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Jadwan Pty Ltd v Rae & Partners (A Firm) [2020] FCAFC 62 (9 April 2020)
Last Updated: 20 April 2021
FEDERAL COURT OF AUSTRALIA
Jadwan Pty Ltd v Rae & Partners (A
Firm) [2020] FCAFC 62
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Appeal from:
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File number:
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TAD 28 of 2018
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Judges:
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BROMWICH, O’CALLAGHAN AND WHEELAHAN JJ
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Date of judgment:
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Catchwords:
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NEGLIGENCE – appeal by way of
rehearing – where the primary judge dismissed the appellant’s
applications against the respondent
solicitors seeking damages for alleged
professional negligence – duty of care owed by the first to fourth
respondent solicitors
and counsel in providing legal advice to the appellant
nursing home operator – where the appellant, in respect of its Derwent
Court nursing home in Hobart, faced Commonwealth government sanctions and the
revocation of its approval as a Commonwealth funded
nursing home operator under
the National Health Act 1953 (Cth), and sought advice from the first to
fourth respondent solicitors and counsel – errors by primary judge –
Full Court
to decide for itself – whether the first to third respondents
and counsel were negligent in failing to advise the appellant
that it had
grounds to challenge a decision of a delegate of the Minister to impose
financial sanctions pursuant to s 45E of the
National Health Act –
whether the appellant would have acted on such advice – whether the first
to fourth respondents and counsel were negligent
in failing to advise the
appellant of the enactment of the Aged Care Act 1997 (Cth) and the
transitional provisions in the Aged Care (Consequential Provisions) Act
1997 (Cth) – whether the first to fourth respondents and counsel were
negligent in failing to advise the appellant of the significance
of that
legislation to a proposed decision by a delegate of the Minister to revoke its
nursing home approval pursuant to s 44(2)
of the National Health Act
– what advice did the exercise of reasonable care require – first to
fourth respondents and counsel negligent in failing
to identify new legislation
– whether, if reasonable and prudent advice given, the appellant would
have become an approved
provider of aged care services upon the commencement of
the Aged Care Act – characterisation of the appellant’s claim
as one for its lost opportunity to become an approved provider under the new
legislation and to conduct its nursing home business at new premises, or
alternatively, to sell its Commonwealth approvals to another
approved provider
– formulation of the content of reasonable and prudent advice –
causation involving proof of a past
hypothetical in which circumstantial
evidence was the dominant consideration, assessed prospectively and without the
benefit of hindsight,
on the balance on probabilities – finding that even
if the appellant had been given reasonable and prudent advice by its solicitors
and counsel, the appellant had not established that it would have become an
approved provider of aged care services upon the commencement
of the Aged
Care Act and thereby have avoided the damage which it claimed – appeal
dismissed. APPEAL – nature of appellate review –
principles that guide appellate review of findings of fact – whether error
of primary
judge must be demonstrated as wrong by “incontrovertible facts
or uncontested testimony” – statements of principle
in appellate
judgments should not be treated as if they were provisions of a statute –
whether error if findings open on the
evidence – duty of appellate Court
– consideration of Devries v Australian National Railways
Commission, Fox v Percy and Robinson Helicopter Company Inc v
McDermott
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Legislation:
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Aged Care Act 1997 (Cth) Div 1, Part 2.1, Part 4.4,
ss 7, 10‑2(1), s 14‑1, 16-1
to 16- 11, 42-1, 42‑4, 54‑1, 54‑2, 66‑1,
67‑1 to 67-5, 68‑1, 68-3, 96‑1
National Health Act 1953 (Cth) ss 4, 39, 39A, 39AA, 39B,
40AA, 40AD, 44, 45D, 45DB, 45DC, 45E, 105AAB
National Health Regulations 1954 (Cth) Part 4, regs 8, 11,
12(1), 12(3), 12(11), 16, 19, 28
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Cases cited:
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Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117
FCR 424
Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia v ACCC [2007] FCAFC 132; 162
FCR 466
Devries v Australian National Railways Commission [1993] HCA 78; 177
CLR 472
Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172
Jadwan Pty Ltd v Secretary, Commonwealth Department of Health and Aged
Care [2002] FCA 1052
Minister for Immigration and Multicultural Affairs v Jia Legeng
[2001] HCA 17; 205 CLR 507
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA
28; 194 CLR 355
Commonwealth Gazette No GN 28 of 16 July 1997
Commonwealth Gazette No GN 36 of 3 September 1997
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5, 6, 7 and 8 November 2018
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Registry:
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Tasmania
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Division:
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General
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National Practice Area:
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Other Federal Jurisdiction
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Category:
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Catchwords
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Number of paragraphs:
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570
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Counsel for the Appellant:
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Mr M Pearce SC with Mr D Deller |
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Solicitor for the Appellant:
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Keypoint Law
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Counsel for the First, Second and Third Respondents:
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Mr P Jackson SC with Ms K Cuthbertson
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Solicitor for the First, Second and Third Respondents:
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Tremayne Fay Rheinberger Lawyers
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Counsel for the Fourth Respondent:
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Mr C Gunson SC with Ms B Myers
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Solicitor for the Fourth Respondent:
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Lander & Rogers
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Counsel for the Fifth Respondent:
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Mr S McElwaine SC
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Solicitor for the Fifth Respondent:
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Shaun McElwaine & Associates
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Table of Corrections
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19 April 2021
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In [318(4)(i)] the words “, to which we referred at [279]
above” deleted and in [336(11)] amount “$20,000”
replaced with
“$25,000”.
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ORDERS
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TAD 28 of 2018
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AND:
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RAE & PARTNERS (A FIRM)First
Respondent WILSON DOWD (A FIRM)Second
Respondent TOOMEY MANING & CO (A FIRM) (and others named in the
Schedule)Third Respondent
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BROMWICH, O’CALLAGHAN AND WHEELAHAN JJ
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DATE OF ORDER:
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THE COURT ORDERS THAT:
- The
appeal be dismissed.
- The
parties file and exchange any submissions as to costs or other consequential
orders, not to exceed three pages, by 4.00pm 4 May
2020.
- If
so advised, the parties file and exchange any submissions in reply, not to
exceed three pages, by 4.00pm 11 May 2020.
- The
question of costs, and any consequential orders, shall be considered on the
papers.
Note: Entry of orders is dealt with in Rule 39.32 of
the Federal Court Rules 2011.
REASONS FOR
JUDGMENT
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[1]
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[2]
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[13]
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[14]
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[22]
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[28]
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[34]
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[38]
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[38]
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[45]
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[45]
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[53]
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[56]
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[61]
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[70]
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[91]
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[96]
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[103]
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[108]
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[110]
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[112]
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[113]
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[116]
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[126]
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[136]
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[142]
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[148]
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[154]
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[155]
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[160]
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[168]
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[181]
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[185]
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[194]
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[196]
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[210]
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[216]
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[236]
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[240]
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[248]
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[255]
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[257]
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[261]
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[269]
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[271]
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[273]
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[278]
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[279]
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[287]
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[290]
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[290]
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[292]
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[294]
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[299]
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[300]
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[303]
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[306]
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[310]
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[312]
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[313]
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[313]
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[319]
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[334]
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[334]
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[338]
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[342]
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[342]
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[352]
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[355]
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[355]
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[358]
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[360]
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[360]
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[369]
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[373]
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[373]
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[375]
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[377]
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[377]
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[381]
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[383]
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[383]
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[384]
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[395]
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[395]
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[399]
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[402]
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[416]
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[433]
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[448]
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[449]
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[458]
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[468]
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[471]
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[484]
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[487]
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[487]
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[508]
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[516]
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[526]
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[529]
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[530]
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[562]
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[563]
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[564]
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[566]
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[567]
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[569]
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THE COURT:
Introduction
- This
is an appeal from orders made by a judge of this Court following the trial of a
multi-faceted suit in negligence. The proceeding
against the first to third
respondents was commenced in the Supreme Court of Tasmania on 3 February
2003, and in that Court was consolidated
with two other proceedings that were
also commenced in 2003 against each of the fourth and fifth respondents. The
consolidated proceeding
was cross-vested to this Court on 12 August 2016.
The primary judge dismissed the proceeding with costs. The unsuccessful
applicant,
Jadwan Pty Ltd (Jadwan), sought damages against its former
solicitors for alleged professional negligence arising out of the revocation of
its approval
under the National Health Act 1953 (Cth) as a
Commonwealth-funded nursing home on 6 August 1997 by a delegate of the
Minister for Health and Family Services. In the
case of the fifth respondent,
its negligence was in failing to serve a writ on a defendant to one of the
proceedings before the time
for service fixed by the Supreme Court Rules
2000 (Tas) expired. Jadwan now appeals the primary judge’s decision.
If successful on appeal, Jadwan seeks an order that the proceeding
be remitted
for the assessment of damages.
Case overview
- Jadwan
is the trustee of the J.G. & J.I. Alexander Family Trust. Its directors at
the relevant time were members of the Alexander
family: Mr Jeff Alexander
(who passed away in 2004); Mrs Joan Alexander; Ms Julie
Alexander; and Mr Wayne Alexander. Unless indicated
to the contrary, the
references in these reasons for judgment to Mr Alexander are to
Mr Jeff Alexander. From 1984 until 6 August
1997, Jadwan operated Derwent
Court Nursing Home (Derwent Court) from a Victorian era, heritage listed,
two-storey grand home to which a ground level extension had been added. Jadwan
had purchased
Derwent Court to operate as a nursing home. It was located only a
short distance from central Hobart. Derwent Court’s mix of
residents
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 the subject of the proceeding
occurred, accommodated
upstairs on the second floor.
- Jadwan
received benefits from the Commonwealth under the National Health Act in
respect of its residents. For this purpose, it had approval for 51 beds,
which approvals were referred to in the evidence as “bed
licences”.
When Jadwan’s Commonwealth approval as a nursing home was revoked in
August 1997, it became ineligible to
receive those benefits. In anticipation of
the delegate’s decision to revoke approval, Derwent Court’s
residents were
relocated to other nursing homes and it ceased to provide nursing
home care. Derwent Court has not operated as a nursing home since.
At the time
of trial, Jadwan remained the owner of the property from which Derwent Court had
operated, which it leased to a third
party unconnected to these
proceedings.
- In
1997, Jadwan retained the services, in turn, of each of the first respondent
(Rae & Partners), the second respondent (Wilson Dowd), and the
third respondent (Toomey Maning & Co), which were firms of solicitors
in Hobart, to give it advice in relation to issues that had arisen concerning
its nursing home approval.
The scope of the retainers of those firms was in
dispute, and we shall return to that issue. Although Jadwan retained the three
Hobart
firms, one solicitor, Mr Stephen Wicks, undertook the work as an
employee of each of the firms. The reason for this was that in 1997
Mr Wicks moved from Rae & Partners, to Wilson Dowd, and then to Toomey
Maning & Co, and as he moved firms he took Jadwan’s
files with
him.
- Also
in 1997, Jadwan retained the Melbourne firm Coltmans Price Brent to give it
advice about the sale and transfer of its approvals.
The late Mr John Hogan was
a partner of that firm who undertook the work, and the fourth respondent is the
executrix of his estate.
The scope of Mr Hogan’s retainer was also in
dispute.
- The
liability of the first to fourth respondents was alleged by Jadwan to have
arisen out of their failure to advise Jadwan to take
available steps in respect
of the decision of a delegate of the Minister made on 6 August 1997 to
revoke Derwent Court’s approval
as a nursing home pursuant to s 44(2)
of the National Health Act. Jadwan alleged that as a result of that
decision it lost its entitlement to Commonwealth benefits in respect of the
residents of
Derwent Court, and that it was thereby disabled from becoming an
approved provider of aged care services upon the commencement on
1 October
1997 of the Aged Care Act 1997 (Cth). That disability arose because no
approval was in place for any beds at Derwent Court on 30 September 1997,
being the day before
the commencement of the relevant provisions of the Aged
Care Act, which was a necessary condition in order to engage the
transitional provisions in the Aged Care Consequential Provisions Act
1997 (Cth) (Consequential Provisions Act). In summary, Jadwan
alleged that but for Mr Wicks and Mr Hogan failing in their respective
duties as solicitors, they would have
identified the significance of the
provisions of both the Aged Care Act and the Consequential Provisions
Act. Jadwan claimed that, had they not failed in their respective duties,
each would have advised Jadwan of the urgent necessity of seeking
interlocutory
injunctive relief in the Federal Court of Australia to restrain the revocation
of Derwent Court’s approval, so
as not to forfeit Jadwan’s
entitlement to become an approved provider in respect of Derwent Court under the
Aged Care Act on 1 October 1997. Jadwan claimed that it would have
given instructions to act in accordance with that advice, and that injunctive
relief would have been granted by the Court.
- Jadwan
further alleged that had Mr Wicks and Mr Hogan not failed in their
respective duties, they would have advised Jadwan that it
needed to ensure that
at least one Commonwealth-funded resident had to remain at the nursing home
until 1 October 1997 to prevent
Jadwan forfeiting its entitlement to become
an approved operator of Derwent Court under the Aged Care Act beyond that
date. Jadwan alleged that it could and would have taken that action.
- Jadwan
also alleged against the first, second, and third respondents that they were
negligent in failing to advise Jadwan that it
had grounds to, and should have
challenged, an earlier decision made on 3 February 1997 by a delegate of
the Minister to impose financial
sanctions pursuant to s 45E of the
National Heath Act. As a result of those sanctions, Jadwan alleged that
it had been denied an entitlement to claim a Commonwealth benefit in respect
of
any new resident admitted to Derwent Court after the date of that
decision.
- In
closing submissions at trial, Jadwan claimed loss and damage on two alternative
bases. The first basis was that upon the hypotheses
that Jadwan would have
obtained remedies to set aside the decision of the Minister to revoke its
approval, and that it would have
achieved the lifting of the financial
sanctions, Jadwan would have built a new 51 bed facility on a greenfields
site in Hobart and
operated a nursing home there, with the benefit of approval
for 51 beds under the Aged Care Act. The second basis was that Jadwan
alleged that it lost the chance to sell its 51 bed licences. The second
basis was advanced on the
premise that had Jadwan been provided with reasonable
advice, it would have obtained a remedy to enjoin the proposed revocation
decision.
Having secured such a remedy, it would have left the nursing home
industry in Tasmania. However, its exit then would have been on
more
advantageous terms because nursing home bed licences had a marketable value. If
the Minister’s approval of Derwent Court
as a nursing home had remained in
place, Jadwan alleged that the Commonwealth would have permitted Jadwan to sell
its bed licences.
- On
23 July 1997, Mr Wicks retained Mr David Porter QC of the
Tasmanian Bar to advise Jadwan. Mr Porter was named as a defendant to
a
proceeding that was commenced on 18 July 2003 in the Supreme Court of
Tasmania against Coltmans Price Brent, Mr Porter, and one
other defendant.
The fifth respondent to this proceeding (Worsley Darcey) was a firm
of solicitors that was engaged to act as Hobart agent for Jadwan’s then
Victorian solicitors for the purpose of
serving the writ in the proceeding on
Mr Porter. The writ was not served on Mr Porter within the period
prescribed by the Supreme Court Rules 2000 (Tas), and Jadwan failed in an
application to have time extended: see, Jadwan Pty Ltd v Porter [2004]
TASSC 107; 13 Tas R 162; Jadwan Pty Ltd v Porter (No 2) [2004] TASSC 126;
13 Tas R 219. Worsley Darcey is alleged to be liable to Jadwan in
negligence for the lost opportunity to pursue a claim against Mr Porter and
to
obtain judgment for damages against him. In relation to other issues that
arose in relation to the commencement of the proceeding
against Coltmans Price
Brent, and the circumstances in which Mr Hogan became named as a defendant
to that proceeding, see: Jadwan Pty Ltd v Middletons (formerly Coltmans Price
Brent) [2007] TASSC 74; 17 Tas R 9.
- Jadwan’s
allegations in this proceeding against the respondents were made against the
background that on 19 June 1998, the Federal
Court of Australia had
declared void the decision of the Minister to revoke the approval of Derwent
Court on the ground that for
the purposes of s 5(1)(b) of the
Administrative Decisions (Judicial Review) Act 1977 (Cth) there had been
a failure to observe procedures required by law: Jadwan Pty Ltd v Minister
for Health and Family Services [1998] FCA 715; 51 ALD 245 (Jadwan
No 1). On 4 December 1998, an appeal from that decision was
allowed in part: Minister for Health and Family Services v Jadwan Pty Ltd
[1998] FCA 1549; 89 FCR 478 (Jadwan No 2). The Full Court
set aside the declaration that the Minister’s decision was void, and in
its place ordered that the Minister’s
decision be set aside on a different
ground that had not been raised before the primary judge in Jadwan
No 1. The order of the Full Court did not stipulate the date from which
the order setting aside the decision was to operate. Later, in
Jadwan Pty Ltd
v Secretary, Commonwealth Department of Health and Aged Care [2002] FCA 1052
(Jadwan No 3), North J held that the Full Court’s
order operated from the date of the order with the consequence that Jadwan did
not have
any approval in respect of a resident in place on 30 September
1997, which was immediately before the commencement of the operative
provisions
of Aged Care Act. An appeal from that decision was dismissed: Jadwan
Pty Ltd v Secretary, Commonwealth Department of Health and Aged Care [2003]
FCAFC 288; 145 FCR 1 (Jadwan No 4).
- The
consequences of Jadwan having no approval in force, and no Commonwealth benefit
payable in respect of an approved resident immediately
before the commencement
of the operative provisions of the Aged Care Act, was that the
transitional provisions in s 7(1)(a) of the Consequential Provisions Act
were not engaged, and Jadwan was not taken to be an approved provider under
the Aged Care Act.
Commonwealth funding and regulation of nursing homes
- Central
to framing the allegations made by Jadwan at trial were relevant provisions of
the legislation that regulated Commonwealth
funding of places in private nursing
homes. We have already referred to the three Acts that were relevant: the
National Health Act; the Aged Care Act; and the Consequential
Provisions Act. At the heart of Jadwan’s case at trial was the failure
by Mr Wicks, Mr Hogan, and Mr Porter to advise it in the period
from
July to September 1997 of the enactment of the Aged Care Act, and
the Consequential Provisions Act, and of the effect of material
provisions of the new legislation on the ability of Jadwan to continue to
receive Commonwealth benefits
on account of patients residing at Derwent
Court.
National Health Act 1953 (Cth)
- Prior
to 1 October 1997, proprietors of nursing homes were entitled to receive
benefits under the National Health Act in respect of each approved
patient in the home. In order to be eligible for the benefits, the nursing home
had to be an “approved nursing home”, and the patient had to
be an “approved nursing home patient”.
- There
were limits on the number of approved beds in each State.
Sub-sections 39AA(1) to (4) of the National Health Act made
provision for the Minister by notice published in the Commonwealth Gazette to
specify for a relevant period the maximum bed
numbers for a State or Territory,
and for a region within a State or Territory. By s 39AA(5) of the Act, the
Minister was constrained
in the exercise of powers to grant approvals for
premises, or to approve an increase in the number of approved beds in an
approved
nursing home, by the maximum bed numbers specified for the purposes of
s 39AA(1) to (4).
- Section
40AA of the National Health Act provided that a proprietor of a nursing
home could apply for approval of premises as an approved nursing home, and for
the Minister
to approve premises. Section 40AA(6)(ck) of the Act provided that
the approval of premises as an approved nursing home was subject
to a condition
that the nursing home care provided in the home satisfied the standards
determined under s 45D of the Act, which provided
that the Minister could
determine the standards to be observed in the provision of nursing home care in
an approved home. Section
40AA(d) of the Act authorised other conditions
determined by the Minister for the purpose of ensuring that the needs of
qualified
nursing home patients were satisfactorily provided for, and otherwise
protecting the welfare of qualified nursing home patients.
- Under
s 45E(1) of the National Health Act, if the nursing home care
provided in an approved nursing home did not satisfy the standards determined by
the Minister, the Minister
could by notice served on the proprietor declare that
the home did not satisfy those standards, and under s 45E(2) by notice
served
on the proprietor determine that while the declaration remained in force,
the Commonwealth benefit was not payable to the proprietor
in respect of a
patient admitted after the making of the determination. Sub-sections 45E(10) to
(12) were also relevant to the circumstances
of this case, and
provided –
(10) The Minister shall not make a declaration under
subsection (1) in respect of a nursing home unless:
(a) a Standards Review Panel has been
established in the State or Territory in which the nursing home is situated;
and
(b) the requirements of any regulations made for the purposes of this subsection
have been satisfied.
(11) Without limiting the generality of subsection (10),
regulations made for the purposes of that subsection may provide
for:
(a) the giving, to the proprietor of a
nursing home, of notice of the Minister’s intention to make a declaration
under subsection
(1) in respect of the nursing home;
(b) the reference to the Standards Review Panel in the relevant State or
Territory, at the request of the proprietor, of the notice
given by the
Minister;
(c) the making by the Standards Review Panel of recommendations to the Minister,
including:
(i) recommendations that a
declaration should be made or should not be made; and
(ii) where the Panel recommends that a declaration be made, recommendations
regarding the action that should be taken under subsection
(2) or (3) following
the making of the
declaration.
(12) This section does not imply that the Minister may
not, in circumstances where the Minister is satisfied of the matter referred
to
under subsection (1) (whether or not the Minister has taken any action under
this section), suspend or revoke the approval of
the nursing home concerned as
an approved nursing home under section 44 if he or she considers that to be a
more appropriate course
of action.
- These
sub-sections had the effect that a declaration under s 45E(1) was dependent
upon the requirements of any regulations in relation
to Standards Review Panels
being satisfied. Those regulations were the National Health Regulations 1954
(Cth), to which we refer below.
- Section
44(1) of the National Health Act provided that the Minister might at any
time review the approval of a nursing home. Section 44(2)(b) of the Act provided
that if
the Minister considered that a condition applicable to the approved
nursing home was not complied with, the Minister could vary the
nature of the
approval, or revoke or suspend the approval as the Minister considered justified
in the circumstances of the case.
Section 44(2A) of the Act provided that the
Minister might give the proprietor of an approved nursing home notice of the
Minister’s
intention to revoke or suspend approval. And s 44(4) of
the Act provided that such variation, revocation, or suspension was to be
effected by notice in writing served on the proprietor.
- Section
39B of the National Health Act provided, in an elaborate and indirect
way, for the transfer of approved beds, from one nursing home to another with
the approval
of the Minister. It did so by providing (inter alia) for a
request for revocation of approval or the reduction of beds of one nursing home,
and for notice of an application for the
approval of different premises or an
increase in number of approved beds at different premises. The means by which
the Minister gave
approval was the grant, in the exercise of discretion, of a
certificate in writing under s 39B(5) of the Act. Section 39B(5A) of
the
Act provided that the certificate was to be made subject to a specification that
the nursing home, in relation to which one or
more reduction requests was made,
continue to be conducted in accordance with the conditions to which approval of
the premises under
s 40AA(6) was subject, and s 39B(5B) provided that
a certificate must contain a statement to the effect that it was subject to the
specification imposed by s 39B(5A).
- Section
105AAB(2) of the National Health Act provided for a person affected by a
“reviewable decision” of the Minister, or a delegate of the
Minister, to request within 28 days reconsideration of the decision by the
Minister.
A “reviewable decision” included a decision under
s 44 of the Act which, as noted at [19] above, empowered the Minister to revoke
the approval of a nursing home. Under s 105AAB(4) of the Act, the Minister
was required
to reconsider the reviewable decision, and could affirm, revoke, or
vary the decision. Section 105AAB(7) then provided for application
to the
Administrative Appeals Tribunal for review of any reviewable decision that had
been affirmed or varied, or of a decision to
revoke a reviewable decision.
Decisions under the National Health Act were otherwise amenable to
judicial review under the Administrative Decisions (Judicial Review) Act
1977 (Cth) (ADJR Act), or in the exercise of jurisdiction
under s 75(v) of the Constitution, including that conferred on the
Court by s 39B(1) of the Judiciary Act 1903 (Cth).
National Health Regulations 1954 (Cth)
- The
composition of the Review Panels that were appointed for the purposes of
s 45E of the National Health Act is material to the claims that were
made in this proceeding. Part 4 of the National Health Regulations
provided for a system of Standards Review Panels to review nursing home care
provided in nursing homes and to report findings and
to make recommendations to
the Minister. Regulation 8 made provision for the Minister to establish
Standards Review Panels in each
State and Territory in which a nursing home was
situated. Regulation 11 provided that the Minister might appoint as members
of a
Panel for a State or Territory –
- persons who have
not less than 3 years’ experience in senior positions in the management of
nursing homes, aged persons’
hostels or other establishments of that kind
(reg 11(1)(a)); or
- persons who are
members of not less than 3 years’ standing in professional or industrial
organisations of persons who practise,
or are employed, in nursing homes, aged
persons’ hostels or other establishments of that kind (reg 11(1)(b));
or
- persons who have
knowledge of, and experience in, consumer protection in a health or social
welfare field (reg 11(1)(c)).
- Regulation
12(1) provided that a panel was to consist of the following
members –
(1) a Chairperson appointed by the Minister:
(2) a person appointed under paragraph reg 11(l)(a) (a person experienced
in management);
(3) a person appointed under paragraph reg 11(1)(b) (a member of a
professional or industrial association);
(4) a person appointed under paragraph reg 11(l)(c) (a person with
knowledge of and experience in consumer protection); and
(5) an officer of the Department nominated by the
Secretary.
- Regulation
12(3) provided that the Minister must not appoint a person as a Chairperson
unless the Minister was satisfied that the
person had experience at a
professional or senior management level in, or broad knowledge of, health care
administration or the provision
of nursing home care or care in aged
persons’ hostels or other establishments of that kind.
- Regulation
12(11) concerned vacancies, and provided that the exercise of a power or the
performance of a function of a Panel was not
affected by a vacancy in its
membership.
- Regulation
16 concerned disclosure of interests, and provided –
16 Disclosure of interests
(1) A Chairperson must give written notice to the Minister of all direct and
indirect pecuniary interests that he or she has or acquires
in:
(a) a nursing home; or
(b) a business that provides facilities, goods or services to nursing homes.
(2) If a Chairperson has or acquires an interest
referred to in subregulation (1) or another interest that could conflict with
the
proper performance of his or her functions, the interest must be disclosed
in any report resulting from the performance of those
functions.
(3) If a member (other than the Chairperson) has or acquires an interest
that could conflict with the proper performance of his
or her functions:
(a) he or she must disclose the interest to
the Chairperson; and
(b) except with the consent of the Chairperson, he or she must not take part, or
continue to take part, in the performance of his
or her functions.
(4) If a member referred to in subregulation (3) takes
part, or continues to take part, in the performance of his or her functions,
the
interest must be disclosed in any report resulting from the performance of the
functions.
(5) If a Chairperson:
(a) becomes aware that another member has an
interest referred to in subregulation (3); and
(b) considers that the member should not take part, or should not continue to
take part, in the performance of his or her functions;
the Chairperson must give a direction to the member not to take part, or
continue to take part, and the member must not take part,
or continue to take
part, accordingly.
- Regulation
19 provided that at a meeting, the number of members constituting a quorum was
the number of members constituting a majority
of the members of the
Panel.
Aged Care Act 1997 (Cth)
- The
Aged Care Act was enacted on 7 July 1997 when it received Royal
Assent. The Royal Assent was notified in Commonwealth Gazette No GN 28
dated 16
July 1997. Division 1 of the Act, concerning preliminary
matters, commenced on the day that the Act received Royal Assent. The other
provisions were to commence on a day to be proclaimed. By proclamation dated
3 September 1997 and published on 10 September 1997
in Commonwealth
Gazette No GN 36 of 1997, the commencement date of the Aged Care
Act, except for Division 1, was fixed as 1 October 1997. The
primary judge noted at [158] that the Bills which were later enacted as
the
Aged Care Act and the Consequential Provisions Act (referred to
below) had been introduced into the House of Representatives on 26 March
1997.
- Under
s 7-1 of the Aged Care Act, payments of Commonwealth subsidy could
not be made to a person for providing aged care unless the person was approved
under Part
2.1 of the Act as a provider of aged care. In addition, under
s 42-1 of the Act, an approved provider could receive a residential
care
subsidy only in respect of a place which had been allocated to the provider and
in respect of recipients for whom an approval
was in force. The Act made
detailed provision for the application by a provider for places, and for the
allocation of places by the
Minister. In addition, s 16-1 to s 16-11
of the Act made provision for the transfer of an allocated place from one person
to another
with the approval of the Secretary, who had to be satisfied that the
transfer was justified, having regard to various matters specified
in
s 16-4.
- Section
10-2(1) of the Aged Care Act provided that the approval of an aged care
provider lapsed if it did not provide any aged care during a continuous period
of six months.
This provision could be waived by the Secretary, but the
application for waiver had to be made at least 28 days before the end of
the six month period. The relevance of this provision is that Jadwan had
ceased providing any aged care services by the time of the
commencement of the
Aged Care Act on 1 October 1997, and did not resume the provision of
such services.
- Section
14-1(1) of the Aged Care Act provided that the Secretary might allocate
places to an approved provider. But s 14‑1(2) provided that places
must not be allocated if, under Division 7, a subsidy could not be paid to
the approved provider
in respect of the places, or if a sanction imposed under
Part 4.4 of the Act was in force prohibiting allocation of places to the
approved provider. Part 4.4 of the Act included s 66-1, which is referred
to below.
- The
Aged Care Act contained provisions that corresponded to s 44,
s 45D, and s 45E of the National Health Act relating to the
establishment of and compliance with standards, the imposition of sanctions, and
the revocation of approval –
(1) sections 54-1 and 54-2 provided that the
responsibilities of approved providers included the provision of services as
specified in “Quality of Care Principles” made by the
Minister under s 96‑1, which principles might set out
“Residential Care Standards” (that were applicable before the
“accreditation day”) and “Accreditation
Standards”, (that were applicable on and after the
“accreditation day”); and
(2) section 66-1 provided that the Secretary may impose sanctions that
included the revocation or suspension of the approved provider’s approval
and restricting the provider’s approval to persons to whom the provider
was providing care at the time that the sanction was
imposed.
- As
indicated by s 54‑1 of the Aged Care Act, the Act
contemplated that different requirements and standards would apply in
relation to the provision of aged care after the “accreditation
day”, which was defined by s 42-4 of the Act to be the day
specified in the Residential Care Subsidy Principles (which might be
made by the
Minister under s 96‑1), or if no such day was specified, 1 January
2001. The new requirement of accreditation under
the Aged Care Act and
the new standards were the subject of evidence at trial of Ms Kay Horgan,
who was engaged by Jadwan to give expert opinion evidence.
Aged Care (Consequential Provisions) Act 1997
(Cth)
- The
transitional provisions relating to the Aged Care Act were enacted by the
Consequential Provisions Act. That Act also received the Royal Assent on
7 July 1997. The transitional provisions included s 7(1) of the Act,
which provided –
7 Approved operators and
proprietors
(1) A person who was an approved operator
(within the meaning of Part V of the 1953 Act), or the proprietor (within
the meaning of
the 1953 Act) of an approved nursing home, immediately before the
commencement day is taken, for the purposes of the new Act, to
be an
*approved provider if either of the following
applies:
(a) Commonwealth benefit (within
the meaning of Part V of the 1953 Act) is or was payable to the person in
respect of an approved
nursing home patient, within the meaning of
section 4 of the 1953 Act, for nursing home care received by the patient on
the day before
the commencement day;
(b) the person had been granted a certificate under section 39A of the 1953 Act,
and the certificate was in force immediately before
the commencement
day.
- In
relation to the allocation of places, s 20 of the Consequential
Provisions Act provided (inter alia) –
20 Approvals of nursing
homes
(1) Subject to subsection (5), if an
approval of premises as an approved nursing home under section 40AA of the 1953
Act was in force
immediately before the commencement day, for the purposes of
the new Act:
(a) the Secretary is taken, on
that day, to have allocated under section 14-1 of the new Act, to the proprietor
(within the meaning
of the 1953 Act) of the nursing home, a number of *places
equal to the number of beds to which the approval related immediately before
that day; and
(b) subject to subsection (4), the conditions to which the approval was,
immediately before that day, subject under subsections 40AA(5A)
and (6) of the
1953 Act are taken, on that day, to be conditions to which the allocation is
subject under section 14-5 of the new
Act; and
(c) the allocation is taken to be subject to a further condition under section
14-5 of the new Act that:
(i) the places are allocated in respect of the location at which the premises
are situated; and
(ii) any *care provided, in respect of the places, must be provided at that
location; and
(d) the Secretary is taken, on that day, to have determined under section 15-1
of the new Act that the proprietor is in a position
to provide care, in respect
of those places, for which subsidy under Chapter 3 of the new Act may be
paid.
(2) The allocation of places referred to in
paragraph (1)(a) is taken to be in respect of *residential care
subsidy.
- In
relation to a declaration of non-compliance with standards made pursuant to
s 45E(1) of the National Health Act, s 74 of the
Consequential Provisions Act provided that the declaration was taken to
be a notice of non-compliance under s 67‑2 of the Aged Care
Act. And in relation to a determination amounting to a financial sanction
under s 45E(2) of the National Health Act, s 75 of the
Consequential Provisions Act provided that a determination in force under
s 45E(2) was taken to be a sanction imposed under s 66‑1(c)(ii)
of the Aged Care Act on the commencement day, and ending when the
Secretary lifted the sanction under s 68‑3.
- Schedule
1 of the Consequential Provisions Act effected extensive amendments to
the National Health Act so as to give effect to the transition to the
Aged Care Act in relation to the Commonwealth subsidy of proprietors of
private nursing homes, in respect of approved places, for approved
patients.
Background
The evidence at trial
- The
principal lay witnesses called at trial were Mrs Joan Alexander and
Ms Julie Alexander (who were called by Jadwan), and Mr Wicks
(who
was called by the first to third respondents). As we have mentioned,
Mr Hogan was deceased. Mr Porter was not called by any
party.
- There
was a great deal of documentary evidence. During the course of his work for
Jadwan, Mr Wicks had taken detailed notes of events,
and of his thoughts,
and his file notes were admitted as an exhibit. Mrs Joan Alexander had
maintained a work diary in which she
recorded notes of discussions, meetings,
events, and her thoughts relevant to Jadwan’s affairs. Extracts from Mrs
Alexander’s
diary were admitted into evidence.
- In
relation to the principal lay witnesses, the primary judge made some general
findings in relation to the credit of Mr Wicks and
Mrs Joan Alexander. As to Mr Wicks, his Honour was satisfied
that, unless good reason was established to the
contrary in a particular instance, the Court was entitled to rely on
Mr Wicks’s
file notes as highly probative of what they recorded.
However, his Honour stated that without the benefit of his notes and his
file,
Mr Wicks’s memory proved to be susceptible of error.
His Honour also stated that under robust cross-examination, Mr Wicks
showed
some signs of discomfort, but these observations reinforced rather than
undermined the judge’s confidence in Mr Wicks’s
honesty.
His Honour considered that Mr Wicks asserted a certainty about his
recollection beyond that which his Honour found plausible,
but found that
when Mr Wicks gave such evidence he genuinely believed that his memory
should be preferred. His Honour also found
that in relation to some aspects
of his evidence under cross-examination, Mr Wicks was too prone to make
concessions, which his Honour
characterised as a self-destructive
willingness to make what appeared to be unnecessary concessions. His Honour
thought that Mr Wicks’s
over-confidence and willingness to make
concessions were manifestations of a lack of insight and judgment, and not
dishonesty. His
Honour was satisfied that, without impugning
Mr Wicks’s credibility, in respect of those occasions when
Mr Wicks’s oral
evidence diverged from his contemporaneous written
notes, in the absence of a clear contextual reason or evidence to corroborate
his evidence, the Court was entitled to proceed on the basis that what was
recorded in his notes should be accepted as being more
reliable.
- As
to Mrs Joan Alexander, his Honour found at [146] that she
gave evidence of the truth as she recalled it, and noted at [141] that
her
credit was not put in issue. However, his Honour did not accept all of
Mrs Alexander’s evidence where it was based upon
her recollection.
There were some instances where his Honour preferred contemporaneous notes
to the evidence of Mrs Alexander’s
recollection.
- The
primary judge made no general findings about the credit of Ms Julie
Alexander, but his Honour did not accept her evidence on a
number of
issues.
- Other
lay evidence was given at trial, which included evidence from Ms Denise
Callahan, who was the Acting Director of Nursing at
the time Derwent
Court’s approval was revoked, Dr Philip Timmins, a medical
practitioner who visited Derwent Court frequently
to attend upon patients who
were resident there, Mr Ronald Manson, a retired officer within the
Tasmanian Department of Health and
Community Services, and some relatives of
former residents.
- Expert
evidence was also given at trial, and the expert witnesses
included –
(1) Ms Kay Horgan, a registered nurse and an expert
in aged care and accreditation compliance, who gave evidence about
Jadwan’s
prospects of complying with applicable statutory standards after
1 October 1997;
(2) Mr Geoffrey Brown, who gave evidence about a number of issues,
including the prospective value of the nursing home business conducted
by Jadwan
at Derwent Court at particular points in time;
(3) Mr David Ferrier, a chartered accountant engaged as an expert by
Jadwan, who gave evidence about the value of the business conducted
at Derwent
Court and about the financial affairs of Jadwan and the trust of which it was
trustee, and its capacity to fund relocation
to a new site; and
(4) Mr Paul Davies, a chartered architect who also had qualifications in
building conservation, who gave evidence about what steps
Jadwan would have had
to undertake to complete certain works at Derwent Court, including obtaining
approvals.
Background facts
1984 to August 1996
- Jadwan
commenced operating Derwent Court in 1984. The home operated from an older
building in which residents were located over two
floors. The accommodation was
dormitory accommodation. When at capacity, the home had 51 residents, all of
whom were female. Most
of them had some degree, if not a pronounced degree, of
dementia. Some of the residents were ambulant, while others walked with aids.
The nursing home was the subject of both State and Commonwealth regulation. The
Commonwealth regulation arose as a result of the
funding arrangements under the
National Health Act to which we have referred.
- One
of the issues at trial was the extent to which at material times Derwent
Court’s premises complied with fire safety standards.
In June 1989,
the Department of Health Services Tasmania sent Jadwan a copy of a Tasmania Fire
Service building inspection report
dated 2 June 1989. That report stated
that the Tasmania Fire Service had no objection to the first floor of the home
being occupied
by non-ambulant patients. The report noted that a certificate was
required confirming the completed installation of an alternative
fire detection
system, and recommended the testing and maintenance of a central emergency
lighting system and illuminated exit signs.
The covering letter from the
Department of Health Services Tasmania confirmed that receipt of the report
finalised the approval requirements
for the relocation of residents for the
purposes of “State Private Medical Establishment Licence
No. 151”.
- In
about 1993, the Commonwealth government approved a grant to Jadwan of $106,938
for the purpose of the installation of a lift at
Derwent Court. The grant was to
be paid after the project was completed, with payments being made over
10 years. Jadwan accepted
the allocation of the grant on these terms, but
did not ever install a lift, and therefore did not receive the grant.
- On
4 February 1994, a delegate of the Secretary published a statement in
relation to Derwent Court pursuant to s 45DB of the National Health
Act. The report noted that action was required in relation to the
installation of a lift –
Although residents able to negotiate the stairs are
monitored by staff, ACTION IS REQUIRED to ensure that the current layout of the
home over two storeys does not limit the mobility of residents, especially frail
residents housed upstairs. The team acknowledged
that management of the home,
with a commitment of financial assistance from HHLG&CS, plan to install a
lift between floors.
- On
29 June 1995, a routine visit was conducted at Derwent Court by
Mr Manson of the Tasmanian Department of Health and Community Services
for
the purpose of assessing issues relating to its State licence. A note of that
visit stated the following in relation to fire
safety –
Fire safety:
The most recent full safety clearance for
the building was in August 1989. More recent reports (eg. April 92 and October
93) have
referred to approval of other fire safety matters at the
facility.
- The
note also included some general observations that the overall atmosphere of the
nursing home was comfortable, and that the general
maintenance of the building
was good –
General:
The overall ‘atmosphere’ of the
nursing home was comfortable. It was noticeable during an inspection of all
areas of the
building (offered by Mrs Bensch) that staff were bright and
cheery and had a good rapport with the residents.
The 1st floor section of the building is utilised to house non
ambulant residents, many of whom were in their beds at the time of my visit
(3PM).
The recently installed security panel at the front entrance (TFS approved)
provides good protection from intrusion, and prevents
residents who might wander
from endangering themselves.
The general maintenance of the building is
good.
- However,
Mr Manson also stated by way of conclusion –
Derwent Court is one of the older stock of non purpose
built facilities, and in that context may have a limited medium to long term
effective life when measured against outcome standard expectations and ongoing
changes to building code requirements for residential
care
facilities.
- On
16 April 1996, the Tasmania Fire Service sent a letter to the Director of
Nursing at Derwent Court enclosing a document titled
“Summary of Fire
Safety Status as at April 1996”. That document noted the most recent
major fire safety survey at Derwent Court as having been in June 1989,
following a major
upgrade that included approval to accommodate non-ambulant
residents on the first floor. The report also listed more recent contact
with
the Tasmanian Fire Safety Division, namely between November 1991 and
October 1993, and noted the most recent evacuation exercise
as having taken
place on 28 March 1996. Finally, the document and covering letter both
confirmed the approval of a revised scheme
of evacuation dated 16 April
1996.
The first Standards Monitoring Team
- In
August 1996, a Standards Monitoring Team from the Commonwealth Department
of Health and Family Services (Department) visited Derwent Court and
prepared a draft “Statement on Standards” that addressed the
standard of care at Derwent Court. To distinguish this team from a later team,
we shall refer to it as
the first Standards Monitoring Team. The statement
listed care standards as having been “met”, “action
required” or “urgent action required”. The first
Standards Monitoring Team found that Derwent Court met 18 of the
31 standards set out in the relevant Commonwealth
policy, with nine
standards requiring action so as to be met, and four standards requiring urgent
action. Notably, the statement
identified Objective 7.4, which related to
fire safety, as having been “met”. The primary judge
at [52] characterised the findings in the draft report as “highly
adverse findings”. Some of the adverse remarks in the statement
related to a suggestion that the residents who were located on the first floor
of the home were isolated.
- In
evidence was an undated document prepared sometime after the statement of the
first Standards Monitoring Team that provided a comparative
analysis of the
extent to which Derwent Court met standards of care over six different standards
monitoring visits. Those visits
took place in December 1988, May 1990,
September 1991, November 1993, November 1994, and
August 1996. The document indicated numerous
standards having been recorded
as requiring either action or urgent action after each visit, with 1991
showing the highest proportion
of unmet standards requiring urgent action,
at 13, as contrasted with the second-highest in 1996, at four,
1988 and 1993 at one,
and 1990 and 1994 at nil. The
document also noted that “Following a visit on 24 September 1991
the home was considered a “Home of Concern” (HOC) and remained
listed as such for
a period of two years. Substantial improvement was found on
the subsequent full visit in November 1993 which resulted in the HOC
status
being reviewed”.
- On
6 September 1996, a delegate of the Minister for Health and Family Services
sent a letter addressed to Mr Alexander titled “Notice of Intent
to Make Declaration Under s 45E(1)”. The letter referred to the
visit of the first Standards Monitoring Team in August 1996 and to “the
subsequent discussion of findings on 8 August 1996”. The letter
enclosed the draft statement prepared by the first Standards Monitoring Team and
notified Mr Alexander that, as
a result of the findings in the draft
statement, the delegate intended to make a declaration under s 45E(1) of
the National Health Act that Derwent Court did not satisfy the standards
determined by the Minister under s 45D of the Act, noting a failure to
satisfy 14
of the 31 standards. The letter foreshadowed that sanctions
might then be imposed under s 45E(2) of the Act, which could include
non-payment of a Commonwealth benefit in respect of any residents of Derwent
Court admitted after the date of imposition of the sanction.
The letter referred
to a right to request a review of the notice of intention by the Tasmanian
Standards Review Panel.
The first Standards Review Panel
- On
19 September 1996, Jadwan sought a review of the delegate’s intention
to declare that Derwent Court did not meet Commonwealth
standards. On
7 October 1996, Mr Alexander wrote to the delegate and attached a
four-page schedule of comments relating to the first
Standards Monitoring
Team’s draft statement. The letter claimed that Derwent Court had been
poorly treated, and requested that
the delegate review the points raised with a
view to amending claimed inaccuracies.
- On
30 October 1996, the Tasmanian Standards Review Panel wrote to
Mr Alexander advising that a Panel had been constituted. To distinguish
this Panel from a later Panel, we shall refer to it as the first Standards
Review Panel. The first Panel’s review resulted
in a report dated
2 December 1996. The report recorded that there were five members of the
first Panel, and that the first Panel
attended Derwent Court on three separate
occasions, with not all members of the first Panel attending on each occasion.
The first
Panel interviewed a number of people, including Mr Knight of the
Tasmania Fire Service. The first Panel supported the findings of
the first
Standards Monitoring Team in relation to a number of standards not having been
met, but went further and made additional
adverse findings. In reviewing safety
standards at Derwent Court, the first Panel found that while fire safety had not
been identified
as an issue by the first Standards Monitoring Team, this may
have been due to an erroneous understanding of the effect of the Tasmania
Fire
Service approval in June 1989, to which we have referred at [46] above. The Panel stated that upon
interviewing Mr Knight, the Panel became aware that the documentation
“did not have the effect of a[n] overall fire clearance, or approval
from the fire service to locate frail and non ambulant resident[s]
on the upper
floor”. The Panel stated that there was no overall assessment of fire
safety at the premises, and therefore there was no current
fire clearance for
Derwent Court. The Panel stated that it held grave concerns about the ability to
evacuate the 16 frail non-ambulant
residents on the top floor in the case
of a fire or other emergency. The Panel also stated in a general context that
the lack of
a lift at the premises severely restricted the ability to move
anyone or anything between the two floors. The Panel stated that “the
culture prevailing at Derwent Court is characterised by a ‘penny
pinching’ minimalist approach to the complex needs
of 51 vulnerable
residents”. The Panel recommended that “Derwent Court Nursing
Home should be closed and appropriate alternative accommodation be secured for
the current residents as a matter
of urgency.” It listed its reasons
as including: (1) the inappropriate physical structure of Derwent Court and its
lack of safety in the
case of an emergency; (2) troubling funding circumstances
and the lack of commitment of necessary financial resources by Jadwan to
ensure
an adequate physical environment; (3) a lack of an integrated culture of
commitment towards residents; and (4) a history of
inconsistent compliance with
standards over the lengthy period of Derwent Court’s ownership, management
and direction by Jadwan
and its Director of Nursing, leading the Panel to have
no confidence in there being potential for meaningful improvement. The Panel
did
not recommend that financial sanctions be imposed for the reason that these
would “unnecessarily prolong the operation of an inadequate Nursing
Home”.
- At
trial, Jadwan alleged that the first Standards Review Panel was not validly
constituted under the Act, and that in carrying out
its functions it breached
the rules of natural justice. Jadwan maintained these submissions on
appeal.
- By
letter dated 1 February 1997, Mr Dellar of the Department wrote to
Mr Alexander in relation to the report of the first Standards
Review Panel.
The letter stated that the report raised serious concerns about the standard of
care provided by Derwent Court, including
fire safety. The letter attached a
one-page report from a senior consultant to TasFire Building Safety (a division
of the Tasmania
Fire Service) which stated that the existing building did not
comply with the intent of the Building Code, and that because of the
standard of
exits and fire separation of floors, the 16 residents on the first floor of
the building could not be safely evacuated
with the staff available without
putting lives at risk. The report foreshadowed a complete fire safety survey
that had been arranged
for 4 February 1997. By his letter, Mr Dellar
stated that the fire safety concern was regarded by the Department as very
serious
and significant and requiring immediate attention. The letter requested
that Mr Alexander respond in writing by 6.00pm on Sunday,
2 February
1997, with information about his intentions to correct the problem.
- Mr Alexander
responded to Mr Dellar by letter dated 2 February 1997. In his
response, Mr Alexander stated that a thorough review of
fire safety of the
entire Home was completed by the Tasmania Fire Service in 1988.
Mr Alexander stated that without knowing what
works were required, he could
not provide an informed answer that weekend, that he had sent a fax to TasFire
Building Safety, and
that after receiving advice from TasFire Building Safety he
would be in a position to evaluate the required changes.
The financial sanctions determination
- By
letter dated 3 February 1997 to Jadwan, Mr Dellar enclosed a copy of
the report of the first Standards Review Panel. Mr Dellar
advised that he
had been appointed to act as delegate of the Minister, and had made a number of
decisions. Mr Dellar informed Jadwan
that he was –
(1) declaring, pursuant to s 45E(1) of the
National Health Act, that Derwent Court did not satisfy the
standards determined under s 45D of the Act;
(2) determining, pursuant to s 45E(2) of the National Health Act,
that while that declaration remained in force, Commonwealth benefits would
not be payable to Jadwan in respect of any patient entering
the nursing home
from 4 February 1997 (this was notwithstanding the recommendation of the
Panel that financial sanctions not be imposed
but that Derwent Court close);
and
(3) giving notice pursuant to s 44(2A) of the National Health Act
that, for the reason of standards satisfaction being a condition of nursing
home approval, the serious fire risks reported at the
facility, and the
facility’s poor record of standards compliance, he intended to revoke the
approval of Derwent Court under
s 44(2) of the Act on 6 February 1997,
unless Jadwan could show cause within three days as to why that should not take
place.
- On
4 February 1997, Mr Conor King, an Assistant Secretary of the Department,
wrote to the directors of Jadwan and, with reference
to Mr Dellar’s
letter of 3 February 1997, stated that he had determined under
s 45DC(8) of the National Health Act that there was an urgent need
to advise the public of Mr Dellar’s action to protect the welfare or
interests of persons who
were or would become residents of Derwent Court.
Mr King stated that information about Mr Dellar’s decision had
been made available
to the following groups, and attached copies of his
correspondence to them –
- residents and
residents’ representatives, Derwent Court Nursing Home;
- staff of Derwent
Court;
- Health and
Community Services Union;
- Australian
Nursing Federation;
- the Department
of Community and Health Services;
- Advocacy
Tasmania; and
- Southern Aged
Care Assessment Team.
- Also
on 4 February 1997, Ms June Templer of the Department sent to
Mr Alexander a copy of a “final draft” report to the
Department
dated 4 February 1997 from Mr David Hoffman of Kerr Lewit Clark
& Kidd, a firm of architects, which was made following
inspections of
Derwent Court on 31 January and 4 February 1997. The report listed
13 concerns in relation to fire safety arising
from the inspection of the
premises. The report stated as findings that fire safety and provision for
evacuation on the first floor
were not satisfactory for bed-fast residents or
people with dementia, and that fire safety and provision for evacuation on the
first
floor would be reasonable and satisfactory for ambulant people without
cognitive impairment if smoke separation between the ground
and first floors at
the main staircase and smoke seals at doorways in fire walls were
installed.
- On
5 February 1997, the Department sent to Mr Alexander the report of
Mr Jeff Knight of the Tasmania Fire Service which had been foreshadowed
and
which followed an inspection of Derwent Court on 4 February 1997. The
report comprised 31 pages and made many recommendations,
including the
installation of an automatic sprinkler system, a fire isolated exit from the
first floor, an emergency warning and
intercommunication (EWIS) system, and an
emergency lift.
- On
6 February 1997, Mr Alexander responded to Mr Dellar’s
letter of 3 February 1997, and specifically to his direction to show
cause.
The reply letter was 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:
- 100%
test of all detectors.
- Upgrade
the Fire Indicator Panel Documentation.
- Sound
pressure test of warning devices.
- All
fire doors to be fitted with smoke seals.
- Hole
in smoke wall to be repaired.
- Areas
where services may have penetrated fire or smoke walls to be checked for
compliance.
- Inspection
of emergency lighting system by a qualified person.
- Existing
self-luminous exit signs to be replaced with illuminated signs.
- Relocate
the hose reel to comply with the spindle height required.
- Replace
fire extinguishers as recommended.
- Relocate
fire blanket in kitchen to a recommended position.
- Install
a hose reel on the first floor at the front of the building.
- Material
stored in the undercroft to be reduced.
- Inflammable
material at the rear of the building to be removed.
- Review
of smoke detectors in living areas.
- 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.
- It
is to be noted that the undertakings in the above letter expressly did not
extend to the installation of a fire sprinkler system,
which was to be the
subject of further consideration, and made no mention of the installation of an
emergency lift, which had been
a recommendation in Mr Knight’s
report.
- Also
on 6 February 1997, Mr Alexander sent a further letter to
Mr Dellar that enclosed a letter of 8 June 1989 from the Department
of
Health Services Tasmania and the attached Tasmania Fire Service report dated
2 June 1989, to which we referred at [46] above. Mr Alexander’s
further letter was in the following terms –
Subsequent to our telephone discussion yesterday
afternoon, faxed now is a copy of a letter from the Department of Health
Services
Tasmania dated 8 June 1989.
The Approval in the letter was granted only after significant fire safety
installations to the fire detection system had been implemented,
together with
modifications to the interior of the building. A clearance was also required
from Tasmania Fire Service before the
Approval was given.
A letter, February 1997, over the signature block of Conor King, Department of
Health and Family Services, notes the serious nature
of standards breaches, in
particular fire safety.
The confirmation of first floor fire safety by the Department of Health Services
Tasmania has never been amended or revoked. In my
opinion, Derwent Court Nursing
Home should not be held in breach where no infringement has occurred.
These circumstances are brought to your attention as it appears you are
considering the revocation of Approval under Section 44 of
the National Health
Act 1953.
- On
7 February 1997, Mr Dellar responded to Mr Alexander’s
letter of 6 February 1997, by which he sought to show cause. The substance
of Mr Dellar’s response was that he was not satisfied that
Mr Alexander had taken appropriate or adequate action to correct
or address
the fire safety problems identified in the various reports, and required a more
detailed and comprehensive response pending
which he would defer revocation of
the approval for Derwent Court under s 44(2) of the National Health
Act until 13 February 1997. Mr Dellar stated that if on
13 February 1997 he was satisfied that Mr Alexander was taking
appropriate action
to correct the fire safety problems, he would consider
deferring the revocation of the approval of the home for a further period
of 28
days, that is, up until 6 March 1997, during which time Mr Alexander
would have the opportunity to show cause why Mr Dellar
should not revoke on
the basis of the failure to satisfy the remaining standards.
- At
about this time, Mr Dellar was in communication with another provider of
aged care services, Southern Cross Homes (Tasmania) Inc
with a view to the
relocation of residents of Derwent Court. In a later letter from Mr Dellar
to Southern Cross Homes dated 21 July
1997, Mr Dellar referred to a
letter from Southern Cross Homes dated 7 February 1997 and to its agreement
to consider employment
of staff from Derwent Court, and to its offer to provide
assistance with the transfer of residents to its service.
Jadwan’s retainer of Rae & Partners
- Two
other events of significance also took place on 7 February 1997. First,
Mr Alexander sent a letter to Mr Wicks, who was then an
employee
solicitor of the first respondent, Rae & Partners. The letter referred to a
telephone discussion between Mr Alexander
and Mr Wicks in which he
“outlined a potential problem with the Commonwealth government and
Derwent Court Nursing Home”. The letter attached a number of
documents, including the draft statement of the first Standards Monitoring Team,
the later
report of the first Standards Review Panel, and relevant
correspondence passing between the Commonwealth and Jadwan. The material
text of
Mr Alexander’s letter to Mr Wicks was as
follows –
I refer to an earlier telephone discussion with you when
I outlined a potential problem with the Commonwealth government and Derwent
Court Nursing Home.
Set out below is a brief background to our concerns. The paragraphs in the
letter correspond with the numbers on the relevant
attachments.
- Copy
of Draft Standards Report.
- Formal
notice of unsatisfactory Report.
- The
Action our Home is taking to correct problems and a letter and list setting out
inaccuracies.
- Department
of Health and Family Services (DH&FS) response to 3.
- Because
DH&FS would not amend the Report, a review was applied for.
- On
Saturday 1st February 1997, a letter was delivered by hand by the
State Manager of DH&FS stating serious fire safety concerns.
- On
Sunday 2nd February 1997, a letter of reply was collected by the
Manager of DH&FS.
- On
Monday 3rd February 1997, a letter and report was hand delivered to
us at 8.20 pm. The letter required a response by 6th February
1997.
- Jadwan
Pty Ltd response to 8. above.
- On
6th February 1997, DH&FS was faxed with queries over approved
fire safety and publishing of Derwent Court Nursing Home Action Plan.
- On
6th February 1997 DH&FS faxed a reply.
- From
4th February 1997, all staff, relations, unions and other were
advised of DH&FS intentions.
As you will see our initial concern was what we
perceived to be non-factual comments in the draft Standards Monitoring Team
(SMT)
Report. This report when published is available to anyone including
the media. We believed segments of the Report were derogatory to our staff and
the Home.
We believe it is prudent to seek initial advice in the early stages, but it is
our hope that by genuine actions to satisfy the Department’s
concerns, the
matter will be resolved without legal involvement.
- It
is convenient to record at this point that Mr Wicks denied in
evidence-in-chief that he ever received instructions from Jadwan
to give any
advice in respect of the sanctions determination recorded in the letter from
Mr Dellar to Jadwan dated 3 February 1997
and which was an attachment
to Mr Alexander’s letter of 7 February 1997 referred to
above.
- The
second significant event that occurred on 7 February 1997 was that
Mr Alexander met Mr Wicks. Mr Wicks made a six-page handwritten
file note of that meeting, which records that Mr Alexander raised with him
a number of matters, including the draft statement of
the first Standards
Monitoring Team, the fire safety concerns and remarks about staff contained
therein, the notice of intention
letter dated 6 September 1996, and the
need for an action plan to address the Commonwealth standards in question. The
primary judge,
at [232], summarised the file note as
follows –
Jadwan had initiated an “appeal” against
earlier findings of a Commonwealth Standards Monitoring Team which had inspected
the nursing home on 6 and 7 August 1996. Mr Wicks’s file note reads:
“Appeal went bad – more found”. It also recorded
Mr Jeff Alexander telling Mr Wicks of the following
matters:
- that “Tasfire Building safety” had
been called in and that Derwent Court “does not comply with Building Code
–
concern re evacuation”;
- that Jadwan could comply with most of the care standards “but limited
by the nature of the building (size, age) as to what
can be done re
fire/evacuation etc”;
- that he had met with Mr Dellar that day: “no decision yet” (the
Court infers that to have been a reference to the then
threat of revocation of
Derwent Court’s approval as a nursing home as referred to at [57]
above);
- that in the past the Commonwealth had wanted a lift installed at Derwent
Court. Mr Jeff Alexander had wanted a guarantee of funding
if it was
to be installed, but such a guarantee was “not forthcoming”;
- the 17 year history of the Alexander family’s ownership of nursing
homes including one in Victoria and the legal structures
of the companies
through which that ownership was exercised;
- that there had been an earlier bad report in 1991 in which fire safety had
not been a problem which he suggested had been politically
motivated: “did
much the same thing – they altered final report to [Jadwan’s]
satisfaction”;
- that “staff have enlisted Fran Bladel, union etc to lobby to save
home”;
- that the findings of the [Standards Review Panel] had not yet been
published: “30 days [sic] time”;
- that Jadwan could sell its “beds” if approval attached:
“you sell the licence for the bed – worth about $12,000
each in Tas
in current climate”;
- the perceived “ulterior motive” and saying that he believed
“June Templar is biased”;
- that the residents of Derwent Court were largely dementia
patients.
- Mr Wicks
stated in cross-examination that Mr Alexander had explained to him in this
first meeting that the legal assistance that he
wanted was a law firm that could
write letters on the company’s behalf as he required, and that he thought
that all that Mr
Alexander was really seeking was a letterhead.
Mr Wicks later clarified that this meant that he would write within his
instructions,
but with some “free agency”, as opposed to a
“cut and paste” of text supplied by Jadwan. And later still,
Mr Wicks stated that he understood that Jadwan wanted him or the firm to be
on standby, as necessary, to write on behalf of the company
to the Department as
the company required.
- Beyond
meeting Mr Alexander on 7 February 1997, Mr Wicks gave evidence
that within days of meeting Mr Alexander, he visited Derwent
Court, and
that soon after he met Mr Alexander, he conducted some research at the Law
Society library in Hobart and produced a five-page
handwritten research note
that referred to a number of provisions of the National Health Act,
including s 45E relating to a declaration of non-compliance with standards,
s 44(2A) relating to revocation of approval, and s 105AAB,
relating to
review by the Administrative Appeals Tribunal. Mr Wicks gave evidence that
the office of Rae & Partners did not have
a library apart from the odd
textbook on the shelves, and that the firm used the Law Society library.
