 2108):

You may be aware, we act for Jadwan Pty Ltd, the proprietor of the Derwent Court Nursing Home.

We have been handed a copy of your notification dated 20th July, 1997 of intention to revoke the approval of the Home under the provisions of the National Health Act.

We advise that we are urgently seeking senior counsel’s advice on options open to our client in this matter which may include a review of or appeal against the revocation of the Home’s approval.

In the meantime, and until senior counsel has had the opportunity to fully review the background to this matter and advise on options available to our client, we must warn the Department in the strongest possible terms against taking any action to remove any residents from the Home or to in any way pre-empt a revocation of approval.

70    The Australian Government Solicitor (AGS) responded immediately in the following terms (Ex A1 p 2109):

I refer to your facsimile of 23 July 1997. I act for the Department of Health and Family Services in this matter. Please advise me of what action you propose to take on behalf of your client. The Department will not desist from taking appropriate action to protect the health and welfare of the patients.

I have advised the Department of the competing interests of your clients and the interests of the patients in the home. The Department is aware of the appropriate appeal rights available to your client and expects your client to take advantage of those rights.

71    On 24 July 1997 Jadwan gave notice to all of Derwent Court’s staff. Jadwan thus protested but did not seek to prevent its residents being transferred to other nursing homes. The last resident vacated Derwent Court on 4 August 1997 (Ex A1 p 2651).

72    As Mr Wicks’ letter to Ms Halton indicated, Jadwan had given Mr Wicks instructions to engage senior counsel. On 24 July 1997 Mr Wicks met with Mr Porter to brief him on the circumstances then confronting Jadwan.

73    On 28 July 1997 Jadwan engaged Mr Hogan to assist it to obtain approval from the Commonwealth for it to sell its bed licences (Ex A1 pp 2125-2364).

74    On 6 August 1997 Ms Halton as delegate of the Minister, purporting to act, inter alia, on the advice of the SRP-2, revoked Derwent Court’s approval as an approved nursing home under s 44(2) of the National Health Act. As of that time Jadwan ceased to be entitled to receive Commonwealth benefits for the care of nursing home residents at Derwent Court. However by that time all of its residents had been relocated.

75    On 21 January 1998 Jadwan commenced proceedings in this Court pursuant to the ADJR Act contesting the validity of the 6 August 1997 revocation decision.

76    Initially it may have appeared to Jadwan that it had been successful in restoring its position.

77    On 19 June 1998 Heerey J held that SRP-2 which had recommended that Derwent Court’s approval be revoked had not been validly constituted: Jadwan Pty Ltd v Minister for Health and Family Services [1998] FCA 715; (1998) 51 ALD 245 (Jadwan No 1). His Honour held that Ms Halton’s revocation decision which had, inter alia, relied on the SRP-2’s findings was void in consequence.

78    The Minister appealed that decision. In Minister for Health and Family Services v Jadwan Pty Ltd [1998] FCA 1549; (1998) 89 FCR 478 (Jadwan No 2) a Full Court of the Federal Court of Australia (Burchett, Drummond and Sackville JJ) allowed the Minister’s appeal in part.

79    Their Honours concluded that the primary judge had erred when he had concluded that the procedures required by law for the revocation of Derwent Court’s approval had not been followed – the exercise of the Minister’s s 44(2) power to revoke an approval was not conditional on the establishment of a Standards Review Panel. However, then accepting a new argument advanced by Jadwan in the course of the appeal, the Full Court held that by treating the SRP-2’s findings as having been made by a validly constituted Standards Review Panel, the Minister’s delegate had taken into account a materially irrelevant consideration and for that reason the exercise of the power was to be set aside.

80    The formal orders of the Full Court in Jadwan No 2 as made on 4 December 1998 were:

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.

4.    The Appellant pay half the Respondent’s costs of the appeal.

81    The terms of the third order made by the Full Court led Jadwan to anticipate that its status as an approved provider would be restored. However, the Commonwealth declined to act on that basis.

82    Jadwan therefore commenced further litigation to vindicate its asserted entitlement to operate Derwent Court and to receive Commonwealth funding for its residents.

83    However Jadwan faced a new problem: the National Health Act upon which its asserted entitlements were premised had by that time ceased to govern nursing home standards. The Aged Care Act repealing it had been enacted on 7 July 1997. A proclamation of 3 September 1997 had fixed the date of its commencement as 1 October 1997. As of that date the Aged Care Act had brought into effect an entirely new system for the regulation and funding of nursing homes. By contrast to the National Health Act that had provided for the approval of premises as nursing homes, the Aged Care Act now provided for the approval of providers of aged care. To succeed in the proceedings Jadwan needed to establish that its rights had been maintained by virtue of the operation of the transitional rules enacted in the Consequential Provisions Act.

84    Jadwan’s proceedings were thus premised on the Consequential Provisions Act having had the effect of preserving its status. Jadwan submitted that the Consequential Provisions Act had been enacted to permit proprietors of existing nursing homes approved under the National Health Act to transition under the Aged Care Act, as approved providers for the equivalent number of nursing home residents with funding attached as their premises had had approval for under the National Health Act.

85    Because the Full Court had set aside the Minister’s decision of 6 August 1997 to revoke Derwent Court’s approval as an approved nursing home, Jadwan submitted that the Consequential Provisions Act had grandfathered an entitlement for it to transition to the status of an approved provider under the Aged Care Act. As such it would be entitled to receive Commonwealth subsidies for an equivalent number of nursing home residents (51) as Derwent Court had held approval for.

86    However, in Jadwan No 3 North J rejected that contention. His Honour held that the Full Court in Jadwan No 2 had expressly set aside Heerey J’s order that the Minister’s decision had been void and had substituted for it an order that the decision be set aside. Because the Full Court had not specified a date of effect for that order, that order as provided for by s 16(1) of the ADJR Act, operated only prospectively and from when it was made. Accordingly it operated from 4 December 1998.

87    Having so concluded, North J dismissed Jadwan’s application. Derwent Court had not been an approved nursing home for the purposes of the Consequential Provisions Act when the transitional provisions took effect. The Minister’s revocation of Jadwan’s approval had remained in force until 4 December 1998. Jadwan not having been an approved nursing home on 30 September 1997, the day prior to the Aged Care Act coming into force, it could not benefit by reason of the provisions of the Consequential Provisions Act: see s 7.

88    His Honour added that even if he were wrong to hold that the Full Court’s order had operated from that date, Jadwan would still have fallen outside the operation of the Consequential Provisions Act:

42    In the exceptional circumstance that a proprietor happened to have no patients under care on 30 September 1997, the ACA [Aged Care Act] 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 [Consequential Provisions Act] 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.

89    Jadwan appealed that decision. However, in Jadwan Pty Ltd v Secretary, Department of Health & Aged Care [2003] FCAFC 288; (2003) 145 FCR 1 (Jadwan No 4) a Full Court (Gray and Downes JJ; Kenny J separately deciding) dismissed that appeal.

