Jadwan Pty Ltd v Rae & Partners (A Firm) (No 4)
[2018] FCA 968
•29 June 2018
FEDERAL COURT OF AUSTRALIA
Jadwan Pty Ltd v Rae & Partners (A Firm) (No 4) [2018] FCA 968
File number: TAD 39 of 2016 Judge: KERR J Date of judgment: 29 June 2018 Catchwords: NEGLIGENCE – duty of care owed by solicitors and counsel in providing legal advice to a nursing home operator – whether respondents were negligent in failing to advise the applicant of proposed and relevantly later enacted legislation that would regulate the aged care industry – whether respondents were negligent in failing to advise of available grounds for challenging validity of review panels constituted under the National Health Act 1953 (Cth) and to challenge sanctions imposed by the Minister pursuant to s 45E of that Act – whether advice could have prevented the Minister from revoking the applicant’s approval to operate a nursing home – whether advice would have enabled the applicant to obtain an injunction and rebuild a new nursing home facility or to sell its bed licences – application dismissed Legislation: Constitution, s 75(v)
Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5, 6, 11, 16
Aged Care Act 1997 (Cth)
Aged Care (Consequential Provisions) Act 1997 (Cth), s 7
Evidence Act 1995 (Cth), ss 135, 136, 143
Judiciary Act 1903 (Cth), s 39B
Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), s 5
National Health Act 1953 (Cth), ss 40AA, 44, 45D, 45E, 105AAB
National Health Regulations 1954 (Cth), regs 11, 12
Cases cited: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57
Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321
Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440
Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618
Griffith University v Tang [2005] HCA 7; (2005) 221 CLR 99
Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159
Hunter Valley Developments Pty Ltd v Cohen [1984] FCA 186; (1984) 3 FCR 344
Jadwan Pty Ltd v Minister for Health and Family Services [1998] FCA 715; (1998) 51 ALD 245
Jadwan Pty Ltd v Rae & Partners (A Firm) (No 3) [2017] FCA 1045
Jadwan Pty Ltd v Secretary, Commonwealth Department of Health & Aged Care [2002] FCA 1052; (2002) 71 ALD 520
Jadwan Pty Ltd v Secretary, Department of Health & Aged Care [2003] FCAFC 288; (2003) 145 FCR 1
Minister for Health and Family Services v Jadwan Pty Ltd [1998] FCA 1549; (1998) 89 FCR 478
Date of hearing: 5 - 28 July 2017; 14 - 15 November 2017 Date of last submissions: 23 November 2017 Registry: Tasmania Division: General Division National Practice Area: Other Federal Jurisdiction Category: Catchwords Number of paragraphs: 742 Counsel for the Applicant: Mr M Pearce SC with Mr D Deller Solicitor for the Applicant: McKean Park Lawyers 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 ORDERS
TAD 39 of 2016 BETWEEN: JADWAN PTY LTD
Applicant
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
JUDGE:
KERR J
DATE OF ORDER:
29 JUNE 2018
THE COURT ORDERS THAT:
1.The application as against each Respondent be dismissed.
2.The Applicant pay the costs of the First, Second, Third, Fourth and Fifth Respondents as assessed or agreed.
3.The Respondents have liberty to apply for costs to be awarded on other than a party and party basis within 28 days from the date of this order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
Table of contents
1 INTRODUCTION
[1]
2 CASE OVERVIEW
[5]
3 SUMMARY OF FINDINGS
[27]
4 BACKGROUND
[42]
5 WITNESS CREDIBILITY AND MEMORY
[110]
5.1 Mr Wicks
[112]
5.1.1 Mr Wicks’ undue certainty
[130]
5.2 Mrs Joan Alexander
[140]
6 THE CONTROLLING MIND OF JADWAN
[147]
7 DID EITHER JADWAN OR MR WICKS HAVE PRIOR KNOWLEDGE OF NEW LEGISLATION?
[158]
7.1 The directors of Jadwan
[161]
7.2 Jadwan’s directors blind to the threats facing them
[175]
7.3 Criticism of Jadwan’s management of Derwent Court not a product of ill will
[189]
7.4 Mr Wicks’ knowledge
[198]
8 JADWAN’S CASE AGAINST THE FIRST RESPONDENT (7 FEBRUARY TO 1 JULY 1993)
[220]
8.1 Evidence of Ms Julie Alexander regarding meeting of 26 February 1997
[260]
8.2 Evidence of meeting between Mr Wicks and Mr Alexander on 8 April 1997
[276]
8.3 Findings
[304]
8.3.1 No breach in any event
[305]
9 JADWAN’S CASE AGAINST THE SECOND RESPONDENT (2 JULY TO 12 SEPTEMBER 1997)
[310]
9.1 Jadwan’s problems mount
[320]
9.2 Jadwan decides to “get out”
[330]
9.3 Notice of intention to revoke Derwent Court’s approval
[344]
9.4 Mr Wicks learns of revocation
[346]
9.5 Jadwan expresses concern about the cost of redundancies and seeks approval to sell Derwent Court’s bed licences
[349]
9.6 Fast moving events overlap: Mr Wicks briefs counsel – Jadwan accepts Commonwealth’s offer to meet the cost of redundancy payments
[356]
9.7 Mr Wicks raises issues
[362]
9.8 Jadwan tells Mr Wicks it accepts Derwent Court’s closure – sale of bed licences given priority
[372]
9.9 Mr Wicks tells Mr Porter that Jadwan accepts Derwent Court’s closure – Jadwan engages a Melbourne solicitor without informing Mr Wicks
[387]
9.10 Mr Wicks acts on Mr Hogan’s view that an injunction should be sought
[400]
9.11 Derwent Court’s approval as a nursing home is revoked
[429]
9.12 Consideration
[442]
9.12.1 Jadwan had no plans to relocate
[442]
9.12.2 Mr Wicks’ initial retainer
[448]
9.12.3 From 21 July 1997 Mr Wicks’ instructions were no longer limited
[454]
9.12.4 A solicitor exercising skill and care in Mr Wicks’ position would have identified the existence and relevance of the new legislation
[457]
9.12.5 Mr Wicks did not breach his duty by failing to advise Jadwan to commence proceedings to challenge Ms Halton’s notice of intended revocation
[471]
9.12.5.1 Not a decision
[471]
9.12.5.2 No grounds to challenge conduct for the purpose of decision
[476]
9.12.6 Mr Wicks failed to exercise reasonable care and skill when he advised Jadwan that facilitating Derwent Court’s residents to move out had no potential to harm Jadwan’s interests
[493]
9.12.7 If Jadwan had been competently advised by Mr Wicks it nonetheless would not have retained Derwent Court’s residents beyond 6 August 1997
[510]
9.13 Jadwan would have made a rational financial choice
[527]
9.14 Jadwan had missed its chance to sell its bed licences as a result of procrastination
[546]
9.15 Department offers to meet cost of redundancies only after Jadwan fails to sell its bed licences
[554]