Mr Wicks also stated in evidence
that the firm did not have an Internet
connection, and that he did not use email. In cross-examination, Mr Wicks
said that it was
not likely that after conducting the research that he had
failed to appreciate the significance for Jadwan of those sections of the
Act.
- On
10 February 1997, Mr Dellar of the Department sent a letter by fax to
Mr Alexander, referring to Mr Alexander’s earlier letter
of
7 February 1997 where he advised that he would seek guidance from TasFire
Building Safety as to “which of their requirements and recommendations
are most urgent, and on acceptable time frames for their completion”.
Mr Dellar confirmed that he had met with Mr Jeff Knight, Manager of
TasFire, and attached some type-written notes of the
meeting that were signed by
Mr Dellar, and which stated that the notes had been discussed with
Mr Knight, who endorsed their accuracy.
The notes relevantly stated the
following –
...
- As it presently stands, this facility is not
safe. Mr Knight is not convinced that residents on the first floor in
particular could
be evacuated in the event of a fire. Mr Knight added that
he is familiar with a large number of Nursing and Hostel facilities across
Tasmania, and he knows no other which presents such safety
concerns.
In order to bring the facility up to an acceptable
standard of safety, there are three broad matters which would need to be
addressed:
- Fire (or to a lesser extent, smoke) isolation
horizontally across the building, including the fire/smoke isolation of the
internal
staircase;
- an effective evacuation plan, including a second fire-isolated escape route
(stairs or a lift were discussed);
- sprinkler system.
...
In the short term, Mr Knight’s view was the most serious issue which
needed to be addressed was an effective plan to evacuate
all 51 residents,
with particular emphasis on safely evacuating those on the first floor. Given
the stress to residents that an actual
evacuation would cause, Mr Knight’s
view was that a substantial simulation of an evacuation, using volunteers in
place of residents,
would be the best approach. He felt sure that an exercise
such as this would reveal aspects of the evacuation plan which would need
attention.
On time frames, Mr Knight’s view was that the urgent issue was to
ensure the immediate safety of the residents, and that the
immediate first step
in doing this would be to provide for adequate escape routes and evacuation
procedures and investigate the installation
of a Sprinkler system. He reiterated
(as does the report) that the other matters would need to be attended to over
time.
- The
notes then listed the order of priorities identified by
Mr Knight –
FIRST Priority to be completed as soon as
possible:
- Smoke and fire detection systems
- Means of escape
- Emergency lighting
- Exit signs
- Dangerous goods, noting this has largely been attended to already
- Emergency evacuation plan
- Sprinkler System
To be completed within a year
- Break glass alarms
- Fire and Smoke compartmentation
- Firefighting equipment
To be completed later
- EWIS (this may not be necessary at all)
- Smoke Hazard Management
- Water for firefighting
- On
12 February 1997, Mr Wicks sent by fax a letter to Mr Dellar on
behalf of Jadwan, a copy of which he forwarded to Mr Alexander
later that
day. This appears to have been the first communication by Mr Wicks with the
Department on behalf of Jadwan. In his letter,
Mr Wicks –
(1) stated that Rae & Partners acted for Jadwan,
“which has sought our advice regarding its present dealings with the
Department”;
(2) noted Mr Dellar’s notice of intention to revoke the approval of
Derwent Court;
(3) stated that he asked Mr Dellar to advise what “process
and instrument or instruments [by which] the present Standards Review
Panel was appointed”, including seeking a “copy of any
relevant instrument of constitution or appointment”, so as
“to assist with our consideration of this matter and the advising of
our client”;
(4) noted, “by way of observation only at this point”, that
one member of the Panel, Mr Van der Schoor, was also the Executive Officer
of Aged Care Tasmania Inc, an association
of which a majority of aged care
nursing homes in Tasmania were members, and who would be in a position to
benefit from the revocation
of Derwent Court’s approval and the
reallocation of its residents, thus raising a conflict of interest; and
(5) while maintaining that the above comment was by way of observation only,
expressed concern that Mr Alexander had “learned that Mr [Van der
Schoor] has mentioned to one or more members of Aged Care Tasmania that Derwent
Court Nursing Home is about
to close and the beds will shortly be available for
allocation should members wish to apply for them”, asserting the
inappropriateness of that conduct if true and bearing out Jadwan’s concern
as to Mr Van der Schoor’s
position on the
Panel.
- Also
on 12 February 1997, Mr Paul Morgan of Morgans Pharmacy wrote to
Mr Dellar concerning Derwent Court. Mr Morgan commended the
staff at
Derwent Court and the level of care provided to residents. He also addressed
concerns raised as to hygiene and drug administration
by stating that he did not
share those concerns. Mr Morgan wrote –
... I feel any decision to close Derwent Court Nursing
Home would result in the loss of a valuable aged care facility. I feel it would
be an unfair and incorrect reflection on the staff. In short, I feel it would be
a wrong decision. It would also cause a lot of trauma
to the existing
residents.
- On
13 February 1997, Mr Wicks and Mr Alexander spoke by
telephone, in respect of which Mr Wicks’s file note records the
following
–
You getting a detailed list of what you’ve
done/are doing to comply to go under our letterhead – you want a
stay of the decision – only given notice late Monday (5.45) –
Tues [illegible] – you started calling 8am
yesterday.
- Then,
on 13 February 1997, Ms Julie Alexander sent to Mr Wicks by
fax a document titled “Draft Letter to Department”. The draft
letter identified contractors and agencies that had been contacted by Jadwan,
and steps that Jadwan had in train,
or proposed to take, in response to
Mr Dellar’s letter of 10 February 1997.
- The
information in the draft letter prepared by Ms Julie Alexander was then
substantially reproduced in a letter sent by Mr Wicks
by fax on the same
day to Mr Dellar of the Department. Mr Wicks’s letter requested
a deferral of any decision by Mr Dellar
to revoke the approval of Derwent
Court “pending further negotiations with our client over the meeting of
the various standards and fire safety concerns recently raised”. Then,
in response to Mr Dellar’s letter of 10 February 1997, the
letter listed a number of steps that Jadwan stated
it proposed to take, and a
summary of steps already taken. The letter asserted that the steps were those
identified by Mr Knight
in his meeting with Mr Dellar under the
heading “First Priority”, referred to at [76] above. An exception was the sprinkler
system and a means of escape which the letter stated required more detailed
consideration.
Mr Wicks’s letter stated in conclusion
that –
We note that so far as the issue of fire safety is
concerned, our client has been operating in good faith since June 1989 on an
approval
of the Tasmania Fire Service for the first floor of the Home to be used
by non ambulant residents. We note also that in the five
most recent standards
monitoring visits by your Department over the period September 1991 to August
1996 the Home has been assessed
as meeting the required standard for fire
safety. Under the circumstances it would be most unfair for a revocation
decision to be
made without allowing our client reasonable opportunity to deal
with the large number of matters arising from the most recent fire
inspection
report and the Standards Review Panel report.
- It
is relevant to note here that while Mr Wicks’s letter contained
information that had been substantially reproduced from Ms
Alexander’s
draft letter, the opening two paragraphs and the final paragraph of
Mr Wicks’s letter differed from those
appearing in Ms
Alexander’s draft, which in evidence, Mr Wicks accepted reflected his
input at his initiative.
- On
14 February 1997, Mr Dellar wrote to Mr Wicks in response to his
letter of 13 February 1997. Mr Dellar treated the list of steps
proposed by Jadwan as “undertakings”, and noted those of the
proposed steps that had already taken place. Mr Dellar stated
that he
wished to be advised by 6.00pm 19 February 1997 of Jadwan’s
intentions regarding other matters referred to in the letter,
including
sprinkler systems, and other structural changes, and improvements to the
evacuation procedures, and relevantly stated the
following –
As a result of your letter, and the undertakings it
contains, I will not be revoking the approval of Derwent Court Nursing Home
under
section 44 of the National Health Act 1953 for the present. However, I
still regard the care issues raised in the Outcome Standards review report, and
the matters raised by
the Standards Review Panel, including the fire safety
issues as urgent and serious and I expect Jadwan Pty Ltd to continue to address
these issues urgently.
- Mr Dellar
then referred to his letter of 7 February 1997, to which we referred to
at [68] above, and stated that he
expected to receive the further information in relation to care standards
outlined in that letter by 6
March 1997. Mr Dellar stated that
provided the undertakings on fire safety continued to progress, the action to
revoke the approvals
would be deferred to that time.
- Also
on 14 February 1997, Mr Dellar sent a letter to Mr Wicks that
responded to his earlier faxed letter of 12 February 1997, to which
we
referred at [77] above. The
response enclosed a copy of some extracts of the National Health
Regulations that related to the operation of Standards Review Panels, and
asserted that the composition of the Panel met the requirements of
the
regulations. Mr Dellar stated that he had consulted the Chair of the Panel,
Ms Parr, and that she was satisfied that there was
no conflict of interest
for any member. In relation to Mr Alexander’s allegation that one
panel member, Mr Van der Schoor,
had mentioned to one or more members of
Aged Care Tasmania that Derwent Court was about to close and that the beds would
be shortly
available for allocation should members wish to apply for them,
Mr Dellar responded –
Mr Vanderschoor’s response to me has been
that he has at no time acted improperly as a member of the panel and has not
provided
inappropriate information to any member of Aged Care Tasmania.
By way of clarification, you may find it helpful if I point out that I, together
with officers of the Department have been exploring
options for the alternative
care of the residents of the Derwent Court Nursing Home if revocation of the
home becomes necessary.
This has involved discussion with a number of people
including providers, the State Government and Mr Vanderschoor. Such action
follows
usual Departmental practice where revocation is being considered to
protect the interests of residents in the home. In the case of
Mr Vanderschoor, he had been asked by the Department to let us know of
alternatives which might exist if it became necessary to find
alternative care
for up to 51 nursing home residents. Mr Vanderschoor has provided me with a
number of helpful suggestions and it
may be that in gathering that advice, he
spoke to Aged Care Tasmania members. I did confirm to Mr Alexander that
discussions of this
nature were occurring, in the course of a conversation we
had on February 4 1997.
- On
19 February 1997, Mr John Calder of Tasmanian Building Services Pty
Ltd wrote to Mr Alexander regarding fire safety requirements
at Derwent
Court, following an inspection conducted at the premises. That letter identified
a number of items that the letter stated
had been agreed with the Tasmania Fire
Service and which, if carried out, would satisfy their requirements. The items
that were listed
included a sprinkler system, and a lift with stretcher
capability. The letter stated that with respect to a sprinkler system, it
had
been agreed that if this was installed, a trade-off would be permitted for
certain other items. The letter stated that at that
stage, an accurate costing
for the work could not be provided, but that a ball-park estimate was
$250,000.
- Also
on 19 February 1997, Mr Wicks wrote to Mr Dellar in response to
Mr Dellar’s request of 14 February 1997, to which we referred
at [83] above, that Jadwan provide
certain further information by 6.00pm that day. Mr Wicks addressed the
topics of fire doors, smoke seals,
sprinkler systems, structural changes, and
improvements to evacuation procedures, and sought more time to provide detailed
responses.
- Additionally
on 19 February 1997, Mr Dellar wrote to the residents of Derwent Court
with reference to the letter from Mr King of 4
February 1997, to which
we referred at [62] above. In the
letter to the residents Mr Dellar stated –
The proprietors of Derwent Court Nursing Home provided
the Department with information of action they are taking to resolve the fire
safety issues which were identified and continue to urgently address the need to
ensure the safety of all residents in the event
of a fire. I have therefore
delayed taking any further action to allow the proprietors of the nursing home
the opportunity to formulate
and implement an effective plan of action to
resolve all other areas of concern. I intend to monitor the situation closely to
ensure
that the issues relating to standards of safety and care are properly
resolved.
- On
20 February 1997, Mr Dellar wrote to Mr Wicks in response to his
fax of 19 February 1997. Mr Dellar stated that while there was
evidence that Jadwan had commenced action on a number of items, there was still
much that needed to be done. Mr Dellar noted that
while there was reporting
on initiatives that Jadwan was taking to obtain quotes, and details on items
such as sprinkler systems
and elevators, Jadwan had still not indicated its
final intentions in relation to those matters, or any timetable to have them
resolved.
Mr Dellar stated that the Department would require a further
report by 6.00pm on 24 February 1997 as to progress on unresolved fire
safety issues. Mr Dellar also stated by way of reminder that Jadwan was
required to report to him by 6 March 1997 with respect to
the other
standards issues that needed to be addressed.
- On
25 February 1997, Wormald Fire Systems prepared a quotation for Jadwan for
the design, supply, installation and commissioning of
a sprinkler system at
Derwent Court in the sum of $46,800.
26 February 1997 meetings
- On
26 February 1997, Mr Wicks, Mrs Joan Alexander, and
Ms Julie Alexander attended a meeting with Mr Dellar and
Mr Hargraves of the
Department to discuss, among other things, the options
available to Jadwan to address the safety concerns underpinning the financial
sanctions determination made under s 45E(1) of the National Health Act.
Mr Wicks met with Mrs Alexander and Ms Alexander both before and after the
meeting with the Department and made a file note of the
meetings.
- As
to the meeting with the Department, Mr Wicks gave evidence of his
recollection that he was more or less an observer at this meeting,
that he had
no active role in negotiating on behalf of the company, and that he listened to
what Mrs Alexander and Ms Alexander told
the Department about what
they were doing to meet the Department’s concerns in relation to care
standards and building issues.
Mr Wicks’s note of the meeting with
the Department stated –
Conveyed to Dellar and Hargraves our concern that the
subjective nature of the comments made particularly in the final page of the
Standards Review Panel report and that their personal nature particularly
against the Director of Nursing. He said he heard what
we were saying and made
the point that he has a discretion to publish or not publish that report and
that the proprietors are able
to make submissions as they wish on it and those
submissions may be published by him.
Discussed also the problems the proprietors are having with obtaining quotes for
work to be done at the Home and he said he understood.
He made [it] clear though
he needed to be satisfied by March 6th that the care standards had
been substantially met or in the process of being dealt with.
Discussed the “de canting option” which might be available to the
Alexanders namely to sell or transfer beds to other
Homes thereby reducing the
numbers accommodated on the first floor and making evacuation considerations
less critical.
The Alexanders discussed in general terms the option of rebuilding and
Mr Dellar mentioned the possibility of building at Rokeby
had been
mentioned by Jeff Alexander to him and he felt that there was a need in that
area but pointed out the length of time from
concept stage to completion and
made the point that it would not be acceptable for the fire safety issues at
Derwent Court to be
left in abeyance over that period.
He also referred to the possibility of negotiation standards short of what the
Code requires if the matter of sprinklers or lifts
are being considered and
suggested that if the option of those building works were to be pursued then the
Alexanders should approach
Tas Fire who would put them in touch with the
Building Code of Australia Referent [sic] Committee.
Returning to the question of publication of the Standards Review Panel report,
Mr Dellar did say that he would let us know whether
he proposed to publish
the report if at all.
Confirmed at the end of the meeting that he was awaiting further contact before
6th March before deciding what he would do in respect of the
revocation decision.
We pressed the point of obtaining 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. Discussed also the possibility of adding
on at the back to create
more room. Steven Dellar would and understandably could
not commit himself in this regard.
We worked point by point through progress with meeting the other fire
requirements and Dellar seemed generally happy with what has
been done to
date.
Alexanders to report back to him before 6th March with more
information on their compliance with care standards and he said in this regard
that date is a definite deadline.
- After
the meeting with the Department, Mr Wicks, Mrs Alexander, and
Ms Alexander met and discussed “future options”.
Mr Wicks made a file note of that discussion which
stated –
On return to the office discussed at length with Mrs
Alexander and Julie future options and said that I really can’t assist
in
any way because they need to make what in fact are basic commercial decisions as
to how they will proceed but they should be mindful
of the fact that if they
cannot comply or cannot continue to comply or if they can’t get any
assurance in this regard given
the age and the manner of construction of Derwent
Court then the ultimate option may only be to sell the beds and sell the real
property
and relocate all their efforts and funds back to Victoria where I
understand the Nursing Home there is performing well. Mrs Alexander
also
mentioned the possibility that there could be a problem with the Director of
Nursing, Sister Bench, and it would appear there
was perhaps some truth in the
Standards Review Panel comment about her having been too long in the job. It
appeared from what Mrs
Alexander was saying was that the Director of Nursing has
not been keeping up with current trends and is one of the “old
school”
of nurses. I said this introduced another serious matter for them
to consider that is whether compliance with care standards would
come somewhat
easier if fresh and more competent staff were employed in the place of the
existing one[s].
There was little further I can do and I am not able to advise them on the
commercial aspects of any of the options before them but
they should consider
them further and I would be happy to assist in any way possible. I did say that
I felt that under the circumstances
if a decision was made to revoke the
approval then it may be difficult to challenge that decision through the appeal
processes open
unless they could clearly demonstrate that they did in fact meet
the care standards and that the Standards Monitoring Team or the
Review Panel
were incorrect in the assessments of the premises. I said however there was no
room for misinterpreting the question
of fire safety it has to be dealt with in
some meaningful way.
- Ms Julie
Alexander gave evidence in cross-examination about the later meeting with
Mr Wicks on 26 February 1997. She said that at
that time she was
concerned that they were not receiving legal advice as to what they should be
doing in relation to the financial
sanctions determination, and that she
conveyed that concern to Mr Wicks at the meeting. Ms Alexander gave
evidence that Mr Wicks
said that they “couldn’t do anything
legally unless Derwent Court was revoked and we could only make decisions on a
commercial basis”.
- For
his part, Mr Wicks gave evidence in examination-in-chief that he did not
recall whether he was asked on that day by either Mrs
Alexander or Ms Alexander
to provide advice to Jadwan about anything. However, in cross-examination,
Mr Wicks was taken to the note
and accepted that it recorded advice that he
had given Mrs Alexander and Ms Alexander in that conference.
Further correspondence
- On
4 March 1997, Wormald Fire Systems prepared a quotation for the cost of the
supply and installation of smoke seals on doors and
frames at Derwent Court at
$3,671. On the same day, another supplier, Parmic Pty Ltd, prepared a quotation
for the design, fabrication
and installation of a fire sprinkler system at
$48,500, subject to adequate water supplies being available, and quoted the
installation
of smoke seals on doors at $5,600.
- On
5 March 1997, Mr Wicks sent a fax to Mr Dellar of the Department
attaching a submission prepared by Jadwan addressing the report
of the first
Standards Review Panel. The fax comprised a covering letter which again raised
concerns about the composition of the
first Panel, and the potential for bias on
the part of one of its members. The letter also raised concerns that the members
of the
Panel were not properly qualified to evaluate Derwent Court, because they
did not have sufficient experience in the management of
dementia patients, and
that the Panel members, in their inexperience, had been affected and unduly
influenced by the sad and disturbing
mental and physical condition of many of
the residents. The letter stated by way of conclusion –
... we confirm the opinion of both ourselves and our
client that the Standards Review Panel report contains a number of unfair
inferences
and inaccurate statements which are dealt with in the enclosed
submissions. We believe it would be most unfair to our client and
unnecessarily
alarming to residents of the Home and their families for the Panel’s
report to be published by you. Our client
is doing all within its power to
address the issues raised by both the Monitoring Team and the Review Panel as
the enclosed Action
Plan shows. We believe that in the circumstances it would be
most unfair for the Home’s approval to be revoked, or for the
Review
Panel’s report to be made public.
- In
addition to attaching Jadwan’s submission, the letter also attached what
was described as an “Action Plan” that
addressed the standards
issues raised in the Panel’s report, and a submission signed by the
nursing staff at Derwent Court.
Mr Wicks gave evidence that he had no input
into the submission of Jadwan, the action plan, or the submission from the
nursing staff.
- By
letter dated 6 March 1997, Jadwan itself wrote to Mr Dellar and made
within the letter a five-page submission in response to Mr
Dellar’s
requirement in his letter to Jadwan of 7 February 1997 (referred to
at [68] above) that Jadwan show
cause why approval for Derwent Court should not be revoked on the basis of its
failure to comply with standards.
This submission was a separate submission from
that sent by Mr Wicks the previous day, but covered similar topics. The
submission
addressed the topic of fire safety, but did not state what
Jadwan’s proposals were in relation to a lift or a sprinkler system.
- In
addition to their efforts to attain compliance with Commonwealth safety
standards at Derwent Court, there was evidence that the
directors of Jadwan
investigated the possibility of relocating Derwent Court to a new site. In a
letter dated 28 July 1997 from Mr
Alexander to Mr Hogan,
Mr Alexander stated that at a meeting on 4 March 1997 with Mr Dellar,
Jadwan undertook to relocate and rebuild,
and that Mr Dellar’s
response was that Jadwan was “off the hook”. Mr Wayne
Alexander gave evidence of looking at new sites in 1996 and 1997 at
Glenorchy, Sorell, and Clarence. Mrs Joan Alexander
also gave evidence
of looking at sites, and speaking to real estate agents, and stated that they
looked at about eight blocks. Jadwan’s
chronology filed in the appeal
stated that on 12 March 1997, Mr Jeff Alexander and Mrs Alexander
inspected properties at Sorell and
Glenorchy, and Mr Wayne Alexander
and Mrs Alexander inspected further properties on 15 and 16 March
1997.
- At
about this time, Mr Dellar of the Department was still in communication
with Southern Cross Homes. In his letter to Southern Cross
Homes dated
21 July 1997, to which we referred at [69] above, Mr Dellar referred to its
“revised proposal of 14 March 1997 responding to the possible
relocation of residents of Derwent Court Nursing Home”.
- By
letter dated 17 March 1997 to Mr Alexander, Mr Calder of
Tasmanian Building Services Pty Ltd referred to “our recent
discussion”, and provided an estimate, which was subject to some
qualifications, for the construction of a 51 bed complex on a greenfields
site in the amount of $3,152,760.00.
The second Standards Monitoring Team
- On
12, 13, and 17 March 1997, a second Standards Monitoring Team headed by a
senior interstate member attended Derwent Court for the
purpose of conducting a
further standards assessment.
- On
25 March 1997, and prior to being notified of the outcome of the assessment
by the second Standards Monitoring Team, Jadwan sent
by fax to Mr Dellar of
the Department a two-page letter to provide an “update on the progress of
fire safety” at Derwent
Court with respect to break glass alarms, fire
hoses, smoke seals, smoke detectors, evacuation procedures, and care standards
for
nursing staff. No reference was made in this letter to any proposals for a
fire sprinkler system or a lift.
- The
second Standards Monitoring Team prepared a draft “Statement of
Information”, a copy of which was sent to Jadwan under
cover of a letter
dated 1 April 1997 from Ms Jane Halton, a First Assistant
Secretary of the Department. Ms Halton stated in the
letter that she had
recently been appointed by the Minister as a delegate for the purpose of
considering any action arising from
Jadwan’s failure to satisfy standards
determined under s 45D of the National Health Act. The draft
statement of the second Standards Monitoring Team identified 31 standards,
five of which were met. Action was required
to meet one standard, and urgent
action was required to meet 25 standards. Ms Halton invited Jadwan to
consider the draft statement,
and the reasons for the findings, and to forward
any evidence that contradicted that set out in the statement for her
consideration.
Ms Halton advised that she had grave concerns about the
level of care being provided at Derwent Court and Jadwan’s ability
to
implement changes that would lead to a sustainable improvement in outcomes for
residents. For that reason, Ms Halton advised Jadwan
of her intention, as a
delegate of the Minister for the purposes of reg 26 of the National
Health Regulations, to ask the Standards Review Panel of Tasmania to conduct
a further independent review of the nursing home and to report to her on
their
findings. Of particular note is that Ms Halton stated that the second
Standards Review Panel would not be provided with a copy
of the Statement of
Information attached to her letter –
Please note that in referring this matter to the
Standards Review Panel, I will not be providing it with a copy of the Statement
of
Information arising from the assessment conducted in March 1997. This will
ensure that the Panel acts as a truly independent review
of the care you are
providing and will approach its task without the benefit of the assessment by
monitors from the Department. I
will, however, provide the Panel with a copy of
your submission dated 5 March 1997.
- At
the conclusion of the letter, Ms Halton directed any enquiries to
Ms Lisa Paul of the Department.
- Three
days later, on 4 April 1997, Mr Alexander called Mr Wicks and
told him that Derwent Court had had a visit from “someone from
Canberra” on 12 and 13 March 1997. Mr Alexander told
Mr Wicks that he was still attending to fire requirements.
8 April 1997 meeting
- On
8 April 1997, Mr Wicks and Mr Alexander held a further
discussion. Mr Wicks prepared a file note of that discussion that
relevantly
stated –
Errors in statement (you can’t comment on nursing
matters).
They are concentrating on policies, procedures and practices as per the new
(draft) standards
Director of Nursing has resigned – [with effect from] 2 weeks (family
reasons)
DDN will fill in short term
was the original SMT plus a head from Canberra
Bishop Davies Court rejected one
Nothing we can do at this stage
you’ll speak with Ms Paul – maybe SRP needn’t come through the
place again – pointless challenging composition
(bias) SRP anyway –
clearly new SMT report is a further problem that needs to be dealt with –
Department is obviously
seeing that they ‘get it right’ so AAT
review is less likely of their actions/decisions
- The
file note does not clearly state who made which comments recorded in it. Whilst
initially Mr Wicks gave evidence that his notes
were a record of what
Mr Alexander said to him, he conceded in cross-examination that the
statement, “pointless challenging composition/bias SRP
anyway”, appeared to record a view that he conveyed to
Mr Alexander, and accepted in cross-examination that his advice to
Mr Alexander
was that there was no point in challenging the report of the
first Standards Review Panel. By way of explanation, Mr Wicks stated
in
cross-examination that it “then appeared to me that the department
could simply do it again and get it right.” Despite
Mr Wicks’s evidence in cross-examination, the primary judge held
at [284] that he was not persuaded that the
Court should attribute the
statement that it was pointless challenging the composition of the first
Standards Review panel to Mr
Wicks, as in context it was equally possible
that it was a conclusion expressed by Mr Alexander.
Other developments
- As
foreshadowed in Mr Wicks’s file note referred to at [108] above, on 9 April 1997,
Ms Barbara Bensch, the longstanding director of nursing at Derwent Court,
resigned, effective 1 May 1997.
Ms Bensch stated in her letter of
resignation that her husband had suffered ill health for a number of years, and
that it had become
necessary to spend more time with him. The Deputy Director of
Nursing, Denise Callahan, assumed the position of Acting Director of
Nursing after Ms Bensch left.
- The
next day, 10 April 1997, Mr Alexander wrote to the Program Manager,
Aged and Disability Support Program at St John’s Park
in New Town,
Tasmania, to enquire whether an area might be available in the Carruthers Wing
at premises at New Town to relocate 16
residents for three years while
“we rebuild a new Home.” Mr Alexander subsequently
visited the Carruthers Wing at St John’s Park on 21 April 1997,
and sent a further letter
dated 5 May 1997 to request a telephone call to
discuss further details, such as various charges associated with taking up the
accommodation.
Later, on 30 May 1997, Mr Alexander was faxed details
of the costs associated with occupancy of one floor of the Carruthers
Building.
Practice fire drill
- On
14 April 1997, a practice fire drill took place at Derwent Court that was
observed by an officer of the Community Fire Safety Division
of the Tasmania
Fire Service. Subsequently, by letter dated 22 April 1997, the officer
advised Mr Alexander that the evacuation was
conducted in a professional
and efficient manner, and that staff were to be congratulated on their
efforts.
Jadwan’s response to the statement of the second
Standards Monitoring Team
- By
a five-page letter dated 22 April 1997 addressed to Ms Lisa Paul of
the Department, Ms Julie Alexander addressed some of the findings
in the
statement of the second Standards Monitoring Team that had been provided to
Jadwan under cover of the letter from Ms Halton
of the Department dated
1 April 1997, to which we referred at [105] above. Jadwan’s letter stated
that the letter from the First Assistant Secretary had been received on
7 April 1997, and referred
to a telephone discussion with Mr Alexander
on 9 April 1997. Jadwan’s letter addressed the topics of
“Homelike Environment” at Derwent Court, and fire safety. In
relation to fire safety, Jadwan reported that evacuation of residents on the
first floor
was to be by ski-blanket, and that delivery of ski-blankets from the
supplier had been completed on 26 March 1997. The letter also
referred to
an evacuation drill that had taken place on 14 April 1997, and foreshadowed
a report from TasFire Building Safety as
to their observations of the drill.
Finally, the letter referred to a visit by the Standards Monitoring Team on
18 April 1997 and
to “a most informative session”. On
the second page of the letter, under the heading “Building” the
letter stated –
At a meeting on the 4th March 1997, Mr Dellar
was advised of Jadwan Pty Ltd intention to rebuild at a new location. Reasoning
for the decision to relocate
involved the likely adverse reaction by the
National Trust to an installation of a sprinkler system in a heritage building,
the effect
of the integrity of the building for future functions if a full size
lift was to be installed; and the unsuitability and layout of
the Home in light
of revised building standards.
Directors are actively seeking appropriate land for relocation of the
Home.
- However,
as the Department was later to note, the response by Jadwan to the statement of
the Standards Monitoring Team did not address
all the findings. Indeed, most of
the findings were not individually addressed. The findings of the Standards
Monitoring team in
its statement were set out in an organised, systematic way by
reference to each of 31 nominated standards. Jadwan’s response
stated
in relation to the findings –
Many of the comments in the Findings could be
challenged, but staff would rather look to the future by implementing a new
approach
in order to meet the standards. However there are two standards where
the findings as stated would, we believe, leave a reader with
unfair
misconceptions. The following comments and evidence are submitted for
consideration.
- Jadwan
then addressed two of the objectives, namely “Homelike Environment
– 4.1”, and “Fire Safety – 7.4”. Jadwan
concluded its letter as follows –
As a final comment, it is now eleven weeks since the
threat of revocation of approval was imposed on Derwent Court. Over this time
there has been, and still is, considerable uncertainty in the minds of
residents, relatives and staff concerning the future of the
Home. There are
continuous questions from relatives and others for which we are unable to
provide answers.
The loyalty of our staff has never been in doubt. Considering many staff could
have gained more secure employment elsewhere, but
have chosen to continue to
offer their loyalty and services to our residents and to management in these
difficult times, speaks for
itself.
For the sake of peace of mind for more than one hundred and twenty residents,
relatives and staff, we ask that early consideration
be given to a decision
concerning the future of Derwent Court.
The second Standards Review Panel
- On
9 May 1997, the second Standards Review Panel, to which we shall refer
further below, attended Derwent Court for the purposes of
its review.
- On
11 May 1997, Ms Paul of the Department, wrote to Jadwan in response to
Jadwan’s letter of 25 March 1997, to which we referred
at [104] above, and also in response to another
letter from Jadwan dated 21 April 1997. In response to the latter letter,
Ms Paul confirmed
that Derwent Court remained subject to sanctions that had
two aspects –
- Derwent Court
would not be paid Commonwealth benefits for any resident admitted from
4 February 1997; and
- where Derwent
Court chose to admit a resident after 4 February 1997, it was not able to
charge that resident any more than it would
have been able to charge if the
Commonwealth benefit was being paid.
- Ms
Paul’s letter of 11 May 1997 also raised the topic of fire safety. It
requested confirmation that a fire drill had occurred,
and details of steps that
Jadwan proposed to take to address any deficiencies in the fire drill. Ms Paul
also stated that it concerned
her that Jadwan’s letter of 25 March
1997 did not mention progress on providing a second form of egress for residents
and staff
on the first floor in the event of a fire on the ground floor. This
topic had been raised with Jadwan on 10 February 1997 (see [75] above). Ms Paul requested that,
within 14 days, Jadwan provide a detailed framework setting out the steps
it would take to install
a second egress. The letter foreshadowed that failure
to provide such a framework to ensure that a second egress was installed within
a reasonable time might lead to a recommendation that the nursing home approval
be restricted to the ground floor of the building.
- On
16 May 1997, while Jadwan awaited the outcome of the second Standards
Review Panel’s site visit, Mr Alexander wrote to the
Tasmanian
Department of Community and Health Services to express interest in land at
Glenorchy to build a “first class and
accredited aged care facility in the
Greater Hobart area.” The letter stated, “recently the subject
land was viewed briefly”.
- By
letter dated 28 May 1997, Ms Paul of the Department sent Jadwan a copy
of the report of the second Standards Review Panel, which
was dated 26 May
1997. The covering letter stated that the second Panel’s report would be
considered by Ms Halton of the Department
in relation to the question of
compliance with the standards determined under s 45D of the National
Health Act, which included consideration of whether the approval of Derwent
Court should be revoked under s 44. Ms Paul urged Jadwan to make
a
submission, and stated that it should do so within seven days of receipt of the
letter.
- Notwithstanding
the terms of reg 12(1) of the National Health Regulations, to which
we referred at [23] above, the
second Standards Review Panel comprised only the Chairperson and two other
members. Both of the members, Mrs Ethel Guy
and Ms Janet Cooper, had
been members of the first Standards Review Panel. The Panel’s report
stated that a “Commonwealth Department representative was not
present” (cf, reg 12(1)(e)), and that “it was not
possible to have a fourth member”. As we discuss later, Heerey J
held in Jadwan No 1 that the second Panel was invalidly constituted
for reasons including that Ms Cooper was ineligible for appointment to the
panel.
- Section 5
of the report of the second Standards Review Panel listed the documentation that
the Panel considered, which notably included,
“Statement of
Information: Standards Monitors Report 12-13-17 March 1997”, the
findings of which it referred to in its report, and which it also invited
interviewees to address. The second Panel stated
that it had also interviewed
the three standards monitors who had conducted the March 1997 review. This
was notwithstanding the statements
in Ms Halton’s letter of
1 April 1997, to which we referred at [105] above, that she would not be providing
the second Panel with the Statement of Information from the March review, so as
to ensure
that the review was truly independent. However, as the respondents
submitted, the second Panel’s report did not say from whom
it had received
the report of the standards monitors.
- We
also note at this point that in the context of Ms Halton’s statement in
her letter of 1 April 1997 that the second Panel
would act as a
“truly independent review”, two of the three members of the second
Standards Review Panel, namely Mrs
Guy and Ms Cooper, had been members
of the first Standards Review Panel.
- Amongst
other things, the report of the second Panel stated that the Panel
“retains grave doubt about the ability to evacuate residents down the
back staircase”, and that “[t]he proprietor stated that
installation of a lift was not cost effective”. The report
recorded that Mr Alexander had stated his intention to rebuild the nursing
home in the next two to three years, but that
he anticipated difficulty in
finding the two hectares of land that he would need.
- The
second Standards Review Panel found that 26 standards to which it referred
required urgent action to address, and by way of conclusion
identified four
issues of major concern. The Panel stated that it did not have confidence that
the substantial changes required for
the nursing home to meet standards were
understood, or would be implemented in an ongoing manner, and that the question
of rebuilding
or substantially upgrading the building with at least a lift had
to be addressed. The Panel stated that in the absence of real evidence
that
change was going to take place, it concluded that the nursing home did not, and
would not, meet standards. By way of summary,
the Panel stated
that –
(1) the nursing home care provided was not consistent
with contemporary nursing home care practices;
(2) there was no systematic approach to care and other practices, including the
absence of documented processes to provide evidence
of consistently adhered to
policies and procedures; and
(3) the actions set out in Jadwan’s submissions were inadequate and did
not show a knowledge base that would support improved
outcomes for
residents.
The business plan
- On
28 May 1997, representatives of Jadwan met two officers of the Department
and Mr Jeff Knight from Tasmania Fire Service. At the
meeting, there was a
suggestion that Jadwan should draw up a business plan for rebuilding Derwent
Court.
- By
a four-page letter dated 30 May 1997 addressed to Derwent Court,
Mr Knight set out in a tabular form the position of the Tasmania
Fire
Service on aspects of its fire safety survey dated 4 February 1997, to
which we referred at [64] above.
The letter stated the following as having been discussed at a meeting held after
the inspection, which we take to be the
meeting on 28 May 1997 referred to
above –
The Tasmania Fire Service will require the open stair to
be smoke isolated to prevent the spread of smoke between the ground and first
floors. All glass work associated with the smoke isolation is to be safety glass
as defined by Australian Standard 1288, and required
by the Building Code of
Australia.
The number of residents accommodated on the first floor is to be reduced over
time, and in the short term, non ambulant and residents
who cannot obey basic
instructions are to be relocated to the ground floor leaving ambulant and
coherent residents residing on the
first floor.
This is accepted on the understanding that Management have in place a Business
Plan detailing the plans and time frames for the construction
or purchase of a
new facility within a two year period.
It should be noted that if all residents are removed from the first floor and
access is restricted to staff only, the requirement
for the smoke isolation of
the stairway will be withdrawn.
It was agreed to arrange a further meeting between the Management of the home,
the Department of Health and Family Services and the
Tasmania Fire Service at a
date to be fixed, allowing Management time to formulate a Business Plan for a
new facility.
Management, should, within 14 days of receiving this letter, provide a progress
report on the Business plan so the date of the meeting
may be
set.
- The
table in the letter was substantially reproduced, and the above text was
reproduced, in a separate letter from Mr Knight that
was addressed to
Derwent Court and dated 3 June 1997. It is relevant to note that the
business plan referred to in Mr Knight’s
letter contemplated the
construction or purchase of a new facility within a two year period.
- On
30 May 1997, Mr Alexander received a quotation from Community and
Health Services Tasmania for rental and other costs associated
with occupancy of
one floor of the Carruthers Building at New Town about which Mr Alexander
had enquired for the purpose of relocating
residents from the first floor of
Derwent Court (see [111] above).
The total cost was quoted at $4,100 per month. There is no evidence that
Mr Alexander accepted this quotation, or pursued
the proposal any
further.
- By
letter dated 4 June 1997, Ms Julie Alexander wrote to Ms Paul of
the Department with Jadwan’s response to the report of the
second
Standards Review Panel. The response extended over seven pages. The letter made
some initial observations, including that
–
- the second
Standards Monitoring Team report had been made available to the Panel, when
Ms Halton had said in her letter of 1 April
1997 that it would not be;
- two of the three
members of the Panel had been members of the first Panel; and
- there had been a
period of only three weeks between a visit by the members of the Standards
Monitoring Team on 18 April 1997, and
the inspection by the second
Standards Review Panel, which was a relatively short time within which to be
judged on Jadwan’s
ability to demonstrate sustainable
improvement.
- The
letter then addressed the issues raised by the report of the second Standards
Review Panel, using headings that largely corresponded
to those that the Panel
had employed in its report.
- On
10 June 1997, Mr Alexander met Mr Wicks and asked Mr Wicks
to assist Jadwan with a proposed business plan. Mr Wicks’s note
of
the meeting stated (inter alia) –
Business Plan requested
don’t want to lock into building though
- In
evidence-in-chief, Mr Wicks stated that the reference to the building was
to a new building, and that as far as he could recall,
Mr Alexander was
reluctant to commit to the cost of a new building. However, in cross-examination
Mr Wicks thought it likely that
this was a reference to not locking into
the old building. Mr Wicks’s note also stated, “Can declared
home sell beds? (I yes)”. In evidence-in-chief, Mr Wicks stated
that he could not recall whether that was a question posed to him by
Mr Alexander,
or by him to Mr Alexander, but then stated that he
thought it was a possibility that the question was by him to Mr Alexander,
and
that Mr Alexander gave the answer. The note also stated as
follows –
2 residents have gone (deceased) – can only claim
$26.50 per day resident contrib – have left bed vacant
you fear if you now say you want to sell
- The
note also suggested that Mr Wicks and Mr Alexander discussed the
options available to Jadwan, such as the sale of its beds (“Melb beds
18000 – 25000 in 6/12... here $12000?”) and whether an approved
business plan would result in a “lift” of the declaration.
Mr Wicks accepted in cross-examination that the “lift”
of the declaration was a reference to the financial sanctions, and accepted that
he would have understood at the time that
the lifting of the financial sanctions
was a material concern for Jadwan, because as each patient died, Jadwan’s
funding decreased,
and that once the sanctions were lifted Jadwan could get
funding for 51 beds. Additionally, there are references in the note to a
conditional purchase contract, an option to purchase land, and to
“build” subject to viability.
- By
letter dated 12 June 1997, Mr Wicks provided Mr Alexander with
some suggested amendments and observations about Mr Alexander’s
proposed business plan. The primary judge found at [301] that this advice
did not require Mr Wicks to possess or apply any legal
skills. The body of
Mr Wicks’s letter of advice was as follows –
As discussed, I believe it important and in fact
unavoidable for you to “show your hand” regarding the possibility of
seeking another interested party to come into the picture [at] some point in the
timetable. Your business plan could therefore contain
a “rider” to
the effect that would you wish to retain the right to seek expressions of
interest from and contracting
with any other interested operator who may wish to
either complete the construction of the home or to ultimately operate it.
However
it is far too early to give any more detail in this regard at this point
in time.
I believe an option to purchase is the best way to proceed although under the
circumstances a fairly lengthy option period may be
necessary to enable you to
do all that you need to do up to the point where you decide whether or not you
accept any particular tender
and proceed with the construction. I think you can
safely argue that it is a plan only at this stage and I fail to see how any
degree
of commitment can be inferred from it. If the Plan has the effect of
keeping both the Fire Service and the Department satisfied at least for the time
being then it will
allow you more time to plan your future courses of
action.
Of course, if you reach the stage where the building of a new home appears
economically unviable for you and if there is no other
interested operator in
the wings who could take over the option and construct the home, then it would
appear that you really would
have little option other than to lose the beds
allocated to the home unless, in the meantime, other homes in the area found
themselves
able to buy beds from you.
As mentioned, the Business Plan is necessarily tentative at this stage and you
could perhaps stress in your covering letter that
specified target dates are
your best estimate only. Perhaps a shorter time frame may later emerge as
achievable.
I trust this is of assistance. Clearly, there are a number of issues that need
to be considered further namely the precise form of
any option agreement and the
agreement by which you would bring another operator into the picture at any
particular point within
the time frame. I would be happy to discuss these
further with you.
[emphasis added in second paragraph]
Further correspondence
- On
11 June 1997, the Commonwealth issued a certificate of approval of Derwent
Court as an approved nursing home under s 40AA(2) of
the National Health
Act for the period 1 July 1997 to 30 June 1998. The certificate
was indorsed with conditions, which included –
6.4 The proprietor of the nursing home will ensure that
the nursing home satisfies the standards determined under section 45D.
- On
13 June 1997, Jadwan wrote to Mr Knight of the Tasmania Fire Service
and provided updates on the steps taken at Derwent Court to
improve fire safety.
Amongst other things, the letter stated that Jadwan had agreed to install an
appropriate smoke door to isolate
smoke between the ground and the first floor,
and that Jadwan’s purpose was to accommodate 16 ambulant residents on
the first
floor. The letter also included the business plan for a new building
at the new location, which had target dates that included the
location of
suitable land in December 1997, entry into an option to purchase land in
February 1998, and an opening in October 2000,
which was longer than
the two year period to which Mr Knight had referred in his letters dated
30 May and 3 June 1997.
- Also
on 13 June 1997, Mr Wicks spoke by telephone to Mr Alexander.
Mr Wicks’s note of that conversation included the
following
–
- hostile reception from Canberra
- spoke to Anne Thorpe – very cold
- spoke about whether you’re on the right track – she said she
couldn’t comment on that – could only pass judgment
on what has or
hasn’t been done
- said some operators choose to sell in those circumstances
- C’w value for money is her
concern
...
They’ll make decision within 10 days – 2 weeks
I say get TFS approval of your Plan and of continuing status quo while you
sort out your direction then we’ll write to [Canberra]
a formal letter
asking for assurances and stating your position in detail.
(emphasis added)
- At
[549] the primary judge referred to the conversation recorded by the above note
as having occurred on 13 July 1997, but we are
satisfied that the note is dated
13 June 1997, which is also supported by the surrounding context, namely the
reference in the note
to the plan which Jadwan had submitted to the Tasmania
Fire Service that day, and the later reference to Ms Thorpe in Mr
Wicks’s
file note of 2 July 1997 (see [144] below).
- On
18 June 1997, Jadwan wrote to Ms Paul of the Department and referred
to the discussions on 28 May 1997, to which we referred at
[126] above. The letter addressed the
installation of a smoke door to isolate the ground and the first floor, and
identified a proposal
to accommodate 16 ambulant residents on the first
floor by transferring ambulant residents upstairs. The letter also included the
business plan, substantially in the same terms as that conveyed to
Mr Knight in Jadwan’s letter of 13 June 1997 referred to
above.
- On
23 June 1997, Rae & Partners issued an invoice to Jadwan in the sum of
$1,400. The description of work in the body of the invoice
was in the following
terms –
To our professional fees in acting on the
Company’s behalf in the above matter including numerous attendances on
Directors to
discuss Departmental requirements and to consider Company’s
position and advise, attending to visit the Home on February 10th
(1.5 hours – no charge), drafting on Company’s behalf submissions to
the Department, attending with Directors on February
26th to meet
with Mr Dellar of the Department including attendances before meeting to peruse
file and meet with Directors in preparation,
attendances on the Directors
regarding submission on SRP Report, drafting covering letter to submission and
SRP Report, subsequent
perusal of further SMT Report, meeting with Mr Alexander
on 8th April and attendances generally, exceeding but say
1,400.00
$1,400.00
Jadwan’s retainer of Wilson Dowd
- Mr Wicks
ceased his employment at Rae & Partners, and by 2 July 1997 he had
commenced employment at Wilson Dowd, the second respondent.
Jadwan re-engaged
Mr Wicks as its solicitor after he moved firms.
- A
file note written by Mr Wicks dated 2 July 1997 recorded a telephone
conversation between Mr Wicks and Mr Alexander and relevantly
included
the following statements –
(1) that Jadwan was “still [awaiting] a
response from [Canberra]”;
(2) the Tasmania Fire Service had “now gone sour” on the
downstairs fire door and that the verbal approval on this possibility given a
year prior had “been gone back on”;
(3) the Tasmania Fire Service was “unhappy with 3 year
timetable”;
(4) the Tasmania Fire Service wanted “a package” between the
Commonwealth and it “as to requirements;” and
(5) “Stephen Dellar can’t speak with you
anymore.”
- Importantly,
the file note also recorded that Jadwan was “more inclined to sell now
and get out” and that “you want to push Anne Thorpe [an
officer of the Department]”, which the primary judge inferred meant that
Jadwan wanted to push Ms Thorpe to permit the
sale of its bed licences. The note
also recorded, “you speaking [with] marketing firm today”. It
should be noted that, in her oral evidence before the primary judge,
Ms Julie Alexander stated that she did not share
the view that Jadwan
should sell and “get out”, and said –
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.
- Mrs Joan Alexander
also made a note of the conversation between Mr Alexander and Mr Wicks
on 2 July 1997, which included the following
–
Heard nothing from Commonwealth.
Smoke door Jeff Knight doesn’t want it upstairs.
Unhappy with 2 yrs wants a package.
Unhappy about
Commonwealth what they want
What we want.
Sell out make it part of the deal.
Jeff Knight what he wants
Commonwealth what they want.
Lift declaration. Jeff Knight speaking to Commonwealth we don’t know what
is going on. Local won’t give any advice. Anne
Thorpe won’t give any
advice. Jeff went to see Steve Dellar about beds been [sic] sold and he said he
wasn’t able to
speak to us.
Jeff ringing Anne Thorpe. We would rather get out of it. They shouldn’t
lock us in on a commercial basis. To talk to James
Lang Wotton [sic] tomorrow
morning, selling beds. Get declaration lifted, sell beds. We want 16 ambulant
people upstairs. Fire service
have given us approval for what we have done. Next
week for appointment the Commonwealth and Steve. John Calder got verbal approval
from Jeff Knight for smoke doors. We have been to Glenorchy Sorel and
Kingborough for land. That Steve thought it best we had a plan
and know what we
are doing when we see the Commonwealth.
- Mr Alexander
and Mr Wicks spoke by telephone on 7 July 1997. The file note
prepared by Mr Wicks of that telephone conversation noted
that
Mr Alexander had arranged a meeting for 17 July 1997 with two
representatives of the Department (Ms Hefford and Ms Thorpe) as
well
as Tasmania Fire Service representatives Jeff Knight and Leon Carr.
The file note also recorded that “staff morale very low”, and
that five residents had died.
- That
same day, 7 July 1997, the Aged Care Act and the Consequential
Provisions Act received Royal Assent, though as we have mentioned
at [28] above, this was not
published in the Commonwealth Gazette until 16 July 1997.
15 July 1997 meeting
- On
15 July 1997, Mr Wicks met Mr Alexander and Ms Julie
Alexander the purpose of which, the primary judge held at [330], was to
prepare
for the 17 July 1997 meeting with the Department and the Tasmania
Fire Service referred to at [146] above. Mr Wicks prepared a file
note
summarising what was said at that meeting, which relevantly contained the
following –
Jeff Knight still wants a package.
- 3 years too long for relocation
- purchaser.
- you have decided to get out.
- you to stress you’ll be relocating.
- advertise – tender
- u’taking 16 ambulant res on first floor
- 46 at the moment
licenced to 51.
...
Smoke door – TFS meeting – Jeff Knight, Leon Carr.
- change of mind from bottom to top of stairs – major works
- package being put together – to disclose at meeting
- Canberra officials to meet
...
worst scenario – no residents top floor – 2/3 income drop.
(sprinklers & lift
- 35 residents – home not viable
- The
statement in the note, “you have decided to get out”, was
significant to the findings of the primary judge. The parties disputed whether
this note recorded Jadwan’s intention
to close the nursing home.
In evidence, Mr Wicks stated that he could not
recall precisely who spoke the words, but expected that it was
Mr Alexander. Mr Wicks
was asked whether there was any broader
discussion that day about the statement, and he said that he could not recall.
As to his
own understanding at around 15 July 1997 about Jadwan’s
intentions, Mr Wicks stated in evidence-in-chief –
Up until the statement by Mr Alexander that he –
or that the company decided to get out, it was my understanding that they were
prepared to continue to attempt to satisfy Tas Fire Service and the department
as necessary. But a point came where – my –
my – my
recollection was the point came where it was decided that it was going to be all
too hard or – or economically
not feasible and that the Derwent Court
facility had to be either – I – I can’t recall with any
certainty, but
the – my general understanding is that Derwent Court could
not continue and something would need to be done to either relocate
it in the
short-term or sell up the – the undertaking.
- Mr Wicks
was then asked in relation to the note “you to stress you’ll be
relocating” whether he had any independent recollection of discussion
about that, and why he wrote the note, and he said he did not. Similarly,
in
relation to the note “advertise – tender” Mr Wicks
stated that he had no independent recollection of why he wrote the note, or what
was told to him.
- Mr Wicks
agreed in cross-examination that in the period from July to September 1997,
Jadwan had actively considered three options:
(1) to try to satisfy the
Department that it could continue to operate Derwent Court at its existing
location; (2) if it was unable
to that, to seek to relocate to a new
purpose-built facility in Hobart; and (3) as a last resort, to try to sell the
bed licences.
Mr Wicks also agreed that there was never any talk or
suggestion that Jadwan would simply give up or walk away without trying to
secure something for the asset that it had.
- Ms Julie
Alexander gave evidence that she was present at the 15 July 1997 meeting
with Mr Wicks and stated in cross-examination that
the note “you
have decided to get out” referred to getting out of the building and
relocating to a greenfields site, and was not a reference to selling out of the
nursing home business. Ms Alexander also denied that the suggestion that Jadwan
was considering a new building on a new site was
part of a
“smokescreen” to make the Department think that Jadwan was really
doing something to address its concerns.
In cross-examination, Ms Alexander also
denied that 35 places was the economic tipping point for the conduct of the
nursing home.
- At [336]
and [339], the primary judge held that the inference to be drawn from the note
was that Jadwan had decided to get out of
operating Derwent Court, and that it
intended, if possible, to sell its bed licences. The primary judge reached this
conclusion relying
also on Mr Wicks’s note of 2 July 1997, to
which we have referred at [143]-[144] above, which recorded, “more
inclined to sell now and get out”.
Program of works for a proposed new nursing home
- On
16 July 1997, Mr Calder of Tasmanian Building Services Pty Ltd wrote
to Mr Alexander in relation to a “proposed new nursing
home”, stating “[r]eference is made to your request for a
program of work for the above”. The letter then detailed a
“reasonable minimum” timeline of around 104 weeks for the
project, that is, a two-year timeline.
Cancellation of the meeting of 17 July 1997
- The
meeting that had been scheduled for 17 July 1997 did not take place. In a
later handwritten note by Mr Wicks of an attendance
on
Mrs Joan Alexander and Ms Julie Alexander on 4 August 1997,
Mr Wicks recorded –
– 16/7 Anne Thorpe rang
Jeff to say she couldn’t make the 17/7 meeting – fires not the issue
– you have complex
care needs – Fire hasn’t been a problem
since February.
- A
note in an internal memorandum prepared by Mr Ken Hammond of Tasmania
Fire Service addressed to Chief Officer John Gledhill dated
17 July
1997 set out a short chronology of events, commencing at 15 November 1997,
and as part of that chronology explained the cancellation
in the following
terms –
- 23/06/97 Anne Thorpe, Assistant Director,
Commonwealth Aged and Community Care Division organised a meeting for
17th July to discuss the revised schedule of works.
- 16/07/97 Anne Thorpe advised the TFS that due to the preparation of
paperwork to formally withdraw the Homes [sic] licence, (the
Home is unaware of
this pending action) the Commonwealth Department saw little point in attending
the meeting scheduled for 17th July.
- TFS notified the Home that meeting on 17/07/97 would need to be rescheduled
to a later date.
- 51 Nursing beds will be required as soon as the licence is revoked (the
Department advised the paperwork will be delivered to the
Home on Friday 18th or
by Monday 21st at the latest).
- The
memorandum also stated –
- TFS is concerned that media will attempt to
highlight fire safety as a reason for the departments [sic]
action.
- The
memorandum then set out a proposed press release in the following
terms –
In January the Tasmania Fire Service was requested by
the Commonwealth Department of Health and Family Services, to report on matters
of fire safety within the Derwent Court Nursing Home.
The report outlined various requirements and recommendations in relation to fire
safety issues.
The Tasmania Fire Service and Derwent Court Nursing home Management have worked
closely to improve the levels of fire safety within
the building.
All requirements have been addressed and many recommendations have been or are
in the process of being adopted.
- In
addition, the memorandum attached a press release in the following
terms –
The Tasmania Fire Service was commissioned by the
Commonwealth Department of Health and Family Service, to report on matters of
fire
safety within the Derwent Court Nursing Home. The report contained various
requirements and recommendations in relation to fire safety
issues.
The Tasmania Fire Service and the Management of the Derwent Court Nursing Home
have worked closely to improve the level of fire safety
within the building. To
date all the requirements have been addressed and in addition many of the
recommendation have been adopted
or are in the process of being
adopted.
Monday 21 July 1997 - Notice of intention to revoke
approval of Derwent Court
- By
letter dated 20 July 1997 (which we note was a Sunday), Ms Halton of
the Department wrote to Jadwan and notified it of her intention,
within 14 days,
to revoke the approval of Derwent Court under s 44(2)(b) of the National
Health Act on the ground that she considered that it had not complied with
the condition of approval that the standards formulated under s 45D
of the
Act be satisfied. The letter attached a notice of intention under s 44(2A)
of the Act signed by Ms Halton as a delegate of
the Minister, together with
a statement of reasons. The statement of reasons extended over 19 pages,
and relied on acceptance of
findings of the first Standards Review Panel, the
second Standards Monitoring Team, and the second Standards Review Panel. The
reasons
stated that Ms Halton had found that –
- the Gazetted
Standards had not been complied with by the nursing home;
- the
non-compliance involved serious deficiencies in care, most of which required
urgent action;
- the proprietor
had not taken the appropriate substantial action which would overcome the
deficiencies; and
- there was no
reasonable prospect that the proprietor would do so on the substantial and
urgent basis required.
- The
reasons had a number of attachments, including the report of the first Standards
Review Panel dated 2 December 1996, the statement
of the second Standards
Monitoring Team following its visits on 12, 13 and 17 March 1997, the
report of the second Standards Review
Panel dated 26 May 1997, and the
letter from TasFire Building Safety dated 3 June 1997 to which we referred
at [128] above. In the covering
letter, Ms Halton stated that if she made a decision to revoke the approval
of Derwent Court, Jadwan was
able within 28 days to request the Minister to
reconsider the decision under s 105AAB(2) of the National Health
Act, to which we referred at [21] above. A report of an internal review
by the Department relating to the transfer of residents dated 29 April 1998
stated that the
notice was sent to Jadwan’s registered office in
Melbourne, and that a copy of the notice was hand-delivered to Derwent Court
at
1.00pm on 21 July 1997.
- By
separate letter dated 20 July 1997, Ms Halton notified the residents
of Derwent Court of her intention to revoke the approval of
Derwent
Court’s licence within 14 days. In that
letter, Ms Halton referred to the report of the Second Standards Review
Panel, and stated, inter alia –
The report from the Panel is quite clear - residents at
Derwent Court Nursing Home have a quality of care and life far below that
set by
the approved standards.
The Panel’s report also says that the owner’s proposals to improve
standards are not good enough.
I intend to revoke the approval of Derwent Court Nursing Home in fourteen days.
In this time the Department will find you another
nursing home to move to if you
wish. If you choose to move the Government will keep funding your care.
This step has not been taken lightly. We will make every effort to reduce the
stress of moving to another nursing home. You can expect
that after moving you
will receive better quality nursing home care. The Department is committed to
ensuring that you get good quality
care.
Departmental staff will continue to visit you to let you know about the move to
the new nursing home.
The Department is also writing to all relatives giving them this information. A
discussion for relatives will be held by Mr Dellar,
the Department's State
Manager at 2pm Wednesday 23 July 1997 at the Department’s offices, Level
3, 25 Kirksway Street, Hobart.
More help is available from the Department on 1800 005 119 and from the Advocacy
Tasmania Inc. on (03) 6224 2240.
- The
Acting Director of Nursing at the time, Ms Callahan, gave evidence that the
letter was put beside the bed of each resident, and
that she recalled showing
the letter to family members of the residents. The Department’s report
following its internal review
stated that a letter was also forwarded by the
Department by Express Post to relatives on 21 July 1997, although some of
those letters
were returned unopened. The Department’s report also stated
that the Department contacted the media in relation to the revocation
of the
approval of Derwent Court, and that the media were on site at Derwent Court as
Department staff were arriving to notify Jadwan’s
representatives of the
intention to close the home. On the following day, a newspaper report of the
proposed closure appeared in
the Hobart Mercury under the heading,
“Nursing Home Loses Funding”.
- On
21 July 1997, Jadwan faxed to Mr Wicks a copy of
Ms Halton’s letter to it of 20 July 1997. Mr Wicks also
spoke by telephone
with Mr Alexander, which he recorded in a file note. The
file note stated –
- Nursing home to close in two weeks!
- staff have been told today (!!)
- 28 days to appeal
- 14 days to revocation of licence
- there’s so much against you - you believe any appeal may be not be
worthwhile
- no mention of first SMT report!
- S.44 decision – “if made” my intention to revoke
Notice to the staff
- A
note that appeared to be that of Mrs Joan Alexander and dated
21 July 1997 was put to Ms Julie Alexander in
cross-examination –
Julie is speaking with Anne Thorpe about staff pay
and redundancies.
- Ms
Alexander stated that she did not recall any such conversation with
Ms Thorpe, and denied that she would have raised the topic
of redundancies
herself.
- Also
on 21 July 1997, Mr Dellar of the Department wrote to Southern Cross
Homes, and referred to its revised proposal of 14 March
1997 (see [101] above). Mr Dellar stated that the
Commonwealth would like to proceed to reach agreement so that Southern Cross
Homes would take
responsibility for providing care for the people who were then
resident at Derwent Court. The letter described the proposal of Southern
Cross
Homes as involving the permanent allocation to it of 51 nursing home beds,
the provision of accommodation in the Carruthers
Wing on the floor of a State
government-owned building, and the balance to be accommodated within the Rosary
Gardens Nursing Home
by adding extra places to that facility. In relation to
financing, Mr Dellar stated that the Commonwealth would be willing to fund
costs for minor building alterations of the Curruthers Wing in a sum up to
$90,000 to be made by a single advance at the time of
the agreement, and for an
interest free advance of recurrent benefits of $250,000 to be made by the
Commonwealth, recoverable over
three years.