90    Rejecting Jadwan’s contention that because the Minister’s decision had been affected by jurisdictional error it should be set aside as void from the date of its making, Gray and Downes JJ reasoned:

44    The earlier Full Court did not hold in terms that the decision to revoke Derwent Court’s approval as a nursing home was a nullity. Given that it was exercising jurisdiction under the ADJR Act, it was unnecessary for that Full Court to determine whether the error was jurisdictional or not. The grounds specified in s 5 of the ADJR Act, upon which the Court may make orders in respect of administrative decisions, are not expressed in terms of jurisdictional error. At least in some cases, those grounds include errors that are not necessarily described as jurisdictional errors. An example is the ground in s 5(1)(f), that the decision involved an error of law. See Re Minister for Immigration & Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 at [27] and [57] per McHugh and Gummow JJ. It might be thought that, in enacting s 16(1)(a) of the ADJR Act, which permits the Court to quash or set aside a decision with effect from the date of the order or from such earlier or later date as the Court specifies, parliament was acting on the assumption that even a decision tainted by jurisdictional error could have some force and effect, and leaving it to the Court to decide what force and effect should be accorded to such a decision. It must also be clear that, to the extent to which s 5 of the ADJR Act confers jurisdiction in respect of a ‘decision’, it was intended that there should be jurisdiction, whether or not the decision concerned was subject to jurisdictional error. See Australian Broadcasting Commission Staff Association v Bonner (1984) 2 FCR 561 at 566 per Morling J and Seventh Mingcourt Pty Ltd v Lawrence (1996) 64 FCR 367 at 375 per Branson J. Similar conclusions have been reached in cases concerned with merits review of a ‘decision’ for the purposes of other legislation in Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307 at 313 – 315 per Bowen CJ and 331 – 337 per Smithers J, Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213 at 218 – 219 per von Doussa J (Spender and French JJ agreeing) and, in relation to an appeal to the Court on a question of law from a ‘decision’ of the Administrative Appeals Tribunal, in Clements v Independent Advisory Committee [2003] FCAFC 143 at [36] – [40] per Gray ACJ and North J (Gyles J agreeing).

45    The earlier Full Court had some difficulty in characterising the error that it found affected the decision to revoke approval. In the end, it chose to characterise the error as one of taking into account an irrelevant consideration, by treating the findings of the panel as having been made by a properly constituted panel. As the reasons of the Court show, it would have been perfectly proper for the Minister’s delegate to take into account the views of the panel as the collective views of three people. It was only the decision-maker’s ignorance as to the qualifications of a panel member that might have resulted in more weight being given to the views of the panel than would otherwise have been the case. It is not obvious that this is a finding of jurisdictional error. There is no suggestion that the Minister’s delegate failed to understand the task to be performed. There is every reason to suppose that an error in giving too much weight to evidence, because of ignorance as to the true status of the persons providing that evidence, would have been regarded as something less than jurisdictional error.

46    There is some support for this view in the orders made by the Full Court. The Court deliberately set aside that part of the order of Heerey J which declared void the decision to revoke approval of Derwent Court. That order tended to suggest that there had been jurisdictional error, although his Honour did not say so in terms. Rather, he characterised the error as a failure to observe a procedure required by law and found a statutory intention that the object of the statute could not be achieved if the procedure were not followed. The Full Court substituted for this order an order setting aside the decision. The learned primary judge was correct to view this as a choice by the Full Court to make an order that would operate from the date of the Full Court’s judgment, and not from the date of the decision of the Minister’s delegate. His Honour was correct to follow Wattmaster in which, at 256, Sheppard and Wilcox JJ, with whom Fox J agreed, said:

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. Neither, we think, is anything to be derived from the circumstance that “date of the order” is first mentioned; the probable explanation of that circumstance is ease of drafting.

47    The Full Court’s order is thus to be taken as an order setting aside the decision from the date of the Full Court’s order. It is difficult to conceive that the Full Court would have made the substitution, without exercising the power under s 16(1) of the ADJR Act to set aside the decision from its inception, if it had not intended to change the effect of the order. Unfortunately, the Full Court did not give clear reasons for the orders it made. Its only reason expressed was that it had regard to the ground on which Jadwan had succeeded in resisting, in substance, the Minister’s appeal. The learned primary judge expressed the view that it seemed likely that the Full Court regarded it as just that the revocation decision remain in effect until the date of the appeal judgment because Jadwan had failed to raise before Heerey J the point on which it succeeded in the Full Court. It is at least as likely an explanation that the Full Court had regard to the powers given to the Court in respect of a decision by s 16(1) of the ADJR Act and chose to exercise the power to set aside the decision, pursuant to s 16(1)(a), on the basis that it was not satisfied that there existed jurisdictional error, which might have justified a declaration pursuant to s 16(1)(c) that the decision was void. If the Full Court had regarded the Minister’s delegate as having made a jurisdictional error, it is hard to see how the point of time at which argument came to be directed to that issue could have had any impact upon the form of order that was appropriate, upon the issue being made out.

48    The judgment of the earlier Full Court cannot be discussed without making reference to the question whether, and to what extent, it is open to Jadwan to canvass these issues in the present proceeding. Whatever may have been the reasons why counsel who then appeared for Jadwan did not make submissions to the earlier Full Court as to the date from which any order it made should operate in relation to the decision, it cannot be denied that it was open to Jadwan to make such submissions. The unsuccessful attempt, during the hearing of this appeal, to reopen the orders of the Full Court only serves to underline the fact that the issue could have been raised in the earlier proceeding. In no sense can this Court sit on appeal from the judgment of the earlier Full Court, for the purpose of altering the orders the Full Court made. There is a danger that, if this Court were to act on the basis that the decision of the Minister’s delegate was affected by jurisdictional error, it would be reconsidering what the earlier Full Court did. If the issue of jurisdictional error had been determined in favour of Jadwan by an explicit finding of the earlier Full Court, there would be nothing to prevent this Court acting on that finding; indeed, it would be bound to do so, by the application of issue estoppel. In the absence of such an explicit determination, any attempt by Jadwan now to obtain such a finding must fall foul of the doctrine of res judicata, on the basis that the issue could have been raised in the earlier proceeding. Even if that were not so, the operation of what is known as Anshun estoppel, derived from the High Court’s judgment in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, would bar Jadwan from raising the issue here. In effect, Jadwan now seeks to assert as correct the view taken by Heerey J, that the decision of the Minister’s delegate should be regarded as void, when that view was specifically rejected by the earlier Full Court. This Court could not accept Jadwan’s argument without giving a judgment that would contradict the judgment of the earlier Full Court.

49    If it were open to this Court to look afresh at the effect of the decision of the Minister’s delegate, the proper conclusion is that the decision could not be ignored for all purposes. Nothing in the scheme of the National Health Act at the time required that that be done. It must be remembered that the National Health Act contained no power under which patients could be removed from an approved nursing home, in the event that approval were revoked. There was no statutory bar to Jadwan continuing to provide the care it had provided to the people to whom it had provided it, even after the decision was made. The effect of the decision was only that Commonwealth benefit was no longer payable in respect of persons for whom care was provided. Of course, a decision revoking approval of a nursing home inevitably had the effect of stopping the cash flow of the proprietor. It was probably inevitable that this would require that arrangements be made for the provision of care for the patients by the proprietor of another approved nursing home. Nothing in the National Health Act required that this be done, however. It would have been open to Jadwan to continue to care for the patients in Derwent Court, whilst taking whatever steps were appropriate to have the decision set aside from the date on which it was made. If it had succeeded in doing so, it would have had an entitlement to receive arrears of Commonwealth benefit in respect of each patient for whom it had provided care in Derwent Court in the meantime. Given that scheme, there was nothing about the National Health Act that suggested a legislative intention that a decision revoking approval pursuant to s 44(1) should have no effect if the decision-maker wrongly took into account evidence provided by a panel that had no authority under the legislation.

