Corio Bay & District Private Hospital N.H. Pty Ltd v The Honourable Warwick Smith (As the Commonwealth Minister of State for Family Services )

[1998] FCA 1111

FEDERAL COURT OF AUSTRALIA

ADMINISTRATIVE LAW – Judicial Review – Natural Justice – Whether the commercial interest of a landlord of a nursing home in respect of which subsidised places are allocated under Aged Care Act 1997 (Cth) entitles it to be heard in respect of a decision to reallocate those places to another nursing home – whether a right to be heard is afforded to persons whose commercial interests are affected by a decision

Aged Care Act 1997 (Cth) Div 16, s 16-4
National Health Act 1953 (Cth) s 40AA
Aged Care (Consequential Provisions) Act 1997(Cth) s 20

Annetts v McCann (1990) 170 CLR 596 - applied
Kioa v West (1985) 159 CLR 550 – considered
Dunlop v Woollahra Municipal Council (1975) 2 NSWLR 446- distinguished
Brack v Wills (1977) 1 NSWLR 456 - distinguished
Melbourne Pathology Pty Ltd v Minister for Human Services and Health (1996) 40 ALD 565 - distinguished
Reg v Liverpool Corporation, Ex parte Liverpool Taxi Fleet Operators Association (1972) 2 QB 299 - distinguished
Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589 - applied
Alphapharm v Smithkline Beecham Aust (1994) 49 FCR 250 – considered
Bateman’s Bay Local Aboriginal Land Council v The Community Benefit Fund Pty Ltd (1998) HCA 49 - cited
Byron Environment Centre Incorporation v The Arakwal People & Ors (1997) 78 FCR 1 - cited
Big Country Developments Pty Ltd v Australian Community Pharmacy Authority (1996) 40 ALD 32 – considered

CORIO BAY AND DISTRICT PRIVATE HOSPITAL N.H. PTY LTD V THE HONOURABLE WARWICK SMITH (AS THE COMMONWEALTH MINISTER OF STATE FOR FAMILY SERVICES) AND OTHERS
VG 750 OF 1997

JUDGES:      MERKEL J
DATE:           8 SEPTEMBER 1998
PLACE:         MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 750  of  1997

BETWEEN:

CORIO BAY AND DISTRICT PRIVATE HOSPITAL N.H. PTY LTD
ACN 007 345 315
APPLICANT

AND:

THE HONOURABLE WARWICK SMITH (AS THE COMMONWEALTH MINISTER OF STATE FOR FAMILY SERVICES)
FIRST RESPONDENT

ANDREW PODGER (AS SECRETARY OF THE COMMONWEALTH DEPARTMENT OF HEALTH AND FAMILY SERVICES)
SECOND RESPONDENT

SILKCOURT PTY LTD
THIRD RESPONDENT

B & E O'CONNOR PTY LTD
FOURTH RESPONDENT

JUDGE:

MERKEL J

DATE OF ORDER:

8 SEPTEMBER 1998

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1. The application be dismissed.

1. The applicant pay the respondents’ taxed costs of and incidental to the proceeding.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 750 of 1997

BETWEEN:

CORIO BAY AND DISTRICT PRIVATE HOSPITAL N.H. PTY LTD
ACN 007 345 315
APPLICANT

AND:

THE HONOURABLE WARWICK SMITH (AS THE COMMONWEALTH MINISTER OF STATE FOR FAMILY SERVICES)
FIRST RESPONDENT

ANDREW PODGER (AS SECRETARY OF THE COMMONWEALTH DEPARTMENT OF HEALTH AND FAMILY SERVICES)
SECOND RESPONDENT

SILKCOURT PTY LTD
THIRD RESPONDENT

B & E O'CONNOR PTY LTD
FOURTH RESPONDENT

JUDGE:	MERKEL J
DATE:	8 SEPTEMBER 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