Tuesday 22 July 1997
- Section
42 of the National Health Act provided that a person authorized under the
Act could enter upon the premises of a nursing home and inspect and make copies
of records
that related to the operation of the premises as a nursing home. The
Department arranged for a leased photocopier to be delivered
to Derwent Court on
22 July 1997 so that patient records could be copied, and copying commenced
the following day, 23 July 1997.
The report of the Department’s
internal review dated 29 April 1998 stated that the proprietors of Derwent
Court informed the
Department in a meeting on 22 July 1997 that they would
not be co-operating with the transfer of residents, but that at a second
meeting
on 25 July 1997, they agreed to co-operate fully in the transfer of
information.
- On
22 July 1997, Mr Wicks made a number of file notes. One file note
records a telephone call from Mr Alexander, and states in
part
–
- meeting [with] Stephen Dellar this morning
* - if you can sell the beds within next two weeks you can do so
– what’s the point – may just wait
– discussed at length.
- Another
file note was headed “Jadwan perusal“ in which Mr Wicks stated
(inter alia) –
JADWAN – perusal
- Been operating since? Past records/compliance and standards
- as recently as SMT reports did not recommend closure/Dept did not require
it.
- perceived deficiencies in the building have always existed – have not
been of concern
before
- on what basis has our intention to rebuild been not accepted. !
- clearly a full reassessment of practice is needed
but give us time!
(report suggests enough time has been given and proprietor hasn’t
demonstrated ability to comply)
- In
the note, an arrow was drawn from the words, “on what basis has our
intention to rebuild been not accepted” to the following, which was
written –
– WE NEED TIME TO RELOCATE, RETRAIN ETC ..
CAN’T GET STAFF (eg, Director of Nursing!) within present
climate
- Mr Wicks
was asked in cross-examination about the statement in the note, “We
need time to relocate, re-train”, and he said that this
statement would have been on instructions from his client.
- Another
file note made by Mr Wicks on 22 July 1997 is in the following
terms –
Stephen Dellar – no joy
*foreshadowed starting to move residents out this Friday – funds go with
the residents
½ to St Johns Park – Southern Cross Homes & Carruthers Wing
½ to Rosary Gardens
28 days run from date of revocation
redundancies will break the coy [company]
- sale of beds – 48 hrs.
...
payroll - $50,000 pw:
Redundancies - $400,000
- The
primary judge at [352] inferred that the above-mentioned file note recorded
what Mr Wicks had been told by one of Jadwan’s
directors about what
Jadwan had discussed with Mr Dellar, and that Jadwan had not consulted
Mr Wicks before speaking to Mr Dellar.
The primary judge at [353]
found, in that context, that the words “redundancies will break the
[company] – sale of beds – 48 hrs” disclosed that
Mr Wicks was told by Mr Alexander that he had expressed concern to
Mr Dellar that the cost of redundancy payments
for its staff could break
the company. The primary judge inferred that Mr Alexander had asked
Mr Dellar whether the Commonwealth
would consider picking up those costs.
The primary judge also found at [196] that Mr Dellar had offered
Jadwan a two-day window within
which to sell its bed licences. This inference
arose from a later letter dated 31 July 1997 from Mr Alexander to
Mr Wicks in which
Mr Alexander stated, “Last Tuesday week
[which was 22 July 1997] he [Mr Dellar] advised that we had
no more than 48 hours to find a buyer but he doubted our ability to do
so”.
- Also
on 22 July 1997, Mr Wicks undertook some further legal research. He
prepared a handwritten note titled “Perusing NHA”. The
primary judge summarised Mr Wicks’s evidence on this issue
at [347]-[348] as follows –
On 22 July 1997 Mr Wicks refreshed his legal
research. A three page file note records the research he then undertook. His
note reveals
he did not expand his research beyond the National Health
Act. During the hearing Mr Wicks acknowledged that he had failed to
identify that the Aged Care Act had received Royal Assent on 7 July
1997.
Mr Wicks gave evidence that he had remained entirely unaware of the
existence of that Act and the Consequential Provisions Act throughout the
entire period of his employment with the Second Respondent.
[References omitted]
- It
is not clear from Mr Wicks’s oral evidence whether he undertook the
further examination of the National Health Act on 22 July 1997 at
the Law Society library, as his research in February 1997 had been
undertaken, or elsewhere. In evidence-in-chief,
Mr Wicks was asked whether
at Wilson Dowd he continued to use the Law Society library, to which he
answered –
I expect I would have continued to use the Law Society
library. I would imagine firms the size of Rae & Partners and Wilson Dowd
were probably not sufficiently resourced to run to a – a comprehensive and
up-to-date library, and the proximity to the Law
Society liberty probably made
it unnecessary for them to do so. That’s as much as I can offer in that
regard.
- In
cross-examination, there was an exchange as follows –
MR PEARCE: Yes. Now, you gave some evidence this
morning, Mr Wicks, and unfortunately we don’t have a transcript.
I’m
not sure I’ve got this entirely correct. But I think your
evidence was to the effect that when you did this sort of research,
you only
researched current legislation; is that – am I fairly representing what
you said this morning?---Yes. Yes.
Yes?---I researched what was available - - -
All right?--- - - - in the Law Society library at the time which - - -
Yes. And I take it on 22 July when you did this research you were not aware that
the Aged Care Act of 1997 had received the royal assent on 7 July?---No. I
wasn’t aware.
And your research didn’t pick that up?---No.
- Later
in the cross-examination, there was the following
exchange –
HIS HONOUR: When you did the various pieces of research
that have been referred to, Mr Wicks, I take it, given your evidence, that
all
of this research – I mean, you can please correct me – qualify
anything that I am suggesting by way of a conclusion
- but I take it from what
you have said previously that this research was conducted in the then Law
Society like an Inglis Clark
Library?---Yes, your Honour, it would have
been.
- At
that point, senior counsel for the first to third respondents intervened and
stated that the library could not have been the Inglis
Clark Library, because it
had been established in the Supreme Court building after 1997.
- As
set out below, Mr Porter QC was initially retained on 23 July 1997. In
a file note of Mr Wicks dated 28 July 1997 to which we refer
at [210] below, which recorded
matters about which he wished to speak to Mr Porter, Mr Wicks wrote,
“send Act back to us”. And
in a file note of a telephone
conversation with Mr Porter on 29 July 1997 (see [211] below), Mr Wicks wrote
“you’ll get Act back to me”. These notes support an inference
that Mr Wicks had briefed
Mr Porter with his copy of the National
Health Act. At [500], the primary judge held that, on the evidence
available to the Court, on 22 July 1997, Mr Wicks may well have simply
perused
his existing copy of the National Health Act without visiting the
Law Society library to check whether, since its publication, there had been any
amendments or repeals.
Wednesday 23 July 1997 - the retainer of Mr Porter
QC
- On
Wednesday 23 July 1997, Mr Wicks sought instructions from Jadwan to
brief counsel, and proceeded to engage Mr Porter. As the primary
judge
recorded at [356] of his reasons, Mr Wicks gave evidence explaining
the decision to brief Mr Porter –
Once the notice of intention to revoke was issued by the
Department, it became clear to – to me that the Department were inexorably
heading down the path of closing down Derwent Court, and that the matter had, if
you like, escalated to a – a degree of seriousness
where I believed that
external advice needed to be obtained as to Jadwan’s position and its
options to protect its position
generally.
- The
primary judge found at [358] that Mr Wicks had a short telephone
conversation with Mr Porter on 23 July 1997 in which Mr Porter
advised Mr Wicks to “put them [the Department] on notice
immediately against moving residents”. In acting on this advice, on
23 July 1997, Mr Wicks wrote to the delegate, Ms Halton, copied
to Mr Dellar, and stated –
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.
- Mr Peter Bowen
of the Australian Government Solicitor responded later that day as
follows –
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.
- In
the afternoon of 23 July 1997, Mr Dellar convened a meeting of
relatives of the residents at Derwent Court. The meeting was referred
to in the
report of the Department’s internal review –
Stephen Dellar facilitated a meeting in the afternoon of
23 July 1997 for relatives. The Department presented the reasons behind the
decision, advising relatives of the availability of places in Rosary Gardens
Nursing Home and that support would be provided by the
Department in
transportation costs such as ambulance fees.
Rosary Gardens Nursing Home staff provided relatives with an overview of their
organisation and a detailed orientation package. The
role of the Advocacy
Service was explained and those present were invited to seek advice and support
from this service. About 50
people attended this
meeting.
Thursday 24 July 1997
- The
first resident was transferred from Derwent Court to Rosary Gardens on Thursday
24 July 1997. The Department’s report of
its internal review
stated –
The first resident was transferred from Derwent Court to
Rosary Gardens. The decision to transfer a resident from one facility to
another
is not a matter which can be decided by the Department, but is a matter of
agreement between the resident or his or her representative
and the receiving
facility. The move of this resident was initiated by a family member and was
facilitated by both homes.
- The
report also stated that on 24 July 1997, interviews commenced for those
Derwent Court staff who were interested in employment
at Rosary Gardens.
- Other
events progressed quickly. At around 9.30am, Mr Wicks had a ten-minute
conversation with Mr Alexander ahead of a conference
with Mr Porter.
In his note of that conversation, Mr Wicks recorded that Mr Alexander
said that the Commonwealth “will fund redundancies for nursing staff
(80% of redundancy bill) but won’t fund notice that has to be given under
the awards”. Mr Wicks’s file note included a starred
notation “[n]otices hopefully today but if you give notice and get a
‘stay’ you’ll have patients to still care for with no
staff”. A few lines later were the words: “how will you prove
what you’ve done in period from last SRP ‘til now?”. The
primary judge at [361] inferred from this note that Mr Alexander told
Mr Wicks that his earlier contact with Mr Dellar
had led to the
Commonwealth agreeing to meet 80% of the cost of Jadwan’s redundancy
obligations for its staff at Derwent Court.
The topic of redundancies was also
addressed in a draft affidavit of Ms Julie Alexander that was prepared on
about 6 August 1997.
In cross-examination, Ms Alexander was taken to
passages in the draft affidavit and accepted that: (1) the cost of redundancies
was
a considerable concern to Jadwan; (2) that it was probably correct that a
liability in the order of $500,000 had arisen, but she
just did not recall; and
(3) that there was talk of the Department picking up the bill for redundancies,
and that was subsequently
what happened. Ms Alexander also stated that she
did not recall any discussions with her father about the value of the licences,
and did not recall discussing the value of the licences with Mr Wicks.
- A
conference between Mr Porter and Mr Wicks took place on the morning of
24 July 1997. Following the conference, Mr Wicks spoke to
Mr Alexander by telephone. That conversation was noted by Mr Wicks in
a typed file note –
After attending with David Porter in Chambers I
telephoned Jeff Alexander and explained the options that appeared to be open to
us.
Immediate concern of course is to prevent patients being moved from the home.
Jeff pointed out that the first patient is apparently
going to be moved at 1:00
p.m. today. I said that I intend writing to the Department via the Australian
Government Solicitor and
ask that they hold off the re-location of patients.
This may or may not be effective. If it is not effective and they cannot advise
immediately the next way of preventing the patients being moved would be to seek
an injunction through the Federal Court. The bases
on which the injunction would
be sought are not yet clear and David Porter described it as being perhaps a
high risk application
and the costs of which could run into the order of
$2-$3,000.00 with Affidavits etc and the actual hearing of the injunction. If
the injunction did prove to be successful then we would at least have time to
pursue first of all a review of the decision by the
Minister and if that was not
successful, an application to the AAT for review of the revocation decision.
It would appear to be fairly predictable what the Minister’s attitude
would be to an application for review of the decision.
We would then have to go
to the AAT, costs of which could exceed $5,000.00+. A problem we could strike
ultimately pursuing the matter
through the AAT would be, at the best result, a
decision by the AAT quashing the revocation decision. However, it would appear
that
from that point, the Department could simply turn round and “do it
all again” and perhaps come up with the same decision
properly arrived at.
Of course, if the patients had been moved out then the home would be in a
position of having no patients for
the beds, no staff etc.
Jeff agreed that I should get a letter to the AGS immediately regarding removal
of the residents at least as an attempted holding
measure. He said he would
discuss with the family the question of further courses of action and likely
costs and let me have his
thoughts on that later.
- We
observe that the advice recorded in the above file note contemplated an
interlocutory injunction, following which Jadwan would
seek review of the
decision by the Administrative Appeals Tribunal. It is not apparent that
Mr Wicks fully understood the issues,
because the revocation decision had
not been made, and a reviewable decision could not be the subject of review by
the Tribunal unless
it had been affirmed or varied upon an internal review by
the Minister: National Health Act, s 105AAB(7).
- Mr Wicks
then wrote to the Australian Government Solicitor that day,
stating –
I refer to my facsimile to your client yesterday and
yours in reply. I understand the Department intends to start moving residents
from the home at 1:00 p.m. today.
I repeat the warning to the Department in my facsimile yesterday and ask that
the Department undertakes to hold off any relocation
of residents pending the
full consideration by senior counsel of the background to this matter and any
review and appeal rights that
may be open to our client and, if appropriate, the
exercise of any of those rights.
I make the point that our client’s licence is still in force and the
Department’s action in moving patients from the
home may constitute an
interference with the contractual relationship between my client and its
residents with any consents to relocation,
by either the residents or their
representatives influenced by the Department’s reviewable and
appealable decision that the home does not meet the prescribed
standards.
Your reply as a matter of urgency would be
appreciated.
- Mr Bowen
of the Australian Government Solicitor replied later that day –
I am instructed that the resident moving today is being
moved by her daughter who is going to Queensland, travelling in part on the
ferry this evening. The Department of Health and Family Services is not
arranging this move and can take no action to prevent it.
I am also advised that there are a number of residents in a similar position
where the family is arranging the move.
In relation to the consent to which you referred, this was a consent to release
medical details and particulars held by the Department
to the new home. It was
not a consent to move the person.
- A
file note made by Mr Wicks records a further telephone conversation with
Mr Porter on 24 July 1997 at 2.50pm in which Mr Wicks wrote,
“Still no joy on further consideration”. The note then
referred to the two possibilities of review by the “AAT – act
provides for stays – merit review”, or under the ADJR
Act, stating that it “provides for stay but limits grounds of
review – no reasonable tribunal etc.” The note stated,
“can treat notice of intention as reviewable under ADJR but review
grounds limited.”
- The
same note also recorded a telephone conversation with Mr Alexander at
3.07pm in which reference was made to the Tasmanian Chamber
of Commerce and
Industry sorting out redundancies. The note also recorded that Mr Alexander
would speak with his family that night,
and that Mr Porter “has
not been able to proceed much further”.
Termination of staff at Derwent Court
- Meanwhile,
Mr Alexander proceeded to give notice of termination of employment to the
staff at Derwent Court by letters dated 24 July
1997, which relevantly
stated –
It is with regret that we are now forced by the
Commonwealth Department of Health and Family Services actions to give you notice
of
termination of employment effective from close of business today in
accordance with the table below. If you are successful in gaining
other
employment before the notice period below expires and this requires you to leave
prior to the expiration of the notice period
below, you will be paid for the
time worked up until the time of your leaving employment
only.
- It
is relevant to note that the letters to the staff also stated -
Every effort is being made to reverse the situation and
to keep Derwent Court open.
The Unions (HASCU and ANF) have been advised and talks will continue to take
place, with the view to assisting you gaining other
employment should the need
arise.
At this time, the future of Derwent Court is uncertain. Should the worst occur,
the Alexanders would like to take this opportunity
of thanking you for your past
support particularly over recent months and we wish you every success for the
future.
Friday 25 July 1997
- Mr Wicks
made an undated note of a telephone conversation with Mr Alexander at
“9.12” which commenced “you terminated staff
yesterday”. The primary judge inferred at [373] that the call
occurred on 25 July 1997. The note continued –
* - you want to save the beds – sure can be
done?
- 20 residents have agreed to go to St Johns
- 2 going home
- the rest? – you don’t know – where they’re going is no
better a building
- Janet Cooper’s position
- you accept the patients have to be cared for so closure has to be accepted
- you bought the beds in ‘84 – 51
- bought as a package building & beds
* Tony Holmes acted for you.
- 2 weeks to find a buyer! – unrealistic.
- statement of reasons being dissected now.
- payroll $70,000 pm f/n?
- St Johns will take on no new staff until yours have all been accommodated
– union threatened industrial action.
- The
reference to “St Johns” appears to be a reference to
St John’s Park, which the evidence suggests comprised the
Carruthers
Wing, and was to be managed by Southern Cross Homes.
- The
Department was also advancing matters at this time. An instrument dated
24 July 1997 recorded a decision by Mr Dellar, acting
as delegate of
the Minister, to grant approval in principle pursuant to s 39A(3) of the
National Health Act for an additional 20 nursing home beds for the
Rosary Gardens Nursing Home. On 25 July 1997, a similar instrument was made
with respect
to a further 31 nursing home beds for the Rosary Gardens
Nursing Home, making a total of 51 additional beds for that home. These
approvals appear to have been given after the expiry of the 48 hour window
period that had been offered to Mr Alexander within which
to sell Derwent
Court’s bed licences, to which we referred at [174] above.
- At
about this time, Mr Wicks made an undated note to himself regarding the
relevant legal considerations, which commenced –
Seek review/appeal with a view to the home regaining
approval – absent residents (is this possible)
- doesn’t matter tho [sic] if no residents cos there’s no staff
– both situations brought about directly or indirectly
by Dept’s
actions
- but if we get approval back – attached to the empty home, the beds could
be sold
- demand here?
- demand interstate? (is this possible?).
- abandon trying to keep residents and keeping home open
– protect the goodwill.
- The
note also recorded qualifications for membership of panels that loosely
corresponded to the language of regs 11 and 12 of the
National Health
Regulations for membership of a Standards Review Panel. The primary judge
inferred at [376] that Mr Wicks had undertaken some research on
25
July 1997 in relation to the provisions of the regulations.
- In
cross-examination, when Mr Wicks was asked about this note, he stated that
he could not recall reaching a conclusion that Jadwan’s
legal position
would not suffer any disadvantage if the residents moved out of the home.
However, he accepted that he did not give
Jadwan any advice in the period from
20 to 25 July 1997 that it should take action to prevent the residents from
leaving.
- The
note went on to include the statement –
- glaring inconsistencies in reports of
department’s SMT. Query qualification of SRP
- We
mentioned at [39] above that Mrs Joan Alexander maintained a work
diary. In an entry dated 25 July 1997 at 9.45am, Mrs Alexander
wrote –
JGA 9.45AM 25-7-97
JGA and Steve Wicks
We will go to AAT spend $5,000-
We will tell Commonwealth we want to sell the beds (51) today.
To go to Glenburn tell Pam we are selling today. If we put an injunction on we
run the risk of Commonwealth funding running out.
- Mrs Alexander
gave evidence in examination-in-chief that the note recorded what
Mr Alexander had told her on the telephone in relation
to a conversation
that he had with Mr Wicks. Mrs Alexander then gave evidence in
cross-examination that there was a mistake in the
note, that she was confused,
and that they were not selling 51 beds, but were selling 30 beds at
Glenburn Nursing Home, which was
another nursing home associated with the
Alexander family that was located at Geelong in Victoria. This evidence was
confirmed in
re‑examination. The primary judge at [145] accepted
Mrs Alexander’s evidence on this point, and held it was consistent
with a subsequent note in Mrs Alexander’s work diary also dated
25 July 1997 in which Mrs Alexander wrote, “...we were told
it could have an effect on Glenburn we need to get out quick before they do the
same thing”, and in which she referred to going to Geelong and telling
“them” they were selling the business. In relation to the
reference to risking Commonwealth funding, Mrs Alexander gave evidence
in
cross-examination that this was what Mr Alexander was telling her.
- At
around 11.35am on 25 July 1997, Mr Wicks had a telephone conversation
with Ms Julie Alexander and Mr Alexander. Mr Wicks made both
a
handwritten and a typewritten file note of the conversation. The handwritten
note relevantly stated that “injunction out of the question”
and that they “discussed damages”. The typewritten file note
set out the discussions in more detail, relevantly stating the
following –
Julie Alexander rang and I spoke to her at length about
this matter and she then handed me to Jeff and he discussed it further with
me
as well.
I confirmed with Julie all the matters that we had discussed with Jeff yesterday
regarding injunction proceedings saying that David
Porter said that injunction
proceedings could not be guaranteed to be successful and that they would be
“risky”. I said
that what they needed to bear in mind is that in
such proceedings the Commonwealth would, I expect, push the issue of fire safety
and ultimately, Jeff Alexander may find himself in a position where the Judge
said to him or asked him if he could guarantee that
there would not be a fire in
the home that particular night. Jeff’s answer to this would have to be no
and the Judge would
be likely to take the view that the only matters really to
be balanced are the resident’s inconvenience and upset at being
removed as
opposed to their safety if they remain in the home for even one (1) night or one
(1) night longer. It would be hardly
relevant in the circumstances to argue that
there has not been a fire to date and hence it’s not reasonable to expect
that
one would occur.
They confirmed that the staff had all now been given notice and that
arrangements were presently under way for the Rosary Gardens
Nursing Home to be
upgraded in a rush job to take the 20 or so residents who have decided that they
want to move to Rosary Gardens.
Apparently, the Union has pressured Rosary
Gardens to take any requirements of extra staff occasioned by the Derwent Court
residents
moving out there from amongst the Derwent Court staff.
Jeff then discussed the matter of pursuing Derwent Court retaining its beds to
be able to sell them elsewhere on the market. I said
I was still not totally
familiar with how the beds were constituted and I was going to have to have a
look at the regulations to
“get a handle” on the nature of the asset
that the beds represent. I said in any event, it’s perhaps academic to
pursue that line of enquiry too far because if we can establish that the
Minister’s revocation decision was improperly made
then the question of
damages flowing from that could be pursued and that this matter would most
likely proceed on that basis.
...
- The
last paragraph set out above is significant: (1) it appears to record
Mr Alexander’s desire to retain the benefit of the
51 “bed
licences”; and (2) it suggests that Mr Wicks advised Jadwan that it
could pursue an action in damages, which
idea was also recorded in the
handwritten note referred to above, and elsewhere in Mr Wicks’s file
notes. Mr Wicks stated in
cross-examination that he thought that a cause of
action was available against the Department in consequence of the closure of
Derwent
Court as a result of improper procedures or steps.
- Ms Julie Alexander
gave evidence of a conversation with Mr Wicks about an injunction on about
25 July 1997, as follows –
Do you remember what Mr Wicks told you in that
conversation?---Yes. He was saying that it was too risky to take out an
injunction
because we couldn’t guarantee a judge that there wouldn’t
be a fire at Derwent Court that night. And he also said that
if we take out an
injunction, we – Jadwan wouldn’t receive Commonwealth funding.
Funding would stop and we would have
to fund the operation of the nursing home
ourselves and it would take approximately a year to ..... for the proceedings to
be heard.
So we would have to fund Derwent Court for a whole year out of our own
funds and the risk was that if we lost, we would have to bear
those – bear
the full cost of operating Derwent Court.
Was there any discussion in that conversation about letting the residents
leave?---Yes. Mr Wicks told me there was no harm in letting
the residents
leave.
- Mr Wicks
denied in evidence-in-chief that he had ever advised Jadwan that if it took out
an injunction, the Commonwealth funding would
stop. Mr Wicks also denied
that he ever told Mr Alexander or Ms Julie Alexander that there was no
harm in letting the residents leave
the home.
- The
primary judge found at [382]-[384] that Mr Wicks told
Mr Alexander and Ms Julie Alexander in the telephone conversation that
there
was no harm in letting the residents go, finding that
Ms Alexander’s account was unshaken in cross-examination. However,
at
[385], the primary judge rejected Ms Alexander’s evidence
that Mr Wicks had told her that if Jadwan obtained an injunction
then the
Commonwealth funding would stop, holding that there was no corroboration,
contextual or otherwise, to support that finding,
and holding that he was
satisfied that Ms Alexander’s recall of the context and detail was
inaccurate.
Further consultations with Mr Porter QC
- 25 July
1997 fell on a Friday. On the following Monday, 28 July 1997, Mr Wicks
sought to speak to Mr Porter by telephone. Mr Wicks
made a file note
of the call with the notation “TT David Port – out –
LMTCM”, indicating that he had left a message for Mr Porter to
call him. Mr Wicks’s note then stated –
We are accepting of closure – clients do/did not
want to pursue injunction against the Dept
- Action for damages for loss of beds?
apply for review - why? - can’t
feasibly hope to reopen.
- but – rebuild &
still have beds.
how can we fund this if home not operating?
Or – sell beds
- Send Act back to us
- Mr Wicks
gave evidence that upon Mr Porter not being available, he made notes of the
matters that he wanted to cover with Mr Porter
when he called back, and
that the above were those notes.
- Mr Porter
called back the following day, 29 July 1997, and Mr Wicks made a note
of that conversation –
I explain how we won’t be pursuing an injunction
– too fiddly – we have accepted closure and are working towards
easing the transition – acceptance doesn’t mean we accept the
decision.
- will seek review with a view to claim, damages for cost of beds
- you support FOI request. papers re residents relocation – internal memos
– minutes of meetings, correspondence, phone
call records
- also, all detail on Panel’s qualification/appointments, background etc
– all instruments of appointment and delegation
of delegates.
- you’ll get Act back to me.
- Mr Wicks
said in cross-examination that he did not recall that Mr Porter said
anything about a damages claim.
- The
primary judge found at [387]-[390] that Mr Wicks spoke to Mr Porter on both 28
and 29 July 1997, but it is clear from the evidence
that Mr Wicks spoke to Mr
Porter only on 29 July 1997.
- The
primary judge found at [388] that Mr Wicks at this time conducted some
further research, and in particular into the question whether
the second
Standards Review Panel was validly constituted. Mr Wicks gave some evidence
of this in cross-examination. The finding
is also supported by a note made by
Mrs Joan Alexander and dated 29 July 1997 –
Steve Wicks 9-20AM
Panel wrongly appointed some doubt of validity of decisions. Getting information
from freedom of information.
Jadwan’s retainer of Mr Hogan of Coltmans Price
Brent
- At
this time, Jadwan sought a separate opinion from Mr John Hogan of Coltmans
Price Brent in Melbourne. Mr Hogan made some answers
to interrogatories
sworn on 16 June 2011, which were tendered. In answer to Jadwan’s
interrogatory 22, he stated that he had
worked on transactions involving nursing
homes from about the mid-1980s, and hence by 1997, he had worked on a
considerable number
of transactions relating to nursing homes. Mr Alexander
wrote to Mr Hogan by letter dated 28 July 1997. The letter was four
pages
in length, and contained a number of attachments that comprised a further
236 pages, including the notice of intention to revoke
the approval dated
20 July 1997. Mr Alexander’s letter of instructions to
Mr Hogan relevantly included the following –
Dear John
I thought a brief overview of the background to the events of Derwent Court
since August 1996 may be helpful.
...
COMMENTS
...
3. It has been our intention to rebuild and progress has been undertaken towards
this end. We have heard that DH&FS seem to think
we are not genuine about
this.
...
6. There is concern amongst staff and relatives that an ulteria [sic] motive is
behind all this eg. Southern Cross Homes have been
given precisely 51 beds. Only
46 beds were needed to accommodate our residents. We are approved for 51
residents.
7. Residents have been progressively moved to Southern Cross Homes in Newtown
since Thursday last week.
8. Unions have given us 100% support.
9. Our staff have been given notice and redundancy provisions are being
negotiated. Southern Cross Homes are employing some of our
staff.
10. The move of residents has been well orchestrated by DH&FS to the point
where residents [and] relatives have no choice but
to transfer to Southern Cross
Homes; much to their displeasure and anger.
CONCLUSION
With our residents’ and staffs’ future now set we are looking to
save the bed licenses. As stated previously our genuine
intentions were
two-fold:
1. Immediately update fire safety and care standards.
2. Rebuild an accredited first class aged care facility.
We believe we have completed 1. It seems we have been denied the chance to
complete 2.
We now seek natural justice by being given the opportunity to sell the bed
license [sic] without pressure and in an orderly
manner.
- Ms Julie
Alexander stated in cross-examination that at the time the letter was written,
Jadwan’s intentions were that it wanted
to save and sell the bed
licences.
- Mrs Joan Alexander
gave evidence that she had two meetings with Mr Hogan: one on each of 28
and 29 July 1997. Mrs Alexander made a
note of the meeting on
29 July, which stated in part –
I went to see John Hogan. He didn’t seem to hold
much hope under the act & the gazette 1987. That the best was to go to
court. He mentioned an injunction ...
- For
her part, Ms Julie Alexander gave evidence in cross-examination that she
listened to a telephone conversation with Mr Hogan on
29 July 1997 in
which Mr Hogan drew attention to the possibility of obtaining injunctive
relief, but Ms Alexander stated that at
that time, Jadwan had already
decided not to seek injunctive relief. Ms Alexander gave evidence that
Jadwan instructed Mr Wicks and
Mr Hogan to liaise with each other in
relation to the question of injunctive relief –
Mr Wicks was saying not to take out an injunction and Mr
Hogan was saying to take out an injunction. And we told them to liaise with
each
other and sort it out, lawyer to lawyer.
- There
was an undated file note of Coltmans Price Brent in evidence which
stated –
Jeff Alexander
- Injunction/ Fire mention too great a risk – Judge may not agree.
- Injunction/ if apply funding cut.
- There
was a also a file note dated 29 July 1997 in evidence in the same
handwriting as the note above that referred to “Alexander”
and stated, “Injunction why not”.
- Relevant
to the terms of Mr Hogan’s retainer were two further sworn answers of
Mr Hogan to Jadwan’s interrogatories. First,
Mr Hogan answered
“yes” to interrogatory 12(h), which had asked him whether on or
about 28 July 1997 he made an agreement
with Jadwan to provide legal
services to it –
in connection with the notification by letter dated
20 July 1997 by the Minister ... of her intention to revoke the approval
under
s 40AA of the [National Health Act] to conduct the Derwent
Court Nursing Home?
- The
second was Mr Hogan’s answer to Jadwan’s interrogatory 13(a),
in which he stated –
The agreement was wholly oral. The substance of the
relevant part of the conversation between Mr Jeff Alexander (on behalf of the
plaintiff) and I was that I suggested that it may be possible to negotiate an
agreement with the Commonwealth which enabled the plaintiff
to sell for
relocation its 51 bed licences, to which Jeff Alexander indicated that he wished
me to attempt to do so. To the best
of my belief the conversation was by way of
telephone. I was in my Melbourne office, but I do not know where Jeff Alexander
was.
- In
addition, a witness statement of one of Mr Hogan’s former partners,
Mr Mark Dobbie, was admitted. In that witness statement,
Mr Dobbie
annexed his notes of instructions that Mr Hogan gave him on 15 July
2004 after the proceedings had been served, together
with a memorandum from
Mr Hogan dated 20 July 2004. That memorandum addressed
Mr Hogan’s file notes, and included the following
statement –
On 31 July Stephen Wicks advised that a barrister was
drafting an Appeal with a view to being ready to move on the following Monday.
He advised that the intention was to use the ADJR and a Stay Order. Clearly an
injunction was being considered but, to the best of
my memory, apart from 2
telephone conversations in which the prospect of an injunction was discussed I
was asked for no formal advice
and gave none. Rather I was asked to try to
negotiate an arrangement with the Department which would have allowed Jadwan to
realise
a value for its places.
- Amongst
Mr Dobbie’s own notes are statements attributed to Mr Hogan that
include the following –
We were instructed to keep the doors open for the sale
of the asset.
- The
primary judge found at [398] that Mr Wicks first learned of
Mr Hogan’s involvement on 30 July 1997. Mr Wicks prepared a
typed file note dated 30 July 1997 that recorded a 15 minute telephone
conversation with Mr Alexander during which Mr Alexander told
him that
in the course of speaking with an operator of an aged home in Melbourne about
selling his beds, the operator gave him the
name of his lawyer, Mr Hogan,
who apparently had experience in the area. Mr Wicks’s note
continued –
Jeff apparently spoke with John Hogan and sent him some
background information to this matter and apparently Hogan’s advice
to him
was that we should be proceeding as a matter of urgency with an injunction
application to prevent the revocation of approvals
and the loss of beds.
I explained to Jeff that we had already been down the path of an injunction
proceedings before and that I had sought David Porter’s
advice and that
advice was that injunction proceedings would be risky and no guarantee could be
given of success. I pointed out to
Jeff that he was going to consider with
“the family” whether they wanted to pursue an injunction proceedings
[sic] and
his ultimate advice was to me that they did not and that they accepted
that the residents were going to be relocated but nevertheless
wanted me to
pursue the matter of protecting “the beds”.
Some of the advice that John Hogan appeared to give him seemed to be very much
off the cuff and I said I would telephone Hogan to
see if there was anything
further and relevant that he could add to my thoughts on this matter. However, I
did make the point that
Hogan was not obviously in possession of all the facts
of the case and that both I and David Porter had better knowledge of what
has
transpired, what Jadwan wants and the risks involved with injunction
proceedings. I pointed out to Jeff that it is quite possible
for us to press
ahead with injunction proceedings if he wishes, but he needs to take the risk of
the proceedings not being successful
and bearing the cost of the same. Again he
made no comment to the effect that he is prepared to bear those costs.
I said I would speak with John Hogan and report back to
him.
- Mr Wicks
then spoke to Mr Hogan on 30 July 1997. Mr Wicks’s file
note of the conversation indicates that he spoke to Mr Hogan
for
30 minutes. The file note stated –
- you spoke with Lisa Paul yesterday re not losing
licences – good hearing
- staff entitlements?
Paul said Stephen Dellar already canvassed entitlements and wouldn’t be a
difficulty
- wanted in-house advice re revocation and licences
- fax today.
- need to back Dept. against the wall
- review will be a likely outcome
- not much hope of dealing
Notwith[standing] concerns re injunction
- sufficiency of time to sell leaving revocation open.
bed licences are transferrable.
- apply for AIP of relocation – Dept. investigates – recipient to
prove he can accommodate.
- Dept take no account of disputation –
- $28,000 –
- proceed with injunctive relief to retain licences.
- I’ll remain as solicitor on record
- you’ll be consultant.
- you’ll fax Lisa Paul –
- home to cease to operate but effectively licences will remain for us to deal
with
- if threatened, they are likely to get backs up. See if we can do a
deal
- The
material features of this file note include the reference to what we infer to be
redundancy entitlements, the reference to “need to back Dept against
the wall”, and the evident object of doing this, which was to achieve
a sale of the bed licences before approval was revoked, which
is indicated by
the words, “proceed with injunctive relief to retain
licences”. Also material is that the proposal to seek an injunction
was on the premise that the home would cease to operate.
- Mr Wicks
then spoke to Mr Bowen of the Australian Government Solicitor.
Mr Wicks’s note of that conversation stated –
Discussed our concerns or thoughts about loss of value
of licence
- we are accepting of relocation but in no way concede it is justifiable –
we don’t wish to use residents as pawns in
a dispute with the Dept
- you’ll need to speak with Dellar
- Mr Wicks
then spoke to Mr Alexander on the afternoon of 30 July 1997. The file
note of that conversation noted that the Public Health
Complaints Commission was
involved and that, “You’re not welcome out there – nor are
your staff”. The file note also recorded that Mr Alexander had
received some interest from two other homes in acquiring Derwent Court’s
bed licences. The file note contained the following words –
you would be happy to [undertake] to take no more
residents... - just so you can sell the beds!
- The
file note also stated –
8 left downstairs
35 allowed
- Mr Wicks
then recorded in the same file note that he had left a message at 3.20pm for
Mr Dellar to call him. Mr Wicks also noted a
telephone attendance on
Mr Porter which referred to the ADJR Act, and an
“application for a stay”.
- Also
on 30 July 1997, Mr Hogan sent to Mr Wicks a draft of a letter
that he proposed to send to Ms Paul of the Department, requesting
Mr Wicks to indicate that it was acceptable. Mr Hogan sent the letter
to Ms Paul unaltered, stating –
We confirm that we have been consulted by Jadwan Pty Ltd
the proprietor of Derwent Court Nursing Home relating to the notice of intent
to
revoke the approval of the nursing home under paragraph 44(2)(b) of the National
Health Act 1953.
We note that pursuant to the notification dated the 20th July 1997 the Minister
intends to revoke the nursing home’s approval
under s.44(2) of the Act 14
days after the date of the notice.
Accordingly and with an emphasis on the short time frame within which we are
working we ask that you advise as a matter of urgency
whether the Department
will contemplate the non-revocation of the approval of the nursing home so as to
allow our client the ability
to sell for relocation the 51 bed licences
pertaining to the home.
We would anticipate that the home would not function pending the sale of the bed
licences with all residents relocated and with the
staff of the home having been
given notice upon the basis that their entitlements inclusive of redundancy
payments will be met by
the Commonwealth.
We await your earliest advices.
- There
are three features to observe about Mr Hogan’s letter to
Ms Paul. First, its focus is to facilitate the sale of the “bed
licences”. Second, it proposes that Derwent Court would not function
pending such sale, and that all residents would be relocated.
Third, it refers
to staff having been given notice and that the Commonwealth would meet their
entitlement to redundancy payments.
- Mr Wicks
made a file note of his conversation with Mr Hogan on 30 July 1997
about the draft letter –
- discussing at length prepared fax to Lisa Paul and
possible options – you accept Act doesn’t allow for [...] transfers
of licences – I say fax is OK although answer is perhaps predictable
– Jane Halton is the sticking point – others
are more sympathetic.
I’ll speak with Dellar tonight to see if he will give me
help/information.
Mr Wicks’s communications with the Department on
Wednesday 30 July 1997
- Mr Wicks
then spoke on 30 July 1997 to Mr Dellar. Mr Wicks’s note of
that conversation stated –
- never yet has anyone succeeded in an appeal.
Rating controls imposed some years ago – process of slowly eroding
- low growth in homes
- 8 extra beds last year
- 7 last year
- waiting for market to [...]
40 beds per 1000 [...]
1/10 – beds disappear – move into hostel, resi - 90/1000
Tas ration still over – say 93-94/1000
Outer limit for Tas c.2200
51 allocated to S.C. – ours disappear
If we weren’t revoked – 51 extra beds – of concern
Halton in Cairns
- Does C’w recognise value – in a practical sense yes but overall
– prov of care is utmost
- Planning areas are important – planning considerations could allow a
N. Tas reallocation *!
- Mr Wicks
was cross-examined about this file note, and it was put to him that the
reference to “1/10 – beds disappear” was a reference to
beds disappearing on 1 October. Mr Wicks stated that he had no
independent recollection of the conversation,
nor did he understand what 1/10
meant. The primary judge found at [204] that the reference to “51
allocated to S.C.” was a reference to Southern Cross Homes. In
relation to the reference to “1/10 – beds disappear”,
the primary judge held at [211]-[218] that the note recorded what was going
to happen to Derwent Court’s former allocation
of beds, but declined to
hold that Mr Dellar said anything in the conversation that alerted
Mr Wicks to the new legislation governing
nursing homes.
- Mr Wicks’s
file note indicates that he then spoke to Mr Alexander and raised the topic
of relocation to northern Tasmania –
see what interest you can get from N/N.W. home operators
as Dellar hinted he may look favourably on this.
- Mr Alexander
also wrote to Mr Dellar on 30 July 1997. In that letter,
Mr Alexander referred to the question of redundancy entitlements
and to
relevant industrial instruments, and stated (inter alia) –
...
In view of the intended revocation of approval of Derwent Court Nursing Home
from 4th August 1997, I would appreciate your prompt response to this
letter as to whether or not your department will fund redundancy payments
(including notice) in accordance with the Commission’s decision and for
those staff covered by the Federal Award.
This letter serves as a submission by Derwent Court Nursing Home to the
Secretary of Department of Health and Family Services for
consideration of
redundancy payments.
The events of Thursday 31 July 1997
- Events
continued to move quickly the next day, 31 July 1997. Mr Wicks made a
file note that recorded that he spoke to Mr Porter which
stated –
TT Porter
I’m currently drafting an FOI request & will deal [with] Dellar. I do
not consider it possible for me to draft appeal &
grounds or to efficient to
get say A.B. up to speed so he could do it – will you? – yes –
you’ll find form
of appeal and draft grounds in anticipation of
revocation.
[Emphasis added]
- Mr Alexander
sent Mr Wicks a letter dated 31 July 1997 in which he
stated –
It is simply not possible to find a buyer NOW for the
sale of such a complex business. We ask for a specified time to negotiate a
sale
in an orderly manner. We will immediate place the transaction in the hands of a
business broker and ask him to act as expeditiously
as possible. We would
provide a time frame to support our actions.
Before any of this can happen, two assurances are required:
1. Ms Jane Halton removes or extends the Intention of Revocation.
Our good faith has been displayed over the last 10 days in that residents and
staff have been relocated with the essential co-operation
of Derwent Court
management. This achievement resolves the Department’s immediate concerns
for requiring revocation.
If the revocation is removed or extended we would undertake not to admit
residents during this period.
2. Mr Steven Dellar permits a sale to occur.
The chance of selling the beds in the north of the state is a new twist from
what we had been told by Mr Dellar previously. Last
Tuesday week he advised we
had no more than 48 hours to find a buyer, but he doubted our ability to do so.
Since previous discussions
have required building south of Oatlands, we assumed
the sale of beds in the south would also be our only option.
Further we believe Jadwan Pty Ltd should be given an opportunity to sell their
business of 13 years standing for these reasons:
Referring to Lisa Paul’s letter of 11th May 1997 (copy enclosed), we were
encouraged by the content to continue working on
improving care services. This
has occurred. The second Standards Review Panel acknowledged improvement.
Substantial improvements
have continued over May, June and July, however a
decision to revoke approval has been made on historical data.
Considering the encouragement in Lisa Paul’s letter of 11th May 1997,
regarding care standards, it is unjust that we now receive
a Notice of Intention
indicating the Approval will be revoked in 2 weeks. This is hardly sufficient
time to negotiate a complex business
sale. If it had been indicated by the
Department that they were not going to allow us more time to demonstrate
substantial improvement,
we would have put our bed licenses on the market.
Mr Dellar has stated previously, to put any proposition in writing for his
consideration.
Also enclosed is a copy of our letter to John Hogan for your
information.
- Before
the primary judge, Ms Julie Alexander gave evidence that her father had
dictated the letter to her, that she had typed it,
and that by this time she had
accepted advice that an injunction application was too risky and had decided not
to go down that path
and to sell the business instead.
- After
Mr Wicks had spoken to Mr Porter, he spoke to Mr Alexander.
Mr Wicks’s note of that conversation stated –
- got your letter
- haven’t spoken with northern ops. yet – I say to at least elicit
expressions of interest in view of Dellars ‘hint’
- I explain David Porter is drafting appeal and grounds in anticipation of an
appeal next week – I discuss your letter –
raises nothing we
haven’t already considered/dealt with. Hogan has asked for a
‘stay’ – we shall await a
response
- In
the afternoon of 31 July 1997, Mr Wicks spoke to Mr Dellar. His
note of that conversation stated –
Time frame?
* Material – same locally – same in Canberra
- sent on to [Canberra]. Anne Thorpe – who will collect material –
she’ll contact me – there’s some
technical defect with our
report which she’ll contact me about but won’t delay
things.
- Following
on the same page is a note of a conversation with Mr Hogan, which
stated –
- see put[ting] forward an expression of interest in
moving from Hobart to elsewhere in state.
- expression of interest – you’ll send
I explain Porter’s tactic – drafting appeal and grounds –
awaiting decision to revoke
[Emphasis added]
- The
primary judge at [410] inferred from the use of the word
“tactic” that Mr Wicks had told Mr Porter about
Mr Hogan’s
rationale for seeking an injunction, being to put pressure
on the Department to cause it to give Jadwan a further opportunity to
sell its
bed licences. Mr Hogan’s note of what we infer to be the same
conversation on 31 July 1997 stated –
Maybe → North/North West.
Barrister is drafting Appeal + grounds
Ready to move on Monday
Using ADJR/ + Stay order
- On
the same page of Mr Wicks’s note of his conversation with
Mr Hogan was a note that Ms Julie Alexander “dropped by for
developments”. The note indicates that Ms Alexander provided
Mr Wicks with a copy of a letter dated 31 July 1997 from Mary’s
Grange
Inc that expressed interest should Jadwan plan to sell its bed rights.
Mr Wicks’s file note continued –
I explain ADJR procedure – I’ll write again
to Dellar tomorrow to highlight interest, undertake to take no further residents
and ask for revocation to be held off pending exploring expressions of
interest.
The correspondence of Friday 1 August 1997
- On
Friday 1 August 1997, the Department wrote two letters of relevance. The
first was from Mr Hargrave of the Department to Mr Alexander
which
related to redundancy funding. It relevantly stated –
I am writing in response to your letters of 30 and 31
July 1997, concerning payment of redundancies and the associated period of
notice
required to be served by affected staff.
As previously advised, provisions of the National Health Act allow for
redundancy costs of nursing and personal care stuff to be funded
if:
- a home closes
- a home subsequently reduces its number of beds or
- a home transfers to another site and where;
- as a result of the above, the home makes redundancy payments required by
law or award.
The circumstances relating to your application obviously
meet two of the requisite provisions of the Act and will be considered
accordingly.
The funding details cannot, of course, be finalised until actual
costs are known and have been considered by the Delegate of the
Secretary for
the Department of Health and Family Services.
- The
second letter was from Ms Hefford of the Department in Canberra, and was
addressed to Mr Hogan in response to his letter of 30
July 1997. The
letter relevantly stated –
Under subsection 44(2) of the Act the Minister (or her
delegate) is to take such action as is considered justified in the circumstances
of the case. The period of 14 days from the service of the notice of intention
is to permit the proprietor a further opportunity
to submit relevant material to
the delegate. Your letter appears to constitute the only additional material of
any kind submitted
by or on behalf of the proprietor.
You ask whether the intention to revoke might not be proceeded with so as to
permit the proprietor “the ability to sell for
relocation the 51 bed
licences pertaining to the home”. There was in fact no “bed
licences” under the Act. The
approval of a nursing home under section 40AA
of the Act is subject to a condition that the number of beds available in the
nursing
home for benefit purposes will not exceed the number determined by the
Minister.
Under section 39B of the Act, the Minister may in her discretion grant a
certificate of approval in principle for what is effectively
the transfer of
determined bed numbers between nursing homes. Your client should be aware,
however, that the granting of such a certificate
is subject to a specification
that the nursing home from which beds are to be transferred continues to be
conducted in accordance
with the conditions to which it is subject under
subsection 40AA(6). It is the failure to comply with such a condition that has
precipitated
the present action in respect of Derwent Court Nursing Home.
Whilst the matter is one for the delegate to consider at the relevant time, I
have to say that it appears most unlikely that the
desire of your client as
indicated in your letter would have any material bearing on a decision to revoke
the approval of the nursing
home.
- We
observe that this letter appears to raise the prospect that the Minister would
not issue a certificate enabling the transfer of
bed approvals under s 39B
of the National Health Act, to which we referred at [20] above, on the ground that Jadwan was in
breach of the conditions to which it was subject under s 40AA(6) of the
Act, to which we
referred at [16]
above.
- Also
on 1 August 1997, Mr Wicks sent a letter to Mr Dellar that
referred to Mr Hogan’s letter of 30 July 1997 to Ms Paul of
the Department. Mr Wicks’s letter continued –
I repeat the request in that letter that the
Minister’s delegate gives urgent and close consideration to not revoking
of the
approval of the Derwent Court Nursing Home until such time as my client
can negotiate the sale for relocation of the Home’s
bed approvals.
I have already expressed my concerns at the way in which the Department had
pre-empted any review of the revocation decision by putting
in train the
relocation of residents of the Home. My client’s ultimate decision to take
no action to prevent the relocation
was taken purely in the interests of the
Home’s residents, many of whom were quite upset at the prospect of
relocation. Its
action in not challenging and in fact assisting the relocation
can in no way be construed as an acceptance that there is a proper
basis for the
relocation of the residents or the revocation of the Home’s approval. The
inconsistencies between the reports
of both the Standards Monitoring Team and
the Standards Review Panel, the glaring inconsistencies between the first and
second Standards
Monitoring Team reports, the questions surrounding the
qualifications and experience of Standards Review Panel members, the apparent
improper composition of the second Standards Review Panel and the open and
public support given by a number of doctors familiar with
the Home to the
standard of care given there all raise serious doubts about the basis upon which
the Minister’s delegate is
proceeding in this matter.
It would appear that the Department is further attempting to pre-empt any appeal
against or review of a revocation decision by allocating
51 ‘new’
beds to Southern Cross Homes and thereby creating a position where the total
number of beds allocated at least
in the south of the State, will exceed the
allowable “ceiling” unless the 51 approved Derwent Court beds are
withdrawn.
Up until receiving notice of the Minister’s delegate’s intention to
revoke the Home’s approval, my client had been
making every endeavour to
comply with the Department’s required standards and given the obvious
problems with the lay-out of
the Home was in the meantime, genuinely pursuing
the matter of relocation and rebuilding. My client’s intentions in this
regard
were quite incredibly rejected by the Standards Review Panel as not
genuine.
You would be no doubt aware of the financial loss my client will suffer if the
approvals are revoked. You would no doubt also be
aware of the
Department’s liability if, as we shall seek to prove, the revocation
decision was improperly founded.
With the publicity surrounding the Home’s closure, my client has received
a number of expressions of interest from home operators
in the State for Derwent
Court’s beds. I have copies of written expressions of interest from a
number of operators and Mr Alexander
is even today dealing with others.
It would greatly assist in the resolution of this matter without recourse to
legal processes and perhaps with benefits to aged care
nursing generally in the
State if my client was allowed to negotiate the sale of its beds to other
operators.
- It
is convenient to note that at about this time, Jadwan had received a number of
expressions of interest for some or all of its 51
bed licences in addition
to that from Mary’s Grange, to which we referred at [247] above. Other expressions of interest
included –
(1) Queen Victoria Home on 30 July 1997 –
51 licences;
(2) Adaihi Nursing Home on 31 July 1997 – 2 licences;
(3) Norman & Houlihan on 31 July 1997 – 51 licences;
(4) Karingal Home for the Aged on 1 August 1997 –
51 licences;
(5) Masonic Peace Haven of Northern Tasmania on 1 August 1997 –
between 5 and 10 licences; and
(6) St Luke’s (Anglican Church in Australia) Foundation on
4 August 1997; and
(7) Salvation Army on 27 August 1997 –
20 licences.
- All
of the above expressions of interest were made outside of the 48 hour period
that Mr Dellar had allowed on 22 July 1997 (see [173]-[174] above).
- Late
on Friday 1 August 1997, Mr Porter sent Mr Wicks a fax containing
draft grounds of review and relief to be inserted in an application
to the Court
under the ADJR Act. The orders sought included an order quashing the
decision to revoke approval of the nursing home, and an order pursuant to
s 15
of the ADJR Act suspending the operation of the decision. No
order was sought in the draft application to set aside the February 1997
sanctions determination.
It appears that Mr Wicks prepared a draft
application based upon Mr Porter’s proposed grounds, which were the
subject of some
further refinement. In a draft of the application dated
6 August 1997, the grounds of review provided –
- There
was a breach of the rules of, natural justice in connection with the making of
the decision in that a member of the Standards
Review Panel which reported to
the Minister on 2 December 1996 was biased in that he was, at the time, the
Executive Director of
an organisation the membership of which comprised nursing
home operators which would be likely to benefit from a review decision
adverse
to the applicant.
- The
making of the decision was an improper exercise of the power in
that:
(a) the Minister by her delegate failed to
take a relevant consideration into account in the exercise of the power; namely
that the
applicant had taken remedial action in respect of matters of adverse
comment in the report of the Standards Review Panel of 26 May
1997, between that
date and the formation of the intention to revoke approval, notice of which was
given to the applicant on 20th
July, 1997;
(b) the Standards Review Panel which reported to the Minister on 2 December
1996 and upon which the decision was based included a
member or members who did
not have the qualifications prescribed by Reg. 11 of the National Health
Regulations;
(c) the Standards Review Panel which reported to the Minister on
26 May 1997 and upon which report the decision was based, was not
properly constituted, and included a member or members who did not have the
qualifications, as prescribed by Reg 11 of the National
Health
Regulations.
3. There was no evidence or other material to justify
the making of the decision.
Monday 4 August 1997 - the last resident leaves Derwent
Court
- The
last resident left Derwent Court on Monday, 4 August 1997. On that day,
Mr Wicks attended upon Ms Julie and Mrs Joan Alexander
and
prepared some 11 pages of notes of instructions, which included the entry
to which we referred at [155]
above, namely that when Ms Thorpe telephoned Mr Alexander on
16 July 1997 to cancel the meeting, she stated that fire was not the
issue,
and had not been a problem since February.
- Mr Wicks
also sent a fax to Mr Porter that attached a draft application and
affidavit for Mr Porter’s comment. Mr Wicks wrote
on the cover
sheet –
I’m unsure whether and to what extent I should set
out the deponent’s grievances as to the way in which they have been
treated, the financial effects, the fact that they want to be able to sell the
‘beds’ and so on. Your advice would be
appreciated as to how to
finish it off.
Tuesday 5 August 1997
- The
following day, Tuesday 5 August 1997, Mr Wicks prepared a five-page
note titled “Research & Considering”, in which he
referred to s 39B of the National Health Act, and to the transfer of
beds. In cross-examination, Mr Wicks stated that he conducted this research
in the Law Society library and
that he was unable to answer whether his research
on 5 August 1997 extended to other legislation, or amending
legislation.
- Also
on 5 August 1997, Mr Wicks attended a conference with Mr Porter.
We infer from Mr Wicks’s note of the conference that it
was largely
preparatory to the drafting of an affidavit in support of the proposed
application under the ADJR Act. Mr Wicks’s note included
reference to the constitution of the first Standards Review Panel, and an
allegation that Ms Parr
and Ms Cooper did not have the experience or
qualifications required by law.
- Mr Wicks
also made a file note of a telephone conversation with Mr Hogan on 5 August
1997, as follows –
*TF Hogan – regarding fax from CBR [Canberra]
- I was aware – discussed
They respond to ACAT Team as to needs in a particular area.
- right of appeal for AAT?
going straight to AAT? - I discussed section 105AAB. Yes, you see.
- you’re out of it – good luck!
- Mr Hogan
had no further involvement in the matter, and sometime later on 3 March
1998, Mr Hogan provided to Jadwan an itemised list
of his attendances,
which included -
... Advising you generally with respect to Revocation of
Licence. Examining notice under Section 44(2A) of the National Health Act,
together with correspondence between the Commonwealth of Australia and Jadwan
Pty Ltd.
Perusing and dealing with Jadwan Pty Ltd letter of 28 July 1997.
Receiving and dealing with facsimile from Jadwan Pty Ltd dated 28 July 1997
containing copy letter from Commonwealth Department.
Perusing correspondence to Standards Review Panel, together with supporting
material.
Wednesday 6 August 1997 - revocation of approval
- On
Wednesday 6 August 1997, Ms Halton, as delegate of the Minister,
revoked Derwent Court’s approval as an approved nursing
home under
s 44(2) of the National Health Act. As a consequence of that
decision, Derwent Court was no longer entitled to receive any Commonwealth
benefits for providing nursing
home care to eligible nursing home residents.
Jadwan was notified of the revocation by a letter from Ms Halton, which was
accompanied
by a copy of a signed instrument of revocation and a statement of
reasons which referred to and attached –
(1) the first Standards Review Panel report, dated
2 December 1996;
(2) Jadwan’s submission dated 5 March 1997 in response to the first
Standards Review Panel report;
(3) the second Standards Monitoring Team report which carried out an assessment
on 12, 13, and 17 March 1997;
(4) Jadwan’s submission dated 22 April 1997 in response to the report
of the second Standards Monitoring Team;
(5) the second Standards Review Panel report, dated 26 May 1997;
(6) Jadwan’s submission dated 4 June 1997 in response to the second
Standards Review Panel report;
(7) the letter from Tasfire Building Safety to Jadwan dated 3 June
1997;
(8) the standards determined under s 45D of the National Health Act;
and
(9) the letter from Mr Wicks to Mr Dellar of the Department, dated
1 August 1997.
- The
delegate’s decision to revoke the approval of Derwent Court was
subsequently reviewed under s 105AAB of the National Health Act, and
on 13 October 1998 was affirmed by Mr Griew, the State Manager of New
South Wales of the Department.
- At
this time, Mr Wicks was preparing a draft affidavit for
Ms Julie Alexander to swear in support of the proposed application
under
the ADJR Act. Mr Wicks prepared a note of a conversation with
Ms Alexander dated 6 August 1997 that stated –
*TT Julie Alexander for affidavit material
(concern re implications for Glenburn Home)
- problem with Dept. over redundancies – [Tasmanian Chamber of Commerce
and Industry] are handling – Dept. are dragging
their heels (TCCI –
Mark Watson)
- Ind. Comm. have looked at it & confirmed employees are entitled to
redundancies.
- Watson is unsure of Depts. tactics – they are saying they
“may” meet the redundancies.
- redundancy bill will be over half a million dollars – which could be
value of the bed licences – one will cancel out
the other. (!)
- I say my thought is that if revocation can be shown to be improper damages can
flow.
- The
note then recorded some other matters, before stating –
Dellar was adamant that Dept. had reached an [agreement]
to ‘give’ the beds to Southern Cross. He
[explained] that DC’s beds were going to go into the pool of State beds
& S.C. would be given 51 from
the pool. Discussed redundancies – he
saved us. Next day he rang Jeff & said possibility Dept may pay the
redundancies.
[Strike-through in original]
- Ms Julie
Alexander was cross-examined in relation to this note, and stated that she did
not recall telling Mr Wicks that the redundancy
bill would be over half a
million dollars. Ms Alexander stated that she was not dealing with
redundancies, but had a general awareness
of what was going on in relation to
redundancies. She accepted that a potential redundancy liability of almost half
a million dollars
would be almost crippling at that time. In response to a
proposition that the cost of the redundancies could have been the value
of the
bed licences, Ms Alexander stated that she could not remember what her
understanding at the time was, and stated that she
could not recall being
concerned that the liability to meet the redundancy payments would cancel out
the value of the bed licences,
and stated that it was more likely that
Mr Alexander was handling that side of it.
- As
we have mentioned, Mr Wicks was working on drafts of an affidavit for
Ms Julie Alexander to swear for the purposes of the proceedings
under the
ADJR Act that were then in contemplation. Paragraph 45 of one draft
stated, in relation to a meeting between Mr Alexander, Ms Julie
Alexander,
and Mr Dellar of the Department on 22 July
1997 –
- We
discussed redundancies with Mr Dellar. This is a matter of considerable concern
to the Company because, as a result of the Department’s
Notice of
Intention to revoke the Home’s approval, Notices of Termination had to be
given to all staff on July 24th and a redundancy liability of
something in the order of five hundred thousand dollars has arisen.
We
asked if the Department would be prepared to meet redundancy payments due and Mr
Dellar said no. I understand from my father however
that the following day, Mr
Dellar telephoned my father and said there may be a possibility of the
Department paying out redundancies
for the Company.
[Strike-through in original]
- Adjacent
to the above words that were struck out was written –
Department said the “Department” would meet
the Company’s redundancy liability and it has invited a submission from
the Company in this regard.
- Paragraphs 55
and 56 of the same draft affidavit stated –
- The
loss of its bed approvals will have significant financial consequences for the
Company which otherwise could transfer them either
to another operator who
wished to expand their nursing home or, if the Company was able to do so, it
could build a new home and transfer
the approvals to it. Since news of the
Home’s closure became public, the Company has received a number of written
expressions
of interest from nursing home operators throughout Tasmania to take
a transfer of some, and in a few cases all, of the Home’s
fifty-one bed
approvals.
- It
is most important to the Company that its fifty-one approvals remain in place
while the Company pursues all avenues of appeal open
to it against the
Minister’s revocation decision and, in the event that its appeals result
in a finding that is favourable
to the Company, that it be allowed to negotiate
as it sees fit for the transfer of the approvals to any interested buyer or
buyers.
Thursday 7 August 1997
- Mrs Joan Alexander
recorded the following in a diary entry dated 7 August
1997 –
...now it must be costing us a lot of money it concerns
us, $5,000 – AAT Good money after bad JAA.
...
David Porter’s costs $1,500 – a lot of work classified as AAT
work
- Mrs Alexander
was cross-examined about this entry. She denied that the cost of getting an
injunction was a concern. She stated that
the reference to “JAA” was
to Ms Julie Alexander, and that the note was of a conversation with her,
but that she did
not remember the conversation. Mrs Alexander accepted that
the fact that she had made the notes of such conversations suggested that
those
matters were discussed. Ms Julie Alexander was not cross-examined about
what was recorded in the diary entry.