9.16 Would Jadwan later have brought proceedings?
[572]
9.16.1 Threshold reason to reject Jadwan’s case
[577]
9.16.2 Jadwan would not have sought to persuade its former residents to return in order to have brought proceedings to set aside the sanctions decision
[585]
9.17 Jadwan fails on the balance of probabilities to establish that it could have obtained orders setting aside the sanctions decision
[591]
9.17.1 No inference drawn by reason of consent order made in 2005
[591]
9.17.2 Application out of time
[599]
9.17.2.1 Delay and sufficiency of explanation for the delay
[603]
9.17.2.2 The merits on an impressionistic basis
[607]
9.17.3 Jadwan fails to establish on balance of probabilities an interim injunction would issue
[623]
9.17.4 Jadwan fails to establish on the balance of probabilities that an order that the sanctions decision was void ab initio would be made
[628]
9.18 Jadwan’s loss of business case
[631]
9.19 A tactic to persuade the Commonwealth
[651]
9.20 Conclusion
[667]
10 JADWAN’S CASE AGAINST THE THIRD RESPONDENT (12 SEPTEMBER 1997 ONWARDS)
[668]
11 JADWAN’S CASE AGAINST THE FOURTH RESPONDENT
[684]
12 JADWAN’S CASE AGAINST THE FIFTH RESPONDENT
[706]
13 SUMMARY
[734]
KERR J:
1. INTRODUCTION
This matter has had a long history. The current proceedings were commenced in the Supreme Court of Tasmania by a writ filed on 3 February 2003.
It is unnecessary to detail the narrative of the matter in the Supreme Court. It is enough for these introductory purposes to note that the proceedings were beset by delays punctuated by interlocutory applications. On 12 August 2016, more than 13 years after the writ was filed, Brett J made an order pursuant to s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (the Cross-vesting Act) that the proceeding be transferred to the Federal Court of Australia.
This Court has jurisdiction with respect to any matter arising under Commonwealth law within the meaning of s 39B(1A) of the Judiciary Act 1903 (Cth). Having regard to the not merely colourable relationship between the asserted liability of Jadwan’s lawyers for negligence and the respective provisions of the National Health Act 1953 (Cth) (the National Health Act), the Aged Care Act 1997 (Cth) (the Aged Care Act) and the Aged Care (Consequential Provisions) Act 1997 (Cth) (the Consequential Provisions Act), and having been informed by counsel of the background to the matter, I was satisfied that Brett J’s order was properly made pursuant to s 5(1)(b)(iii) of the Cross-vesting Act and that this Court had jurisdiction to accept this transfer. I remain of that view.
The trial of the matter took place over four weeks (5-28 July 2017). Having regard to conflicting obligations of senior counsel, the Court heard final submissions on 14 and 15 November 2017.
2. CASE OVERVIEW
Derwent Court Nursing Home (Derwent Court) is a Victorian era, heritage listed, two-story grand home to which a ground level extension was added. It is located only a short distance from central Hobart. From 1984 until mid-1997 Jadwan Pty Ltd (Jadwan) owned and operated Derwent Court as a nursing home. It received subsidies from the Commonwealth for its residents. In 1997 its Commonwealth approval as a nursing home was revoked. It thereupon became ineligible to receive subsidies for resident care. Derwent Court’s residents were relocated to other nursing homes and it ceased to provide nursing home care. It has not since operated as a nursing home.
Jadwan is a corporate trustee. It is the trustee of the J.G. & J.I. Alexander Family Trust. Its directors are, and at all relevant times were, members of the Alexander family: Mr Jeff Alexander (now deceased); Mrs Joan Alexander; Ms Julie Alexander and Mr Wayne Alexander. Jadwan had purchased Derwent Court to operate as a nursing home. It remains the owner of Derwent Court which it now leases to a third party unconnected to these proceedings.
Derwent Court’s resident mix had included a high proportion of vulnerable persons with dementia. Most were accommodated in shared rooms, the largest of which accommodated seven residents. Non-ambulant residents were, until the events described below occurred, accommodated upstairs on the second floor.