91    Kenny J’s reasoning, although concurring with the plurality’s conclusion, differed in emphasis:

68    Although the grounds appearing in pars 5(2)(a) and (b) of the AD(JR) Act are “substantially declaratory of the common law” (see Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24, at 39 per Mason J), the AD(JR) Act does not incorporate the common law distinction between jurisdictional and non-jurisdictional errors. The grounds of review specified in s 5 of the AD(JR) Act are not expressed in terms of jurisdictional error. Some of these grounds may include errors that would not be jurisdictional errors in the common law sense: see Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59 at 65 and 72 per McHugh and Gummow JJ. The concept of jurisdictional error played no part in the reasoning of Burchett, Drummond and Sackville JJ, because no question of jurisdictional error arose under the AD(JR) Act. The parties before the Full Court on this earlier occasion quite properly did not make submissions on the existence or non-existence of jurisdictional error.

…

78    Since Craig, the High Court has progressively simplified and rationalised the common law principles of judicial review of administrative action. The result is that today many of the common law principles resemble the statutory regime set out in the AD(JR) Act more than twenty years ago. The gravamen of the appellant’s argument in the present appeal concerns the effect of this rationalisation. In the appeal, now some five years ago, Burchett, Drummond and Sackville JJ held that, in revoking Derwent Court’s approval as a nursing home, the decision-maker took into account an irrelevant consideration (within the meaning of par 5(2)(a) of the AD(JR) Act) and that, in consequence, there was an improper exercise of the power (for the purpose of par 5(1)(e) of the AD(JR) Act). Had the proceeding been constituted under s 39B of the Judiciary Act, their Honours might have found that the decision-maker had regard to an irrelevant consideration and that, in consequence, there was jurisdictional error in the sense discussed in Craig and later cases. It does not follow from this, however, that a decision made by the Federal Court of Australia in the exercise of the jurisdiction conferred by the AD(JR) Act can be treated as if it were a decision in exercise of the jurisdiction conferred by s 39B of the Judiciary Act. The statutory regime and the jurisdiction that it confers is not the same as the common law and the jurisdiction that arises by virtue of s 39B of the Judiciary Act.

79    Further, in relation to remedies, there remain some significant differences between the AD(JR) Act and the common law. One of these differences is relevant to the disposition of the present appeal. In particular, the remedies available under s 16 of the AD(JR) Act are broader and more flexible than those available at common law. As Sheppard and Wilcox JJ (with whom Fox J agreed) said in Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253, 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. Neither, we think, is anything to be derived from the circumstance that ‘date of the order’ is first mentioned; the probable explanation of that circumstance is ease of drafting.

Having in mind what is involved in “setting aside” or “quashing” (as to which see Commissioner for Railways v Cavanough (1935) 53 CLR 220 at 225) it may, at first sight, seem strange to speak of setting at naught a decision as at a particular date. However, it is consonant with the general scope and purpose of the Act and its varied application that there may be cases in which a decision is to be set aside, and, according to ordinary understanding, to become a nullity, but in which the nullifying should nevertheless take effect from some later date. The provision of such an option provides greater flexibility than is available with a writ of certiorari, which quashes a decision ab initio … . The processes of the Court when granting relief under the Administrative Decisions (Judicial Review) Act are very wide and considerations going to the date as at which an order is to take effect quite naturally fit the general scheme.

80    In the earlier appeal, Burchett, Drummond and Sackville JJ expressly set aside the trial judge’s declaration that the decision to revoke the approval of Derwent Court was void. In place of this declaration, the Full Court ordered that the revocation decision be set aside. The primary judge in this proceeding was plainly correct to view this as a choice by the Full Court to make an order that would operate from the date that it was made and not from the date of the decision of the Minister’s delegate.

92    The plurality also addressed the further question considered by North J as to whether the relief Jadwan had sought could, in any event, have restored its position. They did so in the following terms:

51    Even if Jadwan were able to establish that the decision to revoke the approval of Derwent Court should be treated as a nullity, this would establish only one element of s 7 of the Consequential Provisions Act. It would establish that Jadwan was the proprietor of an approved nursing home immediately before the commencement day. Section 7 would operate to deem Jadwan to be an approved provider only if one of the alternatives in s 7(1)(a) and (b) applied. No attempt was made to establish any grant of a certificate under s 39A of the National Health Act, so alternative (b) could not apply. Alternative (a) applied only if Commonwealth benefit was payable to Jadwan in respect of an approved nursing home patient under the National Health Act, for nursing home care received by the patient on the day before the commencement day.

52    By its terms, s 7(1)(a) directs attention to factual reality. Before it can apply, there must have been at least one patient actually receiving nursing home care on 30 September 1997. There must have been the actual receipt of, or entitlement to receive, Commonwealth benefit in respect of such a patient. The words of s 7(1)(a) are plain. If it is necessary, confirmation of their intention to apply to a factual situation is provided by s 7(2)(a)(i), which is designed to ensure the continuity of the operation of a nursing home, to the extent to which it is operating.

53    Treating the decision to revoke the approval of Derwent Court as a nullity would not assist Jadwan to satisfy the requirement of s 7(1)(a). As a matter of fact, on 30 September 1997, there were no patients receiving nursing home care in Derwent Court and no Commonwealth benefit was paid or payable in respect of any such patient. The entitlement to receive Commonwealth benefit in respect of an approved nursing home patient, pursuant to s 47(1) of the National Health Act, was dependent on the actual receipt of nursing home care in the particular approved nursing home.

54    Jadwan’s submission that treating the decision to revoke approval as a nullity is enough to cause s 7(1)(a) of the Consequential Provisions Act to apply must be rejected. To the extent to which it is based on the existence of a cause and effect relationship between the revocation decision and the removal of the patients, the submission is not made out. On the facts, the removal of the patients began and was completed before the revocation decision was made. It was effected during a period when Jadwan had an entitlement to make submissions to the Minister’s delegate about whether the intention to revoke, notified on 20 July 1997, should be carried into effect. No reason was advanced for this Court to overturn the finding of the primary judge that the evidence did not establish that the removal of the patients was unlawful. The situation appears to have been that, in anticipation of the formal revocation of the approval of Derwent Court, Jadwan cooperated with officers of the Department to effect the removal of patients to nursing homes where Commonwealth benefit would continue to be payable in respect of them. In doing so, it acted in the interests of both itself and the patients. As has already been pointed out, there was nothing to prevent Jadwan continuing to provide nursing home care for the patients at Derwent Court, even after the approval under the National Health Act had been revoked. The only consequence of the revocation was that Jadwan could not receive Commonwealth benefit or other benefits under the National Health Act in respect of any patient for whom it was providing nursing home care in Derwent Court. Any attempt to continue to conduct the nursing home would have been to the financial detriment either of Jadwan or of the patients who would have had to pay the full cost of their care. There is no issue of penalising Jadwan for its cooperation in the removal of the patients. The result would have been the same, in terms of the application of the National Health Act, if there had been a power to compel their removal and they had been removed against Jadwan’s will.

55    To say that the impending revocation of approval was the reason for the removal of the patients was one thing. To say that treating the revocation as a nullity requires that the removal be treated as if it had not happened is quite another. The likelihood is that Commonwealth benefit was paid in respect of each of the patients removed. It was paid to the proprietor or proprietors of some other approved nursing home or homes. To suggest that it should be treated as having been payable also to Jadwan on the basis of notional patients on 30 September 1997 would be to rewrite s 47(1) of the National Health Act.

56    Irrespective of the outcome of the argument about causation, the position remains that, on 30 September 1997, there were no patients receiving nursing home care in Derwent Court. Whatever the reason for the absence of patients, it is that absence that prevents Jadwan taking advantage of s 7(1)(a) of the Consequential Provisions Act. Section 20 of the Consequential Provisions Act had nothing on which to operate.