Friday 8 August 1997 - further preparation of papers and
attendances on Mr Porter QC
- On
Friday 8 August 1997, Mr Wicks met with Mrs Joan Alexander
and Ms Julie Alexander, and telephoned Mr Porter to advise him of
recent
developments. Mr Wicks’s note of the conversation with
Mr Porter records that Mr Porter stated that he was to be in court,
and would look at the drafts of the application and the affidavit later in the
day. The note states –
- move Monday
- me to check judge availability.
- Later
on 8 August 1997, Mr Wicks spoke to Mr Alan Parrott of the Hobart
Registry of the Federal Court. Mr Wicks’s note records
that
Mr Parrott told him that no judge was available “unless urgent
– slim chance may be a judge down - o’wise 22/9”. The note
also makes reference to “video link”.
Monday 11 August 1997
- On
Monday 11 August 1997, Mr Wicks sent a fax to Mr Porter that
attached a “revised (final?) form” of
Ms Alexander’s affidavit to be sworn in the contemplated proceedings,
and requested that Mr Porter call him. Mr Porter
later telephoned
Mr Wicks at 4.30pm, as recorded in Mr Wicks’s file note.
The file note indicates that Mr Porter suggested
some relatively small
changes to the application and affidavit. The file note then recorded the
following –
BUT – you see no need on the face of the
affidavit for an interlocutory stay! – If AAT is successful, decision will
be quashed
ab initio & approvals will continue to exist. – [therefore]
don’t proceed with appn – yes
_________
affidavit material will be used in AAT anyway so exercise not wasted.
– pursue review per Minister immediately then we go to
AAT.
- Mr Wicks
did not elaborate on this conversation with Mr Porter in evidence-in-chief,
and he was not cross-examined by counsel for
the fifth respondent, Worsley
Darcey, which faced exposure if any negligence of Mr Porter was found to
have caused loss to Jadwan.
In written reply submissions at trial, the fifth
respondent accepted the note on its face, submitting
at [2.6] –
On 11 August Porter QC gave oral advice to Mr Wicks as
to the drafting of the application, and the affidavit in support. He also
advised
that he did not see a need on the face of the affidavit for an
interlocutory application for a stay. He expressed the opinion that
if the AAT
application succeeded, then the revocation decision would be quashed ab initio
and, in consequence, the approvals would
continue to
exist.
- We
note at this point that the primary judge found at [729] that there were
significant reasons to doubt that Mr Porter had given
the advice that
Mr Wicks had recorded, and had understood him to give. At [730] the
primary judge drew an inference that Mr Wicks
had misconstrued
Mr Porter’s advice when regard was had to a letter that
Mr Porter wrote to Mr Wicks on 19 August 1997, in
which
Mr Porter stated –
I refer to our telephone conversation of 11 August 1997.
I note that we discussed whether the need to maintain the approval status,
pending any review of the determination, was sufficiently imperative to warrant
proceeding with the ADJR application and associated
stay.
As I advised you, it seems to me that the only way a stay can presently be
obtained is by way of the ADJR proceedings. This is because
until the Minister
reviews the determination there is no decision reviewable by the AAT, and hence
no stay could be obtained by that
means. The scenario was to obtain the stay
(hopefully), then to adjourn the ADJR proceedings sine die and to pursue the AAT
remedy.
I note that you were in fact to proceed with the application for review by the
Minister in any event. Not having heard further from
you I assume that the ADJR
proceedings are not to be pursued, at least for the time being, and that AAT
proceedings will be instituted
at the relevant time following the Ministerial
review. My principal purpose in writing to you is to advise that I will be
absent
from Chambers from 25 August to 12 September 1997 and would of course be
happy to speak to you further about this matter upon my
return.
In the meantime I thank you for your instructions and enclose a memorandum of my
fees to date.
- After
Mr Wicks spoke to Mr Porter on 11 August 1997, he spoke to
Ms Julie Alexander on 12 August 1997. Mr Wicks’s file note
of that conversation stated –
*TT Julie to advise Porter’s position.
– patient records – going into envelopes for storage but I doubt
whether they’d be needed or could be used
– I stress need to address reasons for decision on a point by point basis
and get to me asap.
– Denise Callahan is reluctant to get involved – rather
defeatist.
(2 have died since Rosary Gardens relocation)
- politically Minister may not be phased by any opposition
Dellar said after notice of [intention] you had 48 hours to sell – I say
unrealistic in the circs & in any event, Dellar’s
offer &
Canberra’s position may differ significantly.
- Later
on 12 August 1997, Mr Wicks telephoned Mr Alexander.
Mr Wicks’s note indicates that the time of the call was 20
minutes,
and included the words –
* Julie addressing reasons of decision on a point by
point basis.
you surprised re not proceeding
Confirmation of allocation of beds to Rosary Gardens Nursing
Home
- On
20 August 1997, Ms Halton of the Department wrote to the Federal
Member for Dennison, to respond to his questions in relation to
the revocation
of Derwent Court’s approval and the suitability of the proposed
replacement home for Derwent Court’s residents.
In the letter,
Ms Halton confirmed that a new allocation of beds had been made to Rosary
Gardens Nursing Home –
- Twenty
beds were granted to Rosary Gardens Nursing Home on 24 July 1997 and a further
31 beds were granted on 25 July 1997. These
were a new allocation of bed
approvals in light of the announced intention to withdraw funding from Derwent
Court.
- The
decision to allocate 51 beds to Southern Cross Homes Incorporated was an outcome
from the negotiations and formed part of the
agreement reached between the
Commonwealth and Southern Cross Homes Incorporated.
- As
mentioned above, the most recent Outcome Standards Monitoring visit to Rosary
Gardens Nursing Home resulted in a positive report.
In contrast, the findings of
the standards Review Panel of Tasmania in relation to Derwent Court were that 25
of the 31 standards
required urgent action. There were serious deficiencies
between the level of care being provided and the requirements of the standards.
The quality of care at Rosary Gardens Nursing Home is significantly better and
is confirmed by the efforts being made at present.
Administrative review
- On
26 August 1997, Mr Wicks recorded notes of a telephone conversation
with Mr Alexander in the following terms –
Letter to Ombudsman O.K?
- I see no problem but you make no mention of our involvement.
you see our involvement as a sep. issue - don’t think so –
can only await ombudsman’s advice now.
- you discuss reopening.
press for: restitution of bed approvals. Compensation for loss of income and
damages.
- you stress it’s not only restitution of approvals – you want to
get running again – I say do you not have problems
with building etc.
- you say you believe can overcome these. Staff want to come back – you
can get more residents.
- On
28 August 1997, Mr Hargrave of the Department wrote to
Mr Alexander in relation to the proposed payment by the Department of staff
redundancies at Derwent Court. Mr Hargrave proposed to advance Derwent
Court $250,000 to cover the redundancy payments, notwithstanding
that there were
outstanding validations to be completed by Derwent Court. Mr Hargrave noted
that the estimated liability for the
redundancies was $349,634.
- On
28 August 1997, Derwent Court staff wrote to the Commonwealth Ombudsman,
expressing concern about the “hasty closure”
of the home.
- On
1 September 1997, Mr Wicks wrote to Mr Alexander attaching a copy
of a request to the Minister, also dated 1 September 1997, under
s 105AAB(2) of the National Health Act for review of the revocation
decision. The letter of request extended over four pages and set out a number of
grounds on which the
decision was challenged by Jadwan.
- On 13
September 1997, Mr Wicks became an employee of the third respondent, Toomey
Maning & Co, and took the Jadwan file with him.
- As
we stated at [262] above, the
Department’s administrative review by Mr Griew pursuant to
s 105AAB of the National Health Act affirmed the revocation
decision. The notification of the outcome of the review dated 13 October
1997 was accompanied by a nine-page
statement of reasons plus annexures. There
are a number of relevant features of the statement of reasons, including
findings that
both the first and second Standards Review Panels were properly
constituted under the requirements of the regulations. The reasons
stated that
in affirming the decision, Mr Griew relied on evidence that included the
statement of reasons adopted by Ms Halton on
6 August 1997, and the
reports of the first and second Standards Review Panels.
- Also
in October 1997, the Department commenced its internal review, which
resulted in the report dated 29 April 1998, to which we
have referred.
- At
some point later in 1997, Jadwan engaged another legal practitioner,
Mr Sealy of Piggot Wood and Baker in Hobart, to act for it.
On
12 November 1997, Jadwan wrote to Mr Sealy indicating that
Jadwan’s real estate agent had been approached by Ms Parr, on
behalf
of St Ann’s nursing home, who was interested in leasing Derwent Court
in order to relocate some residents from St Ann’s.
Ms Parr had
been the chairperson of the first Standards Review Panel that had described
Derwent Court as being “totally unsuitable for a nursing
home”. In its letter, Jadwan expressed concern about
Ms Parr’s motives.
Nursing Board of Tasmania investigation
- Following
Derwent Court’s closure, the Nursing Board of Tasmania conducted an
investigation and prepared a report about nursing
standards at the home. This
report was formally received by the Nursing Board on 5 February 1998, which
resolved (inter alia) that the former Director of Nursing, Barbara
Bensch, appear before the Board pursuant to s 61 of the Nursing Act 1995
(Tas) (since repealed) to give an explanation of the findings of the
investigation report. The executive summary of the report stated,
in
part –
The findings of the investigation revealed that there
were some deficits in nursing standards, particularly related to the standard
of
documentation which was inconsistent with contemporary nursing care. Other
deficits included the nursing assessment process, continence
management,
restraint, medication administration and pain management. The investigation,
however, could not prove conclusively that
the standard of nursing care did not
meet the required standard.
Evidence was found that nurses were making the best of a difficult situation
they found themselves in and provided the level of care
that they could.
Leadership was lacking from the Director of Nursing and as a result, a culture
of “make the best of what we
have” prevailed. Nurses felt
unempowered by the lack of process in which change could be made.
There was also evidence that whilst nurses stated that they understood the
nursing competencies and guidelines, the principles contained
therein were not
applied to individual’s nursing practice in a consistent manner. A number
of recommendations have been suggested
for consideration by the Nursing Board of
Tasmania.
- Also
within the report was the following statement on which the primary judge relied
at [183] in support of his Honour’s finding
that Jadwan
“scrimped” with staff training –
There were limited opportunities provided for inservice
education due to lack of funds. Most staff funded the cost of continuing
education
themselves. If inservice education was held in the home, it had to be
“in-house”, that is at no cost to the
proprietor.
- Nonetheless,
the report concluded –
The investigation revealed that it is reasonable to
assume from the facts that acceptable nursing care was provided to the
residents.
The investigators were limited because direct observation of nursing
care and nursing practices did not occur.
Judicial review proceedings
Jadwan No 1 – Heerey J – 19 June 1998
- As
we noted at [286] above, in
late 1997, Jadwan engaged a new legal practitioner, Mr Sealy. On
21 January 1998, it commenced a proceeding in the Federal
Court against the
Minister for Health and Family Services seeking judicial review of the decision
by the Minister’s delegate
to revoke the approval of Derwent Court as a
nursing home. Jadwan sought relief under the ADJR Act on two grounds.
First, Jadwan claimed that the second Standards Review Panel had not been
correctly constituted, and that the chairperson of the Panel
had failed to give
Jadwan notice that was required by the regulations. On these bases, Jadwan
claimed that there had been a failure
to observe procedures required by law,
which engaged s 5(1)(b) of the ADJR Act. Second, Jadwan
claimed that the Minister erred in law in relation to her interpretation and
application of the applicable standards.
- On
19 June 1998, Heerey J made an order declaring that the decision of
the Minister on 6 August 1997 to revoke the approval of Derwent
Court was
void: Jadwan Pty Ltd v Minister for Health and Family Services
[1998] FCA 715; 51 ALD 245. Heerey J held that the second Standards
Review Panel was not correctly constituted in accordance with the National
Health Act, to which we referred at [22] to [27] above, because, of the three members
who were appointed, one member, Ms Cooper, was ineligible. Ms Cooper
had been appointed to
represent nursing home staff organisations, but was at the
time the Tasmanian District Registrar of the Federal Court. Heerey J acted
on a concession by the Minister that the Panel was not properly constituted if
it consisted of only two validly appointed members.
It was therefore unnecessary
to consider other arguments that the Panel was invalidly constituted because it
comprised only three
members rather than five, and whether the absence of two
members was cured by reg 12(11) of the National Health Regulations
which provided that “the exercise of a power or the performance of a
function of a Panel is not affected by a vacancy in its membership”.
Heerey J also held that the chairperson of the second Panel had not given
notice to Jadwan in accordance with reg 28 of the
National Health
Regulations. In relation to the consequences of the failure to follow
procedures, Heerey J held that while the Minister seeking to exercise the
power of revocation under s 44 of the National Health Act was not
required to seek a panel report before doing so, in this case the Minister
did seek a report and relied upon that report in making the decision.
Therefore the procedures that were not complied with were procedures
“in connection with” the Minister’s decision to revoke
approval.
Jadwan No 2 – Full Court (Burchett, Drummond and
Sackville JJ) – 4 December 1998
- The
Minister appealed the decision of Heerey J to the Full Court: Minister
for Health and Family Services v Jadwan Pty Ltd [1998] FCA 1549; 89 FCR 478.
The Full Court allowed the Minister’s appeal in part, and held that the
Minister’s decision to revoke approval under
s 44 of the National
Health Act was not conditional upon the appointment of a Panel pursuant to
the National Health Regulations, and further, that the appointment of
panels was authorised for the purposes of financial sanctions in the exercise of
powers under
s 45E of the National Health Act, but not for the
purpose of exercising the power of revocation of approval under s 44.
Therefore, the failure to establish a Panel
in accordance with the regulations
was not a failure to observe procedures required by law such as to engage
s 5(1)(b) of the ADJR Act.
- However,
Jadwan was given leave by the Full Court to amend its application to include an
additional ground, which was that by having
regard to the report of the second
Standards Review Panel, the Minister had regard to an irrelevant consideration.
The irrelevant
consideration was that the Minister treated the Panel on whose
report she had relied as having been validly constituted. For these
reasons, the
order of Heerey J declaring the decision void was set aside, and in
substitution the Full Court ordered that the decision
of the Minister revoking
the approval of Derwent Court be set aside. This was a materially different
order to that made by Heerey
J.
Jadwan No 3 – North J - 23 August 2002
- Following
the decision of the Full Court, Jadwan took some preliminary steps towards the
development of a new nursing home on a greenfields
site. On 1 April 1999, a
company named Aged Care Developments, which described itself as “designers
and builders of quality
aged care facilities”, sent a fax dated
31 March 1999 to Mr Alexander, stating –
Dear Jeff,
I’m pleased to present to you Aged Care Development’s fee structure
and outlines for professional services and cost estimations
for a proposed new
51 bed nursing home facility, to be constructed on your land in Tasmania.
This estimation is based on a brief given to Mark Selby-Hele by Mr. Jeff
Alexander at the offices of Aged Care Developments at Seaford
on
17/03/99.
- The
fax from Aged Care Developments referred to a new building with an area of
2250 square metres, with an estimated cost on a greenfields
site of
$2,445,000.
- Ms Julie Alexander
gave evidence that in July 1999, she bought approximately three hectares of
land at Geilston Bay, Tasmania for
the purpose of using it to build a new
nursing home. She stated that after the decision of Heerey J, she believed
that Jadwan could
re-open Derwent Court. Ms Alexander gave evidence in
cross-examination that she did not learn of the existence of the Aged Care
Act until after the first Full Court decision in Jadwan No 2,
and possibly as late as July 1999. Jadwan’s entitlement to approved places
under the Aged Care Act became the subject of a dispute, and further
litigation. In cross-examination, it was put to Ms Alexander that at the
time of purchase,
she knew that the relevant planning scheme did not permit use
of the land as a nursing home, which she denied. However, there was
no evidence
that the planning scheme did not permit the construction of a nursing home on
the land that Ms Alexander had purchased.
- Jadwan
alleged an entitlement to be an approved provider of aged care within the
meaning of the Aged Care Act, and alleged that by operation of
s 20(1) of the Consequential Provisions Act, to which we have
referred at [35] above, the
Minister was taken to have allocated to Jadwan 51 places for the provision
of residential care under s 14-1 of the Aged Care Act. The Secretary
of the Department contended that Jadwan did not engage the Consequential
Provisions Act because it did not satisfy the conditions in s 7(1)(a)
or (b), which we set out at [34]
above. Relevantly, the issue was whether a Commonwealth benefit was payable to
Jadwan in respect of an approved nursing home patient,
within the meaning of
s 4 of the National Health Act, for nursing home care received by a
patient on 30 September 1997, being the day before the operative provisions
of the Aged Care Act commenced. This issue directed attention to the
effect of the order of the Full Court made on 4 December 1998, by which the
decision
to revoke approval was set aside.
- In 2001,
Jadwan commenced a second proceeding in the Court by which it sought declaratory
relief. On 23 August 2002, North J held
that the effect of the Full
Court’s orders was that the revocation decision remained in effect until
it was set aside by the
Full Court: Jadwan Pty Ltd v Secretary, Commonwealth
Department of Health & Aged Care [2002] FCA 1052. It followed that
Derwent Court was not approved as a nursing home on 30 September 1997, and that
consequently s 20(1) of the Consequential Provisions Act was not
engaged so as to allocate to Jadwan approved places under the Aged Care
Act. North J also held that s 7(1)(a) of the Consequential
Provisions Act required that a Commonwealth benefit be payable in fact in
respect of at least one nursing home patient on 30 September 1997, and
that
on that day, Jadwan had no patients receiving care at Derwent Court.
Furthermore, and in the alternative, North J held that
Jadwan had no
entitlement in law to a Commonwealth benefit on 30 September 1997. And in
the further alternative, North J held that
even if Jadwan had qualified for
the transfer of approved places, its provider status had lapsed under
s 10-2 of the Aged Care Act, to which we have referred
at [30] above, on the ground that
Jadwan had not provided any aged care during a continuous period of
six months, it had not applied for
a waiver, and it was then out of time to
apply for a waiver.
Jadwan No 4 – Full Court (Gray, Kenny and
Downes JJ) - 12 December 2003
- Jadwan
appealed the decision of North J to the Full Court: Jadwan Pty Ltd v
Department of Health & Aged Care [2003] FCAFC 288; 145 FCR 1. The Full
Court affirmed that the order of the first Full Court was to be taken as an
order setting aside the decision to revoke the
approval of Derwent Court from
the date of the Full Court’s order. Gray and Downes JJ held further
that even if, as Jadwan
had argued, the decision to revoke the approval of
Derwent Court should be treated as a nullity, Jadwan had not satisfied the
requirement
in s 7(1)(a) of the Consequential Provisions Act that
there was at least one nursing home patient on 30 September 1997 in respect
of whom there was receipt of, or an entitlement to
receive, Commonwealth benefit
because it had no patients at Derwent Court on 30 September 1997 who were
receiving nursing care. Section
20 of the Consequential Provisions Act
therefore had nothing on which to operate. Further, Gray and Downes JJ
held that even if Jadwan had engaged s 7(1)(a) of the
Consequential Provisions Act, it still had to
overcome s 10-2 of the Aged Care Act in circumstances where Jadwan
had provided no aged care at Derwent Court for well over six months from
1 October 1997, with the consequence
that its approval would have
lapsed.
Settlement and consent orders – North J – 22
June 2005
- Jadwan
and the Minister for Health and Aged Care entered into undated terms of
settlement of the second proceeding, which had been
the subject of the orders of
North J on 23 August 2002 and the subsequent appeal to the Full Court
which was dismissed on 12 December
2003. The recitals to the terms of
settlement recorded that Jadwan had, in that proceeding, sought orders that the
decision of 3
February 1997 under s 45E of the National Health
Act, and to which we referred at [61] above, to impose financial sanctions on
Derwent Court be set aside. The terms provided that the parties would consent to
an order
that the decision be set aside, for a release and indemnity by Jadwan,
and an agreement by the Minister, without admission of liability,
to make a
contribution towards Jadwan’s costs of the proceeding, but with a
provision to set that sum off against the Minister’s
costs of the appeal
to the Full Court that Jadwan had been ordered to pay.
- On
22 June 2005, North J made orders with effect from 3 February
1997 setting aside the financial sanctions that had been imposed
on
Jadwan –
1. Each of the decisions made by the Respondent on 3
February 1997:
(a) to declare under s.45B(l) of the
National Health Act 1953 that Derwent Court Nursing Home did not satisfy the
standards determined under s.45D of that Act; and
(b) to determine under s.45B(2) of the National Health Act 1953 that a
Commonwealth benefit was not payable to the Applicant in respect of a patient
who entered the Derwent Court Nursing Home from
4 February 1997;
be set aside with effect from 3 February
1997.
2. There be no order as to
costs.
- At [592],
the primary judge accepted a submission that “this order has no bearing
on the resolution of the issues in these proceedings.”
Expert evidence of Ms Kay Horgan
- As
we have mentioned, Ms Kay Horgan, who was a registered nurse, gave evidence
as an expert in aged care. She was asked to accept
some assumptions, including
that –
(1) the issues identified by the Department in relation
to fire safety, and in relation to a lift between floors at Derwent Court,
were
being addressed by Jadwan to the satisfaction of the Tasmanian fire authorities
before revocation; and
(2) the findings that were attached to the notice of revocation dated
20 July 1997 were correct.
- Ms Horgan
expressed the opinion that Derwent Court was unlikely by 1 October 1997 to
have been able to meet the responsibilities of
an approved provider under the
Aged Care Act. In particular, when measured against the Residential Care
Standards that Ms Horgan identified in her report dated 13 April 2016,
there was a moderate or high risk of non-compliance. Ms Horgan identified
steps that Jadwan would need to have taken to achieve compliance.
One of the key
points made by Ms Horgan and relied upon by Jadwan was that many nursing
homes would have been non-compliant with
the new Residential Care Standards that
came into force on 1 October 1997, and would have needed to review their
systems in order
to become sustainable in the long term. Ms Horgan also
expressed the opinion in her report that Jadwan was well positioned to comply
with the new accreditation standards by 1 January 2000 and would most
likely have gained accreditation had it applied. In giving
this opinion,
Ms Horgan assumed that Jadwan would have received accelerated attention in
relation to its accreditation under the
new legislation because it had been
identified as a home of concern. Ms Horgan also made a number of comments
in her report about
the integrity of the assessments that had been made by the
Standards Review Monitoring teams and the Standards Review Panels.
- In
relation to the building, Ms Horgan accepted that the building from which
Derwent Court operated was unsuitable for a nursing home,
and that the first
floor was wholly unsuitable. In a joint report with Mr Davies, who was an
expert architect, Ms Horgan and Mr Davies
agreed that the first floor
was a very poor environment for residents, and that the de-commissioning of the
first floor would have
mitigated many of the fire safety risks and freed up
additional staff to concentrate on required improvements related to care. Both
Ms Horgan and Mr Davies in their joint report agreed that the
building, at the time Derwent Court closed, was not suitable for use.
Evidence of reliance and causation
- There
was direct evidence of Mrs Joan Alexander and Ms Julie Alexander
addressed to the issue of causation. In evidence-in-chief,
Mrs Joan
Alexander was asked what Jadwan would have done if its lawyers had advised that,
if it did not apply to the Court urgently
for an injunction or a stay, then it
would lose its business. Mrs Alexander responded that Jadwan would have
fought on, which she
clarified to mean that Jadwan would have gone to court.
Mrs Alexander was also asked what Jadwan would have done if its lawyers had
also advised that in order to save the business, it needed to move a resident
back into the nursing home before 30 September 1997.
Mrs Alexander
stated that Jadwan would have persuaded a resident to come back into the home,
and she nominated a Mrs Jacobs as a
person who wanted to come back to
Derwent Court. Mrs Alexander also gave evidence that, had Jadwan retained
its approval beyond 1
October 1997, and if in order to maintain its
approval it had to move out of Derwent Court, then it would have done so.
- Mrs Alexander
was challenged in cross-examination by counsel for the fourth respondent in
relation to this evidence. Mrs Alexander
did not appear to dispute that the
Commonwealth benefit together with a permissible private contribution for one
resident would amount
to about $30,000 per annum, and in order to keep the
nursing home open, it would be necessary to have a minimum of two nursing staff
on three shifts per day, 365 days per year, together with an extra two to
four staff to cover weekend equivalent leave, annual leave,
sick leave, and the
like. Mrs Alexander accepted that somewhere between eight and ten staff
would be required. Mrs Alexander also
accepted that she had not calculated
the cost of maintaining one resident at Derwent Court on an ongoing basis, and
that she did
not know that any other director of Jadwan had made such
calculations. And Mrs Alexander accepted that when she gave her evidence
that Jadwan would have sought the return of one resident, that she had not
undertaken any sort of financial analysis, and said that
she did not know
whether any other director of Jadwan had done so. During the course of the
cross-examination, senior counsel for
Jadwan objected on the ground that the
proposition that Jadwan advanced was that there needed to be one resident in a
bed on 30 September
1997, and not for 12 months.
- Ms Julie
Alexander gave evidence-in-chief that if any of Jadwan’s lawyers had
advised her that Jadwan needed urgently to apply
for an injunction in the period
July to August 1997, and that if it did not obtain an injunction to stop
the revocation of approval
it would lose the business forever, then Jadwan would
have sought an injunction. Ms Alexander also stated that if she had been
advised
that Jadwan also needed to get a resident to move back into the nursing
home and to have at least one resident in the nursing home
on 30 September
1997, then she believed that Jadwan could get the residents back in, and stated
that the staff wanted to come back
as well. Ms Alexander stated that in
those circumstances, Jadwan would have continued to operate the nursing home
indefinitely, and
if the old premises were unsuitable, it would have rebuilt on
a greenfields site.
- In
cross-examination, Ms Alexander accepted that with only 15 or nine
residents, under normal circumstances it was commercially unviable
to operate
the nursing home. And Ms Alexander accepted that unless the vast majority
of residents had Commonwealth funding, Derwent
Court was not an economic
proposition. A number of assumptions were put to Ms Alexander in
cross-examination from the standpoint
of August 1997, including that from
1 October 1997 Derwent Court could not comply with the prescribed standards
for a nursing home,
that the existing premises could not be modified so as to
achieve compliance, and that Jadwan faced making a decision to build a
new
nursing home. Ms Alexander accepted that, as at August 1997, Jadwan
would not have committed the substantial funds required to
build a new nursing
home without knowing that it had its 51 bed licences, and that it would
have to have had a guarantee from the
Commonwealth that it would have its
51 bed licences before it made that decision.
Summary of the primary judge’s findings
- The
primary judge’s findings may be summarised as
follows –
(1) The directors of Jadwan had entrusted the
responsibility for resident care at Derwent Court to an “old school”
director
of nursing, and there was considerable evidence that she was not in
tune with, and was resistant to the need for change: [176]. Jadwan
ran the
nursing home in outdated facilities with its directors insufficiently aware of
the pressure within the industry to improve
care outcomes: [197].
(2) Until the director of nursing retired in May 1997, there had been no
meaningful policy development in response to the first Standards
Monitoring
Team’s report dated 6 September 1996: [176].
(3) Jadwan made changes only when pressured to do so by the Commonwealth, and
then only to the least degree required for compliance,
and had been reluctant to
spend money to upgrade Derwent Court: [177]. Examples of Jadwan’s
reluctance to spend money included
its failure to install a lift when offered
Commonwealth funding in 1993 [178], its failure to install a sprinkler
system, and its
scrimping on staff training: [183]. As such, Derwent Court
had taken few, if any, proactive steps to ensure that it would remain
viable in
circumstances where care standards would need to improve: [185].
(4) Jadwan had no knowledge of the proposed changes to the legislation, or of
new demands for higher standards: [187].
(5) Prior to 1 October 1997, Mr Wicks did not become aware of the
existence of either the Aged Care Act or the Consequential Provisions
Act, and such legal research as he undertook did not lead him to discover
their existence: [198], [200], [219], [347]-[348], [424], [457],
[671].
(6) In relation to the liability of the first respondent, Rae & Partners,
Jadwan did not initially retain Rae & Partners
to provide Jadwan with
general advice, but rather to provide a letterhead for Mr Alexander’s
purposes to give the appearance
to the Department that Jadwan had secured legal
representation. Mr Wicks was asked to and agreed to be available and to
undertake
only such specific tasks as Jadwan might request of
him: [256]-[258], [296]-[302]. Mr Wicks was not asked to give Jadwan
legal advice
about the prospects of it successfully challenging the sanctions
determination: [272], [284], [289], [304]. As to Mr Wicks’s
concession in cross-examination (see [95] above) that his note of
26 February 1997 appeared to record advice that he had given to
Jadwan, the
primary judge at [268]-[269] referred to that part of the note that
recorded Mr Wicks as stating that it might be difficult
to challenge any
later decision to revoke the approval of Derwent Court unless Jadwan achieved
compliance with fire safety standards
as a statement of the obvious which, to
the extent it was capable of being construed as legal advice, was self-evidently
correct.
The primary judge held at [270] that nothing in the note had
anything to do with Mr Wicks giving advice about the sanctions
determination.
(7) The primary judge held at [300]
that –
The Court has been unable to identify any
instance in which Mr Wicks added anything of legal consequence beyond his
possession of
the status of a legal practitioner. His editing of letters drafted
by Mr Alexander and their prefacing with language such as “we
act for
Jadwan, which has sought our advice regarding its present dealings with the
department” was pure illusion. He went
to meetings as requested to foster
that illusion. There is nothing in his notes to suggest he played any role of
substance.
(8) By 15 July 1997, Jadwan had decided to cease
operating Derwent Court, and intended, if possible, to sell its bed
licences: [31],
[330]-[343], [445]-[447]. This was a critical finding by
the primary judge, and is the subject of challenge by Jadwan.
(9) On 20 July 1997, the Minister’s delegate gave notice of her
intention to revoke the approval of Derwent Court as a nursing
home: [345].
On 21 July 1997, Mr Alexander informed Mr Wicks of the
notice: [346]. From the time Jadwan informed Mr Wicks that it
had
received the notice of intention to revoke Derwent Court’s approval as a
nursing home, Mr Wicks’s instructions changed
such that he was not
merely to represent Jadwan in relation to specific tasks, but to represent
Jadwan generally in relation to Derwent
Court: [454]-[455].
(10) On 22 July 1997, the Department gave Jadwan 48 hours within which
to sell its bed licences [354], but Jadwan did not succeed
in selling
them.
(11) Jadwan requested the Commonwealth to consider picking up the cost of
redundancy payments to its staff: [353], and by 24 July
1997 the
Commonwealth had agreed to meet 80% of the cost of redundancies: [361]. The
Commonwealth’s agreement to meet the cost
of redundancies came with an
implicit price, namely that Jadwan would cooperate in the removal of patients to
alternative accommodation,
dismiss its staff, and cease its nursing home
business: [557], [652]. The Commonwealth had offered Jadwan funds to meet
the cost
of redundancies in recognition that it had lost its chance to sell its
bed licences: [664]. On 24 July 1997, Jadwan gave notice to
all of
Derwent Court’s staff: [372], [534]. Jadwan would not have acted in a
way that required it to forego an offer by the
Commonwealth to meet the cost of
Derwent Court’s staff redundancies: [527], [571]. In particular, it
would not have risked
receipt of the funds by re-engaging staff before the funds
had settled: [653]. It was implausible that Jadwan would have secured
the
agreement of the Commonwealth to meet the cost of redundancies except on the
basis that Jadwan was not going to stand in the
way of the transfer of
residents: [537]. These findings were also critical, and are challenged by
Jadwan.
(12) On 24 July 1997, Mr Wicks conferred with Mr Porter. After
conferring with Mr Porter, Mr Wicks advised Mr Alexander that he
should
write to the Department asking that they hold off relocation of patients,
and if that was not effective, the next way of preventing
removal of the
patients was to seek an injunction from the Federal Court, but that this was a
high risk application: [368]-[370].
Mr Wicks’s advice to Jadwan
on 24 July 1997 that an application for an injunction would be risky, or
that it was a “high
risk application” was not
negligent: [645]-[649]. Similarly, Mr Porter’s advice on
24 July 1997 that seeking an injunction
was a high risk application was not
negligent: [714].
(13) On 25 July 1997, in a telephone call, Mr Alexander instructed
Mr Wicks that an injunction was out of the question, and Mr Wicks
advised Mr Alexander and Ms Julie Alexander that there was no
harm in letting the residents go: [382], [384], [635]. The primary
judge
did not accept the evidence of Ms Alexander that Mr Wicks had advised
Jadwan that it would lose Commonwealth funding if it
sought an injunction,
holding at [385] that there was no corroboration, contextual or otherwise,
to support such a finding, and there
was nothing to suggest that Mr Wicks
ever held or expressed such a view.
(14) However, it was within the scope of a solicitor’s duty that he or she
identify and advise having regard to enacted statute
law of the
Commonwealth: [465]. The primary judge found that the Acts of the
Commonwealth Parliament would have been available for
Mr Wicks at the Law
Society library in Hobart [467], and that the library would have had a copy
of the Aged Care Act and the Consequential Provisions Act
available in its collection on or before 21 July 1997: [469].
(15) A reasonable solicitor would have checked whether the relevant statute law
remained current or had been amended, and upon checking
the Consequential
Provisions Act, its potential relevance would have been
identified: [501]-[503]. In consequence, a reasonable solicitor would have
refrained from
giving Jadwan unqualified advice that its interests would not be
affected if it facilitated the relocation of its residents: [507].
(16) Yet, at this time, Jadwan had already decided to “get out” of
the Derwent Court business, and its concern was to
sell its bed
licences: [636].
(17) With knowledge of the Consequential Provisions Act, competent
advice would have alerted Jadwan to the fact that it not only needed to
establish the invalidity of the decision to revoke
approval, but also that
Jadwan needed to retain at least one resident before the Aged Care Act
came into force on 1 October 1997, and would have to do so at its own
expense: [523].
(18) In relation to the proposed decision to revoke
Jadwan’s approval, competent advice would have been that the delegate did
not need to have reports of a validly constituted Standards Review Panel in
order to make her decision to revoke approval and that
therefore the grounds for
challenging the proposed decision were doubtful: [520]. In relation to
challenging the decision to revoke
approval after that decision was made,
competent advice would have been that any application challenging the decision
would not be
finally heard before 1 October 1997, that reliance on the
reports of the Standards Review Panels on the premise that the panels were
validly constituted would be an error of a non-jurisdictional nature, and that
the judge hearing any application may not set aside
the decision ab
initio: [522].
(19) Competent advice would have been that because of the fire risk to Derwent
Court’s aged and vulnerable residents, success
in obtaining interlocutory
injunctive relief could not be assured: [525].
(20) As to the prospect that an application might
have been made in reliance on s 6 of the ADJR Act on the ground that
the Minister’s delegate had engaged or proposed to engage in conduct for
the purposes of making a decision,
the primary judge was doubtful that Jadwan
would have been entitled to relief under that provision: [478]. However,
even if it could
rely on the ground that the Minister’s delegate was
proposing to rely upon the reports of the two Standards Review Panels,
the
Minister’s delegate was not required to have a report of a validly
constituted Standards Review Panel as a condition of
the exercise of the power
to revoke, and it was open to the delegate to take account of the opinions of
the members of the Standards
Review Panels without giving them formal status, or
the March report of the Standards Monitoring Team, and decide to revoke the
approval
on that basis: [487]-[488]. Commencing a proceeding would not have
prevented the delegate from revoking Derwent Court’s approval:
[479],
[483]. Therefore, there was no breach of duty by Mr Wicks in failing to
advise Jadwan that there were grounds to apply to
the Court to restrain the
delegate from making her decision: [491].
(21) However, even if Mr Wicks had, on 25 July 1997, given Jadwan the
advice that a solicitor acting with requisite professional
skill and care should
have given, Jadwan would not have sought to prevent the transfer of residents
from Derwent Court: [526], [559].
This was in a context whereby, at the
time, Jadwan would have considered that the value of the 51 “bed
licences” was
$12,000 each, and under pressure of a “fire
sale” may have been less: [567]. Further, Jadwan would not have
pursued judicial
review proceedings with the objective of continuing to operate
Derwent Court and rebuilding on a greenfields site: [653].
(22) On both 28 and 29 July 1997, Mr Wicks telephoned Mr Porter
and informed him that an application for an injunction would not
be
pursued: [387]-[389].
(23) On 29 July 1997, Mrs Joan Alexander met Mr Hogan.
Mr Hogan’s retainer was confined to him doing what he could to help
Jadwan obtain approval from the Minister to sell its bed licences at Derwent
Court: [690]. Mr Hogan had been instructed on the basis
that Derwent
Court had to close and that all of its residents would be relocated: [692],
[703]. When Mrs Alexander met Mr Hogan,
he recommended that an
injunction be sought: [395].
(24) On 30 July 1997, Mr Hogan also gave advice to Mr Wicks that
Jadwan should seek an injunction to back the Department against
the wall as a
tactic for the purposes of securing Jadwan additional time to sell its bed
licences: [693], [698]. As a result of this
advice, on the afternoon of
30 July, Mr Wicks called Mr Porter and stated that Jadwan wished
to make an application under the ADJR Act, and to seek a stay of the
revocation decision: [407].
(25) The last resident left Derwent Court on 4 August 1997: [421].
Jadwan did not ever commit itself to relocating and rebuilding
Derwent
Court: [444]-[447], [551]. Jadwan had decided to “get out” of
Derwent Court, and once notified of the delegate’s
decision to revoke
approval, its efforts were focussed on securing funding for redundancies, and
persuading the Commonwealth to allow
it to sell its bed licences: [539].
The Commonwealth, through Mr Dellar, had given Jadwan 48 hours to sell
its bed licences, but
Jadwan had failed to do so: [542]. By 1 August
1997, the Commonwealth had ruled out allowing Jadwan to sell its bed licences
prior
to revocation of the approval of Derwent Court: [543]. Jadwan would
not have been willing to provide care to its residents beyond
the date of
revocation, 6 August 1997, without the availability to it of Commonwealth
subsidies: [571].
(26) Until the Minister’s delegate made her decision on 6 August 1997
to revoke the approval for Derwent Court, it was not
open to Jadwan to seek
relief under the ADJR Act in respect of a “decision” within
the meaning of s 5 of the ADJR Act, because until 6 August
1997, there was no reviewable decision, and therefore Mr Wicks had not been
negligent in failing to advise
Jadwan to pursue that
course: [471]-[475].
(27) Jadwan had failed to prove its pleaded allegations that Mr Wicks had
advised Jadwan to wait until it had been served with a
notice of revocation of
its approval before it commenced legal proceedings, and had advised Jadwan not
to apply for an injunction
to restrain the Minister from taking steps to remove
residents from Derwent Court: [637]‑[640].
(28) As a result of a conversation with Mr Porter on 11 August 1997,
Mr Wicks took no further steps to commence proceedings in the
Federal Court
under the ADJR Act: [438]. Mr Wicks had understood
Mr Porter to advise that there was no need to seek an interlocutory stay of
the revocation, and that
if Jadwan was successful in the AAT, the decision would
be quashed ab initio: [436]. However, the primary judge did not
accept that Mr Porter had given this advice: [730]. Mr Wicks
advised Jadwan of what he
understood to be Mr Porter’s advice, and
although both Ms Julie Alexander and Mr Alexander were surprised,
Jadwan accepted
the advice not to proceed with seeking an
injunction: [441]. However, bringing judicial review proceedings as a
“tactic”
would not have caused the Commonwealth to extend its offer
to permit Jadwan to sell its bed licences: [661]-[666].
(29) At [728], the primary judge accepted that there was no evidence to
suggest that Mr Porter had identified the existence or consequences
of the
Aged Care Act or the Consequential Provisions Act, and accepted
that if Mr Wicks’s file note expressed the true sense of what
Mr Porter conveyed to him, that Mr Porter would
have failed in his
duty to exercise reasonable skill and care by not adverting to the potential
consequences of those Acts.
(30) As to the prospect that Jadwan might have commenced proceedings after
terminating the employment of its staff, and securing
funding of redundancy
payments from the Commonwealth, and after its residents had left, the
consequence of the first sanctions determination
in February 1997 under
s 45E(2) of the National Health Act was that Jadwan would not have
been entitled to any Commonwealth benefits in respect of a resident who returned
to Derwent Court,
because that person would be treated as a new resident for
funding purposes: [574]-[583]. It was unrealistic that Jadwan could have
secured an order before 1 October 1997 setting aside the February 1997
sanctions determination: [584]. Therefore, on this scenario,
Jadwan would
not have become an approved provider of nursing home services under the Aged
Care Act: [583], [681].
(31) On the balance of probabilities, Jadwan would not have succeeded in
obtaining an injunction and ultimately in setting aside
the February 1997
sanctions determination: [590]. The reasons for this included: that the
application for relief would have been
out of time both under the ADJR Act
and if Jadwan had applied for relief under s 75(v) of the
Constitution [599]; that an extension of time would not have been
granted [591]-[622]; that the balance of convenience did not favour the
granting
of interlocutory relief [626]-[627]; that an order that the
sanctions determination was void ab initio would not have been made; and
that any order setting it aside would not have been made before 1 October
1997: [628]-[630]. Unless
Jadwan succeeded in obtaining an order setting
aside the February 1997 sanctions determination with effect from a date
prior to 1
October 1997, Jadwan would not have become an approved provider
under the Aged Care Act: [648].
(32) The prospect that, after having obtained Commonwealth funding for
redundancies, Jadwan would have recruited new staff and met
the cost of
operating Derwent Court for some time to secure the chance of operating at new
premises that were to cost in the order
of $3m was implausible: [588].
(33) As to the liability of the third respondent, Toomey Maning & Co,
because Jadwan never committed to the course of relocating
its business but had
decided to “get out” of the business, no failure of Mr Wicks to
advise Jadwan of the effect of the
Aged Care Act and Consequential
Provisions Act while employed after 12 September 1997 by Toomey Maning
& Co was a cause of any loss to Jadwan: [673]-[677]. Further, to
provide
care for even a single resident required the recruitment of staff and
attracted payroll costs for at least some period of time, and
Jadwan would not
have taken that course: [680].
(34) As to Mr Hogan’s advice, the primary judge held that before
Jadwan consulted Mr Hogan, it had made the key decision to
accept the
Department’s offer to meet its liability for redundancy payments, and it
had dismissed its staff: [699]. The primary
judge held that Jadwan retained
Mr Hogan to assist it, if possible, to sell the bed licences without
pressure, and in an orderly
manner: [692]. His Honour held that
seeking an injunction would not have caused the Commonwealth to extend its
original 48 hour window
for Jadwan to sell its bed licences: [700].
Further, Mr Hogan was not responsible for Mr Wicks’s later
decision to advise Jadwan
not to proceed to seek an injunction: [701].
Therefore, the failure of Mr Hogan to give advice with respect to the
existence and
consequences of the enactment of the Aged Care Act and the
Consequential Provisions Act did not cause Jadwan to suffer any loss of a
chance to continue and ultimately to relocate its business: [704].
(35) As to the fifth respondent, and its liability for the loss of
Jadwan’s chance to bring a proceeding against Mr Porter,
even
assuming that Mr Porter breached his duty as a barrister by failing to
identify the existence and consequences of the Aged Care Act and the
Consequential Provisions Act, such negligence did not cause Jadwan to
lose a chance to continue to operate Derwent Court while it built a replacement
facility on
a greenfields site: [709]. Before Mr Porter was engaged,
Jadwan had resolved to “get out”, and it had asked the Commonwealth
to meet its redundancy obligations: [710]. Mr Porter’s advice on
24 July 1997 that seeking an injunction was a “high
risk
application” was not negligent: [714]. In relation to the application
for an injunction that Mr Porter had been retained
to prepare, Jadwan had
not established that such an application would have resulted in the Minister
giving Jadwan any further opportunity
to sell its bed licences. As to the advice
that Mr Wicks recorded Mr Porter giving to him on 11 August 1997,
if Mr Porter gave advice
that seeking an injunction was unnecessary, then
that advice did not cause Jadwan to suffer any loss: [728]. However, in
light of
the contents of Mr Porter’s letter to Mr Wicks dated
19 August 1997 and referred to at [275] above, the primary judge was
not
prepared to find that Mr Porter gave the advice in the terms recorded
in Mr Wicks’s note, and considered that it was an obvious
inference
from Mr Porter’s letter that Mr Wicks had misunderstood the
advice: [730].
- We
shall return to some features of the primary judge’s reasons in greater
detail when considering the grounds of appeal.
The grounds of appeal
- Jadwan,
by its second further amended notice of appeal, raised 22 grounds which for
the purpose of its submissions were grouped into
challenges to the following
nine findings of the primary judge –
(1) Jadwan had resolved to close the nursing home by
15 July 1997 and was concerned only to seek time from the Department to
negotiate
the sale of bed licences: grounds 7 and 8;
(2) having decided to close the nursing home, Jadwan’s intention from
about 24 July 1997 was to seek agreement from the Department
to pay for
staff redundancies: grounds 7, 8, 11 and 12;
(3) Jadwan would not have succeeded in obtaining an injunction or other
interlocutory relief to prevent the closure of the nursing
home:
grounds 13 and 14;
(4) Jadwan would not have applied for an injunction even if it had been advised
of the impact of the new legislation: grounds 15 and 16;
(5) proceedings to seek to have lifted the financial sanctions imposed by a
delegate of the Minister in February 1997 under s 45E(2)
of the National
Health Act would not have succeeded: grounds 17, 18 and 19;
(6) the retainer of Rae & Partners (as the first law firm engaged by Jadwan
and as Mr Wicks’s employer) did not extend
to giving legal advice on
Jadwan’s rights under the National Health Act in respect of the
financial sanctions: grounds 1 and 2;
(7) Mr Porter did not give advice not to seek an injunction:
grounds 3 and 4;
(8) causation was not established, at least implicitly, by finding that Jadwan
did not suffer any damage from the failure to give
legal advice on the new
legislation by reason of a finding that it did not have any intention to
relocate the nursing home and had
received value for the loss of its bed
licences: grounds 5, 6 and 20;
(9) by way of summary, judgment should have been given arising out of negligence
on the part of Messrs Wicks, Hogan and Porter in
failing to advise of the
consequences of allowing the nursing home to cease functioning prior to the
commencement of the new legislation,
and the antecedent failure of Rae &
Partners (via Mr Wicks) in relation to the financial sanctions:
grounds 9, 10, 21 and 22.
Issue (1) – Jadwan’s decision to close the
nursing home: grounds 7 and 8
Issue (1) - Jadwan’s submissions
- Jadwan
challenged the primary judge’s finding that by 15 July 1997, it had
resolved to close Derwent Court and was concerned
only to seek time from the
Department to negotiate a sale of the bed licences. Jadwan also challenged the
primary judge’s collateral
finding at [341] that statements on behalf
of Jadwan to the Department, and to the Tasmania Fire Service, that it was
intending to
relocate Derwent Court were a mere negotiating position that did
not reflect Jadwan’s true intent. Jadwan submitted that the
respondents
had not at trial alleged that Jadwan had decided to get out of operating Derwent
Court, and that the primary judge did
not raise this case in the course of the
trial. Jadwan accepted that the respondents had submitted that suggestions by
Jadwan to
the authorities that it intended to relocate were a
“smokescreen” to make them think that it was addressing their
concerns,
but submitted this was a different point.
- Jadwan
submitted that the primary judge’s finding that it had decided to cease
operating the nursing home underpinned the judge’s
conclusion that the
lawyers’ failure to advise Jadwan of the new legislation, namely the
Aged Care Act and the Consequential Provisions Act, did not cause
it to lose the nursing home business.
- Jadwan
challenged the primary judge’s findings on the ground that they were based
largely upon an erroneous construction of
Mr Wicks’s file note of
15 July 1997, to which we referred at [148] above. Jadwan relied on other evidence
that it submitted should have led to a contrary finding, which
included –
(1) the evidence of Ms Julie Alexander, who was
present during the conversation with Mr Wicks on 15 July 1997, who
said that the note,
“you have decided to get out”, referred
to getting out of the building and relocating to a greenfields site, and was not
a reference to selling out of the
nursing home;
(2) the evidence of Mr Wicks that in the period from July to
September 1997, Jadwan had under active consideration three options,
namely
remaining in the old building, relocating and selling the licences, and that it
never considered closing down and walking
away (see [151] above);
(3) the absence of any reference in the contemporaneous notes of
Mrs Joan Alexander in her work diary to any plan to bluff the
Department
in relation to Jadwan’s true intentions;
(4) the steps that Jadwan in fact took towards relocation of the nursing home,
which included the investigation of alternative sites,
obtaining costs
estimates, making inquiries about the temporary relocation of upstairs residents
during construction, and the fact
that many of these steps were not disclosed to
the Department as part of any “bluff”;
(5) the steps that Jadwan took in 1999 after succeeding initially in the
Federal Court, namely obtaining another indication of scope
of works, obtaining
a quotation, and the purchase by Ms Julie Alexander of land for the purpose
of building a new nursing home;
(6) the contents of a note that Mr Wicks made on 10 June 1997, to
which we referred at [132] above,
where Mr Alexander was noted as saying “don’t want to lock
in building though”, which Mr Wicks said he understood was likely
to be a reference to not wishing to lock into the existing old building, and
which Jadwan submitted the primary judge had misinterpreted as being a reference
to a new building;
(7) the contents of a file note made by Mr Wicks on 22 July 1997, to
which we referred at [170] above,
in which he wrote, “On what basis has our intention to relocate not
been accepted. !”, and “we need time to relocate –
retrain etc”, which Mr Wicks accepted in evidence reflected
instructions from Jadwan; and
(8) the subsequent conduct of Jadwan in July and August 1997 in instructing
its lawyers to make an application to set aside the revocation
decision.
- Jadwan
also submitted that the primary judge did not consider the issue whether Jadwan
had decided to “get out” of the
nursing home on the correct premise,
which was the likely impact of the new legislation at the time, including the
transitional provisions
in the Consequential Provisions Act to which we
have referred, and to which attention should have been directed. Jadwan
submitted that it would not have adopted the strategy
attributed to it by the
primary judge if it had been made aware of the likely effect of the new
legislation on its approval and its
bed licences for Derwent Court.
- Moreover,
Jadwan submitted that the idea that it had decided by 15 July 1997 to get
out of the nursing home was not a case that was
made at trial by the
respondents. Jadwan pointed to paragraph 74(b) of the further amended
defence of the first to third respondents,
which alleged that between 24
and 25 July 1997, Jadwan had decided to cease operating the nursing home. A
corresponding allegation
was made by the fifth respondent in
paragraph 80(b) of its defence. For her part, the fourth respondent alleged
in paragraph 69A(a)
of her defence that by the time Mr Hogan was
engaged (which was on or about 28 July 1997), Jadwan had decided to cease
operating
Derwent Court as a nursing home. Jadwan submitted that a case that
Jadwan had decided on 15 July 1997 to close the nursing home,
and to
negotiate for the sale of the licences, and to adopt a position with the
Department about a proposed relocation that was not
genuine, was not put to any
witnesses, was not opened by any respondent, or closed, or raised by the primary
judge during the course
of the trial.
- Jadwan
relied on the oral evidence of Mr Wicks and Ms Julie Alexander, to
which we referred at [144] and
at [149] to [152], and submitted that the inference that
the primary judge drew, that it had decided to get out of the nursing home by
15 July 1997,
was in error. In summary, that was
because –
(1) Mr Wicks had accepted in cross-examination that
Jadwan had been considering all its options;
(2) Ms Alexander had stated in evidence that they had decided that they wanted
to relocate;
(3) it was not put to Mrs Joan Alexander that Jadwan had decided by
15 July 1997 to sell; and
(4) the intention to rebuild and relocate was supported by other evidence,
including –
(a) the inspection of potential greenfields
sites, which was the subject of oral evidence from Mrs Joan Alexander,
Ms Julie Alexander
and Mr Wayne Alexander, and supported by
contemporaneous notes of Mrs Alexander;
(b) the cost estimates that Mr Alexander obtained from Tasmanian Building
Services, to which we referred at [102] above;
(c) the business plan for relocation dated 13 June 1997 submitted to
Mr Jeff Knight of the Tasmania Fire Service, to which we referred
at [137] above;
(d) the program of works which Jadwan obtained from Tasmanian Building Services
dated 16 July 1997, to which we referred at [154] above;
(e) the letter dated 10 April 1997 from Mr Alexander to
St John’s Park in New Town enquiring about the possible temporary
relocation
of 16 residents while a new home was built, to which we referred
at [111] above;
(f) Mr Alexander’s visit to the Carruthers Wing at New Town on
21 April 1997, his subsequent letter on 5 May 1997, and the
response
of 30 May 1997, to which we referred at [111] above;
(g) Mr Wicks’s file note immediately following the notice of
revocation, in which he wrote, “on what basis has our intention to
rebuild been not accepted. !”, and “We need time to
relocate, retrain, etc”, to which we referred to at [170]-[171] above;
(h) paragraph 45 of the draft affidavit of Ms Julie Alexander, to
which we referred at [266] above;
and
(i) the file note of Mr Wicks dated 26 August 1997, to which we
referred at [279] above which
recorded a conversation with Mr Alexander and which stated, “You
discuss reopening”, and, “...restitution of approvals –
you want to get running
again...”.
(5) Jadwan submitted that most of the steps that it had
undertaken towards relocation, such as the search for suitable land, the
enquiries
about suitable alternative accommodation for its residents, and the
obtaining of cost estimates, were not matters that were conveyed
by Jadwan to
the Department, and that this did not sit with the theory that Jadwan was
engaged in some negotiating ploy with the
Department, or that the proposal to
relocate was some sort of “smokescreen”. And when it was put to
Ms Julie Alexander
in cross-examination that Jadwan was engaged in creating
a “smokescreen”, and that relocation never really had any serious
prospect, she denied it.
(6) Jadwan acknowledged that no further steps were taken to arrange for the
relocation of the residents, or the construction of a
new home on a greenfields
site before the revocation of the approval, but submitted that this feature of
the evidence fell to be
evaluated against the fact that Jadwan’s nursing
home approval was in jeopardy, and under threat of being revoked.
(7) Jadwan also relied on the evidence that, following the determination of the
Full Court appeal in December 1998, to which we referred
at [292] above, in response to a request from
Mr Alexander, on 1 April 1999, Aged Care Developments sent a fee
structure and cost estimate
to him for the construction of a new 51 bed
nursing home (see [294] above), and
on the evidence of Ms Julie Alexander, to which we referred at [296] above, that in July 1999, she
purchased some land at Geilston Bay for the purpose of using it to build a new
nursing home.
(8) Finally, Jadwan submitted that the finding that it had determined on
15 July 1997, before the notice of intention to revoke was
given by the
Department, to close Derwent Court was inconsistent with everything it
subsequently did from that point onwards, including
instructing lawyers to seek
a stay of the revocation, and commencing two proceedings in the Court for the
purpose of restoring its
position as the holder of the
approvals.
Issue (1) – respondents’ submissions
- The
respondents submitted that there was no error in the primary judge’s
findings concerning Jadwan’s decision to “get
out” of
operating a nursing home at Derwent Court. The respondents relied on the primary
judge’s finding at [673] that
Jadwan had formed this intention before
it received the notice of intention to revoke the approval dated 20 July
1997, and submitted
that the finding was supported by a matrix of evidence,
including –
(1) evidence in Mr Wicks’s file note of
7 February 1997 (see [72]
above) that the possible sale of the bed licences was in contemplation at that
time;
(2) Mr Wicks’s file note of 10 June 1997, which recorded
discussion between him and Mr Alexander about the possible sale of
beds
(see [132]-[133] above);
(3) Mr Wicks’s file note of his conversation with Mr Alexander
on 2 July 1997, to which we referred at [144] above, which recorded
Mr Alexander as stating that he was “more inclined to sell now and
get out”;
(4) Mrs Joan Alexander’s note of the same conversation that was
recorded in her diary in which she wrote (inter alia), “we would rather
get out” and “selling beds” (see [145] above); and
(5) Mr Wicks’s file note of 15 July 1997 in which he recorded,
“you have decided to get out” (see [148] above).
- The
respondents submitted that this evidence fell to be evaluated against the
broader context, including the reducing number of residents
at Derwent Court,
which was 46 at the time of Mr Wicks’s note of 15 July 1997.
That note also recorded –
Worst scenario no residents top floor, two-thirds income
drop, 35 residents home not viable.
- The
respondents submitted that, by this statement, Mr Alexander had represented
that Derwent Court would not be viable with only 35
residents in the home.
The broader context also included the difficulties that Jadwan was experiencing
with the Department that are
evident from the notes of the discussions with
Mr Wicks on 2 and 15 July 1997. The respondents submitted that
the idea that some
residents might be relocated temporarily was never seriously
considered as an option, and that it was not a commercial option for
Jadwan.
- As
to Jadwan’s stated proposal to build a new nursing home on a greenfields
site, the respondents submitted that the evidence
about attempts to locate
suitable land did not really amount to much. In the report of the second
Standards Review Panel dated 26
May 1997, the following was
recorded –
Mr Alexander tabled a vision statement and
strategic plan, recently compiled by him, other Directors and Denise Callahan.
He stated
his intention to rebuild the nursing home in the next 2-3 years, but
anticipated difficulty finding the two hectares of land he would
need.
- The
respondents also submitted that there was no error in the primary judge’s
understanding at [447] that the reference in Mr
Wicks’s note of
10 June 1997 to “don’t want to lock into building
though” was a reference to a new building, and not the existing
building (see [132]-[134] above). The respondents submitted that this
accorded with Mr Wicks’s evidence-in-chief, and his different answer
in cross-examination was an example of Mr Wicks giving
a spontaneous,
unthinking response. The respondents also relied on the context of the
reference, which was to the business plan that
had been requested (see [132] above).
- The
respondents disputed that the Tasmania Fire Service was satisfied with the
progress that Jadwan had made in addressing fire safety
issues, and relied on
Mr Wicks’s note of 2 July 1997, which recorded that the Fire
Service had “gone sour” on a downstairs fire door, that it
was “unhappy with 3 year timetable” (which was a
reference to the timeline in the proposal to relocate in Jadwan’s business
plan in its letter of 13 June
1997), and that it wanted a package between
the Commonwealth and it as to requirements. The respondents submitted that there
was
no evidence that Mr Jeff Knight of the Tasmania Fire Service, with whom
Mr Alexander had been dealing, had any involvement in the
internal
memorandum of 17 July 1997 on which Jadwan had relied.
- The
respondents submitted that by the time the notice of intention to revoke the
approval was given, Jadwan was not going to commit
to litigation in
circumstances where it had decided to close the nursing home. This was
consistent with Mr Wicks’s note of
what Mr Alexander told him on
21 July 1997, “There’s so much against you – you
believe any appeal may not be worthwhile” (see [164] above).
- As
to Mr Wicks’s acceptance in cross-examination (see [151] above) that in the period from July to
September 1997, Jadwan had actively considered three options, the
respondents emphasised
that what Mr Wicks ultimately agreed to was a
proposition that there was “never talk or suggestion that Jadwan would
simply give up and walk away without trying to secure something for the asset
that it had”.
- In
response to Jadwan’s submission that the case that Jadwan had decided to
“get out” of Derwent Court by 15 July
1997 had not been run at
trial, the respondents submitted that the real import of the primary
judge’s findings was that Jadwan
had formed that intention by the time it
received the notice of intention to revoke the approval dated 20 July 1997,
as indicated
by [529], [538], and [673] of the primary judge’s
reasons, where his Honour found –
- That
Jadwan had a settled resolve to “get out” is confirmed by
Jadwan’s conduct in the immediate aftermath of it
having been notified of
Ms Halton’s notice of intention to revoke Derwent Court’s approval
as a nursing home. Without
waiting for any legal advice Jadwan had called on Mr
Dellar to tell him that having to meet the cost of staff redundancies would
break the company.
...
- Notwithstanding
Jadwan’s surviving directors’ contrary present recall, the evidence
I have accepted establishes that before
Jadwan had received
Ms Halton’s notice of intention to revoke Derwent Court’s
approval as a nursing home Jadwan had decided
to “get
out”.
...
- The
Court has given its reasons for concluding that Jadwan had never committed
itself to that course. It has given reasons for concluding
that even before
Jadwan had received notice of Ms Halton’s intention to revoke Derwent
Court’s approval as a nursing
home, Jadwan had decided to “get
out” of operating a nursing home at those premises.
