Jadwan Pty Ltd v Rae & Partners (A Firm)
[2020] FCAFC 62
•9 April 2020
FEDERAL COURT OF AUSTRALIA
Jadwan Pty Ltd v Rae & Partners (A Firm) [2020] FCAFC 62
Appeal from: Jadwan Pty Ltd v Rae & Partners (A Firm) (No 4) [2018] FCA 968 File number: TAD 28 of 2018 Judges: BROMWICH, O’CALLAGHAN AND WHEELAHAN JJ Date of judgment: 9 April 2020 Catchwords: 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
Legislation: Administrative Appeals Tribunal Act 1975 (Cth) s 41(2)
Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 6, 11, 15, 16
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
Aged Care (Consequential Provisions) Act 1997 (Cth) ss 7, 20, 74, 75(1)(c), Schedule 1
Civil Liability Act 2002 (Tas) s 4
Constitution s 75(v)
Evidence Act 1995 (Cth) s 140(1)
Federal Court of Australia Act 1976 (Cth) ss 23, 24(1)(a)
Judiciary Act 1903 (Cth) ss 39B(1), 80
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
Supreme Court Rules 2000 (Tas)
Wrongs Act 1958 (Vic) s 66
Cases cited: Abalos v Australian Postal Commission [1990] HCA 47; 171 CLR 167
AJH Lawyers Pty Ltd v Hamo [2010] VSCA 222; 29 VR 384
Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; 261 FCR 301
Allesch v Maunz [2000] HCA 40; 203 CLR 172
Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 5) [1996] FCA 256; 64 FCR 73
Armory v Delamirie (1722) 1 Str 505; 93 ER 664
AS Bannister v Sirrom Enterprises Pty Ltd [2016] SASCFC 153
Ashby v Slipper [2014] FCAFC 15; 219 FCR 322
Badenach v Calvert [2016] HCA 18; 257 CLR 440
Bennett v Minister of Community Welfare [1992] HCA 27; 176 CLR 408
Benning v Wong (1969) 122 CLR 249
Birrell v Australian National Airlines Commission [1984] FCA 419; 5 FCR 447
Boensch v Pascoe [2019] HCA 49
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424
Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336
Brunskill v Sovereign Marine & General Insurance Co Ltd [1985] HCA 61; 62 ALR 53
Cassell & Co Ltd v Broome [1972] AC 1027
Chambers v Jobling (1986) 7 NSWLR 1
Chaplin v Hicks [1911] 2 KB 786
Chappel v Hart [1998] HCA 55; 195 CLR 232
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v ACCC [2007] FCAFC 132; 162 FCR 466
Cousins v Cousins [1991] ANZ Conv R 245
CSR Ltd v Della Maddalena [2006] HCA 1; 224 ALR 1
Da Costa v Cockburn Salvage & Trading Pty Ltd [1970] HCA 43; 124 CLR 192
Dearman v Dearman [1908] HCA 84; 7 CLR 549
Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472
Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471
Dominic v Riz [2009] NSWCA 216
Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172
Edwards v Noble [1971] HCA 54; 125 CLR 296
Firth v Sutton [2010] NSWCA 90
Fox v Percy [2003] HCA 22; 214 CLR 118
Grant v Sun Shipping Co Ltd [1948] AC 549
Hawkins v Clayton [1988] HCA 15; 164 CLR 539
Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; 247 CLR 613
Jadwan Pty Ltd v Middletons (formerly Coltmans Price Brent) [2007] TASSC 74; 17 Tas R 9
Jadwan Pty Ltd v Minister for Health and Family Services [1998] FCA 715; 51 ALD 245
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
Jadwan Pty Ltd v Secretary, Commonwealth Department of Health and Aged Care [2002] FCA 1052
Jadwan Pty Ltd v Secretary, Commonwealth Department of Health and Aged Care [2003] FCAFC 288; 145 FCR 1
Johnson v Perez [1988] HCA 64; 166 CLR 351
Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392
Kitchen v Royal Air Force Association [1958] 1 WLR 563
Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; 77 NSWLR 205
Lee v Lee [2019] HCA 28; 372 ALR 383
Lewis v Hillhouse [2005] QCA 316