93    While the observations of both North J at first instance in Jadwan No 3 and the plurality in Jadwan No 4 are necessarily obiter, no party in these proceedings disputes that the correct construction of the transitional provisions provided for by s 7 of the Consequential Provisions Act is that Jadwan could not have benefited from those provisions unless Derwent Court not only had the status of an approved nursing home, but also was in receipt of a Commonwealth benefit payable on the day before the commencement day of the Aged Care Act (ie 30 September 1997) for nursing home care actually received by at least one resident.

94    Mr Pearce thus opened Jadwan’s case on the basis that Jadwan’s former legal advisors had negligently failed to advise Jadwan as to the necessity of it obtaining an injunction to set aside a decision purportedly made on 6 August 1997 by a delegate of the Minister pursuant to s 44(2) of the National Health Act to revoke its licence to operate Derwent Court and to retain at least some residents at Derwent Court as at 30 September 1997 so that it could obtain the benefit of the Consequential Provisions Act.

95    Mr Pearce thereafter conducted the trial on Jadwan’s behalf on what the Court understood to be the premise that Jadwan’s case was that its lawyers’ negligence had cost it the chance, as the proprietor of an approved nursing home under the National Health Act, to transition pursuant to the Consequential Provisions Act to become an approved provider of aged care services upon the Aged Care Act coming into force on 1 October 1997. Had Jadwan been properly advised it would have been able to continue operating a nursing home at the same premises or relocating its nursing home (with funding attached to its residents) to a new facility on a greenfield site. Alternatively, as Mr Pearce contended in opening, Jadwan was denied a chance to have sold its 51 bed licences in late 1997.

96    As noted, prior to closing submissions, Jadwan formally abandoned its contention that the failure to give such advice had cost Jadwan a chance to have continued to operate a nursing home from its existing premises until the present.

97    However, that the trial had previously been conducted as a “loss of a chance” (or a loss of opportunity) case can be illustrated by the submissions Mr Pearce advanced on the issue decided by the Court in these proceedings in Jadwan Pty Ltd v Rae & Partners (A Firm) (No 3) [2017] FCA 1045 (Jadwan No 5).

98    In making submissions on the admissibility of pricing information provided to Jadwan by Mark Selby-Hele (of “Aged Care Developments”) for the construction of a new nursing home on a greenfield site Mr Pearce referred to the exercise that he submitted the Court would be required to undertake in deciding this matter:

And if your Honour accepts that there has been such a breach of the duty of care, your Honour then turns to the question about whether it has caused any loss. Now, the moment we move into that question, we move – and I’ve had to say a number of things about this, but we move into the realm of the past hypothetical fact and there is a vast number of past hypothetical facts that your Honour will have to make findings about and we all accept that. Your Honour will have to make a finding about if Jadwan had got the advice that we say it should have been given, would it then have applied for an injunction. Your Honour has got to decide that on the balance of probabilities. If the application for the injunction was made, would the injunction have been granted?

Your Honour has got to decide that on the balance of probabilities. If the injunction had been granted and Jadwan on 1 October had a valid approval for 51-bed licences transitioned then into the new regime, would Jadwan then have continued to operate this business. Your Honour has got to decide that. And then your Honour has got to decide, “Well, how would it have done that? Would it have stayed on at Derwent Court?” Now, if your Honour decides that, then your Honour has got to think, “Well, what would it have cost Jadwan to stay on at Derwent Court,” or your Honour might take the view that, “No, Jadwan would have rebuilt,” any your Honour has got to decide that on the balance of probabilities, but it is a past hypothetical fact. And if that’s what your Honour decides, your Honour then has to work out what it would have cost to rebuild as a matter of past hypothetical fact because it didn’t happen. We have to imagine it would have happened.

Now, the High Court has told us on at least two occasions, and we will go to these matters in closing submission eventually, but the High Court has told us that in the realm of past hypothetical fact a lot of the time there’s not much you can do but speculate and engage in conjecture. You just have to do that. There needs to be some evidentiary basis for it, but it is ultimately a matter of speculation and conjecture. And the evidence that we rely on is the evidentiary basis for the speculation and the conjecture that your Honour will have to engage in about what it would have cost Jadwan to relocate.

(transcript p 833 lines 1-32)

99    That submission was advanced on a loss of a chance analysis. Mr Pearce’s closing written submissions put the Applicant’s case explicitly on that basis.

100    However, in closing oral submissions, without notice, Mr Pearce sought to rearticulate the basic premise upon which these proceedings were to be decided. In respect of all but the Fifth Respondent, he submitted, the proceeding was not a loss of a chance case, rather, Jadwan’s cause of action was for “loss of property”:

… We plead the claim against the Fifth Respondent as a loss of opportunity, but we plead against the other four respondents loss of property. That’s paragraph 70. The negligence caused loss; the loss is the loss of the business. So that’s how we pleaded it. I don’t think I opened the case on any different basis, your Honour, but your Honour I accept that our written submissions accept the proposition that it’s a loss of opportunity case. And what I want to now say to your Honour is if you want to regard it that way, in the same way this was done in the joint reasons [in Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440], you reach the same result.

(transcript p 1878 line 12-19)

101    In submissions in reply, Mr McElwaine SC expressed concern that the Applicant had pleaded, opened and run its case on the basis that it was a loss of opportunity case. It had filed written closing submissions expressly and exclusively on that premise. Jadwan’s counsel should not be permitted belatedly to contend it was a loss of business case in those circumstances (transcript p 1919 line 30 – p 1920 line 20). It would be unfair for the Court to permit that course to be taken. That submission was adopted by all of the Respondents.

102    Mr McElwaine submitted that the Applicant’s rearticulation of its case was, in any event, based on a misunderstanding of Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440 (Badenach), which was a lost opportunity case, and contended that Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159 (Hill) was not analogous because the relevant negligence in that case did not involve a failure to advise:

It’s plainly a lost opportunity case […] It’s not a case about opportunity to litigate, although that’s one aspect. It’s a case about if I had been given different advice, then I had the opportunity of avoiding the detrimental impact of decision making by the Commonwealth […] that’s the lost opportunity.

(transcript p 1920 lines 6-24)

103    Mr McElwaine’s objection to Jadwan rearticulating the premise of its claims at such a late stage was both understandable and justified. The trial had spanned several weeks. It had been conducted throughout without close reference to the pleadings.

104    Mr Pearce opened Jadwan’s case on the basis of an unpleaded alternative scenario that, but for the negligence of its legal representatives, Jadwan would have been able to sell, and would have sold, its bed licences. Given that no objection had been taken in respect of that opening, and that the trial proceeded on the premise that Jadwan would seek to make good that element of its case, I rejected an objection pressed by Mr McElwaine later in the trial that certain evidence Mr Pearce had sought to adduce to support that proposition should not be admitted in the absence of express pleadings. The trial had been conducted to that point, without objection, on the basis of Mr Pearce’s opening. It did not appear to the Court that any unfairness would be occasioned to the Respondents given that in respect of the quantum of damages, they had elected merely to put Jadwan to proof. Further, the conduct of the trial, rather than the pleadings, which until that point had hardly been mentioned, should govern the outcome. I subsequently granted leave to Jadwan and the Respondents to amend their respective pleadings to reflect the actual conduct of the trial.

105    To put it bluntly, for better or for worse, the trial was conducted on the basis that Mr Pearce’s opening had set its parameters. There was almost no mention of the pleadings.

106    It would be inconsistent with the Court having facilitated that approach (which then had benefitted Jadwan) to allow Jadwan, months after the trial in which a proposition had never been articulated, and contrary to its closing written submissions, to entirely reformulate its case on the basis of its formal pleadings.