- The
first to third respondents submitted that such a case was within the terms of
paragraph 74 of their defence, albeit that they
pleaded that the decision
to cease operating the nursing home was made between 24 and 25 July
1997. The first to third respondents
also relied upon the case which they opened
at trial, which included reference to the file notes of Mr Wicks of 2
and 15 July 1997
and the reference in the latter file note to
“You have decided to get out”, and to a submission that was
made that the reference to “You to stress you will be
relocating” referred to how the circumstances were to be explained to
others. And they relied on paragraph 69A of the amended defence
of the
fourth respondent, which had alleged that by the time Mr Hogan had been
engaged (which was on 28 July 1997), Jadwan had decided
to cease operating
Derwent Court as a nursing home.
- In
summary, the first to third respondents submitted that by 15 July 1997 at
the latest, Jadwan had reached the position where it
was going to get out of the
business, and this involved selling the bed licences. This was brought about as
a result of the difficulties
that Jadwan was having with the Department, and the
diminishing viability of the business as a result of the reduction in the number
of residents, particularly if there were to be no residents on the first floor
and therefore only 35 residents remaining. In addition,
as to a proposed
relocation, the evidence was that the Tasmania Fire Service was not satisfied
with Jadwan’s three year timeline
for relocation during which time it
proposed the home would continue to operate at Derwent Court. And the
respondents submitted that
there was a real question as to whether Jadwan could
find the land, which was reflected in Mr Alexander’s comment to the
second
Standards Review Panel, to which we referred at [322] above. Finally, and by way of summary,
the respondents relied on Jadwan’s failure to commit to the significant
items of expenditure
involved in the installation of a lift and a fire sprinkler
system.
- The
fourth respondent submitted by reference to the terms of Jadwan’s letter
of instructions to Mr Hogan dated 28 July 1997
(see [216] above), and the surrounding
circumstances, including that residents were being moved out of Derwent Court
and that staff had been
given notice, that by the time Mr Hogan had been
retained, Jadwan had decided to sell its bed licences. The fourth respondent
submitted
that from these circumstances, it was to be inferred that Jadwan
accepted that Derwent Court had to close, and submitted that
Mr
Hogan’s retainer was confined to negotiating with the Department
to secure more time within which Jadwan could attempt to sell
its bed licences,
which was supported by the surrounding facts, including that Mr Wicks and
Mr Porter were generally retained. In
other words, Mr Hogan was only
asked to facilitate the particular objectives set out in the letter of
instructions. The fourth respondent
emphasised that Mr Hogan was not
instructed to give advice in relation to the sanctions determination, and was
not instructed to
give advice in relation to the potential ongoing operation of
Derwent Court, because he was instructed on the premise that Jadwan
had decided
that Derwent Court had to close. The fourth respondent submitted that the
penultimate paragraph of Mr Hogan’s letter
to the Department, to
which we referred at [233] above,
confirmed that Mr Hogan’s instructions were that Derwent Court would
cease to operate. The fourth respondent relied
on the primary judge’s
findings at [692] and [703] and submitted that they were not the subject of
challenge by any ground
of appeal –
- I
am satisfied that Mr Hogan’s instructions were that Jadwan did not dispute
Derwent Court had to close and that all of its
residents would be relocated.
Jadwan was not seeking Mr Hogan’s advice as to how to prevent that
occurring, or how Derwent
Court might later relocate. Jadwan was retaining Mr
Hogan to assist it, if possible, to sell Derwent Court’s bed licences
without
pressure and in an orderly manner.
...
- I
reject it was within Mr Hogan’s retainer or any perambulatory duty
associated with his retainer to have provided advice as
to how Derwent Court
might continue to operate. Mr Hogan had been given express instructions that
Jadwan accepted Derwent Court would
have to close. He had been told that Jadwan
had given notice to its staff at Derwent Court and the residents were
leaving.
- The
fourth respondent also submitted that at the time Jadwan consulted
Mr Hogan, it had already decided not to seek an injunction,
and relied on
the evidence of Ms Julie Alexander to this effect, to which we referred
at [219] above. Relying on
Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1 at [309]
(Malcolm A‑JA), [364] (McPherson A‑JA), and [678]
(Ormiston A‑JA), the fourth respondent submitted that there was
no
positive duty on Mr Hogan to give advice on matters that were not directly
within the ambit of his retainer. Further, the fourth
respondent submitted that
the implications of the Aged Care Act and the Consequential Provisions
Act, which were not proclaimed until 3 September 1997, were
novel, complex, and would have been time consuming to work out, and work of that
nature was not incidental to the limited scope
of Mr Hogan’s
retainer.
- The
fourth respondent submitted that Mr Hogan was instructed to liaise with
Mr Wicks in relation to the question whether Jadwan should
seek an
injunction, which he did, and after that time, Jadwan had no further
communications with, and did not give any further instructions
to,
Mr Hogan. The fourth respondent submitted that Mr Hogan’s
involvement ceased on the basis that, through Mr Wicks, Jadwan
was acting
on his advice to seek an injunction.
- The
fourth respondent further submitted, more generally, that in evaluating the
primary judge’s findings in relation to Jadwan’s
intentions, and
what it likely would have done, appropriate weight should be given to the
advantages which the primary judge enjoyed,
and the subtle influences of having
seen two directors of Jadwan give evidence and the better understanding of the
evidence that
the primary judge enjoyed as a result of undertaking a view of the
Derwent Court premises.
Issue (2) – Jadwan’s intention to seek agreement
from the Department to pay for staff redundancies: grounds 7, 8, 11 and
12
Issue (2) - Jadwan’s submissions
- Jadwan
submitted that the primary judge erred in finding that Jadwan’s decision
to accept Commonwealth assistance in relation
to redundancy payments supported
the finding that Jadwan had decided that Derwent Court had to close, and that
Jadwan must have indicated
to the Commonwealth that it was not going to stand in
the way of the transfer of its residents. These findings were the subject of
paragraphs [35]-[37], [349]-[361], and [527]-[571] of the primary
judge’s reasons.
- The
primary judge found at [539] that once Jadwan was notified of the
delegate’s intention to revoke the approval, Jadwan’s
objectives
narrowed to doing what it could to avoid liability for staff redundancies, and
to persuade the Commonwealth to allow it
to sell the bed licences. Critically,
the primary judge held at [568]-[569] that had Jadwan received the advice
that it alleged that
it should have, it would not have acted differently by
forfeiting the certainty of the Commonwealth funding of redundancy payments
in
exchange for enhancing its chances of selling the bed licences.
- Jadwan
challenged the primary judge’s findings at [557] and [652]-[653] that
the Commonwealth’s undertaking to meet the
cost of redundancies came with
an implicit price, namely that Jadwan would terminate the employment of the
staff, and cease the nursing
home business at Derwent Court. Jadwan also
challenged the finding at [537] that it was implausible that Jadwan could
have secured
the Commonwealth’s agreement to fund the redundancies except
on the basis that Jadwan would not stand in the way of the transfer
of its
residents. Jadwan relied on the following –
(1) The existence of more likely explanations for the
Commonwealth’s agreement to fund the redundancy payments, namely political
considerations and the desire to avoid opprobrium as a consequence of the
decision to revoke approval for the nursing home.
(2) The absence of any testamentary evidence to support the findings, where
there was a failure by the respondents at trial to call
any witnesses who had
knowledge of any of these matters, such as Mr Dellar, Mr Hargrave,
Ms Thorpe, or other persons at the Department
with whom Mr Alexander
communicated in circumstances where Mr Alexander had passed away, and could
not give evidence on the topic.
(3) The terms of the letter from Mr Hargrave of the Department dated
1 August 1997, to which we have referred at [248] above, which Jadwan submitted are
inconsistent with the primary judge’s finding that there was any agreement
in place under
which the Department agreed to fund the redundancy payments to
secure Jadwan’s agreement to close the nursing home.
(4) The terms of Mr Wicks’s file note of 6 August 1997, to which
we referred at [263] above, which
recorded, “problem with Dept. over redundancies ... Dept are dragging
their heels”, was inconsistent with the existence of the agreement
that was found to have been made.
(5) The terms of the letter from Mr Hargrave of the Department dated
28 August 1997, to which we referred at [280] above, were also inconsistent with the
existence of such an agreement.
(6) The unlikelihood that in circumstances where Jadwan was by letters from its
solicitors dated 23 and 24 July 1997 threatening
legal action
(see [182]-[189] above), and where the Department was
represented by the Australian Government Solicitor, that an undocumented
agreement of the type
found, involving waiver of rights by Jadwan, and an
agreement of the Commonwealth to pay hundreds of thousands of dollars, would
have been made.
(7) When it was put to Ms Julie Alexander in cross-examination that it was
important to get redundancy funding from the Commonwealth
locked in before
Jadwan took the Commonwealth to Court because of the risk that the funding would
not come, Ms Alexander responded,
“that sounds like rubbish to
me”.
(8) The fact that an advance payment of $250,000 was proposed in late August
1997, to which we referred at [280]
above, well after the last resident had left, and while there was still time to
challenge the revocation decision, was not consistent
with the type of informal
agreement found by the primary judge.
(9) Jadwan submitted that the primary judge was in error at [564] in
equating the value of the assistance for the redundancy payments
with the value
of the bed licences, and relying upon that consideration to support the finding
of the agreement with the Commonwealth.
(10) In referring to the equivalence of the value of the redundancy payments and
the value of the bed licences, the primary judge
at [564], referred to the
file note of Mr Wicks of a conversation with Ms Julie Alexander on
6 August 1997, to which we referred
at [263] above, which contained the words,
“redundancy bill will be over half a million dollars – which
could be value of the bed licences – one will cancel out the
other.
(!)”. Jadwan submitted that the note of Mr Wicks referred to
above did not support the relevant finding because Mr Wicks gave no
evidence about the note, and received no instructions from Jadwan about
redundancies, and when Ms Julie Alexander was asked about
the note, she
gave evidence that she had little to do with redundancies, which were handled by
Mr Alexander;
(11) Jadwan challenged the suggestion that there was in fact an equivalence
between the value of the assistance for the redundancy
payments and the value of
the bed licences, and referred (inter alia)
to –
(a) Mr Hargrave’s estimate in his
letter of 28 August 1997 (see [280] above) that the cost of redundancies
was estimated at $349,634;
(b) the evidence that Mr Alexander told Mr Wicks that Melbourne beds
were $18,000 to $25,000, and were $12,000 in Hobart (see [134] above);
(c) the evidence of an expert valuer, Mr Brown, who was engaged by the
fourth respondent, and who was of the opinion that in situ the licences
were valued at $27,500 each, and perhaps $30,000 or more if they were separated;
and
(d) the contemporaneous evidence of interest in purchasing the licences, and
therefore the existence of demand in the
market.
(12) Jadwan also relied on the evidence that the payment
of redundancies would not in fact have broken Jadwan, and that it had over
$600,000 in cash reserves at the relevant time.
(13) Jadwan further submitted that, had it been given advice to apply
immediately to seek an injunction to prevent closure of the
nursing home, then
no question of redundancies would have arisen, and relied on the passage in the
letters of termination dated 24
July 1997, to which we referred at [195] above, in which Jadwan stated,
“Every effort is being made to reverse the situation and to keep
Derwent Court open”.
(14) Finally, Jadwan relied on the absence of any evidence that the Commonwealth
had relied upon any sort of implicit agreement in
response to Jadwan’s
claims under the ADJR Act.
- Jadwan
also submitted that no respondent made a case at trial that Jadwan had decided
to accept the Commonwealth assistance for redundancy
payments as a form of
compensation for the closure of the nursing home. Jadwan pointed to
paragraph 74(d) of the further amended
defence of the first to third
respondents which went no further than to allege that between 24 and
25 July 1997, Jadwan was negotiating
redundancy payments for staff. There
was a corresponding plea by the fourth respondent in paragraph 69A(c) of
her amended defence,
and by the fifth respondent at paragraph 80(d) of its
defence. Jadwan submitted that none of the respondents pleaded the kind of
tacit
agreement with the Commonwealth that was the subject of the primary
judge’s findings, that nothing was put to the relevant
Jadwan witnesses,
and that the respondents did not make that allegation during the course of their
openings. Jadwan submitted that
the only place in the trial where the issue was
raised was in the course of exchanges between the primary judge and senior
counsel
for the fourth respondent, and even then only in a fleeting way during
closing submissions in the context of a discussion about the
market value of the
bed licences. Jadwan submitted that the point was only floated by the primary
judge, was not overwhelmingly received
by senior counsel for the fourth
respondent, was not put to senior counsel for Jadwan, and was not the subject of
any amendment to
the pleadings. Furthermore, Jadwan submitted that its principal
case was that Jadwan should have been in the position where it sought
interlocutory relief from the Court by 23, 24, or 25 July 1997, and if
it had been successful, the question of redundancies would
not have
arisen.
Issue (2) – respondents’ submissions
- The
respondents submitted that the primary judge’s finding that the funding of
redundancies by the Commonwealth came with an
implicit price, namely the
dismissal of the staff and the cessation of the nursing home business, was not a
finding as to a legally
enforceable agreement, but simply a finding as to what
the facts were at the time. To put it another way, the occasion for the payment
of redundancies was the closure of the business and the dismissal of all the
staff. This was to be understood in the surrounding
context of the determination
of the Commonwealth to see Derwent Court closed, and its residents transferred
to other homes. The respondents
submitted that part of the context was that once
Jadwan failed to sell its licences within the 48 hour window period which
Mr Dellar
had given to Mr Alexander, the Department would no longer
approve a transfer of the licences. However, the funding of redundancies
was not
compensation for the bed licences. The respondents submitted that
Mr Wicks’s file note of 24 July 1997 (see [188] above)
supported an inference that Mr Alexander gave notice to the staff on
24 July 1997, only after obtaining the agreement of the Commonwealth
to
fund 80% of the cost of redundancy payments. The respondents submitted that
the significance of these circumstances is that Jadwan
was not in a strong
negotiating position, and it could not risk the Commonwealth not assisting with
the redundancy payments.
- The
respondents submitted that in evaluating the significance of the value of the
bed licences, the correct inquiry was to be directed
to what Jadwan perceived
the value of the licences to be at the relevant time in 1997, and the evidence
of that was in Mr Wicks’s
notes of 7 February and 10 June
1997, which supported a finding that Mr Alexander thought that the value
was $12,000 per bed, which
accorded with the primary judge’s finding
at [567]. The respondents relied on Mr Wicks’s note of
6 August 1997, when
Mr Wicks took instructions from Ms Julie
Alexander for the purposes of drafting an affidavit, where he
wrote –
- redundancy bill will be over half a million dollars
– which could be value of the bed licences – one will cancel out
the
other. (!)
- The
respondents submitted that Ms Alexander was operating on the basis that the
bed licences had a value similar to Mr Alexander’s
understanding. A
figure of $500,000 for redundancies appeared in three versions of a draft
affidavit of Ms Alexander prepared by
Mr Wicks in contemplation of
proceedings under the ADJR Act, and a figure of $400,000 was
recorded in one of Mr Wicks’s notes of a conversation with
Mr Alexander on 22 July 1997. The
value of the bed licences was
relevant to the primary judge’s findings at [562]-[564], which
were –
- Had
the value of Derwent Court’s bed licences significantly exceeded the cost
of Derwent Court’s staff redundancies it
might be plausible to suggest
that had Jadwan been competently advised it would have been prepared to take the
risk of declining
the Commonwealth’s offer in order to put pressure on the
Department to reconsider its (passed) deadline of 48 hours to sell
them.
- But
that was not the case.
- The
total Jadwan would have expected to get for the sale of Derwent Court’s
bed licences if it had been permitted to sell them
was no more than roughly
equivalent to the over half a million dollars it was liable for with respect to
redundancy payments.
- As
to various statements in the documentary evidence about the burden that
redundancies would place upon Jadwan, the respondents relied
on the balance
sheet of the trust for the year ended 30 June 1997 which, while showing a
substantial cash balance of $836,881, recorded
substantial current
liabilities in the sum of $1,095,495 in the beneficiary current account,
and recorded the net asset position
as $100, with no provision for
liability for the redundancy payments.
Issue (3) – Jadwan would not have succeeded in
obtaining an injunction or other interlocutory relief to prevent the closure
of
the nursing home: grounds 13 and 14
Issue (3) - Jadwan’s submissions
- Jadwan’s
case at trial was that an application by it for injunctions to preclude the
operation of the decision to revoke the
approval of Derwent Court would have
been successful. That case was pleaded in paragraph 68 of Jadwan’s
second further amended
statement of claim, and was rejected by the primary
judge. The primary judge also held at [490] that, had they been commenced,
proceedings
seeking an injunction would not have prevented Ms Halton of the
Department making an effective decision to revoke the approval of
Derwent Court,
because Ms Halton would have been advised before making her final decision
that she did not need to rely on the report
of a Standards Review Panel in order
to revoke the approval of Derwent Court as a nursing home. Jadwan submitted that
there were
four elements to the primary judge’s reasoning. First,
that Jadwan could not have applied for any interlocutory relief based upon
s 5 of the ADJR Act prior to Ms Halton’s revocation
decision on 6 August 1997: see [473] of the primary judge’s
reasons. Second, it was doubtful that, prior to receipt of the decision
and the reasons on 6 August 1997, Jadwan could have made a successful
application
on the ground that Ms Halton proposed to engage in conduct that
would engage s 6 of the ADJR Act on the ground that she proposed
impermissibly to give weight to the reports of the Standards Review Panels:
see [478], [482] and
[484] of the primary judge’s reasons.
Third, if Jadwan had alleged that Ms Halton’s proposed conduct
was unlawful because she proposed to take account of the reports of
the
Standards Review Panels in making her decision (as the Full Court ultimately
held she need not have, but did), then this would
only have alerted the
Department to the error, which could then be avoided and a lawful decision made
without reliance on the reports:
see [479], [484]-[492], and [520] of
the primary judge’s reasons. This finding reflected the reasoning of the
Full Court in
Jadwan No 2. Fourth, the primary judge relied
upon the fire risk at Derwent Court as militating against interlocutory
relief.
- Jadwan
submitted that the errors in the primary judge’s reasons were as
follows –
(1) the primary judge’s reasons assumed
incorrectly that the sole basis for seeking relief that was advanced on behalf
of Jadwan
at trial was under the ADJR Act, whereas Jadwan pleaded and ran
its case on the basis that relief was also available under s 39B of the
Judiciary Act and s 23 of the Federal Court of Australia Act,
that had been pleaded, opened, and closed by Jadwan, which the primary judge did
not consider;
(2) the primary judge erroneously assumed that Jadwan’s case required it
to show that it would have been successful in setting
aside the financial
sanctions determination from a date prior to 1 October 1997 (see [648]
of the primary judge’s reasons);
(3) the notice of intention to revoke the approval of Derwent Court dated
20 July 1997, to which we referred at [160] above, was accompanied by a statement
of reasons which disclosed the erroneous intention to rely upon the reports of
the Standards
Review panels, and therefore the primary judge was in error
at [482] in finding that until Jadwan received the revocation decision
on
6 August 1997, it would have considerable difficulty in establishing that
Ms Halton proposed to rely upon the Standards Review
Panel reports;
(4) following service of the notice of intention to revoke the approval, the
Department notified residents that Derwent Court would
close, and arranged for
the relocation of all the residents before 6 August 1997, which rendered it
arguable that the Commonwealth
proceeded on the basis that its decision was
final, thereby arguably making that decision amenable to the Court’s
powers under
s 5 of the ADJR Act;
(5) the prospects of obtaining interlocutory relief were good, and the fact that
the exercise of the power to revoke approval was
ultimately held to be unlawful
was a powerful indication that a triable issue would have been established;
(6) the assumption that the Department would have realised that it could make
the decision lawfully without reference to the reports
of the Standards Review
Panels was ambitious, was not the subject of evidence from any witness, and
would not have emerged in the
rushed circumstances of an application for
interlocutory relief in July or August 1997;
(7) even if an argument were made on an application for interlocutory relief in
July or August 1997 that the delegate could revoke
the approval without
reference to the reports of the Standards Review Panels, there was enough
material that pointed to various irregularities
to establish a triable issue
about the lawfulness of the proposed revocation;
(8) on the question of balance of convenience, the issues were overwhelmingly in
Jadwan’s favour, and the most important factor
was the impact of the new
legislation on Jadwan’s position should it not have extant approval and a
resident patient on the
day before the commencement date of the Aged Care
Act; and
(9) in relation to any concerns about care and fire risk, there was evidence
available from medical practitioners and relatives about
the quality of care,
and the fire risk could have been addressed by temporarily relocating the
upstairs residents.
- Jadwan
made a number of submissions by way of challenge to the primary judge’s
finding at [487]-[490] that, if proceedings had
been commenced by Jadwan,
Ms Halton would have been advised that she could revoke approval without a
report of a Standards Review
Panel, thereby being able to “mend her
hand”. Jadwan submitted that in the circumstances of an urgent application
for
interlocutory relief, it was not to be supposed that the point would become
so apparent that it would defeat an application for an
interlocutory injunction
in July or August of 1997. Jadwan relied on the facts that the reasons of
Heerey J in Jadwan No 1 made no reference to the point, there
was no evidence that the point was argued before Heerey J, and that the
point arose only on
the appeal to the Full Court, which was argued in
November 1998. Indeed, the reasons of Heerey J proceeded on the
premise that the
delegate was entitled to take account of a Panel report, but
that there was error because the Panel was invalidly constituted. Jadwan
submitted that no witness from the Commonwealth had been called to support a
finding that the point had been conceived and would
have been deployed
in 1997, in circumstances where the evidence suggested it was not argued
before Heerey J in 1998. Jadwan submitted
that a fresh revocation decision
would amount to a novus actus interveniens, on which the respondents
bore the onus of proof. Further, Jadwan relied on the reasons of Mr Griew
dated 13 October 1997, who conducted
the administrative review of the
revocation decision under s 105AAB of the National Health Act, to
which we referred at [284] above.
The significance of those reasons, Jadwan submitted, was that the Commonwealth
perpetuated its error by relying upon the
reports of the invalidly constituted
Standards Review Panels, and that this militated against the finding that at any
point prior
to 1 October 1997, the Commonwealth would have been alert to
the idea that it could revoke the approval without reliance on those
reports.
Additionally, Jadwan submitted that in any event, it would have been difficult
in the context of an application for interlocutory
relief for the Commonwealth
to “mend its hand” simply by omitting reference to the impugned
reports, but at the same
time acting upon, or adopting the conclusions of the
Panels recorded in those reports.
- Jadwan
further submitted that the primary judge’s reasons proceeded on the
premise that the only arguable ground on which Jadwan
could have challenged the
decision to revoke the approval was the invalidity of the report of the second
Standards Review Panel,
when this was not so. Jadwan relied on the draft grounds
of review that had been prepared by Mr Porter and Mr Wicks, but not
acted
upon. Those grounds included an allegation that Jadwan had been denied
natural justice, and Jadwan submitted that, competently represented,
Jadwan
would have been able to persuade a judge of the Court that there were triable
issues.
- As
to the balance of convenience, Jadwan submitted that competently represented,
Jadwan would have mounted a challenge to the reports
of the Standards Review
Panels by relying on the ostensible bias or conflict of interest of two members
of the first Panel, the irregularities
in the composition of the second Panel,
and the fact that the second Panel was not truly independent as Ms Halton
represented it
would be (see [105]
and [122] above). Jadwan submitted
that, competently represented, it would also have challenged the accuracy and
fairness of the Panels’
findings. Amongst other things, Jadwan submitted
that it had available to it evidence from Dr Timmins, who visited Derwent
Court
regularly and who could have attested in a favourable way to the
conditions at Derwent Court, and to the potential harm to dementia
patients
should unnecessary changes be made to their environment. Prior to the closure of
Derwent Court, Dr Timmins had up to 20
patients who were resident
there, and he visited the home weekly. Dr Timmins gave evidence that his
impression was that the standard
of nursing care at Derwent Court was excellent,
and that he could not recall a single major problem that he had with any of the
nurses
not providing care. Dr Timmins stated that patients with dementia do
not tolerate change, that many of his patients would not have
understood the
change, and that at the time he was upset that the closure of Derwent Court was
going to affect them in some adverse
way. Dr Timmins was taken to a letter
to the editor of the Hobart Mercury which was published on 25 July 1997
which he wrote and
to which 18 other medical practitioners put their names.
The medical practitioners stated in the letter –
...
Collectively, we have had scores of years attending to the medical needs of
residents at Derwent Court Nursing Home and consider
ourselves well qualified to
comment on the nursing attention given. It is not just formal care, it is
overwhelmingly generous and
indeed loving care. The nurses and aides work in the
most difficult of circumstances, as those looking after the frail and severely
demented would well know, and do so with humour, willingness and respectful
professionalism. That 65 jobs are in jeopardy and the
lives of 46 frail
residents are to be disrupted should not in any way be seen to reflect the
excellent standards of nursing care
that have been maintained over many
years.
The inference that nursing care has been inadequate or unprofessional should be
refuted absolutely.
- Jadwan
submitted that opinions to this effect were available to Jadwan in
July 1997 on the question of balance of convenience and
to rebut the
assessments in the two impugned reports of the Standards Review Panels.
- Additionally,
Jadwan submitted that evidence from relatives of residents of Derwent Court was
available on the question of balance
of convenience. At trial, evidence was
given by Mr Weston, whose mother had been a resident at Derwent Court
immediately before its
closure. Mr Weston described the level of care that
his mother had required, stated that his mother was happy at Derwent Court, that
she did not complain about the care that she was given, that she did not want to
leave Derwent Court, and that he was happy with
the care that his mother was
given. Evidence was also given by Mr Measham, who was a retired Baptist
minister, who visited his mother
at Derwent Court at least three times per week.
Mr Measham described the environment in which his mother lived at Derwent
Court,
and stated that he had no reason to doubt her comfort, that there was a
sense of care there, that his mother had not made any complaints
to him while
she was at Derwent Court, and that when the closure was announced, he did not
want his mother moved.
- At
the trial, Jadwan also adduced evidence from a retired officer of the Tasmanian
Department of Health and Community Services, Mr
Manson. Mr Manson
stated that he was directly involved in the regulation of Derwent Court, that he
had visited the home approximately
25 times, that he was very familiar with
the home, and that the care provided by Derwent Court matched other nursing
homes generally
quite well. Mr Manson had been the author of the report to
which we referred at [49]
to [51] above.
- As
to fire safety, Jadwan relied on the contents of the memorandum to the Chief
Fire Officer of the Tasmania Fire Service dated 17
July 1997, to which we
referred at [156]-[159] above, which proposed a press release
that stated that the Fire Service and the management of Derwent Court had worked
closely to
improve the level of fire safety in the building, that all
requirements had been addressed, and that many recommendations had been,
or were
in the process of being adopted. Jadwan submitted that the contents of the
memorandum reflected the evidence that was available
if evidence had been sought
from the Fire Service, and in any event, components of the information in the
memorandum concerning the
steps taken to improve the level of fire safety were
within the knowledge of Jadwan.
- Finally,
on the question of balance of convenience, Jadwan submitted that if it had not
obtained interlocutory relief that enjoined
the revocation of approval, then
final relief would not have been available, because of the effect of
s 7(1)(a) of the Consequential Provisions Act, to which we referred
at [34] and [297]-[299] above.
Issue (3) – respondents’ submissions
- The
respondents accepted that the potential relief that was available to Jadwan on
an interlocutory basis was not confined to the
ADJR Act, and at least the
fifth respondent accepted that Jadwan could have established a triable issue.
The respondents also accepted that
Jadwan did not need to demonstrate that it
would succeed in having the sanctions determination set aside effective from a
date prior
to 1 October 1997. However, the respondents submitted that the
balance of convenience weighed heavily against granting any relief
in relation
to the revocation decision. The respondents pointed to the evidence of the
history of non-compliance that was to be found
in the several reports that were
available to the Commonwealth from December 1988. The respondents identified the
fact that the Chair
of the second Panel, Dr Flett, had specialist
qualifications in geriatric medicine. The respondents emphasised that the
reports that
were available to the Commonwealth measured the performance of
Derwent Court against required standards, whereas the evidence to
which Jadwan
had pointed, such as that of Dr Timmins, or of relatives of residents, did
not.
- The
respondents submitted that on the question of the balance of convenience, the
commercial interest of Jadwan in engaging the transitional
provisions of the
Consequential Provisions Act would not have carried much weight when
balanced against the welfare, health, and safety of elderly dementia patients
housed in what
was, on the material available to the Commonwealth, a
sub-standard nursing home with a continuing fire risk in respect of which Jadwan
had been unwilling to expend money. The three main items on which the
respondents relied were: (1) the failure of Jadwan to install
a sprinkler
system; (2) the failure to install a lift; and (3) the failure to
install separation doors to compartmentalise smoke
and fire.
- The
fourth respondent relied on other matters, including that the effect of granting
an injunction would be to increase the number
of Commonwealth funded places,
with a consequential financial burden on the Commonwealth. Alternatively, the
fourth respondent submitted
that only a small number of places were capable of
undertaking the transition to the Aged Care Act (see [389] below), and this favoured refusal of
interlocutory relief. The fourth respondent also submitted that the prospect of
the Commonwealth
making an ex gratia payment to Jadwan under s 34 of
the Audit Act 1901, as then in force, was a factor against granting
interlocutory relief.
Issue (4) – Jadwan would not have applied for an
injunction even if it had been advised of the impact of the new legislation:
grounds 15 and 16
Issue (4) - Jadwan’s submissions
- Issue (4)
is concerned with causation, and Jadwan challenged the primary judge’s
findings at [510]-[526] that if it had been
advised in late July 1997
of the new legislation, it would nonetheless not have instructed its lawyers to
seek an interlocutory injunction.
The primary judge’s findings included
that competent advice would have alerted Jadwan to the fact that in order to
transition
to approval under the Aged Care Act, in addition to
establishing the invalidity of the revocation decision, it was also necessary to
retain at least one resident until
the Act came into force on 1 October
1997, which the primary judge held appeared to be widely known. In addition, the
primary judge
held that competent advice would have alerted Jadwan to all the
difficulties, the subject of the primary judge’s findings,
and to which we
have referred at [310 (18)-(20)] above. The primary judge held that
competent advice would have been to the effect that, subject to interlocutory
relief, Jadwan
would have to retain any residents beyond 6 August 1997 at
its own expense until the revocation decision was set aside. And the primary
judge held that competent advice would have been that because of the apparent
fire risk, success in obtaining injunctive relief could
not be assured. The
primary judge referred to Derwent Court’s payroll expenditure
of $70,000 per fortnight, and held that upon
receiving competent advice,
Jadwan would have chosen to resume cooperating with the Department, and would
not have sought to prevent
the removal of Derwent Court’s residents.
- Jadwan
submitted that the findings were made despite the
following –
(1) the evidence of Mrs Joan Alexander and
Ms Julie Alexander that they would have given instructions to seek an
injunction;
(2) the evidence that when Mr Hogan advised Jadwan that it should seek an
injunction to protect its position, it instructed its lawyers
to do so; and
(3) the evidence in the file note of Mr Wicks that Mr Alexander was
surprised when told by Mr Wicks on 12 August 1997 that an application
for an injunction would not be proceeding.
- Jadwan
also submitted that the findings were based upon other findings, namely that
competent advice would have been that an application
for an injunction would not
have secured maintenance of Derwent Court’s approval status, which Jadwan
also challenged as part
of Issue (3). Jadwan submitted that the primary
judge did not ever consider what Jadwan would have done had Jadwan been
reasonably
advised that an application for an injunction would probably have
succeeded.
Issue (4) – respondents’ submissions
- The
respondents addressed the evidence of Mrs Joan Alexander and
Ms Julie Alexander in relation to what Jadwan would have done had
it been
given advice that it would lose its business if it did not apply for an urgent
injunction. The respondents submitted that
the responses in evidence should be
viewed cautiously because the questions to which the evidence responded did not
take account
of questions of risk, prospects of success, or the cost of
litigation.
- The
fifth respondent submitted that the evidence of Mrs Joan Alexander and
Ms Julie Alexander was unsatisfactory, and self-serving.
It pointed to the
evidence that on 29 July 1997, there were 15 residents left in the
nursing home, and on 30 July 1997, there were
nine. By reason of the
sanctions determination, any new residents were not entitled to a Commonwealth
benefit. It was submitted that
Jadwan had not established that it could
economically have continued to conduct the nursing home with the sanctions in
force, and
that Jadwan would not have committed the substantial funds necessary
to continue its business. In this respect, reliance was placed
on the evidence
in cross-examination of Mrs Joan Alexander and Ms Julie
Alexander, to which we have referred at [307] and [309] above. The fifth respondent also
relied on what it submitted was the consistent reluctance of Jadwan to spend
money on things such
as a lift, a sprinkler system, or the relocation of first
floor residents, or to take any steps beyond an aspirational business plan
to
move to a new site as undermining any inference that Jadwan would have devoted
resources to seeking an injunction, and keeping
Derwent Court
operational.
Issue (5) – proceedings to seek to have the financial
sanctions lifted would not have succeeded: grounds 17, 18 and 19
Issue (5) - Jadwan’s submissions
- Issue (5)
relates to the financial sanctions determination dated 3 February 1997. The
significance of this issue is that the respondents
alleged that by reason of the
financial sanctions determination, Derwent Court was bound to close in any
event. The first challenge
made by Jadwan is that it submitted that the primary
judge’s consideration of the issue proceeded upon a misconception that
the
financial sanctions had to be lifted by 1 October 1997. Jadwan submitted
that, contrary to the statement at [648] of the primary
judge’s
reasons, no concession to this effect was made by Jadwan at trial, and that no
respondent made the case at trial that
the financial sanctions had to be lifted
by 1 October 1997. Jadwan submitted that its case was that the financial
sanctions had to
be lifted eventually in order for Derwent Court to be
financially viable, but that did not have to happen by 1 October 1997.
Jadwan
submitted that it needed only one resident occupying a bed at Derwent
Court on 30 September 1997 in order to become an approved provider
under
the Aged Care Act.
- The
second challenge made by Jadwan is to the primary judge’s assumption that
Jadwan had only 28 days from the date of the determination
on
3 February 1997 within which to apply to have it set aside. Jadwan
submitted that the primary judge was in error in considering
that an application
could be made only under the ADJR Act or by a proceeding in the High
Court under s 75(v) of the Constitution, and in respect of the
latter, was in error at [599] in assuming that there was a 28 day time
limit in respect of such a proceeding.
Jadwan submitted that there was no time
bar to a proceeding under s 75(v) of the Constitution, although
delay might be relevant to the question of relief. Further, and as we have
already mentioned, Jadwan submitted that the
primary judge overlooked the
jurisdiction of this Court under s 39B of the Judiciary Act for
which there was also no time bar, although delay was also relevant to the
question of relief. It followed, Jadwan submitted,
that the primary
judge’s analysis at [607]-[622] of the question whether an extension
of time would have been given by the
Court in relation to an application by
Jadwan under the ADJR Act was unnecessary, because Jadwan did not need to
make such an application. And if delay in bringing proceedings became relevant,
Jadwan
submitted that the relevant delay from February to July 1997 was not
unreasonable, that there were explanations for the delay, namely
that Jadwan had
been endeavouring to satisfy the Department that sanctions should be lifted
without the need to resort to legal proceedings,
and that Mr Wicks had
erroneously advised Jadwan on 26 February 1997 that there was nothing he
could do in relation to the financial
sanctions (see [94] above), and that there was in any event
no prejudice to the Commonwealth as a result of the delay.
- Jadwan
submitted that the primary judge was in error in placing no weight on the
consent orders of North J made 22 June 2005. While
accepting that the
orders of North J did not give rise to a res judicata or an issue
estoppel, Jadwan submitted that the primary judge went too far in saying that no
inference should be drawn about the Commonwealth’s
reasons for consenting
to the orders, and that it should not lightly be assumed that the Commonwealth
would consent to an order for
which there was no basis in fact or law,
particularly when no witness from the Commonwealth was called to give
evidence.
- Jadwan
also submitted that the primary judge too lightly brushed aside the conflicts of
interest that Jadwan alleged affected two
members of the first Standards Review
panel, namely Mr Van der Schoor and Ms Parr. Jadwan submitted that
Mr Van der Schoor’s
conflict of interest was that he was employed by
Aged Care Tasmania, which was an industry association of religious, charitable,
and benevolent nursing homes that were competitors of Jadwan. Jadwan submitted
that this apparent conflict manifested itself when,
according to the evidence
comprising Mr Wicks’s letter to Mr Dellar of the Department
dated 12 February 1997 to which we referred
at [77] above, Mr Alexander claimed that
he had learned that Mr Van der Schoor had mentioned to one or more members
of Aged Care Tasmania
that Derwent Court was about to close and that the beds
would be available for allocation.
- In
relation to the chairperson of the first Panel, Ms Parr, Jadwan submitted
that her conflict was that she sat on the board of St
Ann’s Nursing
Home, which was a rival nursing home situated across the road from Derwent
Court. Jadwan submitted that the conflict
became apparent to Jadwan later when,
after Derwent Court had closed, a real estate agent engaged by Jadwan reported
that Ms Parr
had made an approach with a view to leasing the premises for
use as nursing home accommodation. Jadwan pointed to the report of the
first
Standards Review Panel chaired by Ms Parr which stated in the first line of
its reasons for decision on p 14 of the report,
“The physical
structure of Derwent Court is completely inappropriate for the purpose of a
Nursing Home”. Jadwan relied on the evidence of Mr Wicks at trial
that he knew Ms Parr personally, and knew that she was on the board of
St Ann’s Nursing Home, and that Mr Wicks did not raise this
issue with Jadwan, including at the conference with Mr Porter on
5 August 1997, to which we referred at [258] above. Jadwan also sought to rely upon
several entries in the first to third respondents’ itemised bill of costs
for the proceeding
below as evidence that the first to third respondents had
obtained a proof of evidence from Ms Parr, but did not call her at the
trial.
- Jadwan
also submitted that a third member of the first Standards Review Panel,
Ms Cooper, was not qualified to be a member of the
Panel for the reasons
found by Heerey J in relation to the second Standards Review Panel, to
which we referred at [291] above.
Jadwan submitted that there were other irregularities relating to the report of
the first Standards Review Panel, including
a failure to give the correct notice
as required by reg 28 of the National Health Regulations, which was
one of the grounds on which Heerey J found that the report of the second
Standards Review panel should be declared void.
- In
summary, Jadwan submitted that conflicts of interest affecting two members of
the first Panel, the lack of qualifications of a
third member, and
irregularities affecting the notice that was given to Jadwan, were sufficient to
invalidate the financial sanctions
determination based upon the first
Panel’s report, and that a Court would have so held if an appropriate
application had been
made in 1997 or 1998. Jadwan submitted that unlike the
revocation decision, the financial sanctions determination was dependent upon
a
report of a validly constituted panel, and relied on s 45E(10)
and (11) of the National Health Act, to which we referred
at [17] above. Jadwan submitted
that the Minister’s determination was therefore affected by jurisdictional
error and was therefore
amenable to relief in the exercise of the Court’s
jurisdiction under s 39B of the Judiciary Act.
- In
addition, Jadwan submitted that one other way of overcoming the financial
sanctions determination was to comply with the relevant
standards to the
Department’s satisfaction. Jadwan submitted that this was the subject of a
pleading in its reply, its opening
at trial, evidence at trial, and closing
submissions. Jadwan relied on the evidence of an expert witness, Ms Horgan,
to whom we referred
at [303]
to [305] above, that it was most
likely that Derwent Court would have become compliant with standards applicable
to an approved provider
when accreditation standards under the Aged Care Act
came into effect on 1 January 2000.
- Jadwan
submitted that the primary judge did not make any findings as to whether
Mr Wicks or Mr Porter should have advised Jadwan to
apply to have the
financial sanctions determination set aside. Jadwan contended that Mr Wicks
and Mr Porter, as part of their retainers,
should have considered the
financial sanctions determination, as it affected the viability of the nursing
home business, which at
least Mr Wicks understood. Jadwan submitted that
Mr Wicks and Mr Porter breached their duties of care by failing to
advise Jadwan
to apply to the Court to have the determination set
aside.
Issue (5) – respondents’ submissions
- As
to the financial sanctions determination, the respondents submitted that
Jadwan’s pleadings alleged causation of damage only
by reference to a lost
opportunity and a failure to make an application for an injunction to prevent
the operation of the revocation
decision (see paragraphs 67-69A of
Jadwan’s second further amended statement of claim).
- The
respondents further submitted that there was no triable issue that could have
been demonstrated in order to support an application
for any interlocutory
relief, save for the supposed conflict of interest or apprehended bias of
Ms Parr and Mr Van der Schoor. The
respondents submitted
that there was no evidence at trial that St Ann’s nursing home, on
whose board Ms Parr sat, was a competitor
of Derwent Court, which
specialised in psychogeriatric care. Further, when regard was had to the
requirements of the regulations
(see [22]-[27] above), the participation and
experience of Ms Parr and Mr Van der Schoor in the industry were
qualifying rather than disqualifying
factors. The respondents opposed
Jadwan’s application to adduce as evidence on the appeal the bill of
costs, referred to at
[364] above.
They submitted that no Jones v Dunkel inference could arise from their
failure to call Ms Parr.
- The
respondents submitted that the order made by North J on 22 June 2005
on which Jadwan relied (see [362]
above) was a consent order to bring to an end what was futile litigation. The
respondents submitted that the sanctions determination
was then no longer of any
practical effect, because the nursing home was no longer operating.
- The
respondents also submitted that the Commonwealth was set upon a course to have
the nursing home closed, and if there was any invalidity
in the sanctions
determination, it would have taken steps to achieve the same outcome on a valid
basis. In this respect, the respondents
pointed to the report of the second
Standards Monitoring Team, in respect of which no vitiating error such as bias,
or conflict of
interest, was alleged to exist.
Issue (6) – Rae & Partners retainer did not extend
to giving legal advice on Jadwan’s rights under the National Health Act in
respect of the financial sanctions: grounds 1 and 2
Issue (6) – Jadwan’s submissions
- The
only basis on which Jadwan maintained that Rae & Partners was liable to it
was for a failure to give advice to challenge the
financial sanctions
determination. The primary judge found that Rae & Partners was not retained
by Jadwan to give it advice in
respect of the financial sanctions determination,
and that its retainer was limited to providing a letterhead for Jadwan’s
purposes, and to stand ready for such further specific tasks that it might be
instructed to undertake: see [29] and [223]-[309] of
the primary
judge’s reasons. Jadwan challenged this finding, and relied on the
following evidence –
(1) the terms of Jadwan’s letter of retainer to
Rae & Partners dated 7 February 1997 (see [70] above), which enclosed a copy of the
Department’s letter notifying the financial sanctions determination and
stated it sought
“initial advice in the early stages, but it is our
hope that by our genuine actions to satisfy the Department’s concerns, the
matter will be resolved without legal involvement”;
(2) immediately after receiving instructions, Mr Wicks went to the Law
Society library and researched the relevant law (see [74] above);
(3) on 12 February 1997, Mr Wicks wrote to the Department stating that
Jadwan had “sought our advice about its present dealings with the
Department” and sought assistance “with our consideration of
this matter and the advising of our client” (see [77] above);
(4) on 5 March 1997, Mr Wicks wrote again to the Department confirming
the “opinion of both ourselves and our client” that the
report on which the financial sanctions determination was based was unfair and
inaccurate (see [97]-[98] above);
(5) Mr Wicks admitted that he was aware from early in the piece that the
financial sanctions determination, if not lifted, would
eventually result in the
closure of the nursing home;
(6) at a meeting with the Alexanders on 26 February 1997, Mr Wicks
advised them that if they could not comply with the standards
“the
ultimate option may only be to sell the beds” (see [93] above);
(7) Julie Alexander gave evidence that she asked Mr Wicks for advice about
the financial sanctions determination at the meeting on
26 February 1997
(see [94] above);
(8) on 8 April 1997, Mr Wicks met with Mr Alexander and made a
note that it was “pointless challenging composition/bias of SRP anyway
... so AAT review is less likely of their actions/decisions”
(see [108] above);
(9) on 10 June 1997, Mr Wicks had another meeting with
Mr Alexander at which the lifting of the financial sanctions was discussed
(see [134] above); and
(10) on 23 June 1997, Rae & Partners submitted an account to Jadwan,
including for “numerous attendances on Directors to discuss
Departmental requirements and to consider the Company’s position and
advise” and for consideration of the report on which the financial
sanctions determination was based (see [141] above).
- Jadwan
submitted that the primary judge’s conclusion that these matters did not
justify a finding that Rae & Partners was
retained to provide legal advice
on the financial sanctions determination was based upon –
(1) an unwarranted discounting of concessions made by
Mr Wicks ([252], [270] and [284] of the primary judge’s reasons);
(2) a misreading of Mr Wicks’s note of the 26 February meeting
([270]-[272] of the primary judge’s reasons);
(3) an implausible conclusion that Mr Alexander, not Mr Wicks, spoke
the critical words at the meeting on 8 April recorded by Mr
Wicks in
his note ([284]–[289] of the primary judge’s reasons);
(4) a failure to take account of the meeting on 10 June 1997;
(5) a failure to take account of the terms of the invoice raised by Rae &
Partners; and
(6) a general failure to consider the entirety of the
evidence.
Issue (6) – respondents’ submissions
- In
relation to Mr Wicks’s initial retainer when he was employed by Rae
& Partners, senior counsel for the first to third
respondents accepted that
Mr Wicks was retained to give legal advice, but only in the broadest
possible terms. Until 10 June 1997,
when Mr Wicks was asked to assist
with a business plan, he was not asked to give advice on any particular point.
Counsel submitted
that Mr Wicks was not asked to give legal advice about
the sanctions, but he was engaged to assist Jadwan in its dealings with the
Department, when requested. Counsel relied on the terms of
Mr Alexander’s letter of 7 February 1997, and
Mr Wicks’s note
of the initial meeting on 7 February 1997, to
which we have referred at [70] and
[72] above. Counsel submitted that
Jadwan wanted to turn things around with the Department by their own dealings,
which was supported
by the reference in Mr Wicks’s note to an earlier
bad report in 1991, where the report had been altered to Jadwan’s
satisfaction.
Counsel also relied on Mr Wicks’s file note of the
meeting on 26 February 1997 with Mrs Joan Alexander and
Ms Julie Alexander,
to which we referred at [93] above, and submitted that it did not
support Jadwan’s argument that Mr Wicks was instructed to do anything
about the sanctions,
or advised them that nothing could be done. Counsel
submitted that the evidence in Mr Wicks’s note of the meeting was to
be
preferred to Ms Julie Alexander’s evidence in cross-examination
(see [94] above).
- Senior
counsel for the first to third respondents submitted that Mr Wicks’s
letter of 5 March 1997 to Mr Dellar of the Department
(see [97] above) was significant to the question
of the scope of the instructions which Jadwan gave to Rae & Partners.
Mr Wicks gave evidence
that Jadwan was responsible for drafting the
submissions that were attached to the letter, and in relation to the letter
itself.
Although Mr Wicks did not recall obtaining approval from
Mr Alexander, he said that it was his clear instructions not to have any
communications with the Department without Jadwan’s approval. Counsel
relied on the terms of the letter of 5 March 1997, and
its focus on
resistance to revocation of the approval of Derwent Court, and to the public
dissemination of the report of the first
Standards Review Panel, rather than the
financial sanctions determination. Senior counsel for the first, second, and
third respondents
submitted that likewise, Mr Wicks’s note of his
discussion with Mr Alexander on 8 April 1997 (see [108] above) did not evidence any concern by
Jadwan about the financial sanctions determination, and the reason was that the
decision
was not affecting Jadwan in a significant way at that time. Counsel
pointed to evidence that by the time of Mr Wicks’s attendance
on
Mr Alexander on 10 June 1997, the number of residents at Derwent Court
had reduced by only two (see [133]
above). Counsel relied on the fact that there was no contact between Jadwan and
Mr Wicks between 8 April and 10 June 1997 as indicating
the
limited nature of the retainer of Mr Wicks during the period. And in
relation to the letter from Mr Wicks to Mr Alexander dated
12 June 1997, counsel relied on the passage in the second paragraph that we
have emphasised under [135] above
as indicating a strategy to keep the Department and the Tasmania Fire Service
satisfied for the time being, and to buy time.
That strategy also informed the
telephone advice that Mr Wicks gave to Mr Alexander on 13 June
1997, and which is recorded in the
file note to which we have referred
at [138] above. Counsel emphasised
the proposal to seek assurances from the Department as supporting the
respondents’ case that Jadwan
was not prepared to commit to spending money
unless it received assurances of longevity from the Department. That case was
also supported
by Mr Wicks’s file note of his attendance on
Mr Alexander on 7 February 1997 (see [72] above), where in the context of the
installation of a lift at Derwent Court, Mr Alexander was recorded as
stating that he wanted
a guarantee of funding from the Commonwealth if the lift
was to be installed, and the guarantee was not forthcoming. For all these
reasons, counsel submitted that it was not possible to infer that the scope of
Mr Wicks’s retainer extended to giving any advice
about the financial
sanctions determination.
Issue (7) – Mr Porter QC did not give advice not
to seek an injunction: grounds 3 and 4
Issue (7) – Jadwan’s submissions
- The
primary judge found that, notwithstanding the terms of Mr Wicks’s
note of 11 August 1997 to which we referred at [273] above, the evidence did not establish
that Mr Porter gave advice not to pursue an application for an injunction.
That was because
the primary judge at [729]-[730] drew an inference that
Mr Wicks had misconstrued Mr Porter’s advice.
- Jadwan
submitted that it was not open to the primary judge to draw an inference that
Mr Wicks had misunderstood Mr Porter’s
advice when it was not
put to Mr Wicks, and Mr Porter was not called as a witness. As we
noted at [274] above, Mr Wicks
was not cross-examined at all by counsel for the fifth respondent, which faced
exposure if any negligence of Mr
Porter was found to have caused loss to
Jadwan. Furthermore, Jadwan relied on a written submission in reply made on
behalf of the
fifth respondent at trial where it was affirmatively submitted
that –
On 11 August Porter QC gave oral advice to Mr Wicks
as to the drafting of the application, and the affidavit in support. He also
advised
he did not see a need, on the face of the affidavit, for an
interlocutory application for a stay. He expressed the opinion if the
AAT
application succeeded, then the revocation decision would be quashed ab
initio and, in consequence, the approvals would continue to
exist.
- Jadwan
submitted further that, contrary to the primary judge’s finding,
Mr Porter’s letter of 19 August 1997, to which
we have
referred at [275] above, was not
inconsistent with advice not to proceed with an interlocutory stay or
injunction. Further, there were other aspects
of Mr Wicks’s note of
11 August 1997 that were consistent with the advice having been given,
namely the reference to the affidavit
material not being wasted, because it
could be used in the AAT. Jadwan also submitted that there was no challenge to
the primary
judge’s findings at [728] that Mr Porter had not
identified the existence or consequences of the Aged Care Act or the
Consequential Provisions Act, and that if Mr Wicks’s note of
11 August 1997 expressed the true sense of what Mr Porter conveyed to
him, then Mr Porter had
failed in his duty to exercise reasonable skill and
care by not adverting to the potential consequences of those Acts.
- Jadwan
accepted that perhaps not much turned on these findings, because by
11 August 1997 all the residents had left Derwent Court,
and that the focus
of the case against Mr Porter was the failure in July 1997, when he
was first retained, to advise that an injunction
should be immediately
sought.
Issue (7) – respondents’ submissions
- The
fifth respondent submitted that Mr Porter was not retained to advise about
the sanctions determination, and that this submission
was supported by the fact
that Jadwan had not sought advice from Mr Wicks about the sanctions
determination.
- In
relation to the disputed question as to what advice Mr Porter gave on
11 August 1997, the fifth respondent submitted that its failure
to call
Mr Porter did not give rise to any inference, because Mr Porter was
not a party, and was an adverse party vis-à-vis
the fifth respondent,
because it was engaged to serve a writ upon him. Primarily, however, the fifth
respondent submitted that by
11 August 1997, the approval of Derwent Court
had been revoked, and all the residents had left, and whatever advice
Mr Porter gave
on that day was of no practical significance and of no real
consequence.
Issue (8) – did Jadwan suffer any damage from the
failure to give legal advice on the new legislation: grounds 5, 6 and
20?
Issue (8) – Jadwan’s submissions
- Jadwan
submitted that it was to be inferred that the primary judge did not consider
that it had suffered any damage as a result of
the failure of the lawyers to
advise it of the new legislation. On this appeal, if successful, Jadwan does not
seek damages, but
an order that the proceeding be remitted for the assessment of
damages. Jadwan sought a finding on appeal that it suffered some damage.
It
submitted that if it succeeded on other grounds of appeal, then it will succeed
in showing that, but for the negligence of the
lawyers, it would have retained
its bed licences for Derwent Court as at 30 September 1997, and in
consequence must have suffered
some damage. Jadwan submitted that, contrary to
the primary judge’s findings, there was a clear preponderance of view that
Derwent Court was, in fact, a well-run nursing home with a high standard of
care, and relied on the expert evidence of Ms Horgan,
the evidence of
Dr Timmins, and the evidence of relatives of former residents.
Issue (8) – respondents’ submissions
- The
respondents submitted that Jadwan had not shown that, as a result of the failure
to give advice about the new legislation, Jadwan
lost an opportunity of some
value. The respondents submitted that Jadwan was required to demonstrate a
substantial, and not merely
speculative, prospect that a detriment would be
avoided (see, Badenach v Calvert [2016] HCA 18; 257 CLR 440 at [39]
(French CJ, Kiefel and Keane JJ)), and submitted that attention should be
directed to the identification of what opportunity Jadwan
had lost. The
respondents relied upon Hunt & Hunt Lawyers v Mitchell Morgan Nominees
Pty Ltd [2013] HCA 10; 247 CLR 613 at [24]- [25] in aid of a submission
that it is necessary in an action in negligence alleging economic loss to
identify, with some precision, the
interest that is infringed by the negligent
act, because the identification is necessary for a proper understanding of the
damage
that was suffered, and for the determination of what acts or omissions
may be said to have caused the damage. The respondents submitted
that
Jadwan’s claim should be evaluated as being the lost opportunity of
avoiding the detrimental consequences of Commonwealth
decision-making, and not
merely the lost opportunity to obtain some sort of injunctive relief from the
Court. The significance of
framing the issue in that way, it was submitted, is
that it is necessary to focus on whether Jadwan would ultimately have been
successful
in avoiding revocation of the approval of Derwent Court. The
respondents submitted that the evidence supported a conclusion that
the
Commonwealth would not have given up in its endeavours to revoke the approval of
Derwent Court, and relied on evidence that included
the letter from
Mr Bowen of the Australian Government Solicitor referred to at [183] above, and the fact that the
Commonwealth contested Jadwan’s ADJR Act applications, including on
appeal. The respondents also submitted that Jadwan had to demonstrate that,
contrary to the primary judge’s
findings, the Commonwealth would not have
made a new or substituted decision to the same effect. The respondents submitted
that the
legal burden of proving causation remained on Jadwan, and that this
required Jadwan to show that the claimed loss would not have
been suffered if
the first to fourth respondents had given different advice. The respondents
submitted that this required Jadwan
to demonstrate a hypothesis in favour of
causation of loss that was more probable than competing hypotheses denying
causation, relying
on Sellars v Adelaide Petroleum NL [1994] HCA 4; 179
CLR 332 at 367-368 (Brennan J). The respondents relied on the evidence of
Ms Julie Alexander in cross-examination, to which we have referred
at [309], [358] and [359] above, the substance of which was
that, in August 1997, she believed that it would have been too risky to
commit the development
of a new nursing home unless she could be assured that
Jadwan would have been entitled to 51 bed licences.
- The
respondents submitted that Jadwan did not establish that by 1 October 1997,
Derwent Court would have retained at least one resident
subject to a
Commonwealth benefit. The respondents relied on the letter from Ms Halton
of the Department to the residents at Derwent
Court dated 20 July 1997, to
which we referred at [162] above,
and evidence of the departure of residents from 24 July 1997. The evidence
in Mr Wicks’s file note of 10 June 1997,
to which we referred
at [133] above, was that two
residents had died at that point, and the file note of 7 July 1997, to
which we referred at [146] above,
indicates that five residents had died by that time. The respondents relied on a
note that was in evidence of the further
reductions in the number of residents,
to which we shall later refer.
- The
respondents also relied on evidence that on 24 and 25 July 1997, the
Commonwealth had allocated an additional 51 bed licences
to Rosary Gardens,
and was facilitating the movement of residents to that home, as Ms Halton
had foreshadowed in her letter of 20
July 1997. There was significance in
the fact that this allocation occurred in circumstances where the maximum number
of beds was
regulated by s 39 and 39AA of the National Health
Act.
- The
respondents also relied on the effect of the sanctions determination and
submitted that once a resident had left, the resident
could not return and be
the subject of a Commonwealth benefit unless the sanctions determination was
lifted. The respondents submitted
that there was no allegation by Jadwan that an
application for interlocutory relief would have succeeded in staying or
otherwise
ameliorating the effect of the sanctions determination (see
also, [369] above). In broad terms,
the respondents submitted that the operation of Derwent Court with a
substantially reduced number of residents
in respect of whom a Commonwealth
benefit was payable was not sustainable.
- Further,
the fourth respondent submitted that by operation of s 39B(5)-(5B) of the
National Health Act, Jadwan was unable to effect a transfer of the bed
licences, because it was not compliant with the conditions imposed on its
approval
under s 40AA(6) of the Act, which included the condition under
s 40AA(6)(ck) that it satisfy the standards determined under s 45D.
This claimed impediment had been identified by Ms Hefford of the Department
in her letter to Mr Hogan of 1 August 1997 (see [249] above). Jadwan replied that the
Minister had power under s 40AD(1) of the Act to alter the conditions
applicable to a nursing home,
but we observe that s 40AD(1) appears to have
been concerned only with an alteration of the number of beds.
- In
addition, the fourth respondent submitted that it was doubtful that all of
Jadwan’s bed licences would transition to corresponding
approvals under
the Aged Care Act from 1 October 1997. The fourth respondent relied
on the terms of s 14‑1(2) of the Aged Care Act, which
constrained the Secretary’s power to allocate places to an approved
provider, and which it submitted prevented the Secretary
from allocating places
in respect of which a Commonwealth subsidy was not payable. The fourth
respondent relied on the effect of
the sanctions, which had a corresponding
operation under s 66‑1(c)(ii) of the Aged Care Act as a result
of the operation of s 75(1)(c) of the Consequential Provisions Act.
The fourth respondent submitted that in consequence, on 1 October 1997,
Jadwan would have been taken to have been allocated only
those places in respect
of which a Commonwealth subsidy was then payable, and not all 51 places.
For its part, Jadwan replied that
the fourth respondent’s submission was
made for the first time on appeal. In any event, Jadwan submitted that the
sanction,
transformed as one under s 68‑1 of the Aged Care
Act, was capable of being lifted, and remained subject to review. In the
alternative, Jadwan submitted that these matters highlighted
the liability of
Mr Wicks and Mr Porter for failing to advise Jadwan to have the
financial sanctions lifted before 30 September 1997.
- Counsel
for the first to third respondents addressed the liability of the third
respondent, Toomey Maning & Co, and submitted
that the primary judge was
correct in concluding that no failure by Mr Wicks after 12 September
1997 was a cause of any loss to Jadwan
because, by that stage, all the residents
had left, and Jadwan had terminated all its staff, and that Jadwan would not
have committed
to a course that required the recruitment of staff and payroll
costs, in particular without the benefit of subsidies at that time
because of
the operation of the financial sanctions determination.
- Further,
the fourth respondent submitted that the contractual principles relating to
remoteness of damage applied, and that the damage
claimed by Jadwan did not
arise naturally from the breach, and nor could it be reasonably supposed to have
been within the contemplation
of the parties. In this respect, counsel for the
fourth respondent, who argued the point, relied on the decision of the England
and
Wales Court of Appeal in Wellesley Partners LLP v Withers LLP [2016]
Ch 529 in support of a submission that the contractual principles of remoteness
of damage, which direct attention to what was reasonably
within the
contemplation of the parties at the time they entered into the retainer, applied
also in relation to a concurrent claim
for negligence in tort. Jadwan submitted
by way of reply that there was no privity of contract between Jadwan and
Mr Porter, who
had been retained by Mr Wicks, and that if
Mr Porter had been liable to Jadwan, he was liable in tort.