Background

The applicant, Corio Bay and District Private Hospital N.H. Pty Ltd (“Corio Bay”), was at all material times the owner of the premises situated at 67 Sydney Parade, East Geelong (“the Geelong premises”) at which Lakeaura Pty Ltd (“Lakeaura”) had conducted the business known as the Claverly Private Nursing Home.  Lakeaura was the lessee of the Geelong premises pursuant to a five year lease, granted by Corio Bay.  The lease commenced on 1 January 1993 and was due to expire on 31 December 1997.  On 1 November 1995, Lakeaura sold the business to the third respondent, Silkcourt Pty Ltd (“Silkcourt”), and assigned its interest in the lease to Silkcourt.  On 28 October 1997, Silkcourt entered into a contract to sell the business to the fourth respondent, B & E O’Connor Pty Ltd (“O’Connor”) as from 31 December 1997 when its lease of the Geelong premises was due to expire.

Silkcourt was an approved provider of aged care under the Aged Care Act 1997 (Cth) (“the Act”) in respect of thirty places allocated to it under the Act in respect of the Geelong premises. The places entitled Silkcourt to provide Commonwealth subsidised age care at the Geelong premises for thirty persons. On 30 October 1997, Silkcourt made application under the Act for the transfer of the thirty places to O’Connor, so as to enable O’Connor to increase its allocation of places under the Act at its nursing home at 355-357 Wilsons Road, Whittingham, to sixty places. The nominated date for the transfer to take effect was 31 December 1997.

On 24 October 1997, Corio Bay notified the Commonwealth Department of Health and Family Services (“the Department”) of its interest in relation to any application by Corio Bay to transfer the places away from the Geelong premises and requested certain information about any proposed transfer. The Department’s letter in response, dated 29 October 1997, noted the secrecy provisions in Div 86 of the Act and declined to provide any of the information requested by Corio Bay. Corio Bay was not notified by the Department of the application by Silkcourt for the transfer of the places away from the Geelong premises.

On 22 December 1997, a delegate of the first respondent, the Minister for Health and Family Services, approved the transfer of the thirty places to O’Connor as from 31 December 1997.  The decision to approve the transfer of the places was made without Corio Bay being afforded any opportunity to be heard in relation to that decision.

As a consequence of the approval, as from 31 December 1997, the thirty places previously allocated under the Act to Silkcourt in respect of the Geelong premises owned by Corio Bay, were no longer allocated to those premises. Evidence was given by the applicant, that as a consequence of the loss of the thirty places, there was a diminution in the value of the Geelong premises from approximately $800,000 as a nursing home to which thirty places were allocated under the Act, to a value of approximately $320,000 after the loss of those places.

Corio Bay has applied to the Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“ADJR Act”) for orders setting aside the delegate’s decision to approve the transfer of the places on the grounds that:

• the decision was prejudicial to Corio Bay’s interest as owner of the Geelong premises;

• the rules of natural justice required the delegate to afford Corio Bay an opportunity to be heard prior to making the decision;

• the decision was made without affording Corio Bay an opportunity to be heard;

• accordingly, the decision was made in breach of the rules of natural justice and was void and of no effect.

Senior counsel for the first and second respondents (“the Commonwealth respondents”) submitted that Corio Bay’s proceeding was misconceived.  He contended that:

• the allocation of places under the Act was to the proprietor of the business being conducted as a nursing home and not to the proprietor of the premises at which the nursing home business was conducted;

• the Act did not recognise the owner of premises at which a nursing home business was conducted, as having any right or interest whatsoever in relation to places allocated under the Act in respect of the premises;

• whilst the owner of such premises could have a consequential or indirect commercial interest which might be affected by a decision to approve a transfer of the places under the Act to another location, such an interest was not sufficient to entitle the owner to be heard in respect of that decision.

It was also contended on behalf of the Commonwealth respondents that the consequential commercial interest of Corio Bay did not give it standing, as an aggrieved party, to make its application to the Court under the ADJR Act. Counsel for Silkcourt and O’Connor adopted the submissions made on behalf of the Commonwealth respondents.