Louth v Diprose [1992] HCA 61; 175 CLR 621
Luxton v Vines [1952] HCA 19; 85 CLR 352
Malec v JC Hutton Pty Ltd [1990] HCA 20; 169 CLR 638
McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) [1904] HCA 51; 1 CLR 243
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357
Mills v Mills [1938] HCA 4; 60 CLR 150
Minister for Health and Family Services v Jadwan Pty Ltd [1998] FCA 1549; 89 FCR 478
Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; 264 CLR 541
Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; 205 CLR 507
Minister for Immigration, Local Government and Ethnic Affairs v Msilanga [1992] FCA 44; 34 FCR 169
Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388
Northern Territory v Mengel [1995] HCA 65; 185 CLR 307
Papaconstuntinos v Holmes à Court [2012] HCA 53; 249 CLR 534
Paterson v Paterson [1953] HCA 74; 89 CLR 212
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355
Provident Capital Ltd v Papa [2013] NSWCA 36; 84 NSWLR 231
Purkess v Crittenden [1965] HCA 34; 114 CLR 164
Riverside Nursing Care Pty Ltd v Bishop [2000] FCA 434; 60 ALD 704
Roads and Traffic Authority of NSW v Dederer [2007] HCA 42; 234 CLR 330
Robinson Helicopter Company Inc v McDermott [2016] HCA 22; 331 ALR 550
Rosenberg v Percival [2001] HCA 18; 205 CLR 434
Scott v Pauly [1917] HCA 60; 24 CLR 274
Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332
SSHontestroom v SS Sagaporack [1927] AC 37
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd [1999] HCA 3; 160 ALR 588
Sykes v Midland Bank Executor & Trustee Co Ltd [1971] 1 QB 113
Tabet v Gett [2010] HCA 12; 240 CLR 537
Thorne v Kennedy [2017] HCA 49; 263 CLR 85
Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125
Vairy v Wyong Shire Council [2005] HCA 62; 223 CLR 422
Voulis v Kozary [1975] HCA 44; 180 CLR 177
Walsh v Law Society of New South Wales [1999] HCA 33; 198 CLR 73
Warren v Coombes [1979] HCA 9;142 CLR 531
Waterways Authority v Fitzgibbon [2005] HCA 57; 221 ALR 402
Watt or Thomas v Thomas [1947] AC 484
Wellesley Partners LLP v Withers LLP [2016] Ch 529
Western Australia v Ward [2002] HCA 28; 213 CLR 1
Whiteley Muir & Zwanenberg Ltd v Kerr (1966) 39 ALJR 505
Yarrabee Coal Co Pty Ltd v Lujans [2009] NSWCA 85; 53 MVR 187
Commonwealth Gazette No GN 28 of 16 July 1997
Commonwealth Gazette No GN 36 of 3 September 1997
Dates of hearing: 5, 6, 7 and 8 November 2018 Registry: Tasmania Division: General National Practice Area: Other Federal Jurisdiction Category: Catchwords Number of paragraphs: 570 Counsel for the Appellant: Mr M Pearce SC with Mr D Deller Solicitor for the Appellant: Keypoint Law Counsel for the First, Second and Third Respondents: Mr P Jackson SC with Ms K Cuthbertson Solicitor for the First, Second and Third Respondents: Tremayne Fay Rheinberger Lawyers Counsel for the Fourth Respondent: Mr C Gunson SC with Ms B Myers Solicitor for the Fourth Respondent: Lander & Rogers Counsel for the Fifth Respondent: Mr S McElwaine SC Solicitor for the Fifth Respondent: Shaun McElwaine & Associates
Table of Corrections 19 April 2021 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”. ORDERS
TAD 28 of 2018 BETWEEN: JADWAN PTY LTD
Appellant
AND: 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
JUDGES:
BROMWICH, O’CALLAGHAN AND WHEELAHAN JJ
DATE OF ORDER:
9 april 2020
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.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.
3.If so advised, the parties file and exchange any submissions in reply, not to exceed three pages, by 4.00pm 11 May 2020.