- Finally,
the respondents submitted that if the appeal is allowed on liability issues,
questions of causation, remoteness, and contributory
negligence, and for what
damage the respective respondents were liable remained live issues to be
determined. The fourth and fifth
respondents submitted that they were not
concurrent wrongdoers with the first, second, and third respondents, and that
any judgments
against the respondents required separate consideration, as the
respondents may be liable for different losses. The fourth respondent
gave as an
example that by the time Mr Hogan was retained, the value of the business
was likely to be much lower than at earlier
points in time during which
Mr Wicks was retained, and submitted that the fourth respondent, if liable,
should not be liable for
the whole of the loss of the business as a going
concern.
- The
fourth respondent also submitted that separate consideration had to be given to
questions of remoteness of damage because the
instructions upon which
Mr Hogan acted were discrete, and what was within the reasonable
contemplation of the parties to that retainer
might well be different from the
position of the other respondents and Mr Porter.
- For
the above reasons, it was submitted that if the appeal is allowed, the matter
should be remitted to the primary judge for the
determination of those issues,
and not merely the assessment of damages.
Issue (9) – summary issue: grounds 9, 10, 21 and
22
Issue (9) - Jadwan’s submissions
- This
issue was described by Jadwan as a summary of outcomes that flowed from success
on the preceding issues. Jadwan prefaced its
submissions on this issue by
identifying four findings that it submitted were favourable to it, and which
were not challenged on
appeal by the relevant respondents –
(1) from 21 July 1997, when Mr Wicks was
informed by Jadwan that it had received the notice of intention to revoke the
approval of
Derwent Court, the retainer of the second respondent, Wilson Dowd,
was no longer limited, and it was retained to represent and advise
Jadwan
generally ([454] of the primary judge’s reasons);
(2) Mr Wicks should reasonably have been aware of the new legislation, and
identified the potential relevance of the Consequential Provisions Act
([465] and [501]-[503] of the primary judge’s reasons);
(3) Mr Wicks breached his duty of care by advising Jadwan on 25 July
1997 (see [207] above) that there
was no harm in letting the residents go ([507] of the primary judge’s
reasons); and
(4) on the assumption (contrary to the primary judge’s principal finding)
that Mr Wicks’s note of his conversation with
Mr Porter on
11 August 1997 was accurate, then Mr Porter was in the same position
as Mr Wicks, that is, that he should have identified
the potential
consequences of the new legislation ([507] of the primary judge’s
reasons).
- Having
regard to those favourable findings, Jadwan challenged the following findings of
the primary judge –
(1) that Jadwan had resolved by 15 July 1997 to
close the nursing home, and to seek to sell the licences;
(2) that Jadwan had agreed with the Department on 24 July 1997 that it
would not stand in the way of the removal of the residents,
and the closure of
the nursing home, and that the Department would pay the redundancies;
(3) because of its decision to close Derwent Court, Jadwan would not have acted
on advice to apply for an injunction to keep the
home open, and to prevent the
removal of residents;
(4) that an application for an injunction, if made before 6 August 1997,
would not have been successful in preventing the closure
of Derwent Court either
because there was no decision that could be the subject-matter of an
application, or because the Commonwealth
would “mend its hand” and
make a lawful decision revoking the approval;
(5) that Jadwan needed to have the financial sanctions lifted before
1 October 1997, and that was unlikely to have occurred;
(6) that an injunction would not have been granted; and
(7) the first respondent, Rae & Partners, was not retained to give legal
advice.
- Jadwan
submitted that the following consequences followed if its challenges were
successful –
(1) Mr Wicks and Mr Porter breached their
duties of care by not advising Jadwan to seek an injunction to prevent the
closure of Derwent
Court and the removal of residents;
(2) an injunction would have been granted, with the consequence that Jadwan
would have made the transition to being an approved provider
under the Aged
Care Act;
(3) Jadwan would have succeeded in having the financial sanctions lifted;
(4) Jadwan would have continued to operate Derwent Court, eventually relocating,
or alternatively, it would have sold its licences
at a proper market value;
and
(5) the first, second, third and fifth respondents were liable for
Mr Wicks’s omission to advise, and Mr Porter was liable
for not
advising Jadwan to seek to have the financial sanctions determination set
aside.
- In
relation to the fourth respondent, who is alleged to be liable for any
negligence of Mr Hogan, Jadwan submitted that the key issue
was the extent
of Mr Hogan’s retainer. By paragraph 38 of the amended defence of the
fourth respondent, it was admitted that
Mr Hogan professed to have special
expertise in the law relating to the conduct of nursing homes in Australia.
Jadwan relied on the
terms of the letter of instructions, referred to
at [216] above, and a letter from
Mr Hogan to Jadwan dated 3 March 1998 where Mr Hogan itemised his
account, and stated, “Advising you generally with respect to revocation
of licence...”. Jadwan submitted that in the context of
Mr Hogan’s retainer to assist in the sale of the bed licences,
Mr Hogan’s
negligence lay in his failure to give Jadwan the critical
advice about the impact of the new legislation, which jeopardised Jadwan’s
ability to sell its licences. Although Mr Hogan had advised Jadwan to seek
an injunction, he did so essentially for tactical reasons,
and did not advise
Jadwan of the effect of the new legislation.
Issue (9) – respondents’ submissions
- In
relation to the retainer of Mr Hogan, the fourth respondent submitted that
advice about the new legislation was outside the scope
of Mr Hogan’s
retainer, which the fourth respondent submitted was limited to attempting to
negotiate some way for Jadwan to
sell its bed licences. The fourth respondent
submitted that the work required to be undertaken to ascertain the implications
of the
new legislation was novel, complex, and would have been time consuming.
The fourth respondent submitted that work of that nature
was not incidental to
the very limited scope of Mr Hogan’s retainer, nor was it something
obvious that a solicitor in Mr Hogan’s
position should have informed
his client about. The fourth respondent referred to a number of authorities that
have considered the
solicitor’s “penumbral” duty, but
submitted that it was unnecessary to consider them, because there were good
reasons
not to impose an obligation on Mr Hogan beyond the scope of his
retainer.
- The
fifth respondent submitted that, in order to succeed, Jadwan had to establish
the following, each of which was contested wholly
or in part by the
respondents –
(1) each of the respondents was subject to a duty of
care which required the giving of the particular advice for which Jadwan
contended;
(2) if such advice had been given, Jadwan would have given instructions to
commence a proceeding for injunctive relief;
(3) a judge of this Court would have granted interlocutory relief;
(4) interlocutory relief would not have been granted on terms that Jadwan could
not, or could not reasonably, comply with;
(5) Jadwan would have been able to retain at least one pre-February 1997
resident for such period of time as was necessary to enable
it to construct and
complete the development of a new facility elsewhere;
(6) it would ultimately have succeeded in its primary claim, and thereupon would
have obtained permanent injunctive relief or a stay;
(7) at no point would the Commonwealth have made a new or substitute decision or
decisions to the same effect, that would have been
effective to revoke the
licences; and
(8) in the interim, Jadwan would have been able to maintain the conduct of its
business with one nursing home patient from 1 October
1997, and in a way
that complied with the new care standards pursuant to the Aged Care
Act.
- By
way of reply submissions, Jadwan accepted that it had to establish (1)
to (4). As to (5) and (8), Jadwan accepted that it could
not have
continued to operate the nursing home with a small number of residents for very
long, but submitted that this highlighted
the urgency of an injunction, and the
need to have the financial sanctions lifted. As to (6), Jadwan relied on
its ultimate success
in having the revocation decision set aside. And as
to (7), Jadwan submitted that this was an issue on which the respondents
bore
the onus of proof.
The nature of this appeal
- There
was a dispute between the parties concerning the principles applicable to the
review on appeal of the findings of fact made
by the primary judge that were
challenged by Jadwan.
- The
appeal to this Court is brought under s 24(1)(a) of the Federal Court of
Australia Act 1976 (Cth) and is in the nature of an appeal by way of
rehearing: Minister for Immigration and Multicultural Affairs v Jia Legeng
[2001] HCA 17; 205 CLR 507 at [75] (Gleeson CJ and Gummow J);
Western Australia v Ward [2002] HCA 28; 213 CLR 1 at [68]- [71]
(Gleeson CJ, Gaudron, Gummow and Hayne JJ). In an appeal by way of rehearing,
the powers of the Court are exercisable where an appellant
demonstrates some
legal, factual, or discretionary error: Allesch v Maunz [2000] HCA 40;
203 CLR 172 at [23] (Gaudron, McHugh, Gummow and Hayne JJ). “The
views and the conclusions of the trial judge ultimately have to be shown to be
wrong. They should not be laid to one side and a simple re-argument of the case
take place”: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd
[2001] FCA 1833; 117 FCR 424 (Branir) at [24], [28] and [29]
(Allsop J, Drummond J and Mansfield J agreeing). What
amounts to error will depend upon the issue in contention.
- The
principles that guide appellate review of findings of fact made by a trial judge
have been discussed and applied in many High
Court cases over the course of more
than 100 years. Those cases include: McLaughlin v Daily Telegraph Newspaper
Co Ltd (No 2) [1904] HCA 51; 1 CLR 243 at 277 (Griffith CJ); Dearman
v Dearman [1908] HCA 84; 7 CLR 549 at 561 (Isaacs J); Scott v Pauly
[1917] HCA 60; 24 CLR 274 at 278-281 (Isaacs J); Paterson v Paterson
[1953] HCA 74; (1953) 89 CLR 212 at 218-225 (Dixon CJ and Kitto J); Voulis v Kozary
[1975] HCA 44; (1975) 180 CLR 177 at 181-183 (McTiernan J); Warren v Coombes
[1979] HCA 9; 142 CLR 531 at 537-553 (Gibbs ACJ, Jacobs and Murphy JJ);
Brunskill v Sovereign Marine & General Insurance Co Ltd [1985] HCA 61
62 ALR 53 (Brunskill) at 56-57 (Gibbs CJ, Wilson, Brennan, Deane
and Dawson JJ); Abalos v Australian Postal Commission [1990] HCA 47; 171
CLR 167 at 178-9 (McHugh J); Devries v Australian National Railways
Commission [1993] HCA 78; 177 CLR 472 (Devries) at 479-481
(Deane and Dawson JJ); State Rail Authority of New South Wales v
Earthline Constructions Pty Ltd [1999] HCA 3; 160 ALR 588 (Earthline
Constructions) at [73]-[93] (Kirby J); Walsh v Law Society
of New South Wales [1999] HCA 33; 198 CLR 73 at [54] (McHugh, Kirby and
Callinan JJ); Rosenberg v Percival [2001] HCA 18; 205 CLR 434
at [27], [37]-[41] at (McHugh J), [92] (Gummow J), [103], [163]-[164]
(Kirby J); Fox v Percy [2003] HCA 22; 214 CLR 118 at [22]- [31]
(Gleeson CJ, Gummow and Kirby JJ); CSR Ltd v Della Maddalena
[2006] HCA 1; 224 ALR 1 (CSR) at [17]-[24] (Gleeson CJ,
Kirby J agreeing); Miller & Associates Insurance Broking Pty Ltd v
BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 (Miller)
at [76] (Heydon, Crennan and Bell JJ); Minister for Immigration and
Border Protection v SZVFW [2018] HCA 30; 264 CLR 541 (SZVFW)
at [29]-[34] (Gageler J), [153] (Edelman J); and Lee v Lee
[2019] HCA 28; 372 ALR 383 at [55] (Bell, Gageler, Nettle and Edelman
JJ, Kiefel CJ at [1] agreeing).
- In
evaluating whether there is appealable error in relation to a finding of fact,
the authorities distinguish between cases where
findings depend upon some
benefit enjoyed by the trial judge that is not available to an appellate court,
and other cases, such as
those where the impugned findings are inferences drawn
from uncontroverted facts. Findings that are the product of some benefit enjoyed
by a trial judge may include findings of secondary facts that are based on a
combination of impressions and other inferences from
primary facts: Lee v
Lee at [55], citing Kakavas v Crown Melbourne Ltd [2013] HCA 25;
250 CLR 392 at [144], and Thorne v Kennedy [2017] HCA 49; 263 CLR 85
at [42], which in turn cited Louth v Diprose [1992] HCA 61; 175 CLR
621 at 639-641 (Dawson, Gaudron and McHugh JJ). The advantages that a trial
judge may enjoy include those “that derive from the
obligation at trial to
receive and consider the entirety of the evidence and the opportunity, normally
over a longer interval, to
reflect upon that evidence and to draw conclusions
from it, viewed as a whole”: Fox v Percy at [23]. See also,
Branir at [24], [28] and [29]. The advantages may include the
opportunity to assess the testimony of witnesses. The value and importance
of
having seen and heard witnesses will vary according to the class of case, and
the individual case in question: Watt or Thomas v Thomas [1947] AC 484 at
488, cited in Paterson v Paterson at 224, and Devries at 480. The
disadvantages in which an appellate court is placed “may derive from
considerations not adequately reflected in
the recorded transcript of the trial;
and matters arising from the advantages that a primary judge may enjoy in the
opportunity to
consider, and reflect upon, the entirety of the evidence as it is
received at trial and to draw conclusions from that evidence, viewed
as a
whole”: CSR at [17] (Kirby J, Gleeson CJ agreeing).
“The more prominently limitations of that nature feature in a particular
appeal, the
more difficult it will be for the appellate court to be satisfied
that the primary judge was in error”: SZVFW at [33]
(Gageler J). On the other hand, there may be circumstances where the
capacity for appellate synthesis and perspective places
the appellate court in
an advantageous position over the trial judge: Yarrabee Coal Co Pty Ltd v
Lujans [2009] NSWCA 85; 53 MVR 187 at [3] (Allsop P). In this case,
which turns largely on the inferences that arise from the documentary evidence,
we have had the benefit
of careful consideration of that evidence: cf,
Earthline Constructions at [90] (Kirby J).
- In
relation to an appeal from a decision that depends upon the acceptance of the
evidence of a witness, the Court in Brunskill at 57 referred to
whether the decision was “glaringly improbable”, likely picking up
Lord Sumner’s reference to
“glaring improbability” in
SS Hontestroom v SS Sagaporack [1927] AC 37 at 50.
Brunskill was cited by Kirby P in Chambers v Jobling (1986)
7 NSWLR 1 where, with reference to Warren v Coombs, his Honour
stated at 10 –
[Warren v Coombs] re-established a slightly more
robust and interventionist role for appeal courts in the review of decisions on
the facts or decisions
based on inferences from the facts. For all that, such
review is always to be performed with proper regard to the advantages which
the
trial judge enjoyed. Especially is this necessary (as Brunskill lately
reminds us) where issues of credibility are raised for decision, directly or
indirectly. Particularly is it so where the credibility
of a witness is
determined by the trial judge, expressly or by inference, on the basis of his
impressions of the witness whose credibility
is under attack. In such cases, the
appellate court is not released from its duty to review the trial judge’s
conclusions.
But the circumstances in which it may reverse those conclusions are
very narrowly defined indeed. They are confined to those few
cases where the
trial judge’s decision is “glaringly improbable” or
“contrary to compelling inferences”.
[Emphasis added]
- Both
Brunskill and Chambers v Jobling were then cited by Kirby J
in Earthline Constructions where, at [93] points 2 and 7, his
Honour stated –
- It
may be possible to show, by reference to incontrovertible facts or
uncontested testimony, that although the trial judge reached conclusions
which were adverse to the credibility of an important, even crucial, witness,
such conclusions are plainly wrong. ...
...
- There
is also the case, as was accepted in the early Privy Council decisions where,
although a credibility finding has been made which
represents an apparent
obstacle to appellate review, it is so contrary to the “extreme and
overwhelming pressure” resulting
from the rest of the evidence, or is so
“glaringly improbable” or “contrary to the
compelling inferences of the case”, that it justifies and authorises
appellate interference in the conclusion reached by the trial judge.
...
[Emphasis added, footnotes
omitted]
- Brunskill,
Chambers v Jobling, and Earthline Constructions were cited by
Gleeson CJ, Gummow and Kirby JJ in Fox v Percy
at [28]-[29] –
... the mere fact that a trial judge necessarily reached
a conclusion favouring the witnesses of one party over those of another does
not, and cannot, prevent the performance by a court of appeal of the functions
imposed on it by statute. In particular cases incontrovertible facts or
uncontested testimony will demonstrate that the trial judge’s
conclusions are erroneous, even when they appear to be, or are stated to be,
based
on credibility findings.
That this is so is demonstrated in several recent decisions of this Court. In
some, quite rare, cases, although the facts fall short
of being
“incontrovertible”, an appellate conclusion may be reached
that the decision at trial is “glaringly improbable” or
“contrary to compelling inferences” in the case. In such
circumstances, the appellate court is not relieved of its statutory functions by
the fact that the trial
judge has, expressly or implicitly, reached a conclusion
influenced by an opinion concerning the credibility of witnesses. In such
a
case, making all due allowances for the advantages available to the trial judge,
the appellate court must “not shrink from
giving effect to” its own
conclusion.
[Emphasis added, footnotes omitted]
- Brunskill,
Chambers v Jobling, and Fox v Percy were then cited by the Court
in Miller at [76], in the same context.
- The
first, second, and third respondents, and separately the fourth respondent,
submitted that the Court should not interfere with
findings of fact made by the
primary judge unless they were demonstrated to be wrong by
“incontrovertible facts or uncontested
testimony”, or they were
“glaringly improbable” or “contrary to compelling
inferences”. For this proposition
they cited Robinson Helicopter
Company Incorporated v McDermott [2016] HCA 22; 331 ALR 550 at [43],
where French CJ, Bell, Keane, Nettle and Gordon JJ
stated –
A court of appeal conducting an appeal by way of
rehearing is bound to conduct a “real review” of the evidence given
at
first instance and of the judge’s reasons for judgment to determine
whether the judge has erred in fact or law. If the court
of appeal concludes
that the judge has erred in fact, it is required to make its own findings of
fact and to formulate its own reasoning
based on those findings. But a court of
appeal should not interfere with a judge’s findings of fact unless they
are demonstrated
to be wrong by “incontrovertible facts or uncontested
testimony”, or they are “glaringly improbable” or
“contrary
to compelling inferences”. In this case, they were not.
The judge’s findings of fact accorded to the weight of lay and
expert
evidence and to the range of permissible inferences.
[Footnotes omitted]
- In
this passage, the Court cited Devries at 479-481, Fox v Percy
at [28] - [29], and Miller at [76] which, as Allsop CJ
explained in Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93;
261 FCR 301 (Aldi Foods) at [3]-[10] is important. Statements
of principle in a judgment of an appellate court such as those in [43] of
Robinson Helicopter should not be treated as if they were provisions of a
statute, defining a principle in precise and definite terms: Mills v
Mills [1938] HCA 4; (1938) 60 CLR 150 at 169 (Rich J); Benning v Wong (1969) 122
CLR 249 at 299-300 (Windeyer J); Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC
1027 at 1085 (Lord Reid); Papaconstuntinos v Holmes à Court [2012]
HCA 53; 249 CLR 534 at [29] (French CJ, Crennan, Kiefel and Bell JJ). And
brief allusions, or necessarily incomplete references to principles in appellate
judgments
should not ordinarily be understood as restating principles of
long-standing that have been the subject of detailed and considered
discussion
in earlier cases. The statements of the Court in Robinson Helicopter
at [43] that findings of fact made by a trial judge should not be
interfered with unless they are demonstrated to be wrong by
“incontrovertible
facts or uncontested testimony”, or they are
“glaringly improbable”, or “contrary to compelling
inferences”,
do not apply to all findings of fact. Those expressions have
been used in the authorities in the context of findings that are the
product of
some advantage enjoyed by the trial judge, such as where there has been a
credibility finding after assessing oral testimony.
The advantages enjoyed by a
trial judge may also be more subtle and imprecise, as Allsop J explained in
Branir at [28]-[29], which has been cited and approved in many
subsequent Full Court decisions (see Aldi Foods at [4]). The
corresponding limitations on appellate review result from the “appellate
court proceeding wholly or substantially
on the record”: Fox v
Percy at [23]. The limited application of the statements in Robinson
Helicopter at [43] concerning appellate restraint was confirmed in
Lee v Lee, where at [55], Bell, Gageler, Nettle and Edelman JJ
stated –
Appellate restraint with respect to interference with a
trial judge’s findings unless they are “glaringly improbable”
or “contrary to compelling inferences” is as to factual findings
which are likely to have been affected by impressions
about the credibility and
reliability of witnesses formed by the trial judge as a result of seeing and
hearing them give their evidence.
It includes findings of secondary facts which
are based on a combination of these impressions and other inferences from
primary facts.
- The
grounds of appeal in this case present for consideration the correctness of
specific findings of fact made by the primary judge,
the correctness of the
legal foundation for the primary judge’s findings, and the correctness of
the inferences that the primary
judge drew. As we shall discuss, of particular
importance to the outcome of the appeal is the primary judge’s findings on
causation.
It was necessary for Jadwan to prove on the balance of probabilities
that it would have given instructions to its lawyers to pursue
proceedings to
seek the interlocutory relief that it alleged, and that it would have had at
least one resident at Derwent Court on
30 September 1997 in respect of whom it
was entitled to Commonwealth benefit. The inquiry as to what Jadwan would have
done was necessarily
hypothetical, and involved value judgments by the primary
judge based upon the direct and circumstantial evidence. The particular
issues
that may arise in challenging such findings on appeal were referred to by
McHugh J in Rosenberg v Percival at [27] and [37]-[41] in
the context of a failure to warn a patient of risks attached to surgery. In that
case, McHugh J was of the
view that the Western Australian Court of Appeal
was in error in reversing the trial judge’s finding as to causation,
principally
because the trial judge’s finding was based upon the
credibility of the plaintiff. The causation question in this case is more
complex, because it must be determined against resolution of the hypothetical
issue of what advice a reasonable and prudent lawyer
would have given Jadwan.
And the issue was not what Mrs Joan Alexander or Ms Julie
Alexander would have done had they received that
advice, but what Jadwan would
have done, which directs attention to what inferences arise in relation to what
Mr Alexander would
have done.
- The
fourth respondent also submitted that the possibility that one or more of the
judges constituting this Court might, or might well
have, formed a different
view of the contested evidence or might, or might well have, reached different
findings open on the evidence
to those of the primary judge that were also open
on the evidence, does not provide a principled basis for interfering with the
findings
of fact of the primary judge. This submission must be rejected. The
fourth respondent’s submission is not supported by Warren v
Coombs, or Fox v Percy, and is redolent of the
views of Barwick CJ and Windeyer J in Whiteley Muir &
Zwanenberg Ltd v Kerr (1966) 39 ALJR 505 at 506, Da Costa v Cockburn
Salvage & Trading Pty Ltd [1970] HCA 43; (1970) 124 CLR 192 at 199 and 213-214, and
Edwards v Noble (1971) 125 CLR 296 at 304-306 and 312-313, which
were rejected by the majority in Warren v Coombs at 542-553. In Fox v
Percy at [25], in a frequently cited passage, Gleeson CJ, Gummow
and Kirby JJ said of an appellate court’s task –
Within the constraints marked out by the nature of the
appellate process, the appellate court is obliged to conduct a real review
of
the trial and, in cases where the trial was conducted before a judge sitting
alone, of that judge’s reasons. Appellate courts
are not excused from the
task of “weighing conflicting evidence and drawing [their] own inferences
and conclusions, though
[they] should always bear in mind that [they have]
neither seen nor heard the witnesses, and should make due allowance in this
respect”
[Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549 at 564, citing The
Glannibanta [1876] UKLawRpPro 35; (1876) 1 PD 283 at 287]. In Warren v Coombes [(1979) [1979] HCA 9; 142
CLR 531 at 551], the majority of this Court reiterated the rule
that:
[I]n general an appellate court is in as
good a position as the trial judge to decide on the proper inference to be drawn
from facts
which are undisputed or which, having been disputed, are established
by the findings of the trial judge. In deciding what is the
proper inference to
be drawn, the appellate court will give respect and weight to the conclusion of
the trial judge but, once having
reached its own conclusion, will not shrink
from giving effect to it.
- What
is set out in the above passage is subject to other principles of appellate
review to which we have referred, including the requirement
that an appellant
show error in the primary judge’s decision, and the acknowledgement in the
authorities of the circumstances
in which the appellate court will not be in as
good a position as the trial judge to decide on the proper inferences to be
drawn.
The weight to be given to the findings of a trial judge will vary
according to the type of issue in question, and the nature and
the extent of the
advantage enjoyed by the trial judge. But if error is shown, a court of appeal
may then be required to make its
own findings of fact and to formulate its own
reasoning based upon those findings if it is in a position to do so: Robinson
Helicopter at [43]; and see also, Waterways Authority v
Fitzgibbon [2005] HCA 57; 221 ALR 402 at [134]- [135]
(Hayne J).
- The
fifth respondent submitted that Jadwan must establish that each inference that
it sought to impugn was not open on the evidence,
citing Ashby v Slipper
[2014] FCAFC 15; 219 FCR 322 at [62], [70]-[73] and [92]. The fifth
respondent’s submission must also be rejected. It is not supported by
Ashby v Slipper, which was an appeal from the summary dismissal of a
proceeding where it was held that an inference drawn by the primary judge was
not open to be drawn on the summary dismissal application, having regard to the
onus that was imposed on the respondent on a summary
dismissal application, and
having regard to other evidence. The finding in Ashby v Slipper
at [92] that the subject inference was not open must be understood as a
finding that, on a summary dismissal application, the inference
should not have
been drawn. It is wrong to suggest that Ashby v Slipper is authority for
any general proposition that an inference may be challenged on appeal from a
decision at trial only if it was not
open on the evidence. As we have indicated,
a constraint of that type on appellate review was rejected in Warren v
Coombs, and it is not consistent with the principles stated in Fox v
Percy at [25], to which we have referred above.
The nature of Jadwan’s claims
- It
is necessary to identify the nature of the claims advanced by Jadwan, the injury
which Jadwan claimed to have suffered, and the
relevant legal principles to the
determination of those claims.
- The
identification of injury, or damage, is not to be equated with the assessment of
damages: see the observations of Gummow A‑CJ
in Tabet v Gett
[2010] HCA 12; 240 CLR 537 at [23]. In Hunt & Hunt v Mitchell
Morgan Pty Ltd [2013] HCA 10; 247 CLR 613, French CJ, Hayne and
Kiefel JJ stated at [25]-[26] –
- In
Hawkins v Clayton [(1988) 164 CLR 539 at 601], Gaudron J pointed out that
in an action for negligence causing economic loss it will almost always be
necessary to identify, with some precision, the interest infringed by the
negligent act [See also Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992)
175 CLR 514 at 527; The Commonwealth v Cornwell [2007] HCA 16; (2007) 229 CLR 519 at 525
[16]]. In [Hawkins v Clayton], it was necessary to identify the interest
in order to answer the question as to when the cause of action accrued. Its
identification
is also necessary for a proper understanding of the harm suffered
and for the determination of what acts or omissions may be said
to have caused
that damage. As her Honour observed [at 601], economic loss may take many forms.
In Wardley Australia Ltd v Western Australia [at 527], it was said that
the kind of economic loss which is sustained, as well as the time when it is
sustained, depends upon the
nature of the interest infringed and in some cases,
perhaps, upon the nature of the interference to which it is subjected.
- An
interest which is the subject of economic loss need not be derived from
proprietary rights or obligations governed by the general
law. The interest
infringed may be in the value of property or its physical condition. Thus in
The Commonwealth v Cornwell [(2007) [2007] HCA 16; 229 CLR 519 at 526 [18]], the
respondent’s interest was an entitlement conferred by federal statute to
participate in a Commonwealth superannuation
fund. An economic interest must be
something the loss or invasion of which is compensable by a sum of money
[Cane, Tort Law and Economic Interests, 2nd ed (1996), p 5]. One such
interest identified in the cases is a lender’s interest in the recovery of
moneys advanced [citation
omitted].
- Jadwan’s
claim in negligence was for damage to its economic interests, namely its ability
to generate income in the business
of an accredited nursing home with approvals
for 51 beds under Commonwealth legislation, or alternatively the capital
value of those
approvals on the assumption that they could be transferred for
consideration. In the case of the first respondent, Rae & Partners,
the
injury was alleged to have been caused by the negligence of Mr Wicks in
failing to advise Jadwan to take action to challenge
the findings of the first
Standards Review Panel, the financial sanctions determination, and the second
Standards Review Panel, in
circumstances where revocation of approval had been
foreshadowed, and the Minister was likely to rely upon the findings in those
reports. In the case of the second respondent, Wilson Dowd, and Mr Porter,
the alleged negligence extended to failing to advise Jadwan
of the enactment of
the Aged Care Act and the Consequential Provisions Act and their
relevance to the continuation of Jadwan’s approvals. No distinction was
made in Jadwan’s pleadings between
Wilson Dowd, and the third respondent,
Toomey Maning. The main allegation made against the fourth respondent in respect
of Mr Hogan’s
advice was his failure to advise Jadwan of the new
legislation, and its potential consequences for Jadwan’s approvals.
- Jadwan
characterised its claim as being one for a lost opportunity to continue to
conduct its nursing home business at new premises,
or alternatively, its lost
opportunity to sell its approvals in the latter part of 1997. The claim
rested on the following central
premises –
(1) that reasonable advice to Jadwan required that its
attention be directed to the new legislation, and to the effect of the
transitional
provisions in the Consequential Provisions Act;
(2) that if Jadwan had received reasonable advice about the operation of the new
legislation, then it would have instructed its lawyers
to seek interlocutory
relief in the nature of injunctions;
(3) an application for such relief would have been successful;
(4) Jadwan would have organised its affairs so as to ensure that at least one
resident with an entitlement to receive a Commonwealth
benefit remained at
Derwent Court on 30 September 1997; and
(5) consequently, on 1 October 1997, Jadwan would have become an approved
provider under the new legislation.
- In
Sellars v Adelaide Petroleum NL, the Court held that the loss of a
commercial or economic opportunity was compensable under s 82 of the
Trade Practices Act 1974 (Cth). At 352-353, Mason CJ, Dawson, Toohey
and Gaudron JJ distinguished between causation of the damage which was to
be proven on
the balance of probabilities, and the assessment of loss which, in
relation to hypothetical or future events, may be proven by reference
to the
principles essayed in Malec v JC Hutton Pty Ltd [1990] HCA 20; 169 CLR
638, under which damages may be assessed having regard to hypothetical or future
possibilities. Their Honours then stated
at 355 –
Hence the applicant must prove on the balance of
probabilities that he or she has sustained some loss or damage. However, in a
case
such as the present, the applicant shows some loss or damage was sustained
by demonstrating that the contravening conduct caused
the loss of a commercial
opportunity which had some value (not being a negligible value), the value being
ascertained by reference
to the degree of probabilities or possibilities. It is
no answer to that way of viewing an applicant’s case to say that the
commercial opportunity was valueless on the balance of probabilities because to
say that is to value the commercial opportunity by
reference to a standard of
proof which is inapplicable.
- Brennan J
at 359 distinguished cases such as Chaplin v Hicks [1911] UKLawRpKQB 104; [1911] 2 KB 786,
where the contractual promise was to afford the plaintiff an opportunity to
acquire a benefit, or to avoid a detriment. In those
cases, a breach of the
promise resulted in loss. Brennan J stated at 359, in relation to
cases where damage was the gist of the cause
of action –
But in cases arising under s. 82(1) of the Act, as in
cases of tort where damage is the gist of the action, a lost opportunity may
or
may not constitute compensable loss or damage. In such cases, the existence and
causation of a compensable loss cannot be proved
by reference to an antecedent
promise to afford an opportunity. The plaintiff, who bears the onus of proving a
loss suffered as the
result of the defendant’s contravening or tortious
conduct, must prove the existence and causation of the alleged loss in some
other way. ...
- And
at 364, Brennan J stated –
As a matter of common experience, opportunities to
acquire commercial benefits are frequently valuable in themselves, not only when
they will probably fructify in a financial return but also when they
offer a substantial prospect of a financial return. The volatility of the
market for speculative shares testifies to both the valuable character of
commercial
opportunities and the difficulty of assessing the value of
opportunities which are subject to serious contingencies. Provided an
opportunity offers a substantial, and not merely speculative, prospect of
acquiring a benefit that the plaintiff sought to acquire
or of avoiding a
detriment that the plaintiff sought to avoid, the opportunity can be held to be
valuable. And, if an opportunity
is valuable, the loss of that opportunity is
truly “loss” or “damage” for the purposes of s. 82(1) of
the
Act and for the purposes of the law of torts.
- In
Tabet v Gett, Gummow A‑CJ at [50] referred to
Brennan J’s reasons for judgment in Sellars at 359, and
stated –
As Brennan J indicated in Sellars, in an action
in tort where damage is the gist of the action, the issue which precedes any
assessment of damages recoverable is whether
a lost opportunity, as a matter of
law, answers the description of “loss or damage” which is then
compensable.
- In
Sellars at 353-4, Mason CJ, Dawson, Toohey and Gaudron JJ referred
to three cases involving the negligence of solicitors: Sykes v Midland Bank
Executor & Trustee Co Ltd [1971] 1 QB 113; the dissenting reasons of
Brennan J in Johnson v Perez [1988] HCA 64; 166 CLR 351, and the
decision of the Court of Appeal in Kitchen v Royal Air Force Association
[1958] 1 WLR 563. Their Honours noted that these cases concerned causes of
action for breach of contract, however we note that in Johnson v Perez, a
cause of action in negligence was also alleged, and at 363, Wilson, Toohey and
Gaudron JJ stated that it was immaterial whether
the problem that arose in
that case, which concerned the time at which damages were assessed, was
considered as one of contract or
tort.
- In
Sykes, the solicitor’s negligence was his failure to draw the
plaintiffs’ attention to an unusual term of an underlease, and
the injury
that was alleged was the loss of the opportunity not to enter into it, or to
negotiate different terms. The plaintiffs
failed to prove that, had they been
given reasonable advice, they would have acted any differently, and were
therefore entitled only
to nominal damages for breach of contract.
Salmon LJ at 129 rejected an argument that the plaintiffs were
entitled to damages on
account of the chance, however slim, that they might have
acted differently.
- In
both Kitchen and Johnson v Perez, the plaintiff’s
damage was the loss of a cause of action for damages for personal injuries. In
Kitchen, the solicitors had negligently allowed the cause of action to
become statute-barred, and in Johnson v Perez, the
solicitors’ negligence in the conduct of the proceeding resulted in the
proceeding being dismissed for want of prosecution.
- In
Johnson v Perez, it was not in issue on appeal that the plaintiff’s
original claim for personal injuries would have succeeded, so consideration
of
the assessment of damages in the claim against the solicitors proceeded on that
basis. Wilson, Toohey and Gaudron JJ at 363 approved
the following
statement of Lord Evershed in Kitchen at 575 –
In my judgment, what the court has to do (assuming that
the plaintiff has established negligence) in such a case as the present, is
to
determine what the plaintiff has by that negligence lost. The question is, has
the plaintiff lost some right of value, some chose
in action of reality and
substance? In such a case, it may be that its value is not easy to determine,
but it is the duty of the
court to determine that value as best it
can.
- Their
Honours in Johnson v Perez at 366 characterised the loss as
follows –
When an action has been dismissed for want of
prosecution due to the negligent conduct of a solicitor, the client has lost the
opportunity
to bring that claim to trial and recover damages in respect thereof.
As already indicated, in some cases it may be appropriate to
describe the loss
as the loss of a chance for there may be various contingencies bearing on the
likelihood that the plaintiff would
have recovered judgment against the
defendant and further that any such judgment would have been
met.
- In
Badenach v Calvert [2016] HCA 18; 257 CLR 440, the beneficiary under a
will alleged that the testator’s solicitor was negligent in failing to
give advice about courses that
might have been taken to avoid the risk of the
testator’s daughter successfully bringing a testator’s family
maintenance
claim. On appeal to the High Court, the solicitor was successful in
arguing that no duty of care was owed to the beneficiary. In
addition, it was
held that even if a duty was owed, the beneficiary had not demonstrated
causation, in that the beneficiary had not
proven on the balance of
probabilities what course the testator would have taken had advice in the terms
alleged by the beneficiary
been given. In addressing the beneficiary’s
claim that the loss was the loss of a chance that the testator would act on the
advice, French CJ, Kiefel and Keane JJ stated
at [39]-[41] –
- The
respondent’s case on causation is not improved by seeking to equate the
chance spoken of with an opportunity lost. It may
be accepted that an
opportunity which is lost may be compensable in tort [Sellars]. But that
is because the opportunity is itself of some value. An opportunity will be of
value where there is a substantial, and
not a merely speculative, prospect that
a benefit will be acquired or a detriment avoided [Sellars at 364].
- It
remains necessary to prove, to the usual standard, that there was a substantial
prospect of a beneficial outcome [Sellars at 355, 367-368]. This requires
evidence of what would have been done if the opportunity had been afforded. The
respondent has not
established that there is a substantial prospect that the
client would have chosen to undertake the inter vivos transactions. Therefore,
the respondent has not proven that there was any loss of a valuable
opportunity.
- The
onus of proving causation of loss is not discharged by a finding that there was
more than a negligible chance that the outcome
would be favourable, or even by a
finding that there was a substantial chance of such an outcome. The onus is only
discharged where
a plaintiff can prove that it was more probable than not that
they would have received a valuable opportunity. To the extent that
the majority
in Allied Maples Group Ltd v Simmons & Simmons (a Firm) [[1995] 1 WLR
1602] holds that proof of a substantial chance of a beneficial outcome is
sufficient on the issue of causation of loss,
as distinct from the assessment of
damages, it is not consistent with authority in Australia and is contrary to the
requirements
of s 13(1)(a) of the Civil Liability Act.
- The
requirement to show that an opportunity lost was something of value was
emphasised by Keane JA (McMurdo P and Wilson J agreeing)
in
Lewis v Hillhouse [2005] QCA 316. In that case, the appellant, who was
the former Queensland Commissioner of Police, Terence Lewis, claimed that his
lawyers had been
negligent in the conduct of an appeal against his criminal
convictions by failing to advance an argument that particular evidence
had been
wrongly admitted. The appellant characterised his damage as the lost chance of a
successful appeal and new trial. Keane
JA held that this claim amounted to
a collateral attack on the conviction, and was precluded for that reason. In
addition, Keane
JA held that in order for the appellant to demonstrate that
he had lost something of value, it was necessary to show on the balance
of
probabilities that if the point had been pursued, then the appellant’s
convictions would have been quashed and verdicts
of acquittal entered.
At [24], Keane JA stated –
In
the present case, unless the appellant is able to show that the evidence
admission point was a good point, ie that it would have
been accepted and acted
upon by the Court, he will have failed to show that he has lost anything of
value. An opportunity to litigate,
considered in the abstract and without regard
for the prospects of a favourable outcome, is not something of value. Rather, it
is
an occasion of confrontation, conflict and expense. No litigant suffers any
real loss by losing the opportunity to run up dry gullies.
It cannot sensibly be
said that the loss of “a right to an appeal” or “a right to a
trial”, without more,
is a loss of something valuable. In the context of a
claim for substantial damages, the loss of a right to an appeal or trial of
criminal charges is, of itself, nothing more than the loss of the opportunity to
be in peril of a conviction and to spend money to
avoid that peril. It is only
if the result of the appeal or trial was likely to be favourable in some sense
that anything of value
has been lost by the litigant. The client may suffer a
loss in terms of wasted costs expended in the process of pursuing hopeless
contentions, but such loss is plainly not what is claimed by the appellant in
this case. It may indeed be the way in which the value
of the appellant’s
loss is quantified in his statement of claim, but this is merely to recognize an
inconsistency in the appellant’s
approach to the formulation of his claim,
and hence another deficiency in the appellant’s pleaded
case.
- As
we mentioned at [384] above, the
respondents sought to characterise Jadwan’s lost opportunity as being the
opportunity to avoid the detrimental
consequences of Commonwealth
decision-making. If Jadwan’s opportunity were to be characterised in that
way, then Jadwan would
be required to prove on the balance of probabilities that
it would have avoided those detrimental consequences.
However, Jadwan did not characterise its lost
opportunity as an opportunity to obtain injunctive relief from the Court, or
generally
to avoid detrimental consequences of government regulatory action. Had
it done that, then it would have had to confront the observations
of
Keane JA in Lewis v Hillhouse, referred to at [430] above. As we indicated at [419] above, by its claim, Jadwan undertook
the burden of proving on the balance of probabilities that it would have sought
interlocutory
relief, that it would have succeeded in doing so, that it would
have had one or more residents in respect of whom it would have been
entitled to
a Commonwealth benefit on 30 September 1997, and that its entitlements
under the National Health Act would have transformed into corresponding
entitlements under the Aged Care Act. Had that occurred, then Jadwan
submitted that it would have held something of value as at 1 October 1997.
On Jadwan’s case,
questions concerning whether the Minister might
thereafter have succeeded in revoking its approval, or whether for other reasons
its value would have been impaired, went to the assessment of damages in
accordance with the principles essayed in Malec v JC Hutton Pty Ltd.
- In
our view, the entitlement of Jadwan under Commonwealth legislation to operate a
nursing home that attracted Commonwealth funding
with approval for 51 beds
was an economic interest, injury to which the laws of negligence are capable of
compensating. The statutory
mechanisms under the National Health Act and
the Aged Care Act for the transfer of the approvals, and the evidence
that the approvals had a market in which they were bought and sold, are a
sufficient
indication that the statutory entitlements had some value. The object
of a judicial review proceeding that Jadwan had in contemplation
from the time
that Mr Porter was engaged on 23 July 1997, and which it later
commenced in January 1998, was to have enjoined, or
set aside the
revocation decision, and to restore the approval of Derwent Court as a nursing
home entitled to Commonwealth funding.
That object was frustrated because Jadwan
failed to secure its position as at 30 September 1997, so that its
approvals under the
National Health Act would engage the transitional
provisions in the Consequential Provisions Act. Jadwan alleged that the
frustration was caused by negligent advice given to it by the first to third
respondents, Mr Hogan, and
Mr Porter. On similar reasoning,
Jadwan’s claim that the negligence of Mr Wicks, from 7 February
to 1 July 1997 when employed
by the first respondent, in failing to advise
Jadwan to take action to challenge the findings of the first Standards Review
Panel
and the financial sanctions determination, resulted, on Jadwan’s
claim, in the impairment of its economic interests as a result
of its inability
to admit new residents who were entitled to Commonwealth benefit, which in our
view is also capable of being regarded
as damage. No different analysis arises
in relation to Jadwan’s claims against the first to fourth respondents in
contract,
which were concurrent with the claims in negligence, and which on the
pleaded case required Jadwan to demonstrate the same loss of
opportunity. The
claim against the fifth respondent was in negligence alone, and the damage was
alleged to be the lost opportunity
to pursue the claim against Mr Porter.
Subject to proving that the claim against Mr Porter had some value, the
lost opportunity to
pursue that claim was capable of being regarded as damage
suffered by Jadwan.
Some observations
- Having
identified the nature of the injury which Jadwan claimed to have suffered, we
shall now identify the main issues that arise
in the evaluation of the evidence
before the primary judge, and the allegations of error by the primary judge that
are raised by
Jadwan’s grounds of appeal, as conveniently grouped by
Jadwan into nine issues (see [312]
above).
- Jadwan
bore the legal onus of proving damage caused by negligence of the respondents.
The alleged causes of action in this proceeding
against the first to fourth
respondents, and any cause of action that existed against Mr Porter,
accrued before 4 July 2003, and
therefore the statutory provisions
affecting questions of breach and causation in the laws of negligence do not
apply: see, Civil Liability Act 2002 (Tas), s 4(3). And the
proceeding against Mr Hogan was brought before the commencement of the
corresponding Victorian provisions with the consequence
that they do not apply:
see, Wrongs Act 1958 (Vic), s 66. The factual questions of breach of
duty and causation are therefore to be resolved by reference to common law
principles, as picked
up by the Judiciary Act, s 80.
- It
was not controversial that each of the relevant legal practitioners owed a duty
to Jadwan to exercise reasonable care in the performance
of their respective
retainers. However, the scope of those duties was in issue. Rae & Partners
maintained that the scope of its
retainer did not require it to give advice
about taking action to challenge the first Standards Review Panel report, or the
financial
sanctions determination, as Jadwan alleged. The fourth respondent
claimed that Mr Hogan’s retainer was constrained by the terms
of his
instructions, which related to Jadwan’s short-term desire to sell its bed
licences before the foreshadowed revocation
of its approval, and which did not
require Mr Hogan reasonably to direct attention to the new legislation. And
the fifth respondent
maintained that Mr Porter had not been requested to
give advice about the new legislation.
- The
retainers of the first to third respondents, Mr Hogan, and Mr Porter
are to be examined separately. Each may be liable to Jadwan
independently in
negligence, and in the case of the first to fourth respondents, also in respect
of a corresponding breach of retainer.
As McHugh J observed in Bennett v
Minister of Community Welfare [1992] HCA 27; 176 CLR 408 at 429, citing
the speech of Lord du Parcq in Grant v Sun Shipping Co Ltd [1948] AC 549
at 563 –
It is “a well settled principle that when separate
and independent acts of negligence on the part of two or more persons have
directly contributed to cause injury and damage to another, the person injured
may recover damages from any one of the wrongdoers,
or from all of
them”.
- While
the existence of a duty to take reasonable care is a question of law, what
reasonable care required to discharge such a duty
depends upon all the factual
circumstances. And whether reasonable care was exercised is a question of fact
that is to be evaluated
prospectively: Vairy v Wyong Shire Council [2005]
HCA 62; 223 CLR 422 at [126] (Hayne J); Roads and Traffic Authority
of NSW v Dederer [2007] HCA 42; 234 CLR 330 at [18] (Gummow J). In
relation to the duty of a solicitor, in Badenach v Calvert,
French CJ, Kiefel and Keane JJ stated at [16]
that –
There could be no doubt that a solicitor owes a duty to
his or her client in both contract and tort. The scope of a solicitor’s
duties with respect to the latter will usually be set by the terms of the
retainer.
[Citation omitted]
- Gageler J
stated in the same case at [57] –
Subject to statutory or contractual exclusion,
modification or expansion, the duty of care which a solicitor owes to a client
is a
comprehensive duty which arises in contract by force of the retainer and in
tort by virtue of entering into the performance of the
retainer. The duty is to
exercise that degree of care and skill to be expected of a member of the
profession having expertise appropriate
to the undertaking of the function
specified in the retainer. Performance of that duty might well require the
solicitor not only
to undertake the precise function specified in the retainer
but to provide the client with advice on appurtenant legal risks. Whether
or not
performance of that duty might require the solicitor to take some further action
for the protection of the client’s
interests beyond the function specified
in the retainer is a question on which differences of view have emerged. That
question was
not addressed in argument, and need not be determined in this
appeal.
[Citations omitted]
- Gageler J’s
reference to taking action beyond the function specified in the retainer was
accompanied by the citation of Hawkins v Clayton [1988] HCA 15; 164 CLR
539 at 544-545 (Mason CJ and Wilson J) and 579-580 (Deane J), and
other cases where a solicitor’s “penumbral”
duty has been
considered. That has occurred often in the context where it has been alleged
that a solicitor’s duty to take
reasonable care required that advice be
given as to the prudence of a proposed transaction: see for example,
Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; 77 NSWLR 205
at 263-270. Whether such an obligation arises depends upon the
circumstances, as the observations of Allsop P in Provident Capital Ltd
v Papa [2013] NSWCA 36; 84 NSWLR 231 at [2]- [6] and of Nettle JA
in AJH Lawyers Pty Ltd v Hamo [2010] VSCA 222; 29 VR 384 at [23]
demonstrate. In the latter case, Nettle JA stated
at [23] –
As Deane J said in Hawkins v Clayton, depending
upon the circumstances, a solicitor may come under a duty to do more than simply
perform the task defined by his instructions.
A duty to warn may arise where
circumstances give rise to a real and foreseeable risk of economic loss by the
client or, in particular
circumstances, even a person who was not a client but
who may be adversely affected.
- In
Dominic v Riz [2009] NSWCA 216, Allsop P referred to other cases,
namely Heydon v NRMA Ltd and the analysis by Campbell JA in
Kowalczuk v Accom Finance Pty Ltd, and stated that the
circumstances of the responsibility of a solicitor to act in respect of a matter
falling outside his or her retainer were less
than clear, and that,
“[p]art of that lack of clarity is the impossibility and unwisdom of
seeking to cover future factual
circumstances of an infinite kind with a legal
test.” And in Provident Capital Ltd v Papa at [5]
Allsop P stated that “[t]he extent of proper fulfilment of the duty
may be debateable in any given case”. We respectfully
agree with these
observations.
- In
Cousins v Cousins [1991] ANZ Conv R 245, Kirby P
stated –
Lawyers are trained, and the law of their profession
requires them to be vigilant for their client's interests. They must sometimes
step in front of their client. They must provide advice to them against the
follies of plans having a legal character, the full legal
ramifications of which
the client may not understand.
- We
do not treat this passage as laying down any general principle of law because,
as we have said, what reasonable care requires in
particular circumstances is
fact-dependent. In Provident Capital Ltd v Papa at [6] Allsop P
cited the above passage, and added –
I recognise the risk of simplistic encapsulation; but
many clients look to and rely on an advising lawyer, not as the expounder of
legal doctrine, but as the confidential adviser about the law and its practical
intersection with life. That is why they seek advice.
- For
reasons that will become apparent, we do not think that any question of a
penumbral duty arises in this appeal. But in relation
to any such suggested
duty, we express a preference for the statement of Kourakis CJ in AS
Bannister v Sirrom Enterprises Pty Ltd [2016] SASCFC 153 at [92] that
“what is sometimes described as a penumbral duty is no more than a
particular aspect of a solicitor’s primary duty”.
- Jadwan
bore the onus of showing that it suffered damage that was caused by the
negligence of its legal practitioners, which entailed
proving on the balance of
probabilities the matters identified at [419] above: Evidence Act 1995 (Cth),
s 140(1). In order for a fact to be proven on the balance of probabilities,
the Court must have an actual persuasion of its existence. A mere
mechanical
comparison of probabilities independent of any belief in its reality, cannot
justify a finding of a fact: Briginshaw v Briginshaw [1938] HCA 34; 60
CLR 336 at 361 (Dixon J). See also, Communications, Electrical,
Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia v ACCC [2007] FCAFC 132; 162 FCR 466 at [31] (Weinberg,
Bennett and Rares JJ). And the Court does not simply choose between
alternatives on the ground that one is more likely.
What must be demonstrated is
a reasonable and definite inference: Bradshaw v McEwans Pty Ltd (1951)
217 ALR 1 at 5 (Dixon, Williams, Webb, Fullagar and Kitto JJ), cited
in Luxton v Vines [1952] HCA 19; 85 CLR 352 at 358 (Dixon, Fullagar
and Kitto JJ).
- Although
the component parts of Jadwan’s case require examination, on the question
of causation upon the hypothesis that its
legal practitioners were negligent,
Jadwan had to satisfy the Court of the fifth proposition referred to at [419] above, namely that if reasonable care
had been exercised, then on 1 October 1997, Jadwan would have become an
approved provider
under the Aged Care Act. To establish that fact
required proof of a past hypothetical on the balance of probabilities, involving
the evaluation – at
a hypothetical level – of manifold and
interdependent facts and circumstances. In evaluating those facts and
circumstances
it is necessary to stand back and consider whether the Court is
satisfied of the ultimate proposition by looking at the overall effect
of the
evidence. The observations of Tadgell JA in Transport Industries
Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 141 in relation to
circumstantial evidence, and his Honour’s focus on what is ultimately
sought to be proved, are equally
applicable to the evaluation of complex past
hypothetical circumstances –
... it should be said that, to assess the evidence in a
case like this by reference to various individually-pleaded particulars, as
though running through items on a check list, is apt to mislead. The evidence is
to be evaluated as a whole in order fairly to consider
whether the party bearing
the onus of proof has established what is ultimately sought to be proved. The
object of the exercise of
evaluation is to discover whether the evidence paints
a picture reflecting real life, rather than to place a tick or a cross against
paragraph after paragraph of torpid pleading. A true picture is to be derived
from an accumulation of detail. The overall effect
of the detailed picture can
sometimes be best appreciated by standing back and viewing it from a distance,
making an informed, considered,
qualitative appreciation of the whole. The
overall effect of the detail is not necessarily the same as the sum total of the
individual
details: cf. Hall (Inspector of Taxes) v. Lorrimer [1992] I
WLR. 939 at 944; Shepherd v. R. [1990] HCA 56; (1990) 170 C.L.R. 573 at 579-80.
In a civil case like this, where there is no direct evidence of a fact that a
party bearing the onus of proof seeks to prove, “it
is not possible to
attain entire satisfaction as to the true state of affairs”: Girlock
(Sales) Pty. Ltd. v. Hurrell [1982] HCA 15; (1982) 149 C.L.R. 155 at 169, per Mason J. In
such a case, however, the law does not require proof to the “entire
satisfaction” of the tribunal
of fact.
- To
prove a past hypothetical on the balance of probabilities has its peculiar
difficulties, as opposed to proof of historic facts:
Sellars v Adelaide
Petroleum NL at 355 (Mason CJ, Dawson, Toohey and
Gaudron JJ). While there may be occasions where it is appropriate to assess
damages on robust
assumptions that are favourable to an applicant if the act of
a wrongdoer has made proof of loss difficult (see, Murphy v Overton
Investments Pty Ltd [2004] HCA 3; 216 CLR 388 at [74], citing Armory
v Delamirie (1722) 1 Str 505; [1722] EWHC KB J94; 93 ER 664), those principles do not apply so
as to ameliorate the requirement to prove causation of the claimed injury or
damage on the ordinary
standard. Particular problems may arise in relation to
testamentary evidence directed to a hypothetical. In relation to such evidence,
“[t]he witness is giving evidence with the benefit of hindsight and knows
where his or her interest lies at the time of giving
evidence”:
Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd
(No 5) [1996] FCA 256; 64 FCR 73 at 77 (Lindgren J). See also the
observations of Kirby J in Chappel v Hart [1998] HCA 55; 195 CLR 232
at 272-3. Testamentary evidence of what the directors of Jadwan would have
done in a hypothetical situation is open to the criticism
that it is
self-serving, and may carry little weight: Dominelli Ford (Hurstville) Pty
Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; 38 FCR 471 at 483
(Beaumont, Foster and Hill JJ). Senior counsel for Jadwan accepted in
submissions on appeal that the evidence of Mrs Joan
Alexander and
Ms Julie Alexander as to what they would have done had they received
competent advice was somewhat self-serving. On
the other hand, as McHugh J
demonstrated in Rosenberg v Percival, if a trial judge forms a favourable
impression of the witness, direct evidence may have substantial weight. It is
not apparent that
the primary judge, who had the benefit of seeing
Mrs Joan Alexander and Ms Julie Alexander give their evidence,
gave any weight to
their evidence on the topic of what Jadwan would have done
had it received different advice. In the present case, the circumstantial
evidence and the inferences arising therefrom were of significance, because the
circumstantial evidence bore upon the probability
of any hypothetical
propositions asserted in the testamentary evidence. In discharging its legal
onus, Jadwan had to show that it
would have acted on advice to seek
interlocutory relief from the Court, and that it would have continued to conduct
its business
so that at least one resident entitled to Commonwealth benefit
remained at Derwent Court on 30 September 1997. That directs attention
to
what Jadwan itself would have done. The primary judge found at [149],
[157], and [531] that Mr Alexander, who had passed away
many years prior to
the trial, was effectively the controlling mind of Jadwan. The hypothetical
question of what course Jadwan would
have taken if it had been given reasonable
and prudent advice therefore depended on circumstantial evidence.
- Part
of the past hypothetical that Jadwan had to prove was what advice the exercise
of reasonable care on the part of Mr Wicks, Mr
Hogan, and
Mr Porter required in the circumstances. That issue had to be evaluated
prospectively, and directed attention to the individual
circumstances of the
retainer of the practitioner concerned, and to the standard of care.
Consideration
- We
shall address the issues argued by Jadwan on appeal, but not in the same order
in which they were presented in argument.
1. The retainer of Rae & Partners – Issue
(6)
- We
respectfully do not agree with the primary judge’s findings that Rae &
Partners had not been retained to give legal advice,
or that the services that
had been provided by Mr Wicks when employed by Rae & Partners did not
add anything of legal consequence.
The starting point is the letter of
instructions that Mr Alexander sent to Mr Wicks on 7 February
1997, to which we referred at [70]
above. That letter referred to Jadwan’s belief that it was
“prudent to seek initial advice in the early stages”, and to
a hope that the matter would be resolved without legal involvement. After
receiving written and oral instructions
from Mr Alexander, Mr Wicks
undertook research at the Law Society library, which was evidenced by a
five-page research note (see
[74]
above). That research note referred to a reprint of the National Health Act
dated 20 September 1996. The note referred to provisions of the Act
relating to declarations of non-compliance, revocation of approval,
and
administrative review by the Administrative Appeals Tribunal. There was no
reference in the note to the ADJR Act, or any other form of judicial
review. Later documents support an inference that Mr Wicks did not have a
proper understanding of
the applicable principles, because he referred in his
notes as late as 31 July 1997 to the proposed ADJR Act proceeding as
an “appeal”, and as we have mentioned, he was advising Jadwan in
July and August 1997 that it could pursue
a claim in damages if it were
shown that the revocation decision was improperly made (see [205]-[206], [210], and [263] above). The evidence does not
support an inference that Mr Wicks had any awareness of the principles
concerning the tort of misfeasance
in public office, and the elements that had
to be established to show an entitlement to damages, as to which see Northern
Territory v Mengel [1995] HCA 65; 185 CLR 307. Rather, it seems that
Mr Wicks proceeded on the incorrect understanding that an action in damages
lay if an administrative decision
was set aside, without more.
- Thereafter,
Mr Wicks sent correspondence to the Department, including the letter of
12 February 1997 to Mr Dellar (see [77] above). The evidence of Mr Wicks
was that the letter of 12 February 1997 was written based upon instructions
given by Mr Alexander
in the conference on 7 February 1997, during a
telephone call on 12 February 1997, and from material that
Mr Alexander provided to
him. Mr Wicks did not say that
Mr Alexander had drafted the letter of 12 February 1997, and the
evidence does not support that inference.
The letter of 12 February 1997
sought from Mr Dellar information about the process and instruments by
which the first Standards Review
Panel was appointed. This request directed
attention to the legality of the Panel’s composition. We infer from the
contents
and form of the letter that its drafting involved the application of
legal skill.
- The
letter dated 13 February 1997 that Mr Wicks sent to the Department was in a
different category, because its contents were based
upon a draft letter that
Jadwan sent to Mr Wicks (see [80] above). However, it is material to
observe that the contents of the 13 February 1997 letter were factual, and
detailed, and necessarily
required precise instructions from Jadwan. But even
then, although Mr Wicks’s letter in its detail followed the text of
the
draft letter sent to him by Jadwan, it did not do so slavishly. The opening
two paragraphs of the letter that Mr Wicks sent were
different, and the
closing paragraph was different. We infer from the contents of those paragraphs
that the preparation of the letter
was the product of the application of legal
skill, which included the review and incorporation of the instructions that
Mr Wicks
had received from Jadwan in the form of the draft letter.
- Nor
do we consider that the work that Mr Wicks undertook in accompanying
Mrs Joan Alexander and Ms Julie Alexander to the meeting
with the
Department on 26 February 1997 did not require legal skill. Mr Wicks
met them before and after the meeting with the Department.
Negotiation and
advice on strategy in the context of a dispute with government are skills that
are reasonably within a lawyer’s
professional expertise. As Allsop P
observed in Provident Capital Ltd v Papa (see [442] above), many clients look to and rely
on an advising lawyer, not as the expounder of legal doctrine, but as the
confidential adviser
about the law and its practical intersection with life. It
is tolerably clear from Mr Wicks’s file note of the meeting on
26
February 1997, to which we referred at [93] above, that he did proffer some
opinions having a legal character, including on the prospects of challenging any
decision to revoke
Jadwan’s approval. We infer from that note, in
combination with the product of Mr Wicks’s legal research, that the
advice
concerned administrative, merits-based review, rather than judicial
review. In cross-examination, Mr Wicks accepted that his notes
of the
meeting of 26 February 1997 recorded advice that he had given to
Mrs Joan Alexander and Ms Julie Alexander. For the reasons
given
by the primary judge at [124]-[128], Mr Wicks’s file notes are
highly probative of what they recorded.