107    I accept Mr McElwaine’s submission that the Court should not permit Jadwan to resile from the case Mr Pearce had conducted on its behalf in a trial extending over four weeks on the basis of a paragraph of a lengthy pleading to which no attention had earlier been directed.

108    I further accept Mr McElwaine’s submission that, having regard to Badenach, Jadwan’s cause of action as against each Respondent in any event is properly to be understood as a claim for the value of a lost opportunity. Mr Pearce in closing oral argument submitted for the Court to find to the contrary, but in the Court’s opinion advanced no persuasive rationale in support.

109    However, lest both of those conclusions be in error, I will make notional findings against the contingency that an appeal court might reject my reasons for not permitting Jadwan to rearticulate its cause of action against the first four Respondents as a claim for loss of property.

5.    WITNESS CREDIBILITY AND MEMORY

110    In the nature of a trial conducted some two decades after the events in dispute occurred, human memory will prove fallible. Entirely without dishonesty, awareness of the outcome of an event may influence how a witness recalls that event, or what he or she said or heard about something occurring long ago. Contemporaneous written records, to the extent they exist, therefore are generally a more solid basis for judicial fact-finding than personal recall.

111    In these proceedings, two witnesses called on behalf of the respective parties maintained detailed notes of the events they had participated in. It is convenient therefore for the Court to state its findings with respect to the reliability of the notes they made and more generally their credit.

5.1    Mr Wicks

112    Mr Wicks was, in turn, an employed solicitor with the First, Second and Third Respondents.

113    The Court’s findings as to what Mr Wicks did or did not do are also at least potentially relevant to the alleged liability of the Fourth and Fifth Respondents.

114    Mr Wicks was an extensive note-taker.

115    A considerable number of Mr Wicks’ file notes were adduced as evidence in Jadwan’s case as part of exhibit Ex A1. The majority of his notes bore a clear indication of the date on which they were made, but some did not.

116    Counsel for the First, Second and Third Respondents, Mr Jackson SC, expressed concern that the Court might misapprehend the import of an undated note within Ex A1 unless regard was given to its context and the chronology of its making.

117    Mr Jackson informed the Court (without objection) that Mr Wicks’ original file had been pulled apart for use in Jadwan’s earlier legal proceedings. Following those proceedings, no steps had been taken to ensure it was accurately reassembled. Mr Wicks’ notes therefore did not appear in the Court Book in proper chronological order (transcript p 1468 line 26 – p 1471 line 14).

118    Mr Jackson advised the Court that Mr Wicks had recently applied himself to reconstructing his file notes in their original chronological order. Mr Jackson sought leave to have the entire corpus of Mr Wicks’ file notes, in the order Mr Wicks had reconstructed them, admitted into evidence on behalf of the First, Second and Third Respondents. Mr Pearce did not oppose that course being taken.

119    I therefore admitted into evidence Mr Wicks’ file notes in the order and form they had been reassembled by Mr Wicks as Ex R1-3 X6.

120    In large measure that precaution may have been unnecessary because the course of the trial led to most of the file notes included within Ex A1 as I have referred to in my reasons not being disputed as to their chronology.

121    However because Mr Pearce was selective (as he was entitled to be) as to which of Mr Wicks’ file notes Jadwan would tender as included in Ex A1, some of Mr Wicks’ file notes are in evidence only as part of Ex R1-3 X6.

122    Unfortunately the pages of that exhibit are not sequentially numbered. The handwritten numbering as appears at the foot of each page is of no assistance. Those numbers refer to equivalent pages of the original Court Book. Unhelpfully, the Court Book in its entirety is not in evidence. Thus when the Court refers to a particular file note within that exhibit in these reasons the source documents have had to be identified by their sequence in date and time.

123    I make the following findings regarding Mr Wicks’ practice of note-taking informed by the evidence as a whole before the Court.

124    I find that at all material times Mr Wicks was an assiduous and careful note-taker. He kept a separate file for Jadwan. I find that Mr Wicks’ regular practice was to make a handwritten note at the time of, or as shortly thereafter as possible, of every communication he had with the directors of Jadwan. I find that he similarly had a practice of making a handwritten note of every action he took on their behalf.

125    I find that Mr Wicks usually, but not invariably specified the date, and less frequently recorded the time of the events he made handwritten notes about. He distinguished telephone calls to him as “TF” from those he made as “TT”.

126    His common (but not invariable) practice was to express anything said by someone by using the word “you” followed by whatever had been said. I find that Mr Wicks took care to identify whether he was recording something said to him in distinction from something he had said but in the haste of making a note sometimes that object was not achieved.

127    I find that where Mr Wicks thought a particular event was of exceptional significance, he would expand his original hand written file note into a longer typed record while the event was still fresh in his mind.

128    I find that none of Mr Wicks’ file notes were constructed in anticipation that they might later be the subject of proceedings such as the present.

129    For the above reasons I am satisfied, unless good reason is established to the contrary in a particular instance, that the Court is entitled to rely on Mr Wicks’ file notes as highly probative of what they record. I include in that regard what they reveal about his own thinking at the time.

5.1.1    Mr Wicks’ undue certainty

130    Without the benefit of his file and his file notes before him, in oral evidence Mr Wicks’ memory of the events recorded proved susceptible to error.

131    As an example, Mr Wicks gave what appeared to be confident evidence during examination-in-chief that he had not known about the sanctions decision until 10 June 1997. After having been shown certain relevant documents Mr Wicks accepted that he must have known about the sanctions decision from 7 February 1997 (transcript p 1567 line 7).

132    More generally, Mr Wicks asserted a certainty about his present recall beyond that which the Court finds plausible.

133    Pressed in cross-examination by Mr Pearce as to what weight could be put on his present recall if it was inconsistent with a file note he had made in 1997, Mr Wicks responded that if a discrepancy existed between his oral evidence and his file notes, his oral evidence should be preferred because he had had the opportunity to review the content of his file notes before being called (transcript p 1638 line 45 - p 1639 line 11; p 1571 lines 1-22).

134    I am satisfied that, in respect of the occasions when Mr Wicks’ oral evidence diverged from his contemporaneously written notes, in the absence of a clear contextual reason or evidence to corroborate his evidence, the Court is entitled to proceed on the basis that that which is recorded in his notes is to be accepted as the more reliable. I do not impugn Mr Wicks’ general credit on that premise. I find that Mr Wicks’ confidence in his capacity to recall those events, while implausible, was genuine.

135    I observed that under robust cross-examination Mr Wicks showed signs of discomfort. However some discomfort can be accepted to be inherent in his having to recall events which, whatever his responsibility for them might be, had turned out badly.

136    Within the limits of a judge’s capacity to evaluate character, my observations reinforced rather than undermined my confidence in Mr Wicks’ honesty.

137    Mr Wicks’ confidence in his present recall under cross-examination was wholly implausible. But it had the ring of truth – as his assertion. Tempting as it might be to conclude that no lawyer could honestly give such evidence, I reject that conclusion in Mr Wicks’ case. I am satisfied that despite his having reviewed his notes (including reassembling them in their original order) he had continued to believe with implausible certainty some things that were inconsistent with them. I find that when Mr Wicks gave such evidence he genuinely believed that his present memory should be preferred in those instances.

138    By way of contrast, in other aspects of his evidence under cross-examination Mr Wicks was perhaps too prone to make concessions. I discuss instances in which that may have been the case at [243], [270] and [278] below. In my view both his over-confidence in certain aspects of his evidence and his self-destructive willingness to make what appeared to the Court may have been unnecessary concessions were manifestations of a lack of insight and judgement, not dishonesty.