The parties were in agreement that the real issue in the proceeding related to whether Corio Bay was entitled to be heard before the decision was made by the delegate to approve the transfer of the thirty places from Silkcourt to O’Connor. In the event that there was such an entitlement, it would follow that the rules of natural justice were not complied with as Corio Bay was not afforded an opportunity to be heard and, accordingly, the decision would be vitiated. In such circumstances Corio Bay would have standing, as an aggrieved party, to challenge the decision. On the other hand, if there was no entitlement to be heard there was no breach of the rules of natural justice with the consequence that Corio Bay’s claim would fail. In that case, it would not matter whether Corio Bay had standing as an aggrieved party to bring the application under the ADJR Act, as Corio Bay would not be entitled to any relief.

Accordingly, it is necessary to determine whether a duty was owed by the delegate to afford Corio Bay an opportunity to be heard prior to making her decision to approve the transfer of the thirty places.

The Act

Prior to the commencement of the Act on 7 July 1997, Commonwealth subsidised nursing home care was governed by the provisions of the National Health Act 1953 (Cth). Immediately prior to the commencement date, Silkcourt, as the person conducting the business of a nursing home at the Geelong premises, had obtained approval for thirty beds in respect of the premises as an approved nursing home pursuant to s 40AA of the National Health Act 1953.

Pursuant to s 20 of the Aged Care (Consequential Provisions) Act 1997 (Cth), the approval of the Geelong premises as an approved nursing home under s 40AA in force immediately prior to the commencement of the Act, entitled the person conducting the business of the nursing home to an allocation of a number of places under the Act, equal to the number of beds to which the approval related. Accordingly, under the Act, Silkcourt was entitled to an allocation of thirty places in respect of its nursing home business at the Geelong premises as from 7 July 1997.

The objects of the Act provided for in s 2, can be briefly summarised as the establishment a system for fair, efficient and suitable aged care which is subsidised by the Commonwealth. The Act provides for the Secretary to the Department of Health and Family Services to approve persons as providers of aged care for the purposes of the Act and for such persons to then apply for an allocation of new places in respect of particular premises in accordance with the provisions of the Act. It is unnecessary for present purposes to outline the detail of the statutory scheme which enables an approved person to be allocated new places under the Act, save to say that pursuant to Div 13, applications may only be made upon the invitation of the Secretary. Division 14 sets out an elaborate scheme for the allocation of places which have been applied for in accordance with Div 13. Section 14-5(3) provides that it is a condition of every allocation of a place that the place is allocated in respect of a specified location and in respect of a particular aged care service.

Division 16 provides for allocated places to be transferred from one person to another with the approval of the Secretary: see s 16-1. Section 16-2 sets out the requirements for the application and the information it is to contain. It is sufficient for present purposes to note that the application for a transfer does not require the consent or any information about the owner of the premises from which, or to which, the places are to be transferred.

Section 16-4 sets out the matters that are required to be considered by the Secretary in determining whether the transfer of places the subject of an application, is justified in the circumstances. A number of matters are set out including whether the transfer is consistent with the objectives of the planning process provided for under the Act, the suitability of the proposed premises for providing aged care and several other matters set out in the sub-section and in the Allocation Principles. Part 7 of the Allocation Principles sets out the principles applicable to a transfer of places under the Act. It is unnecessary to set out the detail of the matters in s 16-4 or the relevant Allocation Principles other than to observe that they are primarily concerned with the suitability of the transferee, the proposed aged care service to be provided by the transferee and the premises at which the service is to be provided in respect of the transferred places, rather than any consideration of the premises from which the places are being transferred.

Relevantly, for present purposes, the Act and the Allocation Principles are not concerned with and do not recognise any interest which the owner of premises might have in relation to an allocation of places in respect of premises. Accordingly, whilst the Act and the Allocation Principles are concerned with a wide range of matters, they have left the arrangements pursuant to which an approved provider is entitled to occupy premises to which places are allocated under the Act, as a private matter for the approved provider. Indeed under the Act and its predecessor, the National Health Act 1953 (Cth), the persons responsible for administering the statutory schemes were not required to be informed of the identity of the owner of premises at which subsidised aged care was provided.

It follows that under the statutory scheme, the owner of the premises in respect of which places are allocated has no right or interest in those places and has no interest recognised or which is required to be considered under the Act. Whilst there are provisions for relinquishment or the cessation of allocated places, and even for waiver of certain requirements under the Act in respect of the allocation of places, no right or interest is conferred upon the owner of premises in respect of any places which are relinquished or which cease.