- As
to Ms Julie Alexander’s evidence that at the meeting on
26 February 1997 she conveyed a concern to Mr Wicks that Jadwan was
not receiving any advice as to what they should be doing in relation to the
financial sanctions determination, the primary judge
held at [272] that
Mr Wicks’s contemporaneous note was inconsistent with him being asked
for advice about prospects of challenging
the determination. The primary judge
at [273] held that the evidence recorded in Mr Wicks’s
contemporaneous note was to be
preferred over Ms Alexander’s recall, and
was not persuaded to accept her evidence on that issue. We see no appealable
error
in that approach, which involved a preference for the contents of a
contemporaneous document. However, we differ from the primary
judge because we
infer from the file note that Mr Wicks gave advice to Jadwan by at least
stating that he could not really assist
in any way, that there was little
further that he could do, and by stating that it may be difficult to challenge a
decision to revoke
the approval through an “appeal” process.
- On
5 March 1997, Mr Wicks sent by fax to the Department some submissions
prepared by Jadwan and its nursing staff under cover of a
letter that challenged
the merits of the first Standards Review Panel’s report, and pleaded that
the approval should not be
revoked, and that the report should not be made
public. We regard that plea as involving legal work, namely an attempt to
negotiate
a favourable outcome with the Department.
- Mr Wicks’s
file note of the meeting with Mr Alexander on 8 April 1997, to which
we referred at [108] above,
recorded a statement that it was pointless challenging the composition of the
first Standards Review Panel. The primary judge
at [284] made no finding as
to whether this statement was to be attributed to Mr Wicks, or to
Mr Alexander. Mr Wicks had accepted
in cross-examination that the note
appeared to record a view that he conveyed to Mr Alexander, but the primary
judge declined to
act on that concession, finding that it was equally possible
that the conclusion was expressed by Mr Alexander. We would not disturb
that finding, because it was informed by the primary judge’s assessment of
Mr Wicks as a witness (see [40] above), and no objective circumstantial
evidence dictates a contrary finding. Further, on the assumption that
Mr Wicks gave the
advice recorded in the file note, we are not persuaded
that the advice was unreasonable at the time that it was given, and we are
not
persuaded that there was any error in the primary judge’s finding to that
effect at [287]. The context of the advice was
that the first Standards
Review Panel had recommended revocation of Jadwan’s approval, and the note
recorded a reasonable view
that by the appointment of the second Standards
Monitoring Team, which had visited Derwent Court in March 1997, the
Department was
seeking to secure its position against the prospect of a review
by the Administrative Appeals Tribunal. At the time, the principal
threat was
revocation of the approval, rather than the imposition of the financial
sanctions, which was having only a marginal effect
on resident numbers. As we
noted at [133] above, by
10 June 1997, resident numbers had been reduced by only two. For the
purpose of evaluating whether Mr Wicks’s advice
was unreasonable at the
time it was given, it is important not to view it in hindsight. The real
significance of the financial sanctions
determination to the revocation of
approval would arise later in relation to the potential operation of the
transitional provisions
of the Consequential Provisions Act, which was
not enacted until 7 July 1997. Moreover, the evidence does not support an
inference that, if Jadwan had at any point prior
to July 1997 been given
advice about the prospect that it could seek judicial review of the financial
sanctions determination, that
it would have acted on such advice and commenced a
proceeding. There was a shortage of evidence on the topic of causation in
relation
to these claims. The primary judge noted at [24] that as a
distinct basis of liability, little attention was given to these claims
at the
trial. On the available evidence, the inference we draw is that Jadwan was
seeking to assuage the Department, and the Tasmania
Fire Service, without
recourse to litigation, and was at least contemplating the sale of its bed
licences.
- On
10 June 1997, when Mr Alexander sought Mr Wicks’s
assistance with the preparation of a business plan (see [132] above), they discussed whether an
approved business plan would result in a lift of the financial sanctions
determination. This discussion
appears to have been incidental to Jadwan’s
main concern, which was to satisfy the Tasmania Fire Service, and in turn the
Department,
of a proposal to relocate Derwent Court to a newly-constructed
building. In relation to the draft business plan, by a letter dated
12 June
1997, Mr Wicks provided some considered comments to Mr Alexander,
which are set out at [135] above.
Those comments included giving advice that an option to purchase new land was
the best way to proceed. We are of the view
that the preparation of that letter
from Mr Wicks involved the application of legal skills.
- For
the above reasons, the primary judge was in error at [256] in
characterising the retainer of Rae & Partners as involving only
the
provision of a letterhead, and not requiring the application of legal skills. We
consider that when Mr Wicks gave advice to Jadwan
on 24 February 1997
about options that were open to it, reasonable care required that the
possibility of judicial review of the financial
sanctions determination and the
proposed revocation be at least identified. We infer that Mr Wicks’s
focus of attention had
been confined to merits review. However, we are not
persuaded that Jadwan established that it would have acted on any such advice
and commenced proceedings at any point prior to service of the notice of
intention to revoke the approval, which occurred on 20 July
1997. Whether
Jadwan would have taken steps to seek judicial review of the financial sanctions
determination, given its focus on
dealing with the requirements of the Tasmania
Fire Service, and the investigation of alternatives such as moving residents out
of
the first floor and developing new premises, is in the realm of true
speculation. Relevant to this conclusion is the special significance
of the new
legislation, which the primary judge inferred at [469] was held in the Law
Society library’s collection by 21 July
1997. The evidence does not
support a finding that a solicitor exercising reasonable care should have become
aware of the new legislation
at any earlier point in time.
2. Had Jadwan decided by 15 July 1997 to “get
out” – Issue (1)
- The
primary judge inferred from a file note prepared by Mr Wicks and dated
15 July 1997 that Jadwan had by that date decided to cease
operating
Derwent Court, and had decided to sell its bed licences. We have set out the
file note at [148] above. Jadwan
made two challenges to this finding. First, Jadwan submitted that the allegation
that it had decided to get out had
not been pleaded, or otherwise run at trial.
And second, Jadwan submitted that the finding was in any event in error.
- As
to whether the respondents ran that case at trial, we accept Jadwan’s
submission in part, to the extent that no respondent
pleaded their case alleging
in terms that Jadwan had decided irrevocably by 15 July 1997 to cease
operating its business at Derwent
Court and to sell its bed licences. The
pleaded case of the first to third, and fifth respondents, to which we referred
at [317] above, was that by 24
and 25 July 1997, Jadwan had decided to cease operating the nursing home.
In our view, within that case was
Jadwan’s circumstances in the weeks and
days leading up to 24 and 25 July 1997, and it was permissible for the
respondents
to rely upon Mr Wicks’s file note of 15 July 1997 to
support that case.
- In
opening Jadwan’s case at trial, senior counsel for Jadwan referred the
primary judge to Mr Wicks’s file note of 15
July 1997, referred
to the fact that the handwritten date was unclear, and submitted that it was
dated 3 July 1997. As to the entry,
“you have decided to get
out”, senior counsel opened the case on the basis that while that may
well have reflected the current thinking at the time, it did not
remain the
case. Later in his opening, senior counsel submitted that, in context, the words
“you to stress you will be relocating” meant getting
out of the old building, and relocating. When senior counsel for the first to
third respondents opened their case, which
occurred after Jadwan’s opening
and before any evidence was called, he referred to Mr Wicks’s file
note of 15 July 1997
and submitted that the decision to get out related to
Derwent Court, which was a spent entity, and accepted a proposition put to
him
by the primary judge that “you to stress you will be
relocating” was how the circumstances would be explained to others. In
written closing submissions in reply at trial, the first to third
respondents
submitted that –
- the business
plan that Jadwan submitted provided for a three-year timeframe, when the
Tasmania Fire Service had requested a two-year
timeframe;
- the business
plan had been prepared only for the purpose of buying more time for the existing
operation at Derwent Court;
- the evidence of
Jadwan seeking a new site was of superficial efforts, and there was no evidence
of any concrete proposal to relocate;
- despite
enquiries about alternative accommodation for residents on the first floor, no
arrangements were ever put in place; and
- these
circumstances indicated that Jadwan had little interest in a future for Derwent
Court as a going concern, as opposed to selling
the bed licences.
- Ms Julie
Alexander was cross-examined about the meeting with Mr Wicks on
15 July 1997, and gave evidence that the reference in the
note was to
getting out of the building, and not the business. It was not put to her in
clear terms that her evidence on that issue
was incorrect, and no proposition to
the effect that Jadwan had by 15 July 1997 made an irrevocable decision to
cease its nursing
home business and to sell the licences was put to her.
However, earlier in the cross-examination, senior counsel for the first to
third
respondents put to Ms Alexander that obtaining quotations for works, and
the making of suggestions that Jadwan was considering
a new building, were part
of a “smokescreen” to make the Department think that Jadwan was
really doing something to address
its concerns, when that was never a really
serious prospect at all. This was an allied point, but it did not amount to
putting a
case that Jadwan had decided by 15 July 1997 to cease operating
its business.
- Senior
counsel for the fourth respondent cross examined Ms Alexander on the
premise that by 28 July 1997, being the date of the letter
from Jadwan to
Mr Hogan, there had been a change of intention from seeking to update the
fire safety and care standards and building
a new facility, to wanting to save
and to sell the bed licences, to which Ms Alexander agreed.
- As
to Mrs Joan Alexander, it was put to her in cross-examination by
senior counsel for the fourth respondent that Jadwan had decided
by 2 July
1997 to get out of the nursing home business, which she denied.
- When
Mr Wicks gave evidence about the file note of 15 July 1997, his
recollection was of a general understanding that Derwent Court
could not
continue, and that something would have to be done to relocate it in the
short-term, or sell up the undertaking. In cross-examination
by senior counsel
for Jadwan, Mr Wicks accepted that during the period from July to
September 1997, Jadwan had actively considered
the three options referred
to at [151] above, and stated that
there was never any talk that Jadwan would just walk away.
- The
file note of 15 July 1997 was an important piece of evidence that was
relied on by the respondents, and together with other circumstantial
evidence
there was a basis to find that Jadwan was in mid-July 1997 contemplating
selling its bed licences. But we rather think that
the case that the respondents
ran was more closely aligned with their pleadings, which was that
between 24 and 25 July 1997 Jadwan
had decided to cease operating the
nursing home, and in the case of the fourth respondent, that the decision had
been made by the
time Mr Hogan was engaged on 28 July 1997.
- For
two reasons, we consider that the primary judge was in error in finding that by
15 July 1997, Jadwan had decided to cease operating
Derwent Court, but had
decided falsely to represent to the Department that it would be relocating. The
first reason is that in our
view, the issue on which the parties joined was
whether Jadwan would have acted on advice to seek interlocutory relief following
its receipt on 21 July 1997 of the delegate’s notice of intention to
revoke, and not whether it had decided by 15 July 1997
to get out of the
nursing home business. The second reason is that in our view, the correct
inference arising from the evidence is
more nuanced, and it is that by
15 July 1997, Jadwan had been giving very serious consideration to getting
out of Derwent Court and
selling its bed licences, but not that it had made a
firm or irrevocable decision to do so by that point, or on that day. That
inference
arises from the following circumstances –
(1) Mr Alexander’s initial mention to
Mr Wicks on 7 February 1997 of the value of the bed licences at
$12,000 each (see [72] above);
(2) Mr Wicks’s file note of 10 June 1997, where he recorded
Mr Alexander asking whether a declared home could sell beds (see
[133]-[134] above);
(3) Mr Wicks’s file note of 2 July 1997, in which Mr Wicks
recorded Mr Alexander as saying, “more inclined to sell now and
get out” and Mr Wicks’s note that Mr Alexander was
going to speak to a marketing firm that day (see [144] above);
(4) Mrs Joan Alexander’s diary entry for 2 July 1997
(see [145] above), which included
the statements –
- Jeff went to see Steve Dellar about beds been
[sic] sold and he said he wasn’t able to speak to us;
- Jeff ringing Anne Thorpe. We would rather get out of it. They
shouldn’t lock us in on a commercial basis. To talk to James
Lang Wotton
[sic] tomorrow morning, selling beds. Get declaration lifted, sell
beds.
(5) although Mr Wicks’s file note of
2 July 1997 records Mr Alexander as stating that he was going to speak
to a marketing firm,
and Mrs Joan Alexander’s diary entry for
2 July 1997 refers to a proposal to speak to Jones Lang Wootton, there was
no evidence
that this occurred, and when Ms Julie Alexander was
cross-examined about Mr Wicks’s note of 2 July 1997, she stated
that the
reference to “more inclined to sell and get out”
represented Mr Alexander’s personal view, and that the directors of
Jadwan had agreed to rebuild;
(6) the contents of Mr Wicks’s file note of 15 July 1997
relating to his attendance on Mr Alexander and Ms Julie Alexander
(see [148] above); and
(7) the contents of Mr Wicks’s file notes of conversations with
Mr Alexander on 22 July 1997 (see [169]-[171] above), which support an inference
that at that time, Jadwan was still at least contemplating the possibility of
continuing to operate
Derwent Court.
- In
preparing its business plans, Jadwan was careful not to make any firm commitment
to relocation, and it allowed itself ample time
to consider its options. That
can be seen in the business plan that was submitted on 13 June 1997, which
allowed until December 1997
for the location of suitable land, and then for
an option to purchase. We would not find that Jadwan was making false
representations
to the Fire Service or the Department at this time: the
high-level, leisurely, and contingent nature of the business plan spoke for
itself. The fact that by 15 July 1997, Jadwan was giving very serious
consideration to getting out of Derwent Court and selling its
licences, and that
it had not made any firm commitment to relocate, informs what inferences are to
be drawn in evaluating the hypothetical
question as to what Jadwan would have
done had it received advice on or shortly after 23 July 1997 about the
effect of the new legislation,
which is an issue to which will turn later in
these reasons.
3. Was there an agreement with the Commonwealth in relation
to payment of staff redundancies – Issue (2)
- At [360]-[361],
the primary judge held that by 24 July 1997, the Commonwealth had agreed to
fund 80% of the cost of redundancy payments
for nursing staff at Derwent Court.
At [527], the primary judge held that Jadwan had a strong economic
incentive not to stand in
the way of the residents of Derwent Court leaving,
because had it retained its residents, it would also have had to retain its
nursing
staff and forego the Commonwealth’s offer to meet the cost of
redundancy payments. At [537], the primary judge held that it
was
implausible that Jadwan could have secured agreement from the Commonwealth to
meet the cost of the redundancy payments except
on the basis that Jadwan had
indicated to the Commonwealth that it was not going to stand in the way of the
transfer of residents.
And at [557], the primary judge held that the
Commonwealth’s undertaking came at an implicit price, namely that Jadwan
would
be expected to dismiss its staff, cooperate in the movement of residents
to alternative accommodation, and to cease its nursing home
business –
In the Court’s opinion it is open to infer that
that undertaking came with an implicit price: Jadwan would be expected to
dismiss
its staff, cease its nursing home business and cooperate in the removal
of Derwent Court’s residents to alternative accommodation.
The Court finds
that that premise informed Jadwan’s immediately subsequent conduct.
Explaining Jadwan’s decision to give
immediate notice to all of Derwent
Court’s staff on 25 July 1997, Mr Alexander told Mr Wicks “that
patients have to be
cared for so closure has to be
accepted”.
- The
primary judge then referred at [558] to the contents of
Mr Hogan’s letter to Ms Paul of the Department dated
30 July 1997
(see [233] above)
in which Mr Hogan stated, conformably with his instructions to
Mr Alexander –
We would anticipate that the home would not function
pending the sale of the bed licences with all residents relocated and with the
staff of the home having been given notice upon the basis that their
entitlements inclusive of redundancy payments will be met by
the
Commonwealth.
- At [559]-[560],
the primary judge inferred that even if Mr Wicks had given Jadwan the
advice that a solicitor acting with the requisite
degree of skill and care
should have given, Jadwan would not have sought to stop the transfer of its
nursing home residents, which
was not a rational choice for it to make. The
primary judge’s reasons included a comparison of the value of the bed
licences
and the extent of the liability for the redundancy payments. The
primary judge at [565] rejected the evidence of the expert witnesses
that
the value of the bed licences at the time was as much as $30,000 each on an
unimpaired basis, and referred to the evidence of
Mr Alexander’s
statements recorded in Mr Wicks’s file notes of 7 February 1997
and 10 June 1997 that the value of the
licences was $12,000. The primary
judge also took account of his finding that Jadwan had already decided to
“get out”
of its nursing home business.
The respondents’ cases at trial
- We
shall address first Jadwan’s submissions to which we referred
at [326] that no respondent had made the case at trial that
Jadwan had
agreed to accept funding of redundancy payments from the Commonwealth as a form
of compensation for the closure of Derwent
Court, or that there had been a tacit
agreement between Jadwan and the Commonwealth that the funding of redundancy
payments was conditional
on Jadwan’s agreement to terminate its staff, to
cease its nursing home business, and to co-operate in the transfer of residents
to the other accommodation.
- In
his opening address at trial, senior counsel for the first to third respondents
referred to Mr Wicks’s file note of 22 July
1997 (see [173] above) and submitted that the question
of redundancy payments was going to be a very important issue for Jadwan, and
drew attention
to the figures of $400,000 for redundancies, and $50,000 per week
for the payroll. Counsel then referred to Mr Wicks’s file
note of a
conversation with Mr Alexander on 24 July 1997 (see [187] above) in which Mr Wicks wrote
that the Commonwealth would fund 80% of redundancy payments for nursing staff,
but not the notice
that had to be given under the Awards. Counsel then submitted
that there was an inescapable inference that as a result of the resolution
of
the redundancy issues, the staff were then given their notice. Counsel referred
to an issue that appeared to arise later, on about
6 August 1997, when
Mr Wicks wrote in a file note of a conversation with Ms Julie
Alexander that in relation to redundancies there
was a problem, and that the
Department was “dragging its heels”, but submitted that any such
issue was eventually resolved,
and the government substantially funded the
redundancies. The primary judge then drew attention to the following statement
recorded
in the file note of 6 August 1997 –
redundancy bill will be over half a million dollars
– which could be value of the bed licences – one will cancel out the
other (!)
- Senior
counsel for the first to third respondents then submitted –
Now, one can see how obtaining that funding for staff
redundancies is an enormous incentive to Jadwan in the situation that it was
already in, keeping in mind that it didn’t have to lose too many more bed
licences before it would become unviable at 35. Now,
with 51 bed licences, of
course, it gets to 35 if it has no patients on the upper floor. But it was
already down five in –
sometime earlier. ...
- Senior
counsel for the fourth respondent, in his opening address at trial, referred to
the letter from Jadwan to Mr Hogan dated 28
July 1997 (see [216] above), and to the reference at
point 9 of the letter –
- Our
staff have been given notice and redundancy provisions are being negotiated.
Southern Cross Homes are employing some of our staff.
- Senior
counsel for the first to third respondents cross-examined Ms Julie
Alexander about the topic of redundancies. Ms Alexander
stated that she
“didn’t know anything about redundancies”, and that
“Jeff was handling it all”. Ms Alexander did not agree
that on 21 July 1997, she had spoken to Ms Thorpe of the Department
about staff pay and redundancies,
when a note in
Mrs Joan Alexander’s diary to that effect was put to her
(see [165] above). Later, counsel
put to Ms Alexander that having given notice to staff so quickly, she was
keen to ensure that she obtained
some funding from the Commonwealth.
Ms Alexander was taken to Mr Wicks’s file note of 24 July
1997, to which we referred at
[187]
above, and the following exchange took place –
Now, clearly, that’s about the terms on which
staff employment could be terminated, isn’t it?---Yes, obviously.
And about redundancies?---Yes.
And about notice provisions and requirements?---Yes.
And it would suggest, would it not, that Jeff knew all about this by 24
July?---Yes.
And is it something you had discussed with Jeff at all on or before 24 July?---I
can’t – I’m not sure. I don’t
know.
You can’t recall. Is that - - -?---Yes.
But you were, from that point on, very keen to make sure that you didn’t
risk losing that redundancy funding, weren’t
you?---I don’t know
what you’re talking about.
Well, you did indeed seek some advice from Mr Wicks in connection with the
redundancy funding, didn’t you?---Me personally?
Are you asking me
personally or are you asking whether Jeff did or anybody else from Jadwan?
I’m sorry, I didn’t hear that?---Did – are you asking whether
Jadwan did or whether I personally sought advice
from Stephen Wicks?
Well, I’m suggesting that you did?---No, I don’t
recall.
- Senior
counsel for the first to third respondents subsequently put to Ms Alexander
that it was important to get the redundancy funding
from the Commonwealth locked
in before Jadwan commenced court proceedings –
But what I’m putting to you is this: it was
important – and you understood it to be important – to get the
redundancy
funding from the Commonwealth locked in before you took them to court
against the risk that if you took them to court, that funding
would not come. Do
you want me to repeat that?---Sounds – yes. Yes.
The proposition I’m putting to you is that by 7 August it was important to
get the redundancy funding from the Commonwealth
locked in before you took them
to court against the risk that if you took them to court the funding
wouldn’t come?---That sounds
like rubbish to me.
- This
was a distinctly different proposition than suggesting to Ms Alexander that
there was an agreement that in exchange for the redundancy
funding, Jadwan would
close Derwent Court and not stand in the way of the transfer of residents.
- Senior
counsel for the first to third respondents then took Ms Alexander to
Mr Wicks’s file note of his conversation with her
dated 6 August
1997, to which we have referred at [263] and [472] above, and the following exchange took
place –
Well, the potential redundancy liability for Jadwan of
half a million dollars would be almost crippling, wouldn’t it, at that
time?---Yes, it would be, yes.
Break the company. Would break the company?---I – Jeff was the one that
handled all the financials. I can’t – I
can’t comment on
that.
Well, it could, in fact, have been the value of the bed licences. That was your
understanding at the time, wasn’t it?---I can’t
remember what my
understanding at the time was.
And you were concerned, I suggest to you, that the liability to meet the
redundancy bill would cancel out any value the bed licences
had. Did you not
have that - - -?---I don’t – I don’t recall - - -
- - - concern in your mind at the time?---I don’t recall. It was –
more likely be Jeff handling that side of it than
me.
More likely Jeff?---Jeff, yes.
The problem is this note has your name at the top of it. And, whichever way you
look at it, it does tend to suggest this came from
you, doesn’t
it?---Well, yes, it does suggest that. Yes.
- Senior
counsel for the fifth respondent also cross-examined Ms Alexander about
Mr Wicks’s file note of 6 August 1997 and its
reference to the
redundancy bill being over half a million dollars. Ms Alexander did not
agree that this was information that she
had given to Mr Wicks.
Ms Alexander was then taken to one of the draft affidavits that
Mr Wicks had prepared, to which we referred
at [266] above, and its reference to discussing
redundancies with Mr Dellar, which was “a matter of considerable
concern to the company”. In relation to the words of the draft
affidavit that were struck out, relating to the Department paying the
redundancies,
the following exchange occurred –
It was true that the department said that it would think
about picking up the bill for the redundancies; that’s correct?---There
was talk of it, yes.
And subsequently that’s what happened, isn’t
it?---Yes.
- Ms Alexander
was then cross-examined by senior counsel for the fifth respondent about the
value of the bed licences –
And you must have, I suggest to you, discussed at least
with your father a price range or an indicative range that you were expecting
to
receive for the licences?---No, we didn’t
You knew, I suggest to you, that the licences, if sold with Commonwealth
subsidies attached in Tasmania would probably bring about
$500,000?---We
didn’t have – I don’t recall a discussion.
I didn’t ask you about a discussion. You knew, I
suggest to you, about August 1997, that the licences on the market in Tasmania
would bring about $500,000 for the lot?---I – I don’t recall knowing
that myself.
And I suggest to you that that is, in substance, what you told to Mr Wicks; that
is, that the redundancy payments would cancel out
the value of the licences?---I
– I don’t recall saying that to him.
HIS HONOUR: You don’t dispute you did though?---No. But I do wonder
whether some of this information has come from discussions
Jeff might have had
with Mr Wicks because I don’t remember having such a discussion.
MR McELWAINE: Well, we can’t ask him now. I’m trying to find out
what you knew and I think your evidence is, “I
don’t recall any
knowledge about the value of the licences” - - -?---Yes - - -
- - - correct?--- - - - that’s right.
“I don’t recall any discussions with my father about the value of
the licences”?---That’s correct.
And, “I don’t recall discussing the value of the licences with Mr
Wicks”?---That’s correct.
But, on each – to each proposition, I think you would have to concede, you
don’t dispute those things happened, do you?---No,
I just can’t
recall. Yes.
- During
closing submissions, the primary judge raised with senior counsel for the fifth
respondent the value of the bed licences and
the cost of
redundancies –
HIS HONOUR: Can I also raise again – and this is a
matter I will have to raise with Mr Pearce, but he will no doubt make the
submission that, even at this late stage, the pleadings be permitted to be
amended, and we will deal with that. But on the assumption
that that were to be
permitted, there is what appears to be relevant evidence about the licences
contained in the evidence that is,
to a substantial degree, more favourable to
your client than that which is referred to in the submissions, and just mention
that
there’s a note where the prospect of sale of the bed licences is
raised with the – with a note in Mr Wicks’ file
saying:
Melbourne beds selling 18 to 23,000, here
12,000.
And then there is a further note where, after the
– after the closure – well, the – the last patients left
Derwent
Court there was an issue about – about whether or not redundancies
would be met by the Commonwealth.
MR McELWAINE: Yes.
HIS HONOUR: And there’s a file note to the effect that the amount of
redundancies effectively are equivalent to the price that
might have been
obtained from the sale of the beds.
MR McELWAINE: That’s perfectly correct, your Honour, and I think that that
was pursued with Julie Alexander and the answers
were noncommittal, but the
proposition which was sought to be established was about $500,000 equals about
$500,000.
HIS HONOUR: Yes.
MR McELWAINE: But it would be wrong for me to say that she is assented to that
proposition.
HIS HONOUR: But the two file notes together seem to suggest the contemporary
evidence - - -
MR McELWAINE: Indeed.
HIS HONOUR: - - - being in the order of $12,000 a piece, which - - -
MR McELWAINE: Yes.
HIS HONOUR: - - - is about six hundred and some thousand, which - - -
MR McELWAINE: Yes. Indeed, your Honour.
HIS HONOUR: - - - is ball park half a million; not far different.
MR McELWAINE: Yes. But against me - - -
HIS HONOUR: Yes.
MR McELWAINE: - - - is the evidence of Mr Brown.
HIS HONOUR: Yes. Of course.
MR McELWAINE: But the evidence of Mr Brown has to be read very, very carefully
because it’s the impaired bed licence value
which is important, not the
pre-economic sanctions decision bed.
- In
final written submissions at trial, counsel for the first to third respondents
submitted –
Contrary to the impression that Julie and Joan Alexander
sought to convey by their evidence, the contemporaneous evidence, especially
from Jeff Alexander, leaves no doubt that the cost of redundancies and securing
Commonwealth funding for that cost were serious issues
for the applicant from
immediately after it received notice of intention to terminate
approval.
- The
written submissions then made a number of references to the evidence.
The primary judge’s reasons
- We
do not understand the primary judge’s reasons, to which we have referred
at [468]-[470] above, as going so far as to find that
some enforceable agreement had been made between Jadwan and the Commonwealth, or
that funding
of redundancies was compensation for Jadwan’s agreement to
close Derwent Court. Rather, the primary judge referred to an undertaking
to
fund redundancies as coming with an “implicit price”. But
even so, we respectfully consider that finding goes too far.
- We
would not infer that Mr Dellar represented to Mr Alexander between 22
to 24 July 1997 that the Commonwealth would agree to fund
redundancy
payments on the condition that Jadwan closed Derwent Court and did not stand in
the way of the transfer of residents.
That inference is not supported by the
evidence, which included the letter that Mr Alexander wrote to
Mr Dellar on 30 July 1997,
to which we have referred at [239] above, by which he requested a
response as to whether the Commonwealth would fund redundancy payments,
including notice. The Department
responded to that request by letter dated
1 August 1997, in the terms which we have set out at [248] above. The inference that we draw is
that on about 22 July 1997, Mr Dellar made representations to
Mr Alexander that were consistent
with the terms of the letter from the
Department dated 1 August 1997 (see [248] above), namely that funding of
redundancy payments was available if, inter alia, Derwent Court closed.
The information in the letter of 1 August 1997 is prefaced by the words,
“As previously advised”. The assistance with redundancy costs
was represented by the letter to be an entitlement under the National Health
Act and the subject of government policy, rather than some sort of
discretionary contribution that was conditional upon the co-operation
of Jadwan
in closing Derwent Court and assisting with the transfer of residents. We
infer that Mr Dellar’s representations gave Mr Alexander some
comfort in making his decision to give notice to the staff.
However, Jadwan did
not immediately co-operate with the Department in the closure of Derwent Court.
Mr Wicks sent the letters of
23 and 24 July 1997 warning the
Department against taking any action to remove residents from Derwent Court
pending full consideration
of the circumstances by senior counsel, and a review
of “appeal rights”. This was not consistent with the
acceptance of an offer not to stand in the way of closure in return for
financial assistance
with redundancy costs. Further, the report of the internal
review by the Department dated 29 April 1998, to which we referred
at
[168] above, stated that the
proprietors of Derwent Court had told the Department in a meeting on
22 July 1997 that they would not be
cooperating with the transfer of
residents, but that this changed at a meeting on 25 July 1997 when they
agreed to co-operate. However,
we infer that the meeting on 25 July 1997
occurred after Jadwan had received advice from Mr Wicks, and after Jadwan
had decided not
to proceed with an application for injunction.
- The
fact that Jadwan was concerned about its liability for redundancy payments was
well-established by the evidence. It was also well-established
that the
Commonwealth had held out to Mr Alexander that assistance with funding
redundancy payments was available upon the closure
of Derwent Court. Senior
counsel for the first to third respondents opened their case on the basis that
the funding of redundancies
was an enormous incentive for Jadwan. And that
proposition was sufficiently put to Ms Julie Alexander in cross-examination
to lay
the foundation for a submission that Jadwan did not want to put at risk
the funding of the redundancies. In a series of answers to
questions directed to
the topic of redundancy payments, Ms Alexander claimed that she could not
recall, or that Mr Alexander had
handled the matter. There were sufficient
matters put to Ms Alexander in cross-examination to support a submission
that there was
a broad equivalence between the contemporary estimates of
liability for the redundancy payments and the perceived value of the bed
licences. Indeed, the suggestion of that broad equivalence arose from the file
note of Mr Wicks of his instructions from Ms Alexander
on
6 August 1997. We are of the view that the primary judge’s findings
at [561]-[564] were within the boundaries of the case
run by the
respondents at trial –
- Jadwan
could not have taken advantage of the Commonwealth’s offer to meet the
cost of staff redundancies if instead of giving
its staff notice it would be
keeping them on to provide ongoing care for Derwent Court’s remaining
residents.
- Had
the value of Derwent Court’s bed licences significantly exceeded the cost
of Derwent Court’s staff redundancies it
might be plausible to suggest
that had Jadwan been competently advised it would have been prepared to take the
risk of declining
the Commonwealth’s offer in order to put pressure on the
Department to reconsider its (passed) deadline of 48 hours to sell
them.
- But
that was not the case.
- The
total Jadwan would have expected to get for the sale of Derwent Court’s
bed licences if it had been permitted to sell them
was no more than roughly
equivalent to the over half a million dollars it was liable for with respect to
redundancy payments ....
4. Would Jadwan have applied for an injunction if it had
been advised of the effect of the new legislation – Issue (4)
Reasonable and prudent advice from Mr Wicks
- In
order to evaluate Jadwan’s case, it is necessary to consider what advice
reasonable care required Mr Wicks to give in the
circumstances in the
period following the service on Jadwan on 21 July 1997 of the notice of
intention to revoke the approvals. This
issue is relevant to the questions of
breach of duty, and causation. In Vairy v Wyong Shire Council
Gummow J at [61] and Hayne J at [124]-[129] emphasised, in
the context of evaluating the question of breach of duty, that the enquiry
is
not directed to an assessment of what might reasonably have been done to avoid
the damage that actually occurred, for that is
a retrospective analysis. Rather,
it is necessary to look forward and to ask what reasonable care was required to
avoid a foreseeable
risk of damage. As Megarry J explained in Duchess of
Argyll v Beuselinck [1972] 2 Lloyd's Rep 172 at
185 –
In this world there are few things that could not
have been better done if done with hindsight. The advantages of hindsight
include
the benefit of having a sufficient indication of which of the many
factors present are important and which are unimportant. But hindsight
is no
touchstone of negligence. The standard of care to be expected of a professional
[person] must be based on events as they occur,
in prospect, and not in
retrospect.
- Further,
there might be a range of reasonable responses to a foreseeable risk of damage,
and the selection of one reasonable response
rather than another that would in
retrospect have avoided the damage in question, does not amount to negligence.
In the professional
negligence context, one way in which that principle
manifests itself is in statements in the authorities that the content of the
duty to exercise reasonable care is to apply the relevant degree of skill and to
exercise reasonable care in carrying out the professional
task. “There is
no implied undertaking that the advice is correct, but only that the requisite
degree of professional skill
and care has been exercised in giving the
advice”: Heydon v NRMA Ltd at [147]
(Malcolm A‑JA).
- On
the assumption that breach of duty is shown, questions of causation arise. On
the issue of causation, the question of what advice
would have been given if
reasonable care had been exercised involves proof of a past hypothetical on the
balance of probabilities.
The issue is often framed by asking what advice a
reasonably prudent solicitor would have given in the circumstances: see, for
example,
Firth v Sutton [2010] NSWCA 90 at [103] (Allsop P,
Macfarlan JA and Young JA agreeing). This question also is to be
examined prospectively, and not with the benefit of hindsight.
- The
primary judge held at [465] that it was unquestionably within the scope of
a solicitor’s duty of skill and care that he
or she identify, and advise,
having regard to the significance of the relevant enacted statute law of the
Commonwealth. Whether that
is so in individual cases will be fact-dependent. No
solicitor or barrister can reasonably be expected to know at the outset of a
retainer all potentially applicable legislation of the Commonwealth. But
generally speaking, the exercise of reasonable care in the
discharge of a
retainer may require a practitioner to identify applicable legislation for the
purposes of giving advice. Subject
to these observations, the primary
judge’s conclusion is not controversial, and is supported by the reasons
for judgment of
Ormiston A‑JA in Heydon v NRMA who stated
at [653] –
... the duty of the lawyer, whether
Queen’s Counsel or senior firm of solicitors, is to advise their clients
on the basis of
principle, in which I would include for present purposes a
proper understanding of statute law and its accepted interpretation.
- There
was no issue about whether Mr Wicks had a reasonable opportunity to
identify the applicable legislation, because he was in the
habit of using the
Law Society library, and had done so in February 1997 when he conducted his
research. The primary judge drew an
inference at [467] that the Acts of the
Commonwealth Parliament were available to Mr Wicks at the Law Society
library, and drew a
further inference at [469] that the Law Society library
would have held copies of the Aged Care Act and the Consequential
Provisions Act in its collection on or before 21 July 1997. The primary
judge held at [501] that when Mr Wicks updated his research on
22 July 1997,
a solicitor exercising the requisite degree of care and skill
in advising his or her client would have checked whether the relevant
statute
law to which he or she had last given attention some months previously remained
current or had been amended, and at [503]
his Honour held that a reasonable
solicitor would have identified the potential relevance of the Consequential
Provisions Act. No notice of contention has been filed by any of the
respondents on appeal, and no challenge was made by the respondents to these
findings.
- The
primary judge stated at [504]-[507] that he did not intend to suggest that,
upon discovering the new legislation, Mr Wicks was
required to draw the
conclusion that s 7(1)(a) of the Consequential Provisions Act would
apply as the plurality in the Full Court reasoned it would in December 2003 in
Jadwan No 4. His Honour held that it was only with hindsight that
the reasoning of North J in Jadwan No 3 and of the Full Court
in Jadwan No 4 might appear self-evident. There were three material
elements to the decisions in Jadwan No 3 and Jadwan
No 4. First, it was held that the order made by the Full Court
in Jadwan No 2 that the revocation decision be set aside operated
only prospectively, that is, from the date of the order that was made on
4 December
1998. Second, the fact that the Full Court’s order
operated only prospectively meant that Jadwan had not been an approved operator
or proprietor
of an approved nursing home immediately before the commencement
day of the new Act, because at that time its approval had been revoked.
Third, the condition in s 7(1)(a) of the Consequential Provisions
Act that a Commonwealth benefit is or was payable in respect of a nursing
home patient was a requirement that had to be satisfied in fact, and
Jadwan did not satisfy that requirement because there were no Commonwealth
benefits payable to Jadwan in respect of an approved
nursing home patient
immediately before the commencement day.
- However,
the primary judge held that Mr Wicks was not in breach of his duty of care
to Jadwan for the following reasons –
(1) at [473] his Honour held that until the
delegate made her decision on 6 August 1997 to revoke approval, there was
no operative
decision, and that until then, an order of review under s 5 of
the ADJR Act was not available;
(2) in relation to review under s 6 of the ADJR Act, at [478],
the primary judge doubted whether Jadwan had a sound basis for relief, and
at [482]-[483], referred to the difficulty
in establishing that the
delegate was proposing to rely on the reports of the first and second Standards
Review Panels prior to receiving
a copy of the delegate’s reasons;
(3) the primary judge held at [479] and [486]-[489] that, had Jadwan
commenced a proceeding seeking relief pursuant to s 6 of the
ADJR
Act, then the delegate would have received advice before finalising her
decision that she was entitled to make her decision based upon
the findings of
the Standards Review Panels as collective views, but without giving them the
status of validly constituted panels,
or she could have based her decision on
the views of the second Standards Monitoring Team;
(4) for the above reasons, his Honour held that the commencement of proceedings
would not have prevented the revocation decision,
and the primary judge held
at [491]-[492] that therefore Mr Wicks was not in breach of his duty;
and
(5) further, on the question of causation, the
primary judge held at [648] that success in setting aside the revocation
decision was
dependent upon Jadwan obtaining an order setting aside the
financial sanctions decision with effect from a date prior to 1 October
1997.
- We
respectfully consider that the primary judge was in error in his Honour’s
analysis for four reasons. First, his Honour confined his attention to
relief under the ADJR Act, when Jadwan did not confine its case at trial
to an hypothesis that it would have sought relief under the ADJR Act. In
its pleadings, Jadwan had made express references to s 39B of the
Judiciary Act, and s 23 of the Federal Court of Australia
Act. The transcript of Jadwan’s opening at trial records that senior
counsel for Jadwan referred to s 39B of the Judiciary Act and to the
prospect of constitutional writs, and to the prospect of making an application
to the Court for an interlocutory injunction
in the exercise of powers under
s 23 of the Federal Court of Australia Act. Given that no decision
to revoke the approval was made until 6 August 1997, and that neither
s 5 nor s 15 of the ADJR Act could until then have been
engaged, any interlocutory relief before the revocation decision likely had to
be granted in exercise of
the Court’s power under s 23 of the
Federal Court of Australia Act. By 1997, it had been established by Full
Court authority that the Court’s power under s 23 of the Federal
Court of Australia Act could be exercised in conjunction with the powers and
jurisdiction under the ADJR Act and s 39B of the Judiciary
Act, although an interlocutory order could not travel beyond the
jurisdiction or powers to grant final relief: Minister for Immigration, Local
Government and Ethnic Affairs v Msilanga [1992] FCA 41; (1992) 34 FCR 169 at 179
(Beaumont J, Black CJ agreeing) and at 185, 187 (Burchett J).
Interlocutory relief might have been available to Jadwan in
the exercise of
power under s 23 of the Federal Court of Australia Act in order to
preserve the subject-matter of an application for judicial review in aid of the
Court’s power upon a final hearing
to make an order authorised by
s 16(2)(b) of the ADJR Act in relation to conduct engaged in for the
purposes of making a decision, or a declaration in the exercise of powers under
s 23 of the Federal Court of Australia Act, or an injunction under
s 75(v) of the Constitution in the exercise of the jurisdiction
conferred by s 39B(1) of the Judiciary Act.
- Second,
the primary judge’s reasons at [482] proceed on a premise that Jadwan
would have experienced difficulties in proving the grounds
on which the delegate
proposed to revoke its approval. We do not accept that premise. The
delegate’s notice of intention to
revoke the approval dated 20 July
1997 attached a detailed statement of reasons which relied on findings of the
Standards Review
Panels and the second Standards Monitoring Team. There should
have been little difficulty in proving, for the purposes of an interlocutory
application, the basis on which the delegate proposed to revoke the
approval.
- Third,
we respectfully consider that the primary judge was in error in making the
affirmative findings at [486]-[490] that any proceeding
commenced by Jadwan
would have done no more than alert the delegate to the points in issue, and that
the delegate would have received
advice before finalising her decision that she
was entitled to make her decision based upon the findings of the Standards
Review
Panels as the collective views of the members, but without attributing to
them the status of validly constituted panels; or alternatively,
that she could
have based her decision on the views of the second Standards Monitoring Team. In
our view, while that hypothesis is
plausible, it is speculation. We agree that
if Jadwan had succeeded in obtaining an interlocutory injunction from the Court,
then
the Department would likely have turned its mind to how it might lawfully
revoke the approval of Derwent Court, and may have reviewed
the question of the
validity of the constitution of the Standards Review Panels. But we consider
that it was in error for the primary
judge to find that the delegate would have
realised that she could make her decision without recourse to the reports of the
Standards
Review Panels having the status as validly constituted panels. We say
this for the following reasons –
(1) We infer that the delegate was operating on the
assumption that a report of a Standards Review Panel was a necessary precursor
to the revocation of approval. That inference arises not only from the fact that
the delegate relied on the reports, but from the
fact that the report of the
second Standards Review Panel was commissioned by the delegate on about
1 April 1997 at a time when Derwent
Court was already the subject of a
declaration of non-compliance with standards, and after the delegate had
received the report of
the second Standards Monitoring Team. In the covering
letter of 28 May 1997 to Jadwan enclosing the report, Ms Paul of the
Department
stated that the delegate would consider the report, “which
could include consideration of whether approval should be
revoked”.
(2) The Department did not at any relevant time in 1997 concede that there was
any irregularity in the composition of the Standards
Review Panels. In his
letter of 1 August 1997 to Mr Dellar of the Department, Mr Wicks
had raised questions about the qualifications
of the Panel members, and referred
to the “improper composition of the second Standards Review
Panel”. There is no evidence that the delegate then sought to
reconsider the basis of her proposed decision. On the contrary, the
statement of
reasons that accompanied the revocation of approval on 6 August 1997 were
substantially the same as those which accompanied
the notice of intention to
revoke the approval, and relied on the reports of the Standards Review Panels
which Jadwan had sought
to impugn.
(3) Similarly, when on 1 September 1997, pursuant to s 105AAB(2) of
the National Health Act, Jadwan sought an internal review of the
delegate’s decision to revoke the approval, it raised expressly the
composition of
the Panels, and claimed that the members of the Panels did not
have the necessary qualifications or skills prescribed by the Regulations.
The
reviewer rejected those claims in his statement of reasons dated 13 October
1997.
(4) The reasons of Heerey J in Jadwan No 1 at [1998] FCA 715; 51 ALD 245 at
249-250 disclose that although the Minister conceded that the composition of the
second Standards Review Panel was irregular,
the Minister continued to defend
the legality of the revocation decision in June 1998, and filed affidavit
material that suggested
that the composition of the second Standards Review
Panel was the product of a deliberate choice. The Minister continued to assert
the legality of the decision by the appeal to the Full Court in Jadwan
No 2.
(5) The idea that the delegate would have thought that she could rely on the
reports of the Standards Review Panels as simply the
opinions of the members of
the Panels without attributing to them any statutory validity is the product of
hindsight that arises
from the decision of the Full Court of 4 December 1998 in
Jadwan No 2: see [1998] FCA 1549; (1998) 89 FCR 478 at 494. It proceeds
on the premise that the delegate would have realised that a report of a Panel
was not a necessary condition for the exercise
of the statutory power to revoke
approval. The circumstances do not support an inference that it would have
occurred to the delegate
or those advising her at any time before 1 October
1997 that the opinions of the Panel members could have been relied on, and that
the question of the validity of their appointments could be
quarantined.
- None
of the above is to suggest that there was not an appreciable risk that, if
Jadwan sought interlocutory relief, the delegate would
have sought to remedy the
foundation for making the decision that she had foreshadowed. But the primary
judge was in error in making
an affirmative finding that she would have
succeeded in doing so prior to 1 October 1997, with the consequence that
any interlocutory
relief that Jadwan obtained would have been inutile, and that
Mr Wicks had therefore not breached his duty of care.
- As
we mentioned at [344] above, on
appeal, Jadwan submitted that a fresh revocation decision would have amounted to
a novus actus interveniens, on which the respondents bore an onus of
proof. It is unnecessary for us to decide that question because, without
reference to any
question of onus, we would not infer from the circumstances
that the delegate would have responded to an application for an interlocutory
injunction in the way found by the primary judge. Having said that, we doubt
that the principles relating to proof of a novus actus interveniens have
any role to play. In our view, the correct analysis is that, at all times,
Jadwan had a legal onus to prove the damage that it
claimed, namely the lost
opportunity to which we referred at [419] and [431] above. In evaluating the past
hypothetical that it was necessary for Jadwan to prove, the respondents had an
onus to introduce evidence
or point to evidence that would counter any prima
facie case that Jadwan established: see generally, Purkess v
Crittenden [1965] HCA 34; (1965) 114 CLR 164 at 167-8 (Barwick CJ, Kitto and Taylor
JJ). But the claimed lost opportunity was the fact in issue, and the onus to
prove that fact
remained stable.
- The
fourth reason for which we respectfully differ from the primary judge is that,
contrary to the primary judge’s finding at
[648], it was not
necessary that Jadwan succeed in setting aside the financial sanctions decision
from a date prior to 1 October
1997 in order to succeed in enjoining the
proposed revocation decision, or in obtaining a final declaration or other final
relief
in the event that Jadwan persuaded the Court (as it did in Jadwan
No 1) that the second Standards Review Panel was invalidly constituted.
And it was not necessary that any relief in relation to the financial
sanctions
decision be obtained before 1 October 1997, although failure to do so
resulted in Jadwan being unable to receive Commonwealth
benefits for any new
patients, and being reliant on existing patients remaining at Derwent Court in
order to engage the transitional
provisions in the Consequential Provisions
Act.
- The
primary judge set out at [512]-[525] of his Honour’s reasons what
competent advice from Mr Wicks to Jadwan should have been
as the foundation
for his Honour’s finding at [526] that, had Jadwan received such
advice, Jadwan would have chosen to resume
its co-operation with the Department,
and would not have sought to prevent the removal of Derwent Court
residents –
- Had
Mr Wicks exercised due care and skill, I am satisfied that he would have
identified the existence of the Aged Care
Act and the Consequential Provisions Act on 22 July 1997. He would have
informed Jadwan of those Acts’ existence when he met with
Mr Jeff
Alexander and Ms Julie Alexander the following day.
- Such
advice would likely have led Jadwan briefly to delay facilitating the
Department’s arrangements for the relocation to other
nursing homes of
those of Derwent Court’s residents. While it involves a degree of
speculation I am prepared to accept that
Jadwan’s directors would have
done so.
- Having
become aware that new legislation would soon replace the National
Health Act I accept that it would have been logical for Mr Alexander and the
other of Jadwan’s directors to have stalled the Department
and sought
urgent advice as to whether there might be something in the new legislation they
could take advantage of.
- But
there was not.
- Competent
advice, had it been provided, would have been to the effect that the new
legislation was the framework upon which new higher
standards of nursing home
regulation was to be erected.
- Competent
advice, given with requisite skill and care, had it been provided, would have
alerted Jadwan to the fact that to transition
as an approved provider in respect
of Derwent Court it would need not only to establish the invalidity of Ms
Halton’s revocation
decision but also to retain at least one of Derwent
Court’s existing residents until the Aged Care
Act came into force on 1 October 1997. I am prepared to infer that
competent advice would include that the Aged Care
Act was to come into force on 1 October 1997 – that that would be the
date appears to have been widely known: [his Honour referred
to [209] of his
reasons for judgment].
- Jadwan
would have been advised it faced an additional hurdle not an easier
pathway.
- Competent
advice would have confirmed the difficulty of challenging Ms Halton’s
intention to revoke Derwent Court’s approval
prior to her making that
decision.
- Such
advice would have identified that the only plausible basis for such a proceeding
would be to assert that Ms Halton was impermissibly
proposing to engage in
conduct viz giving weight to the reports of SRP-1 and SRP-2 as the reports of
validly constituted Standards
Review Panels in the making of her decision, but
that Ms Halton, properly advised, was likely to respond she had no need to do so
and would not. Jadwan’s legal grounds were doubtful.
- Competent
advice would have informed Jadwan that any (improbable) victory on that basis
would likely to be pyrrhic – the point
being conceded and the decision
made nonetheless.
- Competent
advice would have made Jadwan aware that any proceeding brought after Derwent
Court’s approval had been revoked would
be unlikely to obtain a final
hearing before the new legislation came into force on 1 October 1997.
Competent advice would have included
that while Jadwan would have good prospects
of success if Ms Halton did rely on the reports of SRP-1 and SRP-2 as being
those of
validly constituted Standards Review Panels, such an error would be a
non-jurisdictional error (see Jadwan No 4) and that the judge
hearing their
review, in his or her discretion, might exercise one of the other options
available under s 16(1) of the ADJR Act rather
than quashing or setting
aside Ms Halton’s decision from the date of its making.
- Competent
advice would have confirmed that if Jadwan were to retain any residents at
Derwent Court beyond 6 August 1997, subject to
interlocutory relief, it would
have to do so at its own expense until the decision was set aside. It was not
part of Jadwan’s
case that Derwent Court’s residents could have met
the unsubsidised cost of their care.
- Derwent
Court’s average payroll expenditure was $70,000 per fortnight (Ex A1
p 4146). Even with a decreased number of residents
(those wanting to stay)
the cost of staff required for their care would have been substantial. Only if
wholly successful would Jadwan
have recovered those costs.
- Competent
advice would have been that because of the fire risk to Derwent Court’s
aged and vulnerable residents, success in
obtaining injunctive relief by way of
an interlocutory proceeding could not be assured.
- Having
regard to the above, on the assumption that Jadwan would have obtained competent
legal advice as a matter of urgency, the Court
is satisfied that upon receiving
that advice Jadwan would have chosen in any event to resume cooperating with the
Department at some
point before 6 August 1997 when Ms Halton’s revocation
decision was to come into effect. It would not have sought to prevent
the
removal of Derwent Court’s residents.
- Largely
for the reasons we have given at [494]-[496] above, the hypothetical advice
formulated by the primary judge at [519], [520], [521], [522], [523], and
[524] of his Honour’s
reasons was in error. In addition to what we have
said at [494]-[496] above –
(1) The primary judge’s reasons at [522]
proceed upon an incorrect hypothesis that proceedings would have been brought by
Jadwan
after the approval of Derwent Court had been revoked, when Jadwan’s
case extended to alleging that a proceeding seeking an
interlocutory injunction
should have been recommended, and would have been commenced, before the approval
was revoked.
(2) In relation to the finding at [523] that if Jadwan were to retain any
residents at Derwent Court beyond 6 August 1997, and that
subject to
interlocutory relief it would have to do so at its own expense until the
decision was set aside, this finding does not
address the case that Jadwan had
advanced, which was that it would have sought and obtained interlocutory relief.
On the hypothesis
that the Minister was enjoined from revoking the approval of
Derwent Court, we consider that reasonable advice would have been that
any
residents who remained at Derwent Court during the period an interlocutory
injunction remained in force would continue to be
subject to an entitlement that
Commonwealth benefits on their account were payable to Jadwan.
(3) We do not understand the primary judge’s finding at [524] that
Jadwan would recover staffing costs if wholly successful.
Staffing costs were
outgoings for which Jadwan was liable so long as it continued to operate Derwent
Court. We do not consider that
there was any prospect that Jadwan could recover
staffing costs from the Commonwealth.
- As
we mentioned at [209] above, the
primary judge accepted the evidence of Ms Julie Alexander that during a
telephone conversation on 25 July 1997, Mr Wicks
had advised her and
Mr Alexander that there was no harm in letting the residents go. The
primary judge held at [507] that a solicitor
exercising reasonable care,
having become aware of the new legislation, would not have given Jadwan such
unqualified advice. There
is no notice of contention by which the second
respondent challenges this finding. However, as noted above, the primary judge
held
at [526] that for a range of reasons, upon receiving competent advice,
Jadwan would have chosen to resume its co-operation with the
Department, and
would not have sought to prevent the removal of Derwent Court residents.
- Having
concluded that the primary judge erred in formulating the advice that a
solicitor exercising reasonable care would have given
to Jadwan, this Court
should make its own findings: Robinson Helicopter Company Inc v McDermott
[2016] HCA 22; 331 ALR 550 at [43]. We accept, on the unchallenged findings
of the primary judge at [512], that the exercise of reasonable care by a
solicitor in the
position of Mr Wicks would have resulted in the existence
of the new legislation and its transitional provisions being disclosed
to Jadwan
on 23 July 1997. In relation to the advice that a reasonable and prudent
solicitor would have given to Jadwan on that day,
and in the days thereafter,
our findings are as follows –
(1) A reasonable solicitor would have advised Jadwan of
the enactment of the Aged Care Act and the Consequential Provisions
Act, and that the operative provisions were due to commence on a day to be
proclaimed.
(2) The primary judge held at [517] that the proposed commencement date of
1 October 1997 would appear to have been widely known.
That finding was
based upon Mr Wicks’s conversation with Mr Dellar on
30 July 1997, in respect of which Mr Wicks recorded
Mr
Dellar’s reference to “1/10 beds gone”. His
Honour may also have been influenced by his finding at [209] that a
workbook for a seminar that Mr Alexander attended
in August 1997 referred
to 1 October 1997 as the date on which the “Aged Care Structural
Reform Strategy” would come into effect. The primary judge stated that
it was not at all improbable that, as at 30 July 1997, and notwithstanding
that the commencement date had yet to be formally gazetted, that internal
planning within the Department was proceeding on the basis
that the Aged Care
Act was to come into effect on 1 October 1997. The primary judge held
that competent advice would have included that the Aged Care Act was due
to come into force on 1 October 1997. For our part, we would not impute
that knowledge to a reasonable solicitor or barrister
except on the basis that
after ascertaining the existence of the new legislation, a reasonable solicitor
would make enquiries of
the Department or the Australian Government Solicitor to
ascertain whether it knew of the proposed commencement date. We infer that
the
commencement date was ascertainable by these means by no later than 30 July
1997, and if Jadwan had commenced proceedings prior
to that time, the expected
commencement date would likely have been exposed at or before the hearing of an
application for an interlocutory
injunction.
(3) A reasonable and prudent solicitor would have studied the material features
of the new legislation in the same way that Mr Wicks
had studied the
features of the National Health Act when he undertook his research in
February 1997 and again in July 1997. A reasonable study of the
features of the new legislation
would have disclosed the
following –
(a) section 10-2(1) of the Aged Care
Act, which provided that the approval of an aged care provider lapsed if it
did not provide any aged care during a continuous period
of 6 months;
(b) sections 16-1 to 16-11 of the Aged Care Act, which made provision for
the transfer of places with the approval of the Secretary, and did not contain
provisions that corresponded
to s 39B(5A) and (5B) of the National
Health Act;
(c) sections 54-1 and 54-2 of the Aged Care Act, which required
that there be compliance with standards, including new standards that were to
take effect on the “accreditation day”;
(d) section 66-1 of the Aged Care Act, which provided for the
imposition of sanctions for non-compliance with responsibilities, including
revocation of approval;
(e) sections 67‑1 to 67-5 of the Aged Care Act, which provided for
the procedures for the imposition of sanctions;
(f) the transitional provisions in s 7(1) of the Consequential
Provisions Act, to which we have already referred, which required
that immediately before the commencement day of the Aged Care
Act –
(i) Jadwan be an approved
operator or proprietor of an approved nursing home; and
(ii) Commonwealth benefits be payable to Jadwan in respect of an approved
nursing home patient;
(g) section 74 of the Consequential
Provisions Act, which provided that a determination in force under
s 45E(2) of the National Health Act was taken to be a sanction
imposed under s 66‑1(c)(ii) of the Aged Care Act on the
commencement day, and ending when the Secretary lifted the sanction under
s 68‑3.
(4) A reasonable and prudent solicitor would have
advised Jadwan that there was a real risk that, unless Jadwan sought an urgent
injunction
to prevent the delegate from acting in the way foreshadowed in the
notice of intention to revoke the approval, then upon revocation
of its
approval, Jadwan would not have the opportunity to become an approved provider
under the new legislation.
(5) On 3 February 1997, the delegate of the
Minister determined that no Commonwealth financial support was payable in
respect of any
patient who entered Derwent Court from 4 February 1997. The
text of s 45E(2) of the National Health Act was that
“Commonwealth benefit [was] 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”. Reasonable and prudent advice to Jadwan
would have been that there was a reasonable prospect that the effect of the
financial
sanctions determination was that the return of a resident who had left
Derwent Court would be a fresh admission of a patient for
the purposes of
s 45E(2) of the National Health Act.
(6) Reasonable and prudent advice would have directed Jadwan’s attention
to the practical necessity, if it commenced proceedings,
of also challenging the
financial sanctions determination which, unless set aside by a Court, or by the
Administrative Appeals Tribunal, or lifted by the Department, had the
consequence that as residents left Derwent Court, the number of residents
entitled to Commonwealth
benefit diminished, thereby putting at risk
Jadwan’s ability to have at least one such resident in place at Derwent
Court immediately
before the commencement day and to continue operating the
home thereafter. The 28-day time period for making an application under
s 11(1)(c) and (3)(a) of the ADJR Act in relation to the financial
sanctions determination had expired, but could be enlarged by the Court.
There was no time limit applicable to judicial review in the exercise of the
Court’s
powers under s 39B(1) of the Judiciary Act, but delay
might have been relevant to the discretion whether to give a remedy. The 28-day
time limit under s 105AAB(2) of the National Health Act for seeking
administrative merits-based review had expired, but could be enlarged by the
Minister.
(7) Reasonable and prudent advice would have identified that there was a real
question whether Jadwan could effect a transfer of
its licences under the
National Health Act in circumstances where the Department considered that
Derwent Court did not comply with its conditions of approval (see s 39B(5A)
and (5B) of the Act referred to at [20] above). More considered advice would
have pointed to the prospect that the Minister might not issue a certificate
approving the
transfer of licences in circumstances where the Department
regarded Jadwan as being in breach of the statutory conditions. The potential
that s 39B(5A) and (5B) might preclude a transfer of licences, when the
Department took the view that Derwent Court did not comply
with its conditions
of approval, was adverted to in the letter from Ms Hefford of the Department to
Mr Hogan of 1 August 1997 (see
[249]-[250] above). Mr Wicks had previously
addressed this issue in a meeting with Mr Alexander on 10 June 1997
(see [133] above), but his note of
his research in February 1997 did not record any reference to s 39B.
In Mr Wicks’s later note of his
research dated 5 August 1997,
there is reference to s 39B, but there is no express reference to
s 39B(5A) and (5B).
(8) Reasonable and prudent advice to Jadwan would have been that there were
properly arguable grounds on which an injunction might
be sought relating to the
composition of both Standards Review Panels, and the qualifications of their
members. As to whether there
was a serious question to be tried, Mr Wicks
was alerted to the question of Ms Cooper’s eligibility on
25 July 1997 (see [196]
above), and conducted research on that day into the requirements of the
National Health Regulations in relation to the composition of Standards
Review Panels. Mr Porter had identified by no later than 1 August 1997
that the constitution
of the second Standards Review Panel was an available
ground of review, because he included it in the grounds that he prepared and
faxed to Mr Wicks (see [254]
above). The presence of Ms Cooper as a member of both the first and second
Standards Review Panels was an arguable ground on which
the reports of both
could be the subject of at least a declaration as to invalidity, and an
interlocutory injunction in support of
that final relief was an available avenue
to preserve Jadwan’s interest in its bed licences. The exercise of
reasonable care
would have resulted in advice that there were proper grounds to
argue that there was a serious question to be tried.
(9) Reasonable and prudent advice to Jadwan would have directed its attention to
the usual requirement that an applicant for an interlocutory
injunction give an
undertaking as to damages, and to the possibility that the directors of Jadwan
or the beneficiaries of the Trust
might have to give security. However,
reasonable advice would not have over‑stated this consideration, and would
have been
to the effect that it was difficult to say that the Commonwealth would
likely suffer any substantial damage if an interlocutory injunction
were
granted, and subsequently set aside.