In its Second Further Amended Statement of Claim Jadwan advances claims in negligence against three Tasmanian firms of legal practitioners; the First, Second and Third Respondents, and the executrix of the estate of a Melbourne based solicitor Mr John Hogan; the Fourth Respondent.
The liability of each of those Respondents is said by Jadwan to have arisen by reason of their respective failure as solicitors to advise their client to take any action in respect of the decision or purported decision made by a delegate of the then Minister for Family Services (the Minister) pursuant to s 44(2) of the National Health Act on 6 August 1997 to revoke Derwent Court’s approval as a nursing home under that Act.
Jadwan, inter alia, asserts that actions taken by the Commonwealth in accordance with that purported decision resulted in Jadwan losing its entitlement to Commonwealth funding for the residents of Derwent Court and prevented it transitioning to become an approved provider of aged care services on the coming into force of the Aged Care Act.
The First, Second and Third Respondents are proceeded against on the basis that they were each, sequentially in time, retained by Jadwan as its solicitors. The First Respondent was retained on 7 February 1997 when its then employee solicitor, Mr Stephen Wicks, accepted Jadwan’s instructions. Mr Wicks was later re-engaged by Jadwan when he, in turn, became an employee of the Second (as from 2 July 1997) and Third (as from 13 September 1997) Respondents.
Mr Hogan, whose executrix is the Fourth Respondent, was a Melbourne based solicitor. He was engaged on 28 July 1997 by Jadwan on the basis that he possessed specialist skills in relation to the law applying to the regulation of nursing homes.
Jadwan alleges that, in summary, but for the First, Second, Third and Fourth Respondents each failing in their respective duties as solicitors, they would have identified the significance of the terms of both the Aged Care Act and the Consequential Provisions Act. Had they not failed in their respective duties Jadwan contends that they each would have advised Jadwan of the urgent necessity of it, inter alia, seeking an injunction to set aside the Minister’s decision to revoke Derwent Court’s approval so as not to forfeit Jadwan’s entitlement to transition as an approved provider in respect of Derwent Court on 1 October 1997. Jadwan would have given instructions in accordance with that advice. An injunction would have been granted.
Jadwan further alleges that had the First, Second, Third and Fourth Respondents not failed in their respective duties they would have advised Jadwan that it needed to ensure that at least one Commonwealth funded resident would need to remain at the nursing home until 1 October 1997 to prevent Jadwan forfeiting its entitlement to become an approved operator of Derwent Court beyond that date. It asserts that Jadwan could and would have taken that action.
Jadwan alleges that a barrister briefed by Mr Wicks to advise and act for Jadwan also failed to provide it with competent advice. Jadwan pleads that it had intended to join that barrister, Mr David Porter QC, as a respondent to these proceedings. He would have become a party to these proceedings but for the negligence of the Fifth Respondent. The Fifth Respondent had failed to ensure Jadwan’s writ was served on Mr Porter before it expired.
Jadwan posits that a grant of an injunction coupled with Jadwan taking steps to ensure that at least one resident remained at Derwent Court would have enabled it to continue to operate its nursing home business, or, on Jadwan’s worst case scenario, permitted it to have sold its bed licences to another operator.
Because it was not provided with competent advice and did not take those actions, Jadwan had suffered the loss of its chance to obtain those outcomes. It was entitled to be compensated for that loss by an award of damages. Damages were to be assessed on the basis that Jadwan would have taken advantage of the most commercially advantageous of the options that the evidence would establish Jadwan had been willing to pursue and were practically available to it.
On behalf of Jadwan its counsel, Mr Pearce SC, advanced three “scenarios” for the Court to establish the value of Jadwan’s lost chance.
The first of those scenarios was that if Jadwan had been given competent advice, it would have sought and obtained an injunction in the Federal Court of Australia in 1997 staying the operation of the decision revoking Jadwan’s accreditation as an approved provider of nursing home care pursuant to s 44(2) of the National Health Act (the revocation decision) and, in due course, orders setting it aside. Jadwan would have continued to operate its nursing home at Derwent Court until 1 October 1997 when it would have transitioned to become an approved operator of Derwent Court under the Aged Care Act. Jadwan would have continued to operate Derwent Court (with necessary improvements as required to meet the higher standards of care under that Act) with an ongoing entitlement to Commonwealth funding for 51 residents from then onwards to the present.
Jadwan ultimately abandoned reliance on that scenario. On 14 August 2017 its solicitor wrote to the Court and to the Respondents as follows:
The Applicant’s case for damages was opened at trial on the basis of 3 alternative hypothetical scenarios if Derwent Court’s approval as a nursing home had not been revoked, or if the revocation had been suspended or set aside, as follows:
A.that Jadwan would have continued to operate a nursing home in the existing building;
B.that Jadwan would have built a new 51 bed facility on a greenfield site in Hobart and operated the nursing home there;
C. that Jadwan would have sold its 51 bed licences in late 1997.
In light of the evidence at trial, we are now instructed to abandon scenario A above.
Jadwan’s second scenario was that had it received competent advice, the company would have continued to operate Derwent Court and become an approved operator under the Aged Care Act but it would have continued to operate Derwent Court as a nursing home only for a transitional period. During that transitional period it would have purchased land and invested to construct a new nursing home to replace Derwent Court. Jadwan had both the financial capacity and will to undertake such an investment. It would have constructed a modern 51 bed facility on a greenfield site in or around Hobart. Once those new facilities were available Jadwan would have ceased to operate Derwent Court as a nursing home but would have continued as an approved provider of nursing home services from its new premises with an ongoing entitlement to Commonwealth funding for its 51 residents.