In the present case, the lease to Silkcourt of the Geelong premises was due to expire on 31 December 1997, as the option contained in the lease for a further period had not been exercised. Under the lease, Corio Bay had no rights in respect of the nursing home business conducted by Silkcourt. Accordingly, upon the termination of the lease on 31 December 1997, Silkcourt’s entitlement to possession of the premises was to be at an end. In the event that Silkcourt no longer continued in possession after that date and its nursing home business at the premises ceased, that could have resulted in a relinquishment or cessation of the places under the Act. Such relinquishment or cessation, however, would not have entitled Corio Bay to apply for those places under the Act. In any event, Corio Bay was not an approved provider under the Act.

Finally, Div 86 of the Act prevented the disclosure of, inter alia, information that related to the affairs of an approved provider. However, the prohibition did not apply to conduct carried out in the performance of a function or a duty under the Act: see s 86-2(2)(a). Thus, if the rules of natural justice were to apply, Div 86 would not prevent the disclosure of information which might otherwise be protected under the Division.

Did Corio Bay have a Right to be Heard?

As was pointed out in Annetts v McCann (1990) 170 CLR 596 at 598 per Mason CJ, Deane J and McHugh J:

“It can now be taken as settled that, when a statute confers power upon a public official to destroy, defeat or prejudice a person’s rights, interest or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words of necessary intendment:…”

The power exercised by the delegate to approve the transfer of places did not destroy, defeat or prejudice any “right” or “interest” of a proprietary nature of Corio Bay.  Nor could it be said that it destroyed, defeated or prejudiced any legitimate expectation of Corio Bay, as there was nothing in the statutory scheme or in the conduct of any of the parties to the proceeding that engendered a legitimate expectation on the part of Corio Bay that it would have some entitlement to be heard prior to a decision being made to approve the transfer of places.  Any entitlement to be heard in the present case must be founded upon the decision destroying, defeating or prejudicing a financial interest of Corio Bay.

The application and the content of the rules of natural justice in each case depend upon the particular statutory framework applicable to the case: see Kioa v West (1985) 159 CLR 550 at 584-585 per Mason J. The relevance of that framework was described by Brennan J in Kioa at 619 in the following terms:

“The presumption that the principles of natural justice condition the exercise of a statutory power may apply to any statutory power which is apt to affect any interest possessed by an individual whether or not the interest amounts to a legal right or is a proprietary or financial interest or relates to reputation.  It is not the kind of individual interest but the manner in which it is apt to be affected that is important in determining whether the presumption is attracted.

If a power is apt to affect the interests of an individual in a way that is substantially different from the way in which it is apt to affect the interests of the public at large, the repository of the power will ordinarily be bound or entitled to have regard to the interests of the individual before he exercises the power.  No doubt the matter to which the repository is bound or is entitled to have regard depend on the terms of the particular statute and, if there be no positive indications in its text, the subject-matter, scope and purpose of the statute must be looked at to determine whether the repository is bound or is entitled to have regard to individual interests: Water Conservation and Irriation Commission (N.S.W.) v Browning (1).  When the repository is bound or is entitled to have regard to the interest of an individual, it may be presumed that observance of the principles of natural justice conditions the exercise of the power, for the legislature can be presumed to intend that an individual whose interests are to be regarded should be heard before the power is exercised.  Therefore the presumption applies to any statutory power the exercise of which is apt to affect the interests of an individual alone or apt to affect his interests in a manner which is substantially different from the manner in which its exercise is apt to affect the interests of the public.  Of course, the presumption may be displaced by the text of the statute, the nature of the power and the administrative framework created by the statute within which the power is to be exercised.”  (Footnotes deleted)

It is important to distinguish the circumstances in which the duty to accord natural justice arises and those relevant to determining whether there is an intention of the part of the legislature to exclude the rules of natural justice.  As was pointed out in the joint judgment of Mason CJ, Deane J and McHugh J in Annetts at 598:

“…an intention on the part of the legislature to exclude the rules of natural justice was not to be assumed nor spelled out from ‘indirect references, uncertain inferences or equivocal considerations’.”