139    In so far as it is open to a judge to make an assessment based on demeanour, I am satisfied that while on occasions Mr Wicks gave evidence which the Court has rejected, he answered the questions put to him in examination-in-chief and in cross-examination as he understood the truth to be.

5.2    Mrs Joan Alexander

140    Mrs Joan Alexander was a director of Jadwan. She remains so.

141    In respect of the periods relevant to these proceedings her evidence established that she had maintained a work diary. Her practice was to assiduously record, in long-hand, notes of any discussion she had had with her fellow directors. She also recorded notes of meetings relevant to Jadwan’s affairs. Her notes were not confined to events she had directly participated in. They included a record of events she had been told about by other directors of Jadwan. Her evidence confirmed that her practice had been to make notes without delay as soon as possible after the events they described had occurred, or she had been informed of them. Her credit was not put in issue.

142    I ruled in the trial that Mrs Alexander’s diary was admissible as a business record. Parts were then tendered as Ex A1 and Ex R1-5 X1. No application was made to exclude or limit the use of those entries pursuant to s 135 or s 136 of the Evidence Act 1995 (Cth) (the Evidence Act) regarding any hearsay they might contain. Subject to considerations of weight and relevance, such hearsay statements are admissible to prove the truth of what they record. I accept the provenance and routine reliability of Mrs Alexander’s notes regarding the events she recorded.

143    There was only one diary entry about which a dispute arose. In that regard, an entry dated 24 July 1997 (Ex A1 p 3780) refers to the Alexanders having decided to sell 51 beds and Joan Alexander’s intention to go to “Glenburn” to tell “Pam” that “we are selling today”.

144    Mr Gunson SC cross-examined Mrs Joan Alexander on the basis that her note was to be understood as a record of planning to tell “Pam” that the Alexanders were intending to sell Derwent Court’s 51 beds. She denied that. When re-examined by Mr Pearce, Mrs Alexander explained that her reference to 51 beds had been an error on her part; the Alexanders were then planning to sell the Glenburn Nursing Home which they operated in Victoria and her note had wrongly referred to 51 beds rather than Glenburn’s 31 beds (transcript p 534 line 26 – p 535 line 17).

145    I accept that explanation as it is consistent with Mrs Alexander’s subsequent note at Ex R1-5 X1 p 3781. It is consistent with the Alexanders making plans at that time to get out of the nursing care industry entirely. That the Court is entitled to accept the truth of her account in re-examination is reinforced by a later diary entry dated 27 July 1997 (Ex R1-5 X1 p 3783) in which Mrs Alexander records that having regard to the events at Derwent Court, “we need to get out [of Glenburn] quick before they [the Commonwealth] do the same thing”.

146    The Court later refers to certain parts of Mrs Alexander’s oral evidence it did not accept, but it is entirely satisfied that Mrs Alexander gave evidence of the truth as she recalled it.

6.    THE CONTROLLING MIND OF JADWAN

147    As a company Jadwan was and is in law an independent legal personality but necessarily its conduct had and has to be directed by human minds. During the period material to these proceedings Jadwan’s directors were Mr Jeff Alexander (until his death), his wife Mrs Joan Alexander together with their children Ms Julie Alexander and Mr Wayne Alexander.

148    Jadwan’s directors were family members. They appear not to have thought it necessary to formally record the decisions they made as the directors of Jadwan. A difficulty is thus presented at the threshold because there are no relevant records of directors meetings in evidence.

149    However, the evidence given in the trial entitles the Court to conclude that until his untimely death Mr Jeff Alexander was, in practice, the controlling mind of Jadwan.

150    Asked by Mr McElwaine whether his father, Jeff, was “effectively the one in control” of Jadwan, Mr Wayne Alexander answered, “yes, but he did have daily communications with … Julie and with my mother Joan” (transcript p 720 lines 40-43). He gave evidence that Mr Jeff Alexander had been the “predominant director” who oversaw all major decisions, but all directors had input and they would generally reach a consensus regarding decisions made by the company (transcript p 722 lines 6-25).

151    Ms Julie Alexander appears to have played a more active role in the affairs of Jadwan than did her mother and brother. However the evidence establishes that she also deferred to her father even when her instincts were to the contrary.

152    Thus in cross-examination Ms Julie Alexander was asked about a note Mr Wicks had made of a discussion that had taken place between Mr Jeff Alexander and Mr Wicks on 2 July 1997 (Ex A1 p 4125). Mr Jackson suggested to Ms Alexander that the note recorded the intention of the directors of Jadwan at that time as being “more inclined to sell now and get out”. Ms Alexander responded that she believed that to be Mr Alexander’s own personal sentiment, but that she had not shared that view. She gave the following evidence:

I remember Jeff having a discussion with me. It was, I don’t know, probably a month or two before we were closed… the notice of intention, asking what my thoughts were on it, whether we should sell. And my thoughts were that the reports were so grossly wrong that we should be challenging it and not allow these people to rob us of our nursing home.

(transcript p 597 lines 37-42)

153    Whatever concern Ms Julie Alexander may have expressed during that conversation with her father she had said nothing to suggest Jadwan’s directors had not so decided when Mr Jeff Alexander informed Mr Wicks on 2 July 1997 about the intention of Jadwan’s directors. I find that Ms Alexander tacitly accepted that, while they were equally directors, her father was the final decision maker. That conclusion gains confirmation from the evidence Ms Alexander gave about the events that followed.

154    Ms Alexander gave evidence that on 31 July 1997 she had typed a letter of instructions on Jadwan’s behalf, and that her father had dictated the letter to her. That letter (Ex A1 pp 2402-2405) informed Mr Wicks that Jadwan was not in a position to immediately find a buyer for Derwent Court but that, if given a specified timeframe by the Commonwealth to permit it to do so, Jadwan would engage a business broker and negotiate its sale.

155    Ms Alexander’s evidence was that she had disagreed with the content of the letter but had said nothing about her reservations to her father. She had delivered the letter to Mr Wicks as Jadwan’s instructions despite her concerns about its contents. Ms Alexander sought to distance her fellow directors from it. The letter was “purely Jeff’s” (transcript p 620 lines 35-47).

156    However the following exchange took place between Mr Jackson and Ms Alexander (at transcript p 622 lines 6-24):

MR JACKSON: Well, I’m simply establishing that this is a decision Jadwan had come to on ---? No. But I recall at the ---

---31 July?---I do recall at the time that this letter was written in haste and I didn’t have any input on it. We just got it off very hastily to Mr Wicks. And it was – it was an extremely stressful time where, you know, basically it was – you know ---

I have no doubt it was. But this letter reflects, doesn’t it, accurately the decision Jadwan, including you and Jeff, had come to by the time you sat down and typed this letter as Jeff dictated it to you?---No, it wasn’t. It – it was – this is Jeff’s letter that went to ---

Well, were you---?---Mr Wicks.

---content to allow Jeff to make this decision on behalf of Jadwan? It was – at the time, I suppose, you know, it was – there was – it was too much ---

Were you content to allow Jeff to make that decision, the decision reflected in this letter, on behalf of Jadwan?---Yes.