Jadwan’s third scenario, not then pleaded but identified in Mr Pearce’s opening, was advanced against the contingency that the Court might be unpersuaded of the viability of its preferred scenarios. Jadwan’s third scenario posits that had it been provided with competent advice it would have obtained an injunction to stay the revocation decision. Having secured such an injunction it would have “got out” of the nursing care industry in Tasmania. However, its exit then would have been on more advantageous terms. Nursing home bed licences had marketable value. If Derwent Court’s approval as a nursing home had remained in place the Commonwealth would have permitted Jadwan to sell, and it would have been able to have sold Derwent Court’s 51 bed licences.
Jadwan proceeds against the Fifth Respondent for the loss of its chance to have joined Mr Porter directly in these proceedings. It asks the Court to value that lost chance on the basis that but for the negligence of the Fifth Respondent, Jadwan would have obtained judgment for damages against Mr Porter on the same premise as it pleads against its former solicitors. There should be no discount to that amount for the uncertainty of that hypothetical litigation – while not a party the evidence in these proceedings would entitle the Court to find Mr Porter’s responsibility for having caused Jadwan to lose the chance to secure a better outcome as identified in its three scenarios had been clearly established.
Also pleaded against each save the Fourth Respondent is a contention that the lawyers who had acted for Jadwan were negligent in failing to advise Jadwan that it had grounds to and should challenge the Commonwealth’s earlier decision made on 3 February 1997 to impose financial sanctions on Derwent Court pursuant to s 45E of the National Heath Act (referred to by counsel as the “sanctions decision”). As a result of those sanctions Jadwan had been denied entitlement to claim payments from the Commonwealth in respect of any new resident admitted to Derwent Court after the date of that decision.
That pleading, as a distinct basis of liability, was given little attention in the course of the trial. Nonetheless at [166] to [168] of Mr Pearce’s closing written submissions, the Applicant pressed the Court to make findings that Mr Wicks and Mr Porter had breached their respective duties to Jadwan by failing to advise or act in respect to the earlier sanctions decision in addition to, or in the alternative of, the case Jadwan had advanced regarding its legal advisers’ alleged breaches of duty to act or advise in respect of the revocation decision and that Jadwan had suffered loss sounding in damages for that reason.
For reasons the Court provides it is satisfied that Jadwan cannot establish those propositions.
3. SUMMARY OF FINDINGS
The Court sets out its reasons later. Because they are lengthy, it is convenient to summarise the conclusions it has reached before turning to the details. The summary is included as guidance – it omits reasoning and is not intended as independent findings.
Mr Wicks was a relatively young and inexperienced lawyer at the time he was retained by Jadwan after Derwent Court had been sanctioned by the Commonwealth and Jadwan had been warned that Derwent Court’s approval as a nursing home might be revoked unless it took necessary remedial actions. Mr Wicks lacked the experience appropriate for undertaking what became a challenging task. As an employed solicitor Mr Wicks’ employers were vicariously liable for any losses caused by his negligence.
Having regard to the evidence concerning his instructions, the timing of events and the relationship between the parties, I have concluded that the Applicant fails to prove that Mr Wicks had the duties Jadwan has pleaded during the period he was employed by the First Respondent.
By contrast I have concluded that Mr Wicks became subject to those duties after becoming an employee of the Second Respondent. In breach of his duty Mr Wicks failed to exercise reasonable care and skill in providing legal advice to Jadwan after it had been given notice by a delegate of the Minister, Ms Jane Halton, of her intention to revoke Derwent Court’s approval as a nursing home. However I am not satisfied that such failure on his part caused Jadwan to lose a chance to have continued its business at Derwent Court while it built a new 51 bed facility on a greenfield site in Hobart and then operated the nursing home in those new premises or to have sold its 51 bed licences in late 1997.
The evidence before the Court establishes that, in the circumstances then facing Jadwan, its directors had no intention of continuing to operate a nursing home at Derwent Court while building on a greenfield site. Jadwan’s directors had repeatedly shown reluctance to commit to any new expenditure to improve Derwent Court unless guaranteed future funding. Jadwan had already made a decision to “get out” of operating Derwent Court. It knew that the Commonwealth officials responsible for the regulation of nursing homes had exhausted their patience with Jadwan’s management of Derwent Court. The Department of Health and Family Services (the Department) had concerns including, but not limited to, the risk that fire posed to Derwent Court’s residents. Jadwan knew the Tasmanian Fire Service had “gone sour” on the idea of allowing Jadwan to continue to operate Derwent Court as a nursing home without expensive major works while it built new premises. Even assuming Derwent Court might have taken steps to obtain the benefit of the Consequential Provisions Act I am satisfied that Jadwan’s directors would not have committed to the large capital expenditure involved in buying land and building a new nursing home. In the findings I have made, Jadwan would have had to operate Derwent Court with fewer residents than financially viable for the period it would have taken them to construct any new premises, without an assurance from the Department that it would be able to maintain its approval under the higher standards that would be required by the Aged Care Act. I am satisfied no such assurance would have been forthcoming.