In the present case it was common ground between the parties that there was nothing in the statutory scheme that displayed an intention on the part of the legislature to exclude the rules of natural justice in respect of a decision to approve a transfer of places under the Act. Accordingly, the critical question arising is whether, under the statutory framework, the financial interest of Corio Bay is sufficient to attract the rules of natural justice to that decision in the present case. Where a decision affects a person’s financial interest in a “direct and immediate way” ( see Mason J in Kioa at 584 per Mason J) then it is likely to attract the rules of natural justice. However, where the person’s financial interest is not affected directly by the decision in question, the application of the rules is more problematic.

Counsel for Corio Bay pointed to the decisions in Dunlop v Woollahra Municipal Council (1975) 2 NSWLR 446 and Brack v Wills (1977) 1 NSWLR 456, as examples of cases where the Courts have recognised a financial interest as sufficient to attract the rules of natural justice. However, in both of those cases the financial interest in question was one which was directly and immediately affected by the decision. Dunlop concerned a resolution of the Council which directly and immediately affected the entitlement of the plaintiff (“Dunlop”) as the owner of certain land to build on that land without limitation.  As a consequence of the passing of the resolution, which related specifically to Dunlop’s land and certain adjoining land, Dunlop could not build on certain portions of his land at all and there was a significant diminution in the height to which he could build on the balance of the land.  Wootten J (at 475-476) held that the resolution effected a significant reduction in the benefits which Dunlop could derive from his land and accordingly attracted the principles of natural justice.  The resolution was vitiated as no notice of the proposed resolution was given by the Council to Dunlop.

Brack v Wills was a licensing case.  The issue in that case was whether, in determining to grant a conditional application for a Spirit Merchant’s Licence on the application of one party, the licensing Magistrate was obliged to afford an opportunity to be heard to a person who had a pending conditional application for a Spirit Merchant’s Licence in the same neighbourhood.  Yeldham J held that the decision to grant the conditional licence was made in breach of the rules of natural justice, on the ground that the applicant for the other Spirit Merchant’s Licence had an interest which was adversely affected by the decision.  Importantly, in that case, the scheme of legislation was such that the grant of a licence to one party made first in time, adversely affected the chances of such a licence being granted to another party whose application, heard later in time, related to premises in the same neighbourhood.  In those circumstances, it was not surprising that the court found that the rules of natural justice were applicable, as Brack v Wills, like Dunlop, was a case where the court concluded that the decision in question affected the interest of the applicant in a direct and immediate way.

Some caution needs to be exercised, however, before reliance can be placed upon town planning and liquor licensing cases.  Unlike the legislative scheme in the present case, the statutory schemes in licensing and planning cases often contain elaborate procedures for the giving of notice of applications, and the opportunity for objections to applications on a number of grounds, including that the application may have a direct and adverse affect on the interests of particular persons.  In such cases, the right of such persons to be heard prior to the making of a decision is more easily established.

A different situation arises in respect of financial interests which are not affected in a direct or immediate way by a decision made under the statute, or are not required to be considered in determining whether the decision to be made under the statute is one which ought to be made.

In Melbourne Pathology Pty Ltd v Minister for Human Services and Health (1996) 40 ALD 565, the applicants were approved pathology authorities under the Health Insurance Act 1973 (Cth), which had been allocated units of entitlement to operate licensed specimen collection centres, and as such, were entitled to payment of medicare benefits for specimens collected. Determinations were made under the Act reducing the units allocated to each of the authorities with the result that they would have to close centres with loss of patients, a loss of profits, surrender of leases and dismissal of staff. Sundberg J held that the authorities had a legitimate expectation that unit entitlements would not be reduced without their having an opportunity to put forward their respective cases. Clearly, in that case the reduction in the units allocated to the authorities affected their financial interest in a direct and immediate way.