4.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
Introduction
[1]
Case overview
[2]
Commonwealth funding and regulation of nursing homes
[13]
National Health Act 1953 (Cth)
[14]
National Health Regulations 1954 (Cth)
[22]
Aged Care Act 1997 (Cth)
[28]
Aged Care (Consequential Provisions) Act 1997 (Cth)
[34]
Background
[38]
The evidence at trial
[38]
Background facts
[45]
1984 to August 1996
[45]
The first Standards Monitoring Team
[53]
The first Standards Review Panel
[56]
The financial sanctions determination
[61]
Jadwan’s retainer of Rae & Partners
[70]
26 February 1997 meetings
[91]
Further correspondence
[96]
The second Standards Monitoring Team
[103]
8 April 1997 meeting
[108]
Other developments
[110]
Practice fire drill
[112]
Jadwan’s response to the statement of the second Standards Monitoring Team
[113]
The second Standards Review Panel
[116]
The business plan
[126]
Further correspondence
[136]
Jadwan’s retainer of Wilson Dowd
[142]
15 July 1997 meeting
[148]
Program of works for a proposed new nursing home
[154]
Cancellation of the meeting of 17 July 1997
[155]
Monday 21 July 1997 - Notice of intention to revoke approval of Derwent Court
[160]
Tuesday 22 July 1997
[168]
Wednesday 23 July 1997 - the retainer of Mr Porter QC
[181]
Thursday 24 July 1997
[185]
Termination of staff at Derwent Court
[194]
Friday 25 July 1997
[196]
Further consultations with Mr Porter QC
[210]
Jadwan’s retainer of Mr Hogan of Coltmans Price Brent
[216]
Mr Wicks’s communications with the Department on Wednesday 30 July 1997
[236]
The events of Thursday 31 July 1997
[240]
The correspondence of Friday 1 August 1997
[248]
Monday 4 August 1997 - the last resident leaves Derwent Court
[255]
Tuesday 5 August 1997
[257]
Wednesday 6 August 1997 - revocation of approval
[261]
Thursday 7 August 1997
[269]
Friday 8 August 1997 - further preparation of papers and attendances on Mr Porter QC
[271]
Monday 11 August 1997
[273]
Confirmation of allocation of beds to Rosary Gardens Nursing Home
[278]
Administrative review
[279]
Nursing Board of Tasmania investigation
[287]
Judicial review proceedings
[290]
Jadwan No 1 – Heerey J – 19 June 1998
[290]
Jadwan No 2 – Full Court (Burchett, Drummond and Sackville JJ) – 4 December 1998
[292]
Jadwan No 3 – North J - 23 August 2002
[294]
Jadwan No 4 – Full Court (Gray, Kenny and Downes JJ) - 12 December 2003
[299]
Settlement and consent orders – North J – 22 June 2005
[300]
Expert evidence of Ms Kay Horgan
[303]
Evidence of reliance and causation
[306]
Summary of the primary judge’s findings
[310]
The grounds of appeal
[312]
Issue (1) – Jadwan’s decision to close the nursing home: grounds 7 and 8
[313]
Issue (1) - Jadwan’s submissions
[313]
Issue (1) – respondents’ submissions
[319]
Issue (2) – Jadwan’s intention to seek agreement from the Department to pay for staff redundancies: grounds 7, 8, 11 and 12
[334]
Issue (2) - Jadwan’s submissions
[334]
Issue (2) – respondents’ submissions
[338]
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
[342]
Issue (3) - Jadwan’s submissions
[342]
Issue (3) – respondents’ submissions
[352]
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
[355]
Issue (4) - Jadwan’s submissions
[355]
Issue (4) – respondents’ submissions
[358]
Issue (5) – proceedings to seek to have the financial sanctions lifted would not have succeeded: grounds 17, 18 and 19
[360]
Issue (5) - Jadwan’s submissions
[360]
Issue (5) – respondents’ submissions
[369]
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
[373]
Issue (6) – Jadwan’s submissions
[373]
Issue (6) – respondents’ submissions
[375]
Issue (7) – Mr Porter QC did not give advice not to seek an injunction: grounds 3 and 4
[377]
Issue (7) – Jadwan’s submissions
[377]
Issue (7) – respondents’ submissions
[381]
Issue (8) – did Jadwan suffer any damage from the failure to give legal advice on the new legislation: grounds 5, 6 and 20?