I am satisfied that the Commonwealth would have been unfavourably disposed to Jadwan continuing to accommodate nursing home residents at Derwent Court on any ongoing basis. Having regard to what Jadwan knew about the challenges it was facing and the cost and time it would take to build new premises, even if Jadwan had received the advice Jadwan pleads Mr Wicks should have provided it with, I have concluded that Jadwan would not have pursued that course and would have continued to focus upon getting out of Derwent Court with, if possible, Commonwealth approval for it to sell its bed licences.
It is uncontentious that there was a market for such bed licences, subject to Commonwealth approval. Jadwan had been offered a window of 48 hours as its last chance to sell the licences but it had been unable to take advantage of that opportunity.
By the time Mr Wicks’ instructions evolved to oblige him to give Jadwan the advice he ought to have, but failed to, it was already too late for any legal proceedings that Jadwan might have brought as a “tactic” to be effective to influence the Department to yield to that request.
Jadwan, on its own initiative and without legal advice, had already sought and obtained a commitment from the Commonwealth that it would meet the cost of redundancies for Jadwan’s employees at Derwent Court. Jadwan had dismissed all of Derwent Court’s nursing home staff. It had accepted that Derwent Court’s residents had to be relocated.
A more than token challenge to the Department’s action in revoking Derwent Court’s approval as a nursing home as might have put pressure on the Commonwealth to allow Jadwan to sell its bed licences would have had to be accompanied by resolve on Jadwan’s part to continue to provide nursing home care for such of Derwent Court’s already diminished number of remaining residents as it could persuade not to leave. Doing so would put at risk the Commonwealth’s undertaking to fund Derwent Court’s redundancy payments.
The unimpaired market value of 51 bed licences in Tasmania at the relevant time was in the order of $612,000. The amount the Commonwealth had undertaken to meet as the cost of redundancies was of the same order. I have found that Jadwan would not have pursued a strategy inconsistent with accepting Commonwealth funding for staff redundancies which could not guarantee it (even if successful) anything more than a roughly equivalent return.
For that reason Mr Wicks’ failure to provide the advice he ought to have in the period he was an employee of the Second Respondent did not cause Jadwan to lose a chance of selling its bed licences.
I have concluded that Jadwan did not lose a chance to recover its position after Mr Wicks was in turn employed by the Third Respondent.
The Fourth Respondent was a Melbourne based solicitor (now deceased). He was identified by Jadwan as having specialist skills in relation to the law applying to the regulation of nursing homes. The Fourth Respondent was retained by Jadwan only after the revocation decision had been made – and only on a limited basis that he would advise as to how Jadwan might sell its bed licences. The advice he provided Jadwan and Mr Wicks (then an employee of the Second Respondent) was to seek an injunction. His advice was accepted. His retainer as a consultant was then terminated. He was not further consulted. Only after his retainer had come to an end did Jadwan act on Mr Wicks’ advice that proceedings for an injunction pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) were not required. I have concluded that Jadwan has not established its cause of action against the Fourth Respondent.
The Fifth Respondent was a firm of solicitors. It does not dispute that it was negligent in failing to serve a writ on Mr Porter in time. Mr Porter is absent from these proceedings because of that negligence. The Fifth Respondent therefore accepts that if Mr Porter was himself negligent and Jadwan can establish that his negligence caused it to lose a chance to have successfully brought proceedings against him then, to the extent that loss can be valued, the Fifth Respondent is liable to Jadwan in damages. However Jadwan has not established that Mr Porter failed to exercise reasonable care and skill as counsel briefed to provide legal advice to it. I reject that I am entitled to find on the balance of probabilities that Mr Porter gave Mr Wicks advice that an injunction need not be pursued. For that and other reasons the Court rejects that it should find that the admitted negligence of the Fifth Respondent in failing to serve Mr Porter before the writ became stale caused Jadwan to lose the chance to have obtained a judgment sounding in damages against Mr Porter.
4. BACKGROUND
The Court’s reasons require an understanding of this matter’s complex earlier history, including previous litigation Jadwan had unsuccessfully undertaken. Before turning to the evidence as it relates specifically to the matters in dispute in these proceedings, I set out an uncontentious survey of that background.
In 1984 Jadwan sought and obtained Commonwealth approval pursuant to the National Health Act to operate Derwent Court to provide accommodation for 51 nursing home residents. As Derwent Court’s proprietor, Jadwan received a subsidy from the Commonwealth for each of its residents’ care. Most of Derwent Court’s residents were frail aged persons with high dependency needs. Many suffered dementia. A considerable number were non-ambulant. Others required assistance with their mobility.
Few, if any, of the residents accommodated at Derwent Court had sufficient financial means to meet, unassisted, the full costs of their nursing home care. Jadwan’s ongoing economic viability as the operator of Derwent Court accordingly was dependent upon it retaining Commonwealth funding for its residents.
I adopt the following summary of the law as then applicable to the operation and funding of nursing homes from the reasons of North J in Jadwan Pty Ltd v Secretary, Commonwealth Department of Health & Aged Care [2002] FCA 1052; (2002) 71 ALD 520 (Jadwan No 3) at [4]:
The general scheme under the [National Health Act] was that a person could seek an approval in respect of premises to be used for the conduct of a nursing home. The approval was subject to conditions imposed by the statute, including a limitation on the number of beds that could be provided, and a condition that the nursing home would comply with the standards determined by the Minister. The proprietor of the nursing home was entitled to receive a benefit paid by the Commonwealth in respect of approved nursing home care provided to residents. There were sanctions applicable in the event that the conditions attaching to the approval were not met. One sanction was that the Minister could make a declaration of non-compliance. The consequences of making such a declaration was that the Commonwealth benefit was not payable in respect of persons admitted after the date of the declaration. A more severe sanction was the revocation of the approval. This general scheme can be seen in the following relevant provisions:
“40AA (1) The proprietor of a nursing home may apply, in the authorized form, for approval of the premises occupied by the nursing home as an approved nursing home.