In Reg v Liverpool Corporation, Ex parte Liverpool Taxi Fleet Operators Association (1972) 2 QB 299 the Liverpool Corporation, a body responsible for the issuance of taxi licenses, passed a resolution to increase the number of taxi cabs to above three hundred despite undertakings given to taxi owners to limit the number of taxi cabs to three hundred. The Court of Appeal upheld the taxi owners challenge to the resolution, holding that the Liverpool Corporation had acted in breach of rules of natural justice by proceeding in breach of its undertaking, without affording the taxi owners an opportunity to be heard. Lord Denning M.R. (at 307-308) said that in any event, the Corporation was obliged to hear the Taxi Owners Association before making a decision adverse to the interests of the owners.

In my view, in Liverpool Corporation, the entitlement to be heard prior to the passing of the resolution arose by reason of the particular history of the matter and specifically, the undertaking publicly given to the Taxi Owners Association on behalf of the Corporation, rather than by reason of any commercial interest of the Taxi Owners Association in the resolution.  The Association had been assured that the interested parties would be afforded an opportunity to make representations prior to any such decision being made.  Another, but more recent, example of the Court requiring an analogous undertaking to be adhered to on the ground that it raised a legitimate expectation of a right to be heard, was in Century Metals and Mining NL v Yeomans (1989) 40 FCR 564.

Notwithstanding the width of the dicta of Lord Denning in Liverpool Corporation, where a financial interest is indirect or consequential, a right to be heard is unlikely: see Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589 at 597. That case concerned a recommendation to the Secretary of the Department of Community Services and Health to approve the relocation of a pharmacist for the purpose of supplying pharmaceutical benefits at or from particular premises under the National Health Act 1953 (Cth). Under the statutory scheme, a recommendation for approval was required to be made where the relocated premises was no more than five hundred metres by normal access routes from other premises in respect of which the pharmacist was already approved under the Act. At first instance, a competitor, being a rival pharmacist, obtained an order setting aside the decision to recommend the approval, on the ground that it had not been afforded an opportunity to be heard before the recommendation was made. On appeal, the Full Court (Wilcox, Foster and Whitlam JJ), in allowing the appeal, concluded that there was no general principle that obliged a statutory authority charged with the duty of considering an application, to comply with the rules of natural justice by notifying and hearing everybody whose economic interest could be damaged by the approval. The Court (at 597) said:

“There are cases where a statutory authority, charged with the duty of considering an application to use premises for a particular purpose, is expressly obliged to publicise the receipt of the application and to consider objections. Liquor legislation is a well known example. There are cases where such an obligation is implied by the scope and purpose of the legislation. But we do not know of any general principle to the effect that a statutory authority charged with the duty of considering an application is obliged by the principles of procedural fairness to notify and hear everybody whose economic interests may be damaged by an approval. To promulgate a general rule imposing such an obligation would be to visit upon statutory decision makers a potentially massive task of indeterminate reference. In the present case, nothing is to be implied from the scope and purpose of the Act. The relevant provisions are not concerned with minimising competition in the pharmaceutical industry but with reducing the Commonwealth's financial burden in providing pharmaceutical benefits while maintaining an acceptable level of community service. In the absence of authority, we are not prepared to hold that, if it had a discretion about its decision, the Authority had any obligation to notify or hear pharmacists, non-parties to the application for approval, merely because an approval might commercially damage them.”

A distinction can be drawn between the decisions in Dunlop, Brack v Wills and Melbourne Pathology and the decision in Pharmacy Restructuring Authority v Martin.  In the former category of cases, the applicant was entitled to be heard because it had a right, benefit or privilege under the statute which was affected in a direct and immediate way by the decision in question.  In those cases, using the language of Brennan J in Kioa (at 619), the manner in which that right, benefit or privilege was apt to be affected was by the decision operating to destroy, defeat or prejudice that right, benefit or privilege. However, in Pharmacy Restructuring Authority v Martin, the commercial interest of the competitor being merely consequential, the exercise of statutory power did not operate to destroy, defeat or prejudice any right, benefit or privilege of the competitor.  In the absence of special circumstances such as the undertaking in Liverpool Corporation, or a statutory framework which entitles particular categories of persons to have a legitimate expectation of being afforded a hearing, a consequential or indirect commercial interest is not sufficient to attract a right to be heard.