[383]
Issue (8) – Jadwan’s submissions
[383]
Issue (8) – respondents’ submissions
[384]
Issue (9) – summary issue: grounds 9, 10, 21 and 22
[395]
Issue (9) - Jadwan’s submissions
[395]
Issue (9) – respondents’ submissions
[399]
The nature of this appeal
[402]
The nature of Jadwan’s claims
[416]
Some observations
[433]
Consideration
[448]
1. The retainer of Rae & Partners – Issue (6)
[449]
2. Had Jadwan decided by 15 July 1997 to “get out” – Issue (1)
[458]
3. Was there an agreement with the Commonwealth in relation to payment of staff redundancies – Issue (2)
[468]
The respondents’ cases at trial
[471]
The primary judge’s reasons
[484]
4. Would Jadwan have applied for an injunction if it had been advised of the effect of the new legislation – Issue (4)
[487]
Reasonable and prudent advice from Mr Wicks
[487]
The effect of the financial sanctions determination
[508]
Reasonable and prudent advice from Mr Porter QC
[516]
Reasonable and prudent advice from Mr Hogan
[526]
Toomey Maning & Co
[529]
What course would Jadwan have taken had it received reasonable, prudent advice?
[530]
Causation arising from Mr Hogan’s negligence
[562]
5. Did Mr Porter QC give advice not to seek an injunction – Issue (7)
[563]
6. Would an application for interlocutory relief have been successful – Issue (3)
[564]
7. Would proceedings to have the financial sanctions lifted have succeeded – Issue (5)
[566]
8. Did Jadwan suffer any damage from the failure to give advice about the new legislation – Issue (8)
[567]
9. Summary of outcomes – Issue (9)
[569]
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:
1.100% test of all detectors.
2.Upgrade the Fire Indicator Panel Documentation.
3.Sound pressure test of warning devices.
4.All fire doors to be fitted with smoke seals.
5.Hole in smoke wall to be repaired.
6.Areas where services may have penetrated fire or smoke walls to be checked for compliance.
7.Inspection of emergency lighting system by a qualified person.
8.Existing self-luminous exit signs to be replaced with illuminated signs.
9.Relocate the hose reel to comply with the spindle height required.
10.Replace fire extinguishers as recommended.
11.Relocate fire blanket in kitchen to a recommended position.
12.Install a hose reel on the first floor at the front of the building.
13.Material stored in the undercroft to be reduced.
14.Inflammable material at the rear of the building to be removed.
15.Review of smoke detectors in living areas.
16.Installation of break glass alarms in liaison with Tasmania Fire Service.
The Kerr Lewit Clark and Kidd Report and Tasmania Fire Service Survey Report (Item 5) recommend either smoke or fire isolation (as appropriate) of the open stairs from the foyer. Pending clarification from both advisers, recommendations will be effected.
From the Kerr Lewit Clark and Kidd Report, these works will be completed without delay:
Cupboard in Sick Bay to be relocated, providing a further exit.
Fire Evacuation Procedures to be revised to include:
•Distinction between evacuation of building and evacuation to a fire protected area.
•Clarification of assembly areas for upstairs occupants and those downstairs.
•A procedure for evacuation of first floor occupants with respect to fire on ground floor.
All works to be carried out in liaison with Tasmania Fire Service.
The Directors are seriously considering the installation of a sprinkler system. It has not been possible, since receiving the Tasmania Fire Service Report last night, to gain the information necessary to make a decision. There are other considerations to this decision and I seek an early opportunity to discuss the matter in full with you.
With regards to the non-compliance of standards under Section 45D of the National Health Act 1953, the Director of Nursing and I undertake to thoroughly review all standards and seek outside assistance in our endeavours to satisfy the standards. Detailed information on the plans to achieve this outcome will be supplied within 28 days of any deferral of revocation of Approval.
The Directors believe the foregoing is proof of a genuine effort to satisfy the Department, and is a basis for deferral of the revocation of Approval.
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.
1.Copy of Draft Standards Report.
2.Formal notice of unsatisfactory Report.
3.The Action our Home is taking to correct problems and a letter and list setting out inaccuracies.
4.Department of Health and Family Services (DH&FS) response to 3.
5.Because DH&FS would not amend the Report, a review was applied for.
6.On Saturday 1st February 1997, a letter was delivered by hand by the State Manager of DH&FS stating serious fire safety concerns.
7.On Sunday 2nd February 1997, a letter of reply was collected by the Manager of DH&FS.
8.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.
9.Jadwan Pty Ltd response to 8. above.
10.On 6th February 1997, DH&FS was faxed with queries over approved fire safety and publishing of Derwent Court Nursing Home Action Plan.
11.On 6th February 1997 DH&FS faxed a reply.
12.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.
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
TAD 28 of 2018 Respondents
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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