(Emphasis added)

157    I find that Mr Jeff Alexander was, at all material times relevant to these proceedings, effectively in control of Jadwan. Even if other directors had private reservations and even if they had expressed a contrary view, once Mr Alexander had spoken on the company’s behalf they subjected their will to his. I am satisfied that when Jadwan gave instructions to its legal representatives it did so on the basis that Mr Alexander was its “predominant director”. Jadwan impliedly authorised him to be held out as such. Notwithstanding any reservations privately held by other directors, what Mr Alexander communicated as Jadwan’s decisions and instructions were, and were entitled to be, understood by Mr Wicks, the Department, and others dealing with the company, Jadwan’s decisions and instructions.

7.    DID EITHER JADWAN OR MR WICKS HAVE PRIOR KNOWLEDGE OF NEW LEGISLATION?

158    A mystery at the centre of this case is how all of the key actors in these proceedings could have remained unaware, as they gave evidence that they had, of pending significant changes to the statute law governing the regulation of nursing homes. Two bills, which when later enacted became the Aged Care Act and the Consequential Provisions Act, had been introduced into the House of Representatives on 26 March 1997. They had been debated cognately.

159    The Aged Care Act had become law on 7 July 1997. A proclamation of 3 September 1997 had fixed its date of commencement as 1 October 1997.

160    How could such seismic changes to the regulation of the nursing home care industry have gone unnoticed by Jadwan’s directors and Mr Wicks? Should their evidence be rejected as inherently implausible? For the reasons that follow I find to the contrary.

7.1    The directors of Jadwan

161    The three surviving directors of Jadwan gave oral evidence. All were cross-examined. Each denied having had any prior knowledge of the Aged Care Act before it came into force as law on 1 October 1997.

162    Such significant legislative changes can be expected to have been the subject of debate and publicity. It might be thought that a family running a nursing home would have had a strong interest in ensuring they were fully up to date in their knowledge of significant changes facing their industry.

163    It is tempting to treat Jadwan’s surviving directors’ evidence as self-serving and inherently implausible but I refrain from doing so.

164    The documents discovered by Jadwan contain no records of any communications received from the Commonwealth advising it and/or its directors of the anticipated enactment of either the Aged Care Act or the Consequential Provisions Act. The Respondents did not suggest that Jadwan’s records had been culled before discovery or that Jadwan had otherwise failed to disclose relevant correspondence from the Commonwealth. No evidence was adduced by the Respondents to establish that such correspondence had in fact been sent to Jadwan by the Commonwealth.

165    The Respondents submit that Jadwan had prior knowledge because Mr Jeff Alexander would have learnt of that legislation when he attended a standards and accreditation seminar organised by Australian Healthcare Associates Pty Ltd on 25 August 1997 (confirmation letter at Ex A1 p 5454).

166    The Respondents submit that a participants’ workbook discovered by Jadwan (Ex A1 pp 2663-2728) given to those attending that seminar discloses those legislative changes in sufficiently clear terms as to require the Court to find that, from that time Mr Jeff Alexander must have known not only about the passage of those Acts but also that they would come into effect on 1 October 1997.

167    I reject that submission.

168    I accept that Jadwan’s discovery of the participants’ workbook entitles the Court to find that Mr Jeff Alexander attended the seminar and had been given a copy. It would not otherwise have been in Jadwan’s possession. I accept that the preface to the workbook he was given includes the statement that the Aged Care Structural Reform Strategy “that was announced in the 1996 Budget comes into effect from 1 October 1997”. The workbook describes the requirements under the new accreditation standards. Annexure A of the workbook was the text of the new draft standards.

169    However the workbook contains only three oblique references to the Aged Care Act (towards the top of p 6 referring to User Rights, at the foot of p 11 referring to prescribed services and near the top of p 12 when referring to other regulatory requirements). It made no reference to the Consequential Provisions Act.

170    I find it to be plausible that an operator of an existing aged care facility attending the seminar, without existing knowledge that the Aged Care Act had become law on 7 July 1997, might well overlook those references, and focus on it as an information session about new accreditation standards – as a practical development – without regard to their legal underpinnings.

171    In any event I am not prepared to find that the date of 1 October 1997 would have stood out to an existing provider as a key date. In reference to the “transitional timetable”, the workbook contained the following information (at p 29):

The timetable leading to Accreditation day on 1 January 2001, is summarised below. If facilities have not been Accredited by this date their funding will cease.

172    I am not prepared to find that Mr Jeff Alexander’s possession of that material must have given him to understand that a new statutory regime was to come into force on 1 October 1997. That he was simply inattentive to the detail in the workbook is an entirely plausible alternative explanation.

173    In that regard I note that by 25 August 1997 Derwent Court had closed. Mr Jeff Alexander may have had other things on his mind rather than the content of the workbook.

174    I am satisfied that had Mr Alexander discovered, as a result of his attendance at that seminar, that the then operative laws pursuant to which Derwent Court had been sanctioned were to be repealed and would be replaced by an entirely new legislative scheme, it is entirely implausible, given the focus of Mr Alexander’s attention, that he would not have immediately communicated that discovery to the lawyers he had instructed to act for Derwent Court. Having regard to the diligence of Mr Wicks in making extensive contemporaneous notes, had Mr Alexander done so I am satisfied that Mr Wicks would have made a file note and that that file note would be in evidence as part of Ex R1-3 X6. There is no such file note.

7.2    Jadwan’s directors blind to the threats facing them

175    I also reject the Respondents’ submissions that in any event Jadwan’s directors must have known about the Aged Care Act and the Consequential Provisions Act before 1 October 1997. That Jadwan’s directors remained unaware of pending significant legislative changes can be accepted without scepticism when regard is given to the overall picture the evidence in these proceedings paints about the way Jadwan operated Derwent Court.

176    Prior to 1997 the directors of Jadwan had entrusted the responsibility for resident care at Derwent Court to an “old school” Director of Nursing. Mr Jeff Alexander explicitly disowned his having any capacity to provide informed comment on nursing matters when instructing Mr Wicks (Ex A1 p 4115). There is considerable evidence that the Director of Nursing to whom Jadwan had entrusted that responsibility, was not in tune with, and resistant to, the need for change. The Court’s finding in that regard is consistent with the evidence of Jadwan’s principle expert witness, Ms Kay Horgan (an aged care adviser and nurse adviser/administrator) that, until the Director of Nursing retired (by her recollection in May 1997), there had been no meaningful policy development in response to the Standards Monitoring Team’s report provided to Jadwan on 6 September 1996 (transcript p 1197 lines 7-10; p 1197 lines 30-38).

177    Jadwan accordingly had paid little or no attention to emerging threats to its business model arising in consequence of increasing demands for improved care standards in the nursing care industry. Jadwan had made changes only when pressured to do so by the Commonwealth, and then only to the least degree required for compliance.

178    The evidence in these proceedings also establishes that Jadwan had been reluctant to spend money to upgrade Derwent Court. Thus in 1993 Jadwan first accepted but then later rejected a funding offer of in excess of $100,000 from the Commonwealth to enable it to install a lift at Derwent Court (Ex R1-5 X1 p 998; transcript p 426 lines 36 – p 428 line 35).

179    In her evidence Ms Horgan agreed that safety concerns about stairs being the only access to the upper floor at Derwent Court were not confined to residents. The stairs also presented an occupational health and safety risk for staff carrying food trays up and down them (transcript p 1200 lines 35-39).

180    The reason Jadwan had given for rejecting the Commonwealth’s offer was that it would not have covered the full cost of installation. There is reason to doubt that. There was evidence adduced in these proceedings by Jadwan in support of its later abandoned “Scenario 1” that a lift could have been installed for much less than that sum (quote provided by Otis Elevator Company on 19 February 1997 for supply and installation of a lift for $74,000 at Ex A1 p 1560). But even assuming the Commonwealth’s offer would not have covered the full cost as at the earlier point in time Jadwan had rejected it, the fact of that offer’s rejection stands as evidence that Jadwan had been unwilling to expend any of its own funds on improvements to Derwent Court unless compelled to.