The standing cases in relation to commercial interests reinforce this conclusion.  On occasion persons with such interests have sought to establish that they are persons aggrieved, or persons whose interests are affected, by a statutory decision, with the consequence that they have standing to seek administrative review of the decision.  In such cases, the issue of whether a person has the requisite standing is to be determined in the context of the subject matter, scope and purpose of the particular statute in question: see Alphapharm v Smithkline Beecham Aust (1994) 49 FCR 250, 260-261, 272. In Alphapharm, a purely competitive or economic interest in protecting market share was held not to be an interest which the relevant Act recognised for the purpose of standing (Davies J at 263, Gummow J at 272 and 280-281).

The Commonwealth respondents in this matter relied upon Alphapharm. However that case, which was based on a statutory scheme which is quite different to the Act the subject of the present case, related to standing to bring an administrative review proceeding to challenge a decision, rather than the circumstances in which a person is entitled to be heard prior to a decision being made. There are several difficulties with reliance upon standing cases. If a person has standing in respect of reviewing a decision after it is made, it does not follow that the person has an entitlement to be heard in respect of the decision before it was made. Further, standing decisions may depend upon a consideration of whether the regulatory scheme gives an exhaustive measure of judicial review at the instance of competitors or other parties, rather than consideration of the manner in which the interests of a particular person are affected by the decision: see Bateman’s Bay Local Aboriginal Land Council v The Community Benefit Fund Pty Ltd (1998) HCA 49 (6 August 1998) at para 48 per Gaudron, Gummow and Kirby JJ cf; Byron Environment Centre Incorporation v The Arakwal People & Ors (1997) 78 FCR 1 at pp 5, 32-36.

Whilst I prefer to approach the right to be heard by reference to the principles developed in the natural justice cases, the standing cases, particularly in respect of commercial interests, may nevertheless be of some assistance.  For example, if a person has no standing to challenge a decision, it would be difficult to conceive of circumstances in which that person would be entitled to be heard in respect of the making of the decision. The difficulties faced by a holder of a mere private or consequential commercial interest in establishing standing to challenge a decision, were considered in Big Country Developments Pty Ltd v Australian Community Pharmacy Authority (1996) 40 ALD 32. In Big Country, the facts of which are analogous to those in the present case, the applicant was the owner of premises in respect of which its tenant carried on the business of an approved pharmacy under s 90 of the National Health Act 1953 (Cth). Towards the conclusion of the lease, the tenant applied successfully to the Secretary of the Department of Human Services and Health to relocate the pharmacy business from the applicant’s premises to another shopping centre about 1km away. The effect of the decision was to prevent the applicant from re-leasing its property as a pharmacy business, since the Australian Community Pharmacy Authority was only authorised to approve premises which were more than 2km apart from the nearest approved pharmacy. The applicant landlord asserted that it had standing as a person “aggrieved”, as its commercial interest stood to be adversely affected by the decision.

In considering the types of interests which attract standing, Lindgren J (at 92) stated that:

“The ‘ripples of affection’ in financial or commercial terms, arising from administrative decisions extend far and wide, and it is unthinkable that the Parliament intended by ss5(1) and 3(4) of the AD(JR)Act to accord standing to every person who has a financial or commercial interest which is adversely affected by a decision, no matter how ‘remote’ that interest may be from the decision-making activity and no matter how minor the affection…”

His Honour held that the landlord’s private commercial interest in the outcome of a decision relocating its tenants business to other premises, was not sufficient to render it a person aggrieved for the purposes of the ADJR Act. The decision in Big Country suggests that Corio Bay would not have standing to challenge a decision to transfer places allocated under the Act away from the premises, let alone a right to be heard in relation that decision.