…
(6) The approval of premises as an approved nursing home is subject to the following conditions:
(a) a condition that the number of beds available in the nursing home for qualified nursing home patients … will not at any time exceed such number of beds as is determined from time to time by the Minister as the approved number of beds in relation to the nursing home.
…
(ck) a condition that the nursing home care provided in the nursing home satisfies the standards determined under section 45D;
…
45D The Minister may, by written notice, determine standards to be observed in the provision of nursing home care in approved nursing homes.
…
47A(1) Subject to this Part, Part VC and Part VD, the proprietor of an approved nursing home in respect of which this section applies is entitled to receive benefit in respect of each approved nursing home patient in the home for each day on which the patient receives nursing home care in the home.
…
46A … a person is an approved nursing home patient on a day if:
(a) the person is a qualified nursing home patient on that day;
4 … ‘qualified nursing home patient’ means a person who occupies a bed in an approved nursing home for the purpose of nursing home care, …
…
45E(1) If the nursing home care provided in an approved nursing home does not satisfy the standards determined under section 45D, the Minister may, by written notice served on the proprietor of the nursing home, declare that the home does not satisfy those standards.
(2) Where a declaration is in force under subsection (1), the Minister may, by written notice served on the proprietor of the nursing home, determine that, while the declaration remains in force, Commonwealth benefit is not payable to the proprietor of the nursing home in respect of a patient admitted to the nursing home after the making of the determination.
…
44(1) The Minister may, at any time, review the approval of a nursing home under this Part.
(2) If the Minister considers that:
…
(b) a condition applicable to the approved nursing home has not been complied with;
the Minister may vary the nature of the approval or revoke or suspend the approval as the Minister considers justified in the circumstances of the case.
(2A) The Minister may give the proprietor of the approved nursing home written notice of his or her intention to vary the nature of the approval or revoke or suspend the approval as the case may be.”
In common with all approved nursing homes, Derwent Court was the subject of semi-regular inspections by Standards Monitoring Teams regarding the quality of the care provided. The standards that approved nursing homes were required to meet were those determined under s 45D of the National Health Act:
Standards for nursing home care
The Minister may, by written notice, determine standards to be observed in the provision of nursing home care in approved nursing homes.
Jadwan, as the operator of Derwent Court, had struggled to ensure it met those standards prior to the events at the centre of these proceedings.
In 1991 Derwent Court had been identified by the Commonwealth as a “home of concern”. In response Jadwan had made certain improvements. In 1993 that designation had been lifted. Notwithstanding, reports of subsequent Standards Monitoring Teams had continued to refer to aspects of Derwent Court’s provision of aged care services as requiring “action” or “urgent action” if the nursing home was to fully meet Commonwealth standards.
However, it would be misleading to suggest that there was nothing in Derwent Court’s past history in its favour. There is evidence in Jadwan’s business records that Derwent Court not infrequently had been sent unsolicited expressions of gratitude from relatives of residents thanking it and its nursing staff for the kindness and care their elderly relatives had received. In these proceedings there was evidence from a retired general practitioner, Dr Timmins, that in the period prior to Derwent Court’s revocation of approval as a nursing home he had had around 20 residents of Derwent Court as his patients. He had made routine weekly ward rounds attending those of his patients that Derwent Court had identified as needing to be seen. Dr Timmins gave evidence that:
My impression of the nursing care was that it was excellent. I don’t remember a single major problem with any of the nurses being [sic] not providing care or being oddities in the system.
(transcript p 770 line 46 – p 771 line 2)
However in cross-examination Dr Timmins accepted that he had no recall of ever having been told that Derwent Court had been classified as a home of concern between 1991 and 1993. Nor could he recall being informed of the difficulties Derwent Court had had with the Commonwealth from that time to its closure. However, in response to a question regarding sanctions having been imposed resulting in Derwent Court having been unable to accept new residents as from February 1997, Dr Timmins’ evidence was that he guessed that he might have heard of that at some stage. He conceded that the views he had formed in relation to the quality of care at Derwent Court were the result purely of his personal observations. He accepted that he had not been familiar with the Commonwealth standards applicable to nursing homes in 1997 (transcript p 777 line 25 – p 778 line 31).
Notwithstanding Dr Timmins’ positive impressions, from mid-1996 Jadwan confronted growing pressure to satisfy the Commonwealth that the care it provided at Derwent Court met the required care standards as would entitle it to retain Commonwealth funding for its residents.
On 6 and 7 August 1996 a Standards Monitoring Team visited Derwent Court. Its draft report made a number of highly adverse findings regarding the standard of care provided. It recommended that sanctions pursuant to s 45E of the National Heath Act be imposed on Derwent Court. The effect of such sanctions, if imposed, would be that while Jadwan could continue to receive funding for existing residents, no Commonwealth funding would be available for any new residents unless and until those sanctions were lifted.
On 6 September 1996 Jadwan was provided with a draft statement of the report and was notified that sanctions might be imposed.
At Jadwan’s request (Ex A1 pp 1186-1190), a Standards Review Panel (SRP-1) was constituted (or purportedly constituted) to review the recommendation of the Standards Monitoring Team that sanctions under s 45E(1) be imposed. The SRP-1 visited Derwent Court on 10-14 November 1996. Its report, dated 2 December 1996, went well beyond endorsing the conclusions of the Standards Monitoring Team. The report of the SRP-1 recommended that Derwent Court urgently be closed.