181    Later, even knowing it was facing the threat of revocation of Derwent Court’s approval, Jadwan continued to stall on committing to the relatively modest cost of installing a sprinkler system ($46,800 according to a quote at Ex A1 pp 1578-1579). A file note made by Mr Wicks following a meeting on 26 February 1997 he had attended with Ms Julie and Mrs Joan Alexander on Jadwan’s part and Mr Dellar and Mr Hargrave representing the Department (Ex A1 pp 4210-4211) records Jadwan asking for “some sort of assurance with respect of compliance with standards in the future if the home went ahead and installed a lift and sprinkler system”.

182    Ms Horgan, the principal expert witness called on behalf of Jadwan, conceded that Jadwan’s reluctance to make such a modest investment (as I find the fact to be) did not bode well for its future compliance with safety standards (transcript p 1216 lines 1-3). It is uncontentious that a sprinkler system was not installed.

183    Jadwan also scrimped with staff training. After Derwent Court closed, the Nursing Board of Tasmania conducted an investigation. Its report is in evidence (Ex R1-5 X1 pp 3016-3042). The investigation found that Jadwan had provided limited staff training and that “most staff funded the cost of continuing education themselves” (at p 16).

184    Moreover, even accepting, as Ms Julie Alexander contended in her evidence, that Jadwan spent more on staff training than the derisory amounts recorded in its annual accounts, there is no reason to doubt the factual assertion recorded in SRP-1 that Jadwan had returned “large amounts” of funds provided to it by the Commonwealth for staff training (Ex A1 p 1242).

185    The evidence I recite above establishes that Mr Jeff Alexander and his fellow directors lacked critical insight into the growing external pressure for improved care outcomes on the industry in which Derwent Court was operating. Under their leadership both Derwent Court’s physical structure and its approach to nursing care had become anachronistic. Despite Derwent Court earlier having been identified as a home of concern, Jadwan had taken few, if any, proactive steps to ensure Derwent Court would remain viable into a future where care standards would need to improve. Jadwan had been blind to the necessity to do so.

186    The Court does not suggest that Jadwan was alone in that regard. The uncontroverted evidence of Ms Horgan was that with the passage of the Aged Care Act, a considerable number of older-style nursing homes would have needed time to meet the new standards. But the fact that other nursing homes would be affected by those changes is not to the point. Derwent Court was already the subject of adverse attention by the Department. Jadwan’s history of making only grudging and minimal changes in response to that adverse attention heightened the risks Derwent Court faced.

187    In the absence of anything specific to controvert the evidence of the surviving directors that they and Jadwan had had no knowledge of those changes until much later in time, on the premises above, I accept the truth of that evidence. None of them had paid sufficient attention to new demands for higher standards in the industry in which they operated.

188    I give reasons below for rejecting Mr Pearce’s submission that that adverse attention Jadwan experienced from the Commonwealth was the product of ill will.

7.3    Criticism of Jadwan’s management of Derwent Court not a product of ill will

189    Mr Pearce opened Jadwan’s case contending that the Court should find that the Department and its officers had been motivated by ill will towards Jadwan and/or the Alexander family. As a result of that, he contended that the adverse findings of the various Standards Monitoring Teams and Standards Review Panels regarding Derwent Court’s compliance should be discounted.

190    Neither of the expert witnesses called on Jadwan’s behalf gave evidence to support that premise. Ms Horgan’s evidence was that as at 1 October 1997 Jadwan would not have met the required accreditation standards (Ex A3 and transcript p 1192 line 31 – p 1193 line 12). Her evidence was that if Jadwan had been granted sufficient time it subsequently would have been able to have done so.

191    A lay witness, Dr Timmins, suggested as much but in the Court’s opinion the concessions he made in cross-examination (transcript p 778 lines 1-29) mean his suppositions are too frail a basis to impute ill will to the many Commonwealth officers and advisers who assessed Derwent Court against the then Commonwealth standards.

192    The soundness of the earlier assessments which had led to Derwent Court having been designated a home of concern (1991-1993) were not challenged during the trial.

193    The Court is satisfied that even if SRP-1 and SRP-2, as Mr Pearce submitted, were both invalidly constituted by reason of qualifications, quorum and one or more of their members’ apprehended bias, that is not sufficient reason to impute ill will (as opposed to a mistaken understanding by the Department in respect of their members’ qualification for appointment) to the Commonwealth or its officers.

194    In respect of the standards at Derwent Court during the critically relevant period I note that the conclusions of the Standards Monitoring Team which inspected the nursing home on 12, 13 and 17 March 1997 was even more damning. To ensure the latter’s arms-length independence, in the face of Jadwan’s complaints, that Standards Monitoring Team had been headed by a senior team leader from outside of Tasmania. Mr Pearce submits that the tenor of that report demonstrates preconceived ill will but in the Court’s opinion there is no evidence to support that conclusion. Its general consistency with SRP-1 and SRP-2 is not a reason to impute improper motive to its authors.

195    Moreover, it borders on the absurd to suggest the key finding of SRP-1 that Derwent Court’s standards of fire safety were inadequate was the product of malice. It was ultimately uncontentious in these proceedings that Derwent Court’s fire safety standards had been inadequate – Mr Pearce did not submit otherwise. I find that from the time the Commonwealth became aware of the inadequacy of fire safety standards at Derwent Court that issue had had to be dealt with by both it and Jadwan as a matter of substance and urgency.

196    Moreover it is impossible to reconcile claims of antipathy on the part of the Commonwealth towards Jadwan and/or the Alexander family with the uncontentious evidence that:

    the Commonwealth had earlier offered Jadwan substantial funding for the installation of a lift at Derwent Court;

    a senior Commonwealth officer had suggested Jadwan consider selling its bed licences;

    even in the face of impending revocation with mechanisms for the closure of Derwent Court in place on 22 July 1997, Mr Dellar had offered Jadwan a two day window to allow it to sell its 51 bed licences if it could find a buyer for them (Ex A1 p 2402);

    the Commonwealth voluntarily picked up Jadwan’s liability for redundancy payments to its displaced staff after Derwent Court’s closure; and

    a second nursing home, the Glenburn Nursing Home in Victoria owned and controlled by the Alexander family albeit through of a separate company (“Cambrai Pty Ltd”) was not made the subject of adverse regulatory action in respect of the standards of the nursing care it provided (Ex A1 p 4090). The Glenburn Nursing Home passed inspection and continued to operate under the new legislation.

197    Rather than accepting Mr Pearce’s submission that the evidence supports a finding that the Commonwealth was motivated by ill will towards Jadwan, I find, having regard to the factors referred to at [177] to [188], that Jadwan had operated Derwent Court in something of a time warp. It had effectively delegated its responsibility for nursing care to an “old school” Director of Nursing. Jadwan had been reluctant to make any investments to improve its care outcomes and had done so only when compelled. Jadwan had continued to run a small nursing home in outdated facilities as it had in the past, with its directors insufficiently aware of the pressure in their industry for nursing home operators to improve care outcomes. I am satisfied that the evidence entitles me to find that until too late to serve its interests, Jadwan and its directors continued to operate Derwent Court on the premise that its business model did not need to change.

7.4    Mr Wicks’ knowledge

198    Mr Wicks similarly gave evidence that he had not become aware of the existence of either the Aged Care Act or the Consequential Provisions Act until 1 October 1997.