(10) Reasonable and prudent advice would also have alerted Jadwan to potential
difficulties that it faced, including –
(a) the Department had demonstrated a firm
resolve to revoke Derwent Court’s approval, and the Minister was likely to
contest
any proceeding;
(b) the bringing of a proceeding seeking an injunction would likely focus the
Department’s attention on any defects in its
proposed decision-making
process, and would direct the Department’s attention to remedying any such
defects;
(c) most importantly, in the medium to long term, an
interlocutory injunction would not prevent the Minister from seeking to revoke
the approval of Derwent Court on some available basis, whether under the
National Health Act, or under the corresponding provisions of the Aged
Care Act when it came into force, and Mr Wicks in fact gave advice to
this effect on 24 July 1997, saying that the Department could simply
turn
around and “do it all again” (see [188] above);
(d) on the assumption that Jadwan obtained an interlocutory injunction,
reasonable and prudent advice would have alerted Jadwan to
the necessity of
keeping Derwent Court operating until at least the commencement day of the new
legislation in order to preserve
its capacity at that time to become an approved
provider under the Aged Care Act;
(e) initially, the commencement date of the operating provisions would have been
unknown, as they had not been proclaimed, but the
proposed commencement date of
1 October 1997 would upon enquiry of the Department or the Australian
Government Solicitor likely have
been ascertained;
(f) upon the commencement of the new legislation, Derwent Court would still be
subject to the financial sanctions determination,
unless it was set aside by the
Court, or lifted by the Secretary;
(g) because Jadwan would have to keep Derwent Court operating, there were
balance of convenience issues in play relating to patient
care and fire safety
that Jadwan would have to address by affidavit evidence;
(h) if Jadwan sought an injunction, then given that the subject-matter of the
adverse reports related to the quality of care, Jadwan
would have to secure its
professional staffing arrangements at Derwent Court, and address that topic in
evidence;
(i) if the advice was given on 23 or 24 July 1997, Jadwan would have
to take account of whether it proposed to seek an interlocutory
injunction in
determining whether or not to give notice to its staff, in circumstances where
Mr Alexander had identified the issue
of notice to Jadwan’s staff in
his conversations with Mr Wicks on 21, 22, and 24 July 1997;
(j) if the advice was given after 24 July 1997, and Jadwan had given notice
to its staff terminating their employment, thereby triggering
entitlements to
severance and redundancy payments, then the notices of termination could not be
withdrawn unilaterally – see,
Birrell v Australian National Airlines
Commission [1984] FCA 419; 5 FCR 447 at 457-8 (Gray J); and
(k) obtaining an interlocutory injunction would not prevent residents leaving
voluntarily having regard to the uncertain circumstances,
and the
Department’s offer to relocate them in accommodation that the Department
had identified as suitable, and the fact that
the residents and their families
had a choice in that regard.
- The
prospect that, if Jadwan obtained a “stay”, it would not have any
staff, had been adverted to by Mr Wicks on 24 July
1997 in his file
note of his telephone conversation with Mr Alexander (see [187] above). However, in evidence
Mr Wicks denied that he had ever been asked to give any advice to Jadwan
about the termination of its
staff.
- Senior
counsel for Jadwan emphasised in submissions that the grounds of judicial review
available to Jadwan were not limited to those
relating to the composition of the
panels (including apprehended bias), but included a ground relating to denial of
natural justice.
Putting aside the alleged apprehension of bias, there were two
ways in which this ground arose in the evidence. First, in a file
note taken by
Mr Wicks on 8 April 1997 of an attendance on Mr Alexander
following the presentation of the report of the second Standards
Monitoring
Team, Mr Wicks wrote, “They are concentrating on policies,
procedures & practices under the new (draft) standards”
(see [108] above). We do not
consider that there is objective support for the statement in the file note, as
a comparison between the reports
of the first Standards Monitoring Team, the
first Standards Review Panel and the second Standards Monitoring Team shows that
the
reports appear to identify the same standards, being the gazetted standards
set out in Commonwealth Special Gazette S303 dated 11 November 1987. Senior
counsel for Jadwan submitted that, on review, Mr Griew explained the
disparity between the reports
on the basis that the second team was applying new
draft standards, but we can find no support for that submission in
Mr Griew’s
statement of reasons. Even if this suggestion appeared in
Mr Griew’s reasons of 13 October 1997, it does not support a
finding
that this would have been apparent to a reasonable and prudent legal
adviser to Jadwan in July or early August 1997.
- The
second ground on which a denial of natural justice appears in the evidence is in
the draft grounds of review that Mr Porter prepared
on 1 August 1997
(see [254] above), which included a
ground that claimed that Jadwan had not been afforded an opportunity to be heard
in relation to the adverse
material contained in the report of the second
Standards Review Panel. This ground was removed from a later draft of the
application,
and having regard to the fact that by letter dated 4 June 1997
Jadwan responded to the report of the second Standards Review Panel
(see [130] above), we are not
persuaded that a reasonable and prudent legal adviser would regard those
allegations as having merit.
- In
our view, a claim that the Panels were not constituted in accordance with the
regulations was a sufficiently reasonable basis on
which to allege the
invalidity of the Standards Review Panel reports on which the delegate proposed
to rely in revoking approval,
thereby giving rise to a serious question to be
tried.
The effect of the financial sanctions determination
- As
we have stated at [503(5)] above, reasonable and prudent advice
to Jadwan would have included that there was a reasonable prospect that the
effect of the financial
sanctions determination was that the return of a
resident who had left Derwent Court would be a fresh admission of a patient for
the purposes of s 45E(2) of the National Health Act. Further, we
consider that construction to be correct, with the consequence that Jadwan was
reliant on the retention of existing
patients at Derwent Court until 30
September 1997 in order to engage the transitional provisions in the
Consequential Provisions Act. In this respect, the primary judge stated
at [577]-[584] –
- Jadwan’s
underlying proposition necessarily includes that a returning resident, assuming
the sanctions decision was ultimately
to be set aside, would fall within the
description of a person in respect of whom “a Commonwealth benefit...is or
was payable...for
nursing home care received by the patient on the day before [1
October 1997]” for the purposes of s 7(1)(a) of the Consequential
Provisions Act.
- That
proposed need only be stated to be doubted.
- Jadwan
had discharged all its former residents. Because Derwent Court was subject to
financial sanctions it was not eligible to receive
a subsidy for a new
resident.
- A
resident returning to Derwent Court from another nursing home where he or she
had been receiving care after leaving Derwent Court
would have been a new
admission for the purposes of the sanctions decision.
- The
reasoning of the plurality in Jadwan No 4 required there to be a resident in
respect of whom Commonwealth subsidies were payable
at Derwent Court on 30
September 1997 to enable Jadwan to transition as an approved provider under the
Aged Care Act.
- Because
of the operation of the sanctions decision a subsidy would not have been payable
to Derwent Court in respect of any re-admitted
resident on 30 September
1997.
- We
agree with the primary judge’s conclusions, set out above, for the
following reasons.
- Section 7(1)(a)
of the Consequential Provisions Act required that on the day before the
commencement of the Aged Care Act, which was 30 September 1997, a
Commonwealth benefit be payable to Jadwan “in respect of an approved
nursing home patient...for nursing home care received by the patient”.
The financial sanctions determination was the subject of the letter from Mr
Dellar to Jadwan dated 3 February 1997 to which
we referred at [61] above, which stated (inter
alia) –
- Determination
under section 45E(2) National Health Act 1953
The standards Review Panel specifically recommended that
financial sanctions not be imposed as, in the Panel’s view, it would
unnecessarily prolong the operation of an inadequate nursing home. Nevertheless,
to ensure that there is no Commonwealth financial
support for you if new
residents continue to enter the facility, I determine that while this
declaration remains in force Commonwealth benefit is not payable to you in
respect of any patient who enters the nursing home from 4 February 1997.
(emphasis added)
- The
determination was made pursuant to s 45E(2) of the National Health
Act, to which we referred at [17]
above, and which provided –
(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.
(emphasis added)
- The
determination as expressed in the letter referred to Commonwealth benefit not
being payable in respect of any patient who “enters” the
nursing home after 4 February 1997. That engaged the statutory power in
s 45E(2) of the Act, being that Commonwealth benefit
was not payable in
respect of a patient “admitted” to the nursing home after
4 February 1997. The determination as expressed in the letter gave effect
to what was permitted
under the statutory power.
- The
question then arises whether a person who was a resident at Derwent Court, who
then left and became a resident of another nursing
home, and who then returned
to be a resident at Derwent Court again, would have been
“admitted” upon his or her return to Derwent Court, such that
Commonwealth benefit would not have been payable to Jadwan in respect of
that
person.
- The
National Health Act did not include a definition of
“admitted” or “admission”. The
construction of s 45E(2) of the Act and in particular the word
“admitted” in that provision must be assessed in its context,
in a manner that is consistent with the language and purpose of all of
the
provisions in the Act, viewed as a whole: Project Blue Sky Inc v Australian
Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69]- [71] (McHugh,
Gummow, Kirby and Hayne JJ). The construction of s 45E(2) of the Act
is informed by some related definitions in s 4 of the
Act. The definition
of “nursing home” includes (inter alia) premises in
which patients are “received and lodged exclusively for the purpose of
providing them with accommodation and nursing care” and specifically
excludes hospitals and institutions for the treatment of the mentally ill. The
definition of “qualified nursing home patient” is a
“person who occupies a bed in an approved nursing home for the purpose
of nursing home care”, with some limited exceptions. These definitions
suggest that a person who is “admitted” to a nursing home is
a person who is received and lodged, and who occupies a bed, at that nursing
home. Further, those definitions
suggest that a person cannot be
“admitted” at more than one nursing home, and that they can
only lodge and occupy a bed at any one nursing home at any one time.
- We
agree with the primary judge’s finding at [580] that “a resident
returning to Derwent Court from another nursing home where he or she had been
receiving care after leaving Derwent Court
would have been a new admission for
the purposes of the sanctions decision”, and the primary judge’s
characterisation at [582] that such a person would be
“re-admitted” to Derwent Court. Accordingly, we consider that
if, for example, one of the patients who left Derwent Court in late July to
early August 1997 and took up lodgement at Rosary Gardens was later
persuaded to return to Derwent Court, that patient would for
the purposes of
s 45E(2) of the National Health Act be “admitted”
to Derwent Court upon her return, such that Commonwealth benefit would not have
been payable to Jadwan in respect of that
person. Therefore, we reject the
proposition that if Jadwan could have persuaded a patient to return so that she
was a resident at
Derwent Court on 30 September 1997, that Jadwan would
thereby have satisfied the requirement in s 7(1)(a) of the Consequential
Amendments Act that a Commonwealth benefit be payable to Jadwan in respect
of that person on that date.
Reasonable and prudent advice from Mr Porter QC
- Mr Porter
was consulted on the following occasions –
(1) on Wednesday 23 July 1997, Mr Wicks had a
short telephone conversation with Mr Porter, in which Mr Porter
advised him to put the
Department on notice immediately against moving
residents, and which resulted in Mr Wicks’s letter to the Department
of that
day (see [182] above);
(2) on Thursday 24 July 1997, Mr Wicks attended a conference with
Mr Porter at 10.00am (see [188] above);
(3) during the afternoon of Thursday 24 July 1997, Mr Wicks consulted
Mr Porter by telephone (see [192] above);
(4) on Tuesday 29 July 1997, Mr Wicks telephoned Mr Porter and
told him that Jadwan was accepting of the closure, and did not wish
to pursue an
application for an injunction, and requested that the Act be returned to him
(see [212] above);
(5) on Wednesday 30 July 1997, Mr Wicks telephoned Mr Porter
following his discussions with Mr Hogan and Mr Alexander (see [232] above);
(6) on Thursday 31 July 1997, Mr Wicks called Mr Porter, and
requested that Mr Porter draft grounds of review “in anticipation
of revocation” (see [240]
above);
(7) on Friday 1 August 1997, Mr Porter sent Mr Wicks a first
draft of the grounds of review (see [254] above);
(8) on Monday 4 August 1997, Mr Wicks sent a fax to Mr Porter
attaching a draft application and affidavit for Mr Porter’s comment
(see [256] above);
(9) on Tuesday 5 August 1997, Mr Wicks attended a conference with
Mr Porter (see [258]
above);
(10) on Friday 8 August 1997, Mr Wicks telephoned Mr Porter and
informed him of developments, which by then would have included service
of the
notice of revocation (see [271]
above);
(11) on Monday 11 August 1997, Mr Wicks sent a fax to Mr Porter
attaching a draft affidavit of Ms Julie Alexander (see [273] above);
(12) later on Monday 11 August 1997, at about 4.30pm, Mr Wicks spoke
to Mr Porter by telephone (see [273] above); and
(13) on Tuesday 19 August 1997, Mr Porter wrote to Mr Wicks, not
having heard from him since 11 August 1997 (see [275] above).
- It
is a minor point, but as we identified at [214] above, we consider that the primary
judge was in error at [387]-[390] in finding that Mr Wicks spoke to
Mr Porter on both 28 and
29 July. The preferable inference from the
evidence, to which we have referred at [210]-[212], is that Mr Wicks left a message
for Mr Porter on 28 July 1997, and that Mr Porter called him back
and that they spoke on 29 July
1997.
- The
primary judge found that Mr Porter was not negligent in the advice that he
gave in the initial stages. In relation to Mr Porter’s
initial
advice, at [712]-[719] his Honour found –
- I
have concluded Mr Porter’s advice when initially consulted by Mr Wicks,
despite that advice not having then been informed
by an awareness of the
existence of the Aged Care Act and the Consequential Provisions Act, was not
negligent.
- It
will be recalled that Ms Halton gave Jadwan notice of her intention to revoke
Derwent Court’s approval as a nursing home
on 20 July 1997.
- I
am satisfied that Mr Porter’s preliminary advice provided on 24 July 1997
that then seeking an injunction would be “a
high risk application”
was not negligent. His opinion, expressed as his preliminary view, was entirely
justifiable given what
had been identified by at least three inspection reports
as fire safety issues relevant to the care of the non-ambulant residents
of
Derwent Court located on the second floor.
- What
had then been in issue was the possibility of Jadwan applying for an injunction
prior to Ms Halton making her final and operative
decision.
- The
Court has given reasons at [476] to [492] above for having concluded that Jadwan
fails to establish on the balance of probabilities
that applying for an order
pursuant to s 6 of the ADJR Act could have prevented Ms Halton making a final
and operative decision to
revoke Derwent Court’s approval.
- I
further note that Mr Porter was not then purporting to express his concluded
opinion. Rather, he had told Mr Wicks that he would
continue to research and
consider the position.
- It
had been Mr Wicks who had called Mr Porter on 28 July 1997 to inform him that
Jadwan had accepted Derwent Court’s closure
and had decided not to seek an
injunction.
- I
have noted at [387] that Mr Porter, correctly in my view, expressed some
scepticism regarding the reasoning Mr Wicks advanced to
explain Jadwan’s
decision. However Mr Wicks had reconfirmed the next day that Jadwan was not
seeking an injunction. As an indicator
of the finality of that position,
Mr Wicks had asked Mr Porter to return his copy of the National Health
Act.
- As
to [714] and [717] of the primary judge’s reasons, Mr Porter spoke to
Mr Wicks twice on 24 July 1997. On the first occasion,
he spoke to him
in the conference at about 10.00am (see [188] above). On the second occasion,
Mr Wicks spoke to Mr Porter by telephone in the afternoon after
Mr Porter had given the matter further
consideration (see [192] above). On neither occasion did
Mr Porter identify the significance of the new legislation.
Mr Porter’s advice that seeking
an injunction was “perhaps a
high risk application” (see [188] above) did not take account of the
risks for Jadwan if it did not seek an injunction. If Mr Porter had
identified the existence
of the new legislation, then Jadwan would have had the
benefit of Mr Porter’s advice about its significance, and Jadwan
could
then have considered what course it proposed to take based upon reasonable
and competent advice. For the reasons that follow, we
respectfully do not agree
with the primary judge that Mr Porter’s advice was not
negligent.
- In
our view, reasonable care required that senior counsel in the position of
Mr Porter should have taken steps to acquaint himself
with, and advise
Jadwan having regard to current Commonwealth legislation. Reasonable care did
not require that he know of the legislation
when initially retained. But
reasonable care required that he search for the current legislation shortly
after he was retained, and
before he gave advice to Mr Wicks, which
occurred on 24 July 1997, or that he qualify such advice if he had not had
the opportunity
to search for the current legislation. It was not reasonable for
Mr Porter to rely on the reprint of the National Health Act that had
been given to him by Mr Wicks as comprising the current legislation without
conducting further searches to ascertain whether
there had been any amendments
since the reprint. This is a basic legal task. We infer that if Mr Porter
had undertaken reasonable
searches of Commonwealth legislation, then he would
have identified the Aged Care Act and the Consequential Provisions
Act. It is unnecessary for us to go further and make findings as to how
Mr Porter would have gone about those searches. Reasonable care
required
that senior counsel practising in 1997 should have had the means of being able
to check current Commonwealth legislation,
whether from his or her own
resources, or from access to a library. Upon identifying the new legislation,
reasonable care required
that Mr Porter give consideration to its effect on
Jadwan’s circumstances, and to give advice substantially to the same
effect
as we have identified at [503] above in respect of
Mr Wicks.
- Other
findings made by the primary judge about Mr Porter concerned the
preparation of the papers in support of the application under
the ADJR
Act following the advice given by Mr Hogan on 30 July 1997.
At [720]-[724], the primary judge found –
- It
was only after Mr Wicks had been persuaded by Mr Hogan that to convince the
Department to permit Jadwan to sell its bed licences
Jadwan should seek an
injunction to “back the [Department] against the wall” that Mr Wicks
reverted to Mr Porter. He
had done so late on the afternoon of 30 July 1997. He
had asked Mr Porter if he would assist in preparing the necessary
application.
- However
it is important to emphasise that the application Mr Wicks was asking Mr
Porter’s assistance to prepare was to be deployed
merely as a stratagem to
put pressure on the Department. No one, least of all Jadwan (which by then had
dismissed all of its nursing
staff), then had any illusions that such an
application was to be brought with the purpose of allowing Jadwan to continue to
operate
Derwent Court while it proceeded to build a new facility on a greenfield
site.
- That
Mr Porter was so instructed is confirmed by Mr Wicks’ note of his
penultimate conversation with Mr Hogan in which he refers
to Mr Porter’s
“tactic” of preparing an application with the intention of it being
filed after Ms Halton had made
a final and operative decision.
- That
the true aim of that application was to put pressure on the Department to sell
Derwent Court’s beds is also confirmed by
the cover sheet of Mr
Wicks’ facsimile of 4 August 1997 (Ex R1-3 X6 marked 4607) in which, in
relation to Ms Julie Alexander’s
draft affidavit, Mr Wicks seeks Mr
Porter’s advice as to the extent that affidavit should set out “the
deponents [sic]
grievances as to the way in which they have been treated, the
financial effects, the fact that they want to sell the ‘beds’
and so
on”.
- Mr
Porter continued with those preparations, including asking Mr Wicks to check the
availability of a judge to hear an application.
I accept that those preparations
were not complete by the time Ms Halton’s revocation decision of 6 August
1997 was notified
to Jadwan.
- The
primary judge held that any delay in preparing the papers was inconsequential,
based upon his Honour’s findings at [599]
to [627] that Jadwan had
not established on the balance of probabilities that an injunction would have
resulted in the Department
granting Jadwan any further opportunity to sell its
licences.
- We
agree with the primary judge’s findings at [721]-[722] that
Mr Porter was consulted on 31 July 1997 only for the purpose
of
preparing papers to be filed as a tactic to put pressure on the Department to
permit Jadwan to sell its licences. It is not to
be inferred from
Mr Wicks’s file note of 31 July 1997 (see [240] above), or the surrounding
circumstances, that when Mr Wicks and Mr Porter spoke that they had in
contemplation seeking an injunction
to enjoin the delegate from revoking Derwent
Court’s approval. The file note does not support that inference, because
it refers
to an “appeal”, and states that Mr Porter
would draft some grounds “in anticipation of revocation”.
There was then no relative urgency in the way Mr Wicks went about the
preparation of the papers. The other circumstantial
evidence
includes –
(1) Mr Wicks’s file note of his conversation
with Mr Alexander on 31 July 1997 (see [243] above) in which he recorded telling
Mr Alexander that Mr Porter was drafting grounds “in
anticipation of an appeal next week”;
(2) Mr Wicks’s file note of his conversation with Mr Hogan on
31 July 1997 (see [245]
above), and to which the primary judge referred, in which Mr Wicks recorded
that they were “awaiting decision to revoke”;
(3) Mr Porter’s draft application that he sent to Mr Wicks by
fax late in the afternoon of Friday 1 August 1997 (see [254]), which contained no claim for any
injunctive relief, but sought a stay of the revocation decision under s 15
of the ADJR Act, and an order that the decision be quashed; and
(4) Mr Wicks’s fax to Mr Porter on Monday 4 August 1997
(see [256] above), which was also
consistent with the preparation of papers in anticipation of the revocation
decision.
- In
relation to Mr Wicks’s file note dated 11 August 1997 which
records that Mr Porter told him that he saw no need for an interlocutory
stay (see [273] above), the primary
judge held at [729] that there were significant reasons to doubt that
Mr Porter gave the advice that Mr Wicks
had understood him to give.
The primary judge referred to Mr Porter’s letter to Mr Wicks
dated 19 August 1997 to which we have
referred at [275] above as the source of that doubt. We
share those doubts to an extent. Mr Porter may have been addressing the
question of a stay
under s 41(2) of the Administrative Appeals Tribunal
Act 1975 (Cth), and advising that it was not available because the
reviewable decision would not have been amenable to review by the Tribunal
until
after the internal review under s 105AAB(2) of the National Health
Act. However, having regard to the absence of cross-examination on the
topic, and the content of the written reply submission of the fifth
respondent
which we have set out at [378]
above, whether Mr Wicks’s note represented a misunderstanding of
Mr Porter’s advice was not in issue at trial, and we
respectfully
consider that the primary judge was in error in finding that Mr Wicks had
misunderstood Mr Porter’s advice. Mr
Porter’s letter
supports an inference that he discussed with Mr Wicks the utility of
seeking a stay of the revocation of Derwent
Court’s approval in the
circumstances that existed by that time. We infer that Mr Porter had
reservations about the utility
of seeking a stay pending administrative review
by the Minister and then the AAT, and those reservations are reflected in
Mr Wicks’s
file note of the conversation.
- We
have mentioned that no party called Mr Porter. We do not draw any inference
from this failure against any party in evaluating the
evidence. Jadwan could
hardly be expected to have called Mr Porter. And given that the fifth
respondent was engaged by Jadwan’s
former solicitors to serve a writ on
Mr Porter, we do not think that any inference should be drawn from the
fifth respondent’s
failure to call him. Further, although this was not
raised in argument, we expect that Mr Porter would likely have been subject
to
professional obligations that would have prevented him from discussing his
retainer by Jadwan with the legal representatives of the
fifth
respondent.
Reasonable and prudent advice from Mr Hogan
- Mr Hogan
was an experienced Melbourne solicitor whose practice had included working on a
considerable number of transactions relating
to nursing homes. His professed
expertise in the law relating to the conduct of nursing homes in Australia was
the subject of an
admission in paragraph 38 of the amended defence of the fourth
respondent. Reasonable care required that, before giving advice to
Jadwan,
Mr Hogan acquaint himself with the relevant Commonwealth legislation. As
the primary judge remarked at [502], the existence
of the Aged Care
Act, being an Act of the Commonwealth Parliament, was not some hidden trap.
We are satisfied that the exercise of reasonable care by
Mr Hogan in giving
advice to Jadwan required that he draw attention to the new legislation, and in
particular the transitional provisions
in the Consequential Provisions
Act, and give Jadwan advice about the significance of that legislation to
its objective of selling its bed licences. The fact that the
commencement date
for the operative provisions of the legislation had not been proclaimed at the
time Mr Hogan gave advice on 28
to 30 July 1997 reinforced, rather
than detracted from, the requirement that, in the exercise of reasonable care,
he draw the legislation
to Jadwan’s attention. We reject the submissions
advanced by the fourth respondent that advice about the existence and general
effect of the new legislation was outside the scope of Mr Hogan’s
retainer. On the contrary, we would regard such advice as
being well within the
scope of the retainer, and no question of any “penumbral” duty
arises. That is because the enactment
of the new legislation and in particular
the transitional provisions in the Consequential Provisions Act were
directly relevant to the subject-matter on which Jadwan sought advice from
Mr Hogan, namely its desire to “save the bed licences”
(see the letter from Jadwan to Mr Hogan dated 28 July 1997, set out
at [216] above). Jadwan’s
objective to preserve its bed licences reasonably required that Mr Hogan
direct attention to the effect of
the new legislation in order that Jadwan could
consider what course it should follow.
- At [698]-[704],
the primary judge found that Mr Hogan was not liable to Jadwan for the
following reasons –
- ...
I am satisfied that the advice Mr Hogan provided to Jadwan and Mr Wicks was
confined to seeking an injunction as a tactic to put
additional pressure on the
Department to secure a quite different objective: consent to Jadwan being
granted additional time to sell
its bed licences.
- I
have earlier set out my reasons for coming to the conclusion that before Jadwan
had consulted Mr Hogan, its directors had made the
key decision to accept the
Department’s offer to meet Derwent Court’s liability for redundancy
payments. Jadwan had dismissed
all of Derwent Court’s staff.
Mr Alexander’s letter of instruction had referred to those events as
settled (see [394]
and [689] above).
- The
Department was also aware of those circumstances. Mr Hogan’s reasoning and
advice was not implausible but I have rejected
finding on the balance of
probabilities that seeking an injunction in that context would have led to the
Department extending its
48 hour window for Jadwan to transfer its bed
licences.
- But
in any event, Mr Hogan was not responsible for Mr Wicks’ later decision
(based on his understanding of Mr Porter’s
advice) not to proceed in that
regard. On 31 July 1997 Mr Wicks had informed Mr Hogan of Mr Porter’s
“tactic” to
seek an injunction. Mr Hogan’s retainer was
terminated on 5 August 1997. As at that point in time it had been his
understanding,
as conveyed by Mr Wicks, that Jadwan’s lawyers in Hobart
had agreed to file an application for an injunction immediately upon
confirmation of Ms Halton’s revocation decision. That they did not do so
was not his responsibility. He was never advised of
any change of plans.
- I
am therefore not satisfied, even had such a course been likely to have achieved
its objective of persuading the Department to allow
Jadwan a further opportunity
to sell its bed licences (which I have rejected as an available finding) that
there is any basis for
holding Mr Hogan liable for failing to provide advice to
Jadwan to seek such an injunction for that purpose. I reject that Mr Hogan
caused Jadwan the loss of the chance it pleads on that basis.
- I
reject it was within Mr Hogan’s retainer or any perambulatory duty
associated with his retainer to have provided advice as
to how Derwent Court
might continue to operate. Mr Hogan had been given express instructions that
Jadwan accepted Derwent Court would
have to close. He had been told that Jadwan
had given notice to its staff at Derwent Court and the residents were
leaving.
- Accordingly
I reject Jadwan’s case that the failure of Mr Hogan to give advice with
respect to the existence and consequences
of the Aged Care Act and the
Consequential Provisions Act caused Jadwan to suffer the loss of its chance to
continue and ultimately to relocate its business.
- The
primary judge’s findings at [698] are concerned with identifying the
advice that Mr Hogan gave, rather than the advice that
reasonable care
required him to give, and which he omitted to give, which we have addressed
at [526] above. The findings
at [699]-[704] are otherwise concerned with causation, which issue we shall
consider for ourselves on the premise
that reasonable care required that
Mr Hogan draw attention to the new legislation, and its significance to
Jadwan’s objective
of saving its bed licences.
Toomey Maning & Co
- We
are not satisfied that any act or omission of Mr Wicks when employed by
Toomey Maning & Co was capable of being a cause of
the damage alleged by
Jadwan, being the loss of opportunity to which we have referred at [419] and [431] above, and we shall not give any
further consideration to its liability.
What course would Jadwan have taken had it received reasonable,
prudent advice?
- Because
this Court has concluded that the primary judge erred in making findings
concerning the advice that reasonable care required
Mr Wicks,
Mr Porter, and Mr Hogan to give Jadwan, this Court should now make its
own findings concerning causation, weighing conflicting
evidence, and drawing
its own inferences and conclusions: Devries v Australian National Railways
Commission at 479-481 (Deane and Dawson JJ), cited in Robinson
Helicopter Company Inc v McDermott at [43]. As we have discussed, the
question of causation involves the evaluation of a past hypothetical in which
the circumstantial
evidence is the dominant consideration. In this case,
causation does not turn on any relevant advantage that the primary judge enjoyed
by observing witnesses. As we noted at [446] above, senior counsel for Jadwan
accepted that the evidence of Mrs Joan Alexander and Ms Julie
Alexander concerning what they would
have done had they received competent
advice was somewhat self-serving. And as we have already noted, causation
invites attention
to what Jadwan would have done in circumstances where
Mr Alexander, who was its controlling mind, had passed away some years
before
the trial.
- We
infer that at the time Jadwan received the delegate’s notice of intention
to revoke the approval of Derwent Court on 21 July
1997, Jadwan was aware
of a likelihood that it could not continue in the long term to operate Derwent
Court from its existing premises.
This inference is supported by Jadwan’s
acknowledgment that it had to relocate its premises, which had been conveyed to
Mr
Dellar at a meeting on 4 March 1997 (see [100] above), by the letter from Jadwan to
the Department dated 22 April 1997 (see [113] above), by the correspondence passing
between Jadwan and the Tasmania Fire Service in late May and early
June 1997, by Mr Wicks’s
file notes of 10 June 1997,
2 July 1997, and 15 July 1997, by Mr Wicks’s letter of
advice of 12 June 1997, and by the statements
that Mr Alexander made
to the second Standards Review Panel that were recorded in its report
(see [124] above).
- The
letter from the Tasmania Fire Service to Jadwan dated 30 May 1997, to which
we referred at [127] above, made
explicit that the approval of the various fire safety measures set out in the
letter, including the reduction in the
number of residents on the first floor,
was subject to a business plan detailing the plans and time frames for the
construction or
purchase of a new facility within a two year period. The letter
also foreshadowed a meeting between Jadwan, the Fire Service, and
the
Department, after Jadwan had formulated its business plan.
- Jadwan
did not submit a business plan that conformed to the request that it span a two
year period. Instead, by its letter dated 13
June 1997, to which we
referred at [137] above, Jadwan
proposed a plan that extended from December 1997 to October 2000.
Mr Alexander submitted the plan after consulting
Mr Wicks on
10 June 1997, and after receiving Mr Wicks’s letter of advice
dated 12 June 1997. Mr Wicks’s file note of
his meeting with
Mr Alexander on 10 June 1997 gives rise to an inference that
Mr Alexander did not want to lock into a new construction,
and was
considering the alternative of selling the bed licences, which accounted for his
question to Mr Wicks as to whether a declared
home could sell beds.
Mr Wicks’s letter of advice of 12 June 1997 gives further
support for the inference that the realistic
options available to Jadwan at that
time were limited to constructing a new home, or to losing the beds if a buyer
for the licences
could not be found.
- The
fact that Mr Alexander submitted to the Tasmania Fire Service a plan that
extended over more than three years, rather than two
years as requested, did not
go unnoticed. Mr Wicks’s file notes of his conversations with
Mr Alexander on 2 July 1997, and
15 July 1997, referred to the
Fire Service having gone sour on the proposal for a downstairs fire door, and
referred to the Fire
Service being unhappy with the three year timetable,
because it was too long. Further, Mr Wicks’s file note of
15 July 1997
referred to the prospect of the smoke door being required at
the top of the stairs, and to major works. It was in those contexts
that on
2 July 1997 Mr Wicks recorded Mr Alexander as saying that he was
more inclined now to sell and get out, and that he was speaking
to a marketing
firm that day, and that on 15 July 1997 he recorded Mr Alexander as
saying that he had decided to “get out”.
- At
about this time, Jadwan was expecting to meet representatives of the Fire
Service, and the Department, as Mr Knight had suggested
in his letter of 30 May
1997. On 7 July 1997, Mr Alexander advised Mr Wicks of a proposed
meeting on 17 July 1997 at 2.00pm. That
meeting did not occur, because it
was cancelled by the Department upon the delegate deciding to take steps to
revoke Derwent Court’s
approval. However, Mr Alexander had obtained
the letter from Mr Calder of Tasmanian Building Services dated 16 July
1997, to which
we referred at [154]
above, which proposed a timetable extending over 104 weeks. We infer that
Mr Alexander had requested this timetable to have available
to present to
the meeting that had been planned for 17 July 1997, but which did not take
place. In the meantime, Mr Wicks met Mr
Alexander and Ms Julie
Alexander on 15 July 1997, to which we have referred at [458] to [467] above, and we infer that they
discussed getting out of Derwent Court, and that Jadwan was giving serious
consideration to selling
its licences and was thinking of advertising them for
sale, or putting them out to tender.
- We
are not persuaded that at the time Jadwan received the delegate’s notice
of intention to revoke the approval of Derwent Court
dated 20 July 1997,
that Jadwan had taken any steps to further any proposal to relocate Derwent
Court to a greenfields site. While
it may have contemplated purchasing land for
that purpose in late 1996 and early 1997, and some of its directors at
earlier times
had inspected some sites, the evidence does not disclose any
concerted efforts to proceed with any purchase. The report of the second
Standards Review Panel recorded that Mr Alexander tabled a “vision
statement and strategic plan”, and that he stated his intention to
rebuild over two to three years, but noted that he anticipated difficulty in
finding
the two hectares of land that he needed. Mr Alexander’s
business plan that he submitted to the Tasmania Fire Service did not
propose the
location of land until December 1997, and did not propose an option to
purchase land until February 1998. The proposed
dates were qualified as
being best estimates only. The proposal by Tasmanian Building Services dated
16 July 1997 was nothing more
than an indicative timetable, and did not
amount to any affirmative step by Jadwan to relocate Derwent Court. This
situation might
be well understandable, given that Jadwan’s approval for
Derwent Court was known by it to be in jeopardy, and acting rationally,
Jadwan
would not wish to devote substantial funds to a venture that might turn out to
be futile. We regard Ms Julie Alexander as
having accepted in
cross-examination that Jadwan would have to have received a guarantee from the
Commonwealth that if it built a
new home, it would get 51 bed licences,
before it made the decision to do so. That is an unsurprising position for
Jadwan to have
taken, and was a theme in its decision-making relating to
financial expenditure.
- All
this tends to reinforce a conclusion that as at 21 July 1997, there was no
real advance on any proposal to relocate Derwent Court,
and Jadwan had no
developed plans to do so. Nor had Jadwan taken any positive steps to reduce the
number of residents located on
the first floor of Derwent Court, to which Mr
Knight had referred in his letter to Jadwan of 30 May 1997.
Mr Alexander had enquired
on 10 April 1997 about the possibility of
relocating residents to the Carruthers Wing at St John’s Park, and had
subsequently
visited that site on 21 April 1997. There were further
communications in May 1997 that terminated with a fax to Mr Alexander
dated
30 May 1997 setting out the quoted costs (see [129] above). Notwithstanding Mr
Knight’s letter of 30 May 1997, and its reference to the reduction of
the number of residents on
the first floor, Mr Alexander took no actual
steps to facilitate this occurring. This points to Jadwan’s practical
options
narrowing to the sale of the bed licences.
- In
relation to the sale of the bed licences, we infer from Mr Wicks’s
file note and Mrs Joan Alexander’s diary entry of
2 July
1997 that the directors of Jadwan spoke to Mr Wicks about engaging selling
agents to market the licences. We also infer that
on 15 July 1997,
Mr Alexander spoke to Mr Wicks about the possibility of advertising
the licences for sale, or putting them out to
tender, but it appears that prior
to the service of the notice of intention to revoke the approval, nothing was
done. That inference
is reinforced by the evidence of the extensive interest
shown in purchasing the licences that arose after the notice was served,
to
which we referred at [252]
above.
- Upon
Jadwan being served on 21 July 1997 with the notice of intention to revoke
the approval for Derwent Court, one of the first things
to which it gave
attention was the termination of its staff. Ms Julie Alexander spoke to Ms
Thorpe of the Department that very day
about staff pay and redundancies, as
reflected in the primary judge’s findings at [532]-[533].
Jadwan’s concern over
its liability for redundancy payments is also
recorded in Mr Wicks’s file note of 22 July 1997 (see [173]-[174] above), from which it is to be
inferred that Mr Alexander had spoken to Mr Dellar that day. And by
24 July 1997, Mr Alexander had
spoken to Mr Dellar about
Commonwealth funding of redundancies, and received information that the
Commonwealth would fund 80% of
redundancy payments, but not payment in lieu of
notice. Jadwan then prepared letters to its staff terminating their employment.
On
the hypothesis that Mr Wicks should have advised Jadwan of the new
legislation by 23 July 1997, the first issue confronting Jadwan
would have
been whether to proceed to terminate the employment of its staff.
- The
issue of timing, and the influence of other events that were occurring after
Jadwan received the notice of intention to revoke
its approval, must be
considered in forming a view of the overall picture. We set out in a table below
the number of residents that
remained on relevant dates. The information in the
table has been derived from the contents of the note that was in evidence, to
which we referred at [385] above,
Mr Wicks’s file notes of 10 June 1997 and 7 July 1997, and
the report of the internal review by the Department dated
29 April 1998, to
which we referred at [161] above. The information in those documents
largely corresponds, save that the report
of the Department’s internal
review states that seven residents were transferred on 26 July 1997, and
that four were transferred
on 28 July 1997. We have calculated the column
“Residents remaining” based on the figures in the note that was in
evidence,
and the information in Mr Wicks’s file notes of 10 June and
7 July
1997 –
Date |
Departures |
Residents remaining |
Tuesday, 10 June 1997 |
2 |
49 |
Monday, 7 July 1997 |
3 |
46 |
Thursday, 24 July 1997 |
1 |
45 |
Friday, 25 July 1997 |
3 |
42 |
Saturday, 26 July 1997 |
6 |
36 |
Sunday, 27 July 1997 |
8 |
28 |
Monday, 28 July 1997 |
5 |
23 |
Tuesday, 29 July 1997 |
8 |
15 |
Wednesday, 30 July 1997 |
6 |
9 |
Thursday, 31 July 1997 |
4 |
5 |
Friday, 1 August 1997 |
2 |
3 |
Saturday, 2 August 1997 |
2 |
1 |
Sunday, 3 August 1997 |
0 |
1 |
Monday, 4 August 1997 |
1 |
0 |
- If
Mr Wicks had located and advised Jadwan of the new legislation by
23 July 1997, then reasonable care would not result in all of
the issues to
which the new legislation gave rise becoming immediately apparent. The
complexity of the issues would likely cause
a reasonable solicitor, as
Mr Wicks did, to seek instructions to retain counsel. A reasonable
solicitor, and counsel, would take
time to consider carefully the facts, the
legislation, and to formulate advice to Jadwan of the type to which we have
referred at
[503] above. In this
case, Mr Porter took time to consider the issues, because after
Mr Wicks consulted him on the morning of 24 July
1997, Mr Porter
continued to give consideration to the issues, as evidenced by
Mr Wicks’s file note of his telephone conversation
with him on the
afternoon of 24 July 1997.
- Reasonable
and prudent solicitors and counsel would require time to formulate any available
grounds on which to seek an interlocutory
injunction. We consider that the
ineligibility of Ms Cooper for membership of the Standards Review Panels
would have been identified
on 24 or 25 July 1997 as giving rise
to a reasonable argument that there was a serious question to be tried.
Mr Wicks made a note
on 25 July 1997 referring to
Ms Cooper’s position, and at about that time prepared an undated file
note recording his consideration
of the relevant regulations (see [199] above). Further time would have been
required to marshal evidence addressing such issues as the balance of
convenience, which would
have to be addressed on the assumption that Jadwan
proposed to continue operating Derwent Court until the trial of the proceeding.
After a reasonable solicitor had identified the new legislation on Wednesday
23 July 1997, Jadwan would have received preliminary
advice about the
prospects of obtaining an interlocutory injunction on Thursday 24 July
1997. Jadwan would then, as it did, have
to consider that advice and evaluate
its options. On the assumption that Jadwan expressed interest in seeking an
injunction to enjoin
the delegate from making the revocation decision, on
balance, we consider that Jadwan was likely to have been in a position to move
on an application on Monday 28 July 1997.
- The
choice confronting Jadwan from 23 July 1997 and in the days following was
not simply whether to commence and maintain a proceeding
seeking an
interlocutory injunction. The choice was whether to continue to operate Derwent
Court at the existing premises in the
following
circumstances –
(1) Derwent Court remained subject to financial
sanctions;
(2) Mr Alexander understood that the consequence of the financial sanctions
was that as residents left, Jadwan would not be entitled
to a Commonwealth
benefit for any new resident (this inference arises from Mr Wicks’s
note of 10 June 1997);
(3) Jadwan had not taken steps towards relocating to new premises,
notwithstanding its statements to the Department and to the Tasmania
Fire
Service that it would do so;
(4) Jadwan had taken no taken steps to secure alternative accommodation for the
first floor residents, notwithstanding that many
weeks earlier, in April and
May 1997, it had made enquiries to locate alternative accommodation and in
relation to the cost thereof;
(5) if residents remained on the first floor, there was the prospect that Jadwan
would have to effect major works to install a smoke
door at the top of the
stairs on the first floor of the Home;
(6) the Department had arranged alternative accommodation for Derwent
Court’s residents at homes operated by Southern Cross
Homes, namely Rosary
Gardens and the Carruthers Wing;
(7) the Department had on 21 and 22 July 1997 communicated with the
residents and their relatives about its intention to close Derwent
Court, the
reasons for doing so, and of the fact that the Department would find alternative
accommodation for the residents;
(8) the letter to the residents dated 20 July 1997 contained a statement
that implied that moving to new accommodation would be necessary
in order that
the residents retain their entitlement to Commonwealth
funding –
I intend to revoke the approval of Derwent
Court Nursing Home in fourteen day[s]. In this time the Department will find you
another
nursing home to move to if you wish. If you choose to move the
Government will keep funding your care.
[Emphasis added]
(9) the Department had convened the meeting on Wednesday
23 July 1997 at its offices in Hobart with relatives of the residents and
representatives from Rosary Gardens who provided relatives with an overview of
their organisation and a detailed orientation package,
and which was attended by
about 50 people;
(10) in her draft affidavit that was sent to Mr Porter on 11 August
1997, Ms Julie Alexander stated that she had been told by some
of the
relatives that as a result of the meeting, they were convinced that the
Department was adamant that the closure would go ahead,
and that a number of
relatives had told her father that they were upset and angry about the
relocation;
(11) we infer that, in consequence of these communications, a number of
residents, in consultation with their relatives, chose to
leave Derwent Court,
so that –
(a) one resident left on Thursday,
24 July 1997;
(b) three residents left on Friday, 25 July 1997;
(c) by the end of Monday, 28 July 1997, a further 19 residents had left;
and
(d) by the end of Tuesday, 29 July 1997, a further 8 residents had left,
and only 15 then remained (see the table at [540]
above);
(12) it would have been apparent to Jadwan that
residents were likely to continue to leave Derwent Court, even if Jadwan
obtained
an interlocutory injunction, and in this regard, Mr Alexander told
Mr Wicks on 25 July 1997 that 20 residents had agreed to go to
St John’s (see [196]
above);
(13) Mr Alexander appreciated the pressure on residents to leave Derwent
Court, because in his letter to Mr Hogan dated 28 July 1997,
he
stated –
The move of residents has been well
orchestrated by DH&FS to the point where residents [and] relatives have no
choice but to transfer
to Southern Cross Homes; much to their displeasure and
anger.
(14) as we have mentioned, reasonable advice to Jadwan
would have been that the effect of the financial sanctions determination was
that there was a reasonable prospect that Jadwan would not be entitled to
Commonwealth funding in respect of any resident who left
Derwent Court and
sought to return while the sanctions determination remained in force; and
(15) at the same time, Jadwan was dealing with the redundancy issue, and the
Department was facilitating interviews for those staff
at Derwent Court who
wished to take up employment at Rosary Gardens.
- We
infer from Mr Wicks’s file note of 24 July 1997 that when
Mr Porter gave advice to Mr Wicks on 24 July 1997 about the
prospects
of obtaining an injunction, he did so on the premise that if an
injunction was obtained, Jadwan would seek administrative review
of the
revocation decision which, at best, would lead to the Administrative Appeals
Tribunal quashing the decision. Mr Wicks conveyed
to Jadwan
Mr Porter’s opinion that the Department could then simply turn around
and “do it all again”. Whether Jadwan succeeded on judicial
review, or administrative review, this was reasonable and sound advice. As we
have held
at [503(10)(c)], upon the hypothesis that
reasonable advice included identification of the new legislation, reasonable
care still required that
Jadwan be advised that an interlocutory injunction
would not prevent the Department from making another decision. Reasonable care
required that Jadwan be advised that if an interlocutory injunction was obtained
in support of final relief, then following the hearing
and determination of the
proceeding, there was a real prospect that the Department would seek to
“do it all again”, whether under the National Health
Act, or under the corresponding provisions in s 16-1 of the Aged
Care Act that authorised revocation of approval as a sanction. For these
reasons, it would have been reasonable to advise Jadwan that, overall,
there was
an appreciable risk that any success would be pyrrhic.
- The
draft application under the ADJR Act that Mr Wicks and
Mr Porter were working on in early August 1997 was consistent with
Mr Hogan’s letter to the Department of
30 July 1997 that
requested time to sell the bed licences on the basis that Derwent Court would
not function pending a sale. There
was no material in the draft affidavit of
Ms Julie Alexander that addressed what Jadwan proposed to do to maintain
patient care,
or which addressed fire safety. While the draft affidavit that
Mr Wicks sent to Mr Porter on 11 August 1997 referred in passing
to
the possibility of building a new home if Jadwan was able to do so, it
concluded with the following which was confined to an intention
to sell the bed
licences –
It is most important to the Company that its fifty-one
approvals remain in place while the Company pursues all avenues of appeal open
to it against the Minister’s revocation decision and, in the event that
its appeals result in a finding that is favourable
to the Company, that it be
allowed to negotiate as it sees fit for the transfer of the approvals to any
interested buyer or buyers.
- The
application that Mr Wicks and Mr Porter prepared was no more than an
application under s 15 of the ADJR Act to suspend the operation of
the revocation decision. An application of that nature, if successful, would not
have enabled Jadwan to
engage the conditions in s 7(1)(a) of the
Consequential Provisions Act. But importantly, Jadwan would likely have
perceived that the proposed application would have involved little financial
risk to it
other than modest legal costs. Mr Porter had given very modest
estimates (see [188] above) that
the costs of an application to the Court could run to $2,000 to $3,000, and that
the costs of a review by the Administrative
Appeals Tribunal could exceed
$5,000. Even in relation to those costs, Mrs Joan Alexander had
recorded a concern in a diary entry
dated 7 August 1997 that it was costing
a lot of money, referring to the sum of $5,000 for the AAT, and writing that it
was “good money after bad” (see [269] above).
- On
the other hand, any application for an injunction on the basis that Jadwan would
continue to operate Derwent Court was a very different
proposition. In order to
meet its objective, Jadwan would have to refrain from terminating the employment
of all its staff, or alternatively,
if it had already given notice, then
negotiate the withdrawal of the notices of termination with individual staff
members. Jadwan
would have to retain sufficient nursing staff for three shifts
per day, seven days per week, with a significantly reduced number
of residents,
and with the risk, which we find that Jadwan appreciated, that residents would
continue voluntarily to leave. In this
regard, it is not to be supposed that the
residents whom the Department was assisting to relocate to alternative
accommodation, or
their relatives, had any insight into the merits of any claim
that Jadwan had, or in relation to the prospects that Jadwan might
succeed in
continuing to operate Derwent Court notwithstanding the strongly-worded letters
to residents from the Department.
- Ms Julie
Alexander accepted in cross examination that Derwent Court was unviable with
only 15 residents. The commencement and maintenance
of an application for
an interlocutory injunction would likely have involved Jadwan electing to
continue to operate Derwent Court
at a loss for at least two months, and
probably longer.
- Relevant
to any decision to continue operating Derwent Court would have been
Jadwan’s perception in July 1997 of the value of
its bed licences. In
his file note of a conversation with Mr Alexander on 7 February 1997,
Mr Wicks recorded that the bed licences
were “worth about $12,000
each in Tas in current climate”. In his file note of 10 June
1997, Mr Wicks recorded Mr Alexander as suggesting that while licences
in Melbourne were worth
$18,000 to $25,000, the licences in Hobart were worth
$12,000. And in Mr Wicks’s file note of his conversation with
Ms Julie
Alexander on 6 August 1997, to which we have already
referred, he recorded –
- redundancy bill will be over half a million dollars
– which could be value of the bed licences – one will cancel out
the
other. (!)
- While
there was no exact equivalence between the expected Commonwealth assistance for
redundancy payments and the perceived value
of the bed licences, the
contemporaneous evidence is that Ms Julie Alexander made the comparison,
and we infer that the comparison
would not have escaped Mr Alexander. While
we have found that there was no agreement with the Department in relation to the
funding
of redundancy payments, the fact that the Department represented that
Commonwealth assistance was available provided a cushion to
the costs that
Jadwan would incur, and we infer that it was a consideration of which
Mr Alexander took account in deciding to terminate
the employment of all
Jadwan’s staff on 24 July 1997.
- By
at least the end of Friday 25 July 1997, the situation at Derwent Court was
one of great uncertainty and upheaval. Residents had
started leaving. Staff from
the Department had commenced copying patient records. On that day,
Mr Alexander advised Mr Wicks that
he accepted that the patients had
to be cared for, and that closure had to be accepted (see [196] above). However, that decision was
made after receiving the advice of Mr Wicks and Mr Porter who had
failed to identify the new
legislation.
- At [207] above, we referred to the evidence of
Ms Julie Alexander, which the primary judge did not accept, that
Mr Wicks had advised her
in a conversation on about 25 July 1997, that
if Jadwan obtained an injunction, it would not receive Commonwealth funding and
would
have to fund the nursing home itself. That evidence was given by
Ms Alexander in evidence-in-chief. But her evidence was not consistent.
In
cross-examination, Ms Alexander placed that advice in a different context,
namely Jadwan’s decision to give notice to its
staff on 24 July
1997 –
Well, that leads to the question: why was the decision
taken to give notice on 24 July rather than wait?---There was a couple of
reasons.
One – the point that was foremost in my mind was that we had
received advice that we couldn’t – that we –
if we took an
injunction to stop the residents from leaving, we would have to fund the nursing
home for about a year out of our own
funds and, if we lose, then we will bear
those costs ourselves. ...
- That
context was confirmed by Ms Alexander when it was put to her by senior
counsel for the first to third respondents that Mr Wicks
had at no time
told Jadwan that it risked losing Commonwealth funding if it obtained an
injunction, which Mrs Joan Alexander denied,
stating –
I recall having that in my mind at the time that I was
typing the redundancy letters.
- The
primary judge held at [385] that that there was no corroboration,
contextual or otherwise, to support a finding that Mr Wicks
told
Ms Alexander that if Jadwan obtained an injunction, that Commonwealth
funding would cease. However, we can identify two items
of evidence that are
arguably corroborative. First, in Mrs Joan Alexander’s
diary entry for 25 July 1997 Mrs Alexander wrote, “If we put
an injunction on we run the risk of Commonwealth funding running out”
(see [203] above). Second,
there is an undated file note of Coltmans Price Brent referring to
Mr Alexander which stated, “Injunction/ if apply funding
cut” (see [220] above).
We infer that this file note is a record of what Mr Alexander told
Mr Hogan of the advice that he had received from Mr Wicks.
We would not
disturb the primary judge’s finding that Mr Wicks did not give the
advice, which was made after seeing both Mr
Wicks and Ms Alexander
give evidence, where Ms Alexander gave inconsistent accounts. Further, the
primary judge at [385] suggested
a more plausible account of the advice
that was given, which was that it related to the effect of the financial
sanctions decision.
There is support for this alternative account in
Mrs Joan Alexander’s diary entry, which is equally consistent
with the formulation
of the advice suggested by the primary judge.
- On
either version of the advice, Jadwan’s response would indicate that it was
sensitive to the cost of operating Derwent Court
at a loss. The prospect of
deciding on 25 July 1997 to keep Derwent Court operating for some months
with a reduced number of residents,
and at a loss, was not on the same scale as
operating without any Commonwealth funding. But having regard to Jadwan’s
general
sensitivity about expending money and minimising its losses, we find
that the prospect of operating Derwent Court at a loss would
have been a
material consideration for Mr Alexander in deciding whether to seek an
injunction, had Jadwan received the prudent and
reasonable advice that we have
identified.
- Ultimately,
Jadwan would have to decide whether it should keep Derwent Court operating at a
loss for some months. We are not persuaded
that, in late July and early August
1997, Jadwan would have conceived the idea that it only needed to have one or
more residents
remain at Derwent Court until 1 October 1997, and that it
would keep the home running on that basis. As we stated at [296] above, Ms Julie Alexander did not
learn of the existence of the Aged Care Act until after the first Full
Court decision in Jadwan No 2, and possibly as late as July
1999.
- We
referred at [306] above to
Mrs Joan Alexander’s evidence that she was confident that Jadwan
would have persuaded a resident to return to Derwent
Court, and she nominated a
Mrs Jacobs. A staff member at Southern Cross Homes had reported to
Mrs Alexander that Mrs Jacobs was screaming,
and wanted to come back.
We note that the report of the internal review by the Department dated
29 April 1998 recorded concerns about
the fact that the last resident to
leave Derwent Court had spent the last night with only staff for company. Beyond
the hearsay evidence
about Mrs Jacobs, the circumstances of any particular
resident were not explored by the evidence. In the state of upheaval and turmoil
that existed, there must be considerable doubt that relatives, and those
responsible for the care of the dementia patients, would
have permitted one or
more patients to remain at, or to return to Derwent Court. And there are
indications in the evidence that Jadwan
was also concerned about the interests
of its residents, because in his letter to the Department dated 1 August
1997 Mr Wicks stated
that –
My client’s ultimate decision to take no action to
prevent the relocation was taken purely in the interests of the Home’s
residents, many of whom were quite upset at the prospect of
relocation.
- We
are not satisfied on the evidence that Jadwan would have persuaded any resident
to remain at, or return to, Derwent Court: whether
any resident would have done
so is true speculation. Further, as we have held at [508] to [515] above, if a resident had left Derwent
Court, and had been admitted to another nursing home, a return to Derwent Court
would involve
a fresh admission, and would not attract Commonwealth
funding.
- The
operation of Derwent Court for some months with only one or more residents would
not have been an attractive basis on which to
present an application for an
interlocutory injunction to the Court. And it would not have been attractive to
residents, their relatives,
or the Court, for Jadwan to propose that Derwent
Court would remain open only until 1 October 1997, with no longer term
plans in
place.
- In
our view, one of the most substantial considerations for Jadwan would have been
reasonable advice that, even if Jadwan obtained
an injunction, and even if it
was successful at trial, there was a real risk that the delegate would be able
to “do it all again”, including under the new legislation.
All the circumstances of the case show that without some reassurance by the
Department
that its approval was secure, Jadwan was not prepared to commit any
substantial resources to any long-term plans.
- Given
all these considerations, and looking at the accumulation of detail, we are not
persuaded that, had Jadwan been given reasonable
advice to the effect that we
have identified at [503] above,
that it would have commenced and maintained an application for an interlocutory
injunction to enjoin the Minister from revoking
its approval.
Causation arising from Mr Hogan’s negligence
- It
follows that we are not persuaded that Jadwan would have acted on advice from
Mr Hogan about the effect of the new legislation
and commenced a proceeding
seeking an injunction to enjoin the revocation of the approval of Derwent Court,
so as to enable Jadwan
to continue its operations in the interim. Any
application for an injunction of that type upon receiving advice from
Mr Hogan was
not likely to have been made before 1 August 1997. By the
time Jadwan wrote to Mr Hogan on Monday 28 July 1997, it had given
notice
to all its staff, and it was co-operating with the transfer of residents.
As the table we have set out at [540] above shows, by Wednesday 30 July
1997, there were only nine residents left, by Thursday 31 July 1997, there were
five, and by Friday
1 August 1997, there were three. There is an
insufficient evidentiary foundation to find that those remaining residents were
likely
to stay, or that Jadwan had reasonable grounds at the time to think that
they would stay.
5. Did Mr Porter QC give advice not to seek an
injunction – Issue (7)
- We
have addressed this question at [524] above. We do not find that
Mr Wicks misunderstood Mr Porter’s advice. The advice that
Mr Porter gave concerned a proposed
application under the ADJR Act
to suspend the operation of the revocation decision after the revocation had
effect: see, Riverside Nursing Care Pty Ltd v Bishop [2000] FCA 434; 60
ALD 704 at [27]- [28] (Sundberg J). But by 11 August 1997, the
utility of any such order was doubtful, as Mr Porter may have realised.
Mr Porter’s
advice was given well after the staff had been given
notices of termination, and one week after the last resident had left. We are
not persuaded that Mr Porter’s advice on 11 August 1997 was a
cause of the lost opportunity that was the subject of Jadwan’s
claim.
6. Would an application for interlocutory relief have been
successful – Issue (3)
- Jadwan
has not persuaded us that, on the assumption it received reasonable and prudent
advice from its legal advisers, it would have
decided to continue to operate
Derwent Court and to seek an injunction to enjoin the Minister from revoking its
approval. It is therefore
unnecessary for the Court to make any further
findings. In Boensch v Pascoe [2019] HCA 49 at [7], Kiefel CJ,
Gageler and Keane JJ stated –
Though it would have been preferable for the primary
judge to have made findings on all of the facts that were in contest before him,
we would not criticise the Full Court for not addressing an issue raised before
it which it did not consider to be dispositive. The
principle that an appellate
court should confine itself to determining only those issues which it considers
to be dispositive of
the justiciable controversy raised by the appeal before it
is so much embedded in a common law system of adjudication that we have
no name
for it. In some other systems, it is known as “judicial economy”.
Judicial economy promotes judicial efficiency
in a common law system not only by
narrowing the scope of the issues that need to be determined in the individual
case but also by
ensuring that such pronouncements as are made by appellate
courts on contested issues of law are limited to those that have the status
of
precedent.
- In
this case, one of the difficulties about making findings as to whether Jadwan
would have succeeded in obtaining an interlocutory
injunction is that the Court
would be required to make assumptions about a number of factual hypotheses that
we have rejected. Any
further findings would therefore be truly hypothetical in
nature, and they could have no bearing on the disposition of this appeal.
We do
not think the Court should embark on such a course.
7. Would proceedings to have the financial sanctions lifted
have succeeded – Issue (5)
- We
do not infer that an application filed by Jadwan in or after July 1997 to quash
or set aside the financial sanctions determination
could have been heard and
determined before 1 October 1997. If Jadwan had persuaded the Court that it
would have succeeded in becoming
an approved provider under the Aged Care
Act on 1 October 1997, then the chance that it would have succeeded in
having the financial sanctions lifted, and that it would have
avoided a further
decision revoking the approval of Derwent Court, would have been relevant to the
assessment of damages. But as
that question does not arise, it is also
unnecessary for us to address this issue.
8. Did Jadwan suffer any damage from the failure to give
advice about the new legislation – Issue (8)
- For
the reasons set out at [530] to [546] above, we are not persuaded that
Jadwan would have continued to operate Derwent Court so as to engage the
transitional provisions
of s 7(1)(a) of the Consequential Provisions
Act. Accordingly, no act or omission of Mr Wicks, Mr Hogan, or
Mr Porter was a cause of the damage that Jadwan alleged in this
proceeding.
- It
follows that the opportunity for Jadwan to pursue proceedings against
Mr Porter was not one that had any value, and that the fifth
respondent had
no liability to Jadwan for the damage claimed against it.
9. Summary of outcomes – Issue (9)
- The
appeal must be dismissed.
- We
will hear the parties on costs and any consequential orders by inviting written
submissions, and we shall consider any questions
that arise on the
papers.
I certify that the preceding five hundred and
seventy (570) numbered paragraphs are a true copy of the Reasons for Judgment
herein
of the Honourable Justices Bromwich, O'Callaghan and
Wheelahan . |
Associate:
Dated: 9 April 2020
SCHEDULE
OF PARTIES
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Fourth Respondent: |
JANET KAY HOGAN AS THE EXECUTRIX OF THE ESTATE OF THE LATE JOHN MICHAEL
HOGAN |
Fifth Respondent: |
WORSLEY DARCEY & ASSOCIATES (A FIRM) |
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