A significant reason referred to by the SRP-1 as justifying its recommendation that it was urgent that Derwent Court’s approval as a nursing home be revoked was the home’s inadequate fire safety measures and the associated risk to its residents. The SRP-1’s report acknowledged that earlier inspections of Derwent Court had not identified fire safety as an issue requiring urgent action. However, it concluded, the explanation for the absence of any prior attention to fire safety was that previous inspections had been conducted on a flawed understanding of the meaning of an approval given to Jadwan by the Tasmanian Fire Service (the TFS) in 1989. In 1989 the TFS had authorised Jadwan to accommodate residents on the upper floor of Derwent Court. The SRP-1 concluded that that authorisation had not involved any assessment of the actual risk to resident safety and that the TFS documentation “did not have the effect of [an] overall fire clearance, or approval from the fire service to locate frail and non ambulant resident [sic] on the upper floor” (Ex A1 p 1249).
On 3 February 1997 Mr Stephen Dellar of the Commonwealth Department of Health and Human Services sent Jadwan a letter giving it notice that a declaration had been made under s 45E(1) of the National Health Act that Commonwealth subsidies would not be payable with respect to new residents (the sanctions decision) (Ex A1 pp 1270-1293).
Mr Dellar advised that Jadwan had three days to show cause why its approval to operate Derwent Court as a nursing home should not be revoked.
Jadwan replied on 6 February 1997 in the following terms:
I am responding to the requirement in accordance with Section 44(2A) of the National Health Act 1953 to show cause why Approval of Derwent Court Nursing Home should not be revoked.
I understand that cause must be shown in relation to fire safety and satisfying other standards.
In relation to fire safety, on behalf of Jadwan Pty Ltd I give the undertaking to complete the works listed below. The undertaking is given after consideration of the Kerr Lewit Clark and Kidd Report dated 4 February 1997, and the Survey Report following the Tasmania Fire Service fire safety inspection on 4 February 1997.
From the Tasmania Fire Service Survey Report the following works will be completed as soon as practicable and include all items marked ‘Requirements’ in the Report:
1.100% test of all detectors.
2.Upgrade the Fire Indicator Panel Documentation.
3.Sound pressure test of warning devices.
4.All fire doors to be fitted with smoke seals.
5.Hole in smoke wall to be repaired.
6.Areas where services may have penetrated fire or smoke walls to be checked for compliance.
7.Inspection of emergency lighting system by a qualified person.
8.Existing self-luminous exit signs to be replaced with illuminated signs.
9.Relocate the hose reel to comply with the spindle height required.
10.Replace fire extinguishers as recommended.
11.Relocate fire blanket in kitchen to a recommended position.
12.Install a hose reel on the first floor at the front of the building.
13.Material stored in the undercroft to be reduced.
14.Inflammable material at the rear of the building to be removed.
15.Review of smoke detectors in living areas.
16.Installation of break glass alarms in liaison with Tasmania Fire Service.
The Kerr Lewit Clark and Kidd Report and Tasmania Fire Service Survey Report (Item 5) recommend either smoke or fire isolation (as appropriate) of the open stairs from the foyer. Pending clarification from both advisers, recommendations will be effected.
From the Kerr Lewit Clark and Kidd Report, these works will be completed without delay:
Cupboard in Sick Bay to be relocated, providing a further exit.
Fire Evacuation Procedures to be revised to include:
ŸDistinction between evacuation of building and evacuation to a fire protected area.
ŸClarification of assembly areas for upstairs occupants and those downstairs.
ŸA procedure for evacuation of first floor occupants with respect to fire on ground floor.
All works to be carried out in liaison with Tasmania Fire Service.
The Directors are seriously considering the installation of a sprinkler system. It has not been possible, since receiving the Tasmania Fire Service Report last night, to gain the information necessary to make a decision. There are other considerations to this decision and I seek an early opportunity to discuss the matter in full with you.
With regards to the non-compliance of standards under Section 45D of the National Health Act 1953, the Director of Nursing and I undertake to thoroughly review all standards and seek outside assistance in our endeavours to satisfy the standards. Detailed information on the plans to achieve this outcome will be supplied within 28 days of any deferral of revocation of Approval.
The Directors believe the foregoing is proof of a genuine effort to satisfy the Department, and is a basis for deferral of the revocation of Approval.
(Ex A1 pp 1389-1392)
The letter was sent under the signature of Mr Jeff Alexander, one of Jadwan’s directors.
The evidence does not disclose whether the Commonwealth replied formally to that correspondence but it is uncontentious that the outcome was that Jadwan’s response was sufficient to stave off the immediate revocation of Derwent Court’s approval.
However, as might be expected, Jadwan remained under pressure to address the Commonwealth’s concerns.
Against that background, on 7 February 1997, Jadwan engaged a solicitor, Mr Wicks. Mr Wicks was an employee of the First Respondent. The terms of Mr Wicks’ retainer, and how he discharged or failed to discharge his duties pursuant to his retainer, are the subject of consideration later in these reasons. However it is appropriate to note that on Jadwan’s instructions Mr Wicks wrote to Mr Dellar, State Manager, Department of Health and Family Services on 12 February 1997 asking for information about how the SRP-1 had come to be appointed and “by way of observation only at this point” suggested that one of its members, a Mr Van der Schoor, by reason of his position as Executive Officer of Aged Care Tasmania Inc appeared to have had a conflict of interest (Ex A1 pp 1485-1486). On 14 February 1997 Mr Dellar replied to Mr Wicks, providing the information requested and stating he had been advised by the Chair of the SRP-1 that she was satisfied there had been no conflict of interest for any member (Ex A1 pp 1507-1508).
A Commonwealth Standards Monitoring Team headed by a senior interstate member then visited the nursing home on 12, 13 and 17 March 1997. Its report was even more damning than that of the SRP-1 (Ex A1 pp 1635-1668).
That report appears to have prompted the Commonwealth to appoint, or purport to appoint, a second Standards Review Panel (SRP-2) to advise the Minister as to whether Derwent Court’s approval as a nursing home should be revoked. The SRP-2, (excluding, I infer, having regard to Mr Wicks’ representations, Mr Van der Schoor) convened on 9 May 1997. It comprised only three members rather than five as provided by the then reg 12(1) of the National Health Regulations 1954 (Cth) (the National Health Regulations). Its members visited Derwent Court that afternoon. The report of SRP-2 dated 26 May 1997 endorsed the recommendation earlier made by the SRP-1 that Derwent Court be closed. Jadwan was informed of that outcome by letter dated 28 May 2017 (Ex A1 pp 1728-1745).
On 23 June 1997 the First Respondent invoiced Jadwan for the legal services Mr Wicks had up until that time provided to it.
On 2 July 1997 Mr Wicks commenced employment with the Second Respondent. As is evident from a note made by Mr Wicks that day, Jadwan had re-engaged him as its solicitor (Ex A1 p 4125).
On 7 July 1997 the Aged Care Act and the Consequential Provisions Act each received royal assent. Although they thus became laws of the Commonwealth, they did not immediately come into effect. Their date of commencement was to be fixed by Proclamation. Until then the National Heath Act continued to apply to the operation of nursing homes.
By a notice dated 20 July 1997 (Ex A1 pp 1911-2098), Jadwan was advised of the intention of Ms Jane Halton, First Assistant Secretary, Aged and Community Care Division, as a delegate of the Minister for Family Services for the purposes of s 44 of the National Health Act, to revoke the approval of Derwent Court under s 44(2A) of the National Health Act, 14 days after the date of that notice. Jadwan was provided with an extensive statement of Ms Halton’s reasons. On the same day the Department wrote to staff and residents of Derwent Court to inform them of the Commonwealth’s intention to revoke Derwent Court’s approval in 14 days. There is some evidence to suggest that not all of those letters were passed on to their individual addressees but nothing presently relevant turns on that.
Jadwan was advised of that notification on 21 July 1997. Without seeking legal advice, Mr Jeff Alexander immediately approached Mr Dellar, the Department’s senior representative in Tasmania, to advise that the cost of meeting staff redundancies would break the company. I infer he sought the Commonwealth’s agreement to meet those costs. The evidence establishes that on or before 23 July 1997 Mr Dellar provided such an undertaking.
On 23 July 1997 Mr Wicks wrote to Ms Halton in the following terms on Jadwan’s behalf (Ex A1 p 2108):
You may be aware, we act for Jadwan Pty Ltd, the proprietor of the Derwent Court Nursing Home.
We have been handed a copy of your notification dated 20th July, 1997 of intention to revoke the approval of the Home under the provisions of the National Health Act.
We advise that we are urgently seeking senior counsel’s advice on options open to our client in this matter which may include a review of or appeal against the revocation of the Home’s approval.
In the meantime, and until senior counsel has had the opportunity to fully review the background to this matter and advise on options available to our client, we must warn the Department in the strongest possible terms against taking any action to remove any residents from the Home or to in any way pre-empt a revocation of approval.
The Australian Government Solicitor (AGS) responded immediately in the following terms (Ex A1 p 2109):
I refer to your facsimile of 23 July 1997. I act for the Department of Health and Family Services in this matter. Please advise me of what action you propose to take on behalf of your client. The Department will not desist from taking appropriate action to protect the health and welfare of the patients.
I have advised the Department of the competing interests of your clients and the interests of the patients in the home. The Department is aware of the appropriate appeal rights available to your client and expects your client to take advantage of those rights.
On 24 July 1997 Jadwan gave notice to all of Derwent Court’s staff. Jadwan thus protested but did not seek to prevent its residents being transferred to other nursing homes. The last resident vacated Derwent Court on 4 August 1997 (Ex A1 p 2651).
As Mr Wicks’ letter to Ms Halton indicated, Jadwan had given Mr Wicks instructions to engage senior counsel. On 24 July 1997 Mr Wicks met with Mr Porter to brief him on the circumstances then confronting Jadwan.
On 28 July 1997 Jadwan engaged Mr Hogan to assist it to obtain approval from the Commonwealth for it to sell its bed licences (Ex A1 pp 2125-2364).
On 6 August 1997 Ms Halton as delegate of the Minister, purporting to act, inter alia, on the advice of the SRP-2, revoked Derwent Court’s approval as an approved nursing home under s 44(2) of the National Health Act. As of that time Jadwan ceased to be entitled to receive Commonwealth benefits for the care of nursing home residents at Derwent Court. However by that time all of its residents had been relocated.
On 21 January 1998 Jadwan commenced proceedings in this Court pursuant to the ADJR Act contesting the validity of the 6 August 1997 revocation decision.
Initially it may have appeared to Jadwan that it had been successful in restoring its position.