Applying the above principles in the present case, it is my view that Corio Bay had no entitlement to be heard prior to a decision being made to approve the transfer of the places in respect of the Geelong premises to the Wittingham premises.  The “interest” of Corio Bay was, at best, an economic interest which was only indirectly and consequentially affected by the decision under challenge.  There are a number of reasons for arriving at that conclusion:

1. Under the Act, Corio Bay had no right, interest, benefit or privilege. The allocation of places was not to Corio Bay, but to Silkcourt in respect of the nursing home business conducted by it at the Geelong premises. The Act did not recognise any right or interest whatsoever of the owner of the premises in relation to the allocation of places in respect of those premises.

2. The Act did not, directly or indirectly, recognise that the owner of premises in respect of which places were allocated, had any entitlement or interest which would justify it in expecting that it would be afforded an opportunity to be heard prior to an approval to transfer places away from the premises.  As pointed out above, the question of the manner in which an approved provider was entitled to possession of premises in respect of which places were allocated, was entirely a matter of private arrangement between the approved provider and the owner of the premises.

3. The factors which were required to be considered under the Act and the Allocation Principles in respect of a decision to approve a transfer of places did not include consideration of the interests of the owner of premises from which places are to be transferred.

In any event, the commercial interest claimed by Corio Bay in the present case is problematic.  Although evidence was given that the diminution in the value of the premises was from approximately $800,000 to $320,000 as a result of the loss of the allocated places, the valuation is based on an incorrect assumption.  The assumption is that the allocated places in respect of premises attach to, and are a right enjoyed by, the premises as such, and therefore its owner.

In my view, the correct analysis of the owner’s commercial “interest” in allocated places is limited to such interest (if any) as may arise under the terms of the lease of the premises as a nursing home to an approved provider under the Act. It can be accepted that the value of premises is likely to be enhanced if they are leased as a nursing home entitled to enjoy the benefits of subsidised aged care under the Act. However, the justification for valuing the premises on the basis that they will continue to be so used as a nursing home with thirty allocated places under the Act depends on the provisions of the Act. Under those provisions, places may be transferred under Div 16 with the approval of the Secretary, irrespective of the wishes of the owner. If the owner has any entitlement to prevent a transfer it can only arise under a contract or lease. In the present case, as at the date of the decision, being 22 December 1997, the lease only had nine days to run and contained no restriction in respect of Silkcourt’s entitlements under the Act. The lease, as such, is of little significance to the value of the premises at that time.

As the owner of premises has no right to or interest in the allocated places even upon their cessation or relinquishment, the basic assumption made in valuing the premises as a nursing home with thirty places allocated as a future entitlement after 31 December 1997 was based on a misconception. The places did not attach to the premises. Accordingly, the valuation of $800,000, based as it was, on continued use of the premises with thirty places allocated under the Act for three five year terms commencing on 22 December 1997, did not reflect the absence of any entitlement of the owner of premises in relation to the places allocated in respect of those premises. Whilst I accept that Corio Bay acquired, maintained and expected to continue to maintain the premises as a nursing home under the Act or its predecessor, the expectation was not based upon the statutory framework or any legal entitlement. Rather, it was based upon a misconception in relation to Corio Bay’s rights and interest in the allocated places, or more accurately, the absence of such rights or interest. The problematic nature of Corio Bay’s commercial “interest” serves to reinforce the difficulties confronting the holder of indirect or consequential commercial interests in establishing an entitlement to be heard in respect of a decision that is alleged to affect those interests.

Accordingly, for the above reasons, neither the Minister nor the delegate were obliged to afford Corio Bay an opportunity to be heard prior to making a decision to approve the transfer of the places to premises other than the Geelong premises.  In these circumstances, the application is to be dismissed with costs.

I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel

Associate:

Dated:             

Counsel for the Applicant:	Mr B Monotti
Solicitor for the Applicant:	Dean Beveridge & Associates
Counsel for the First and Second Respondent:	Mr K Bell QC and Mr D Downing
Solicitor for the First and Second Respondent:	Australian Government Solicitors
Counsel for the Third Respondent:	Mr S Horgan
Solicitor for the Third Respondent:	Swersky & Velos
Counsel for the Fourth Respondent:	Mr M Heaton
Solicitor for the Fourth Respondent:	Coltmans Price Brent
Date of Hearing:	10 August 1998
Date of Judgment:	8 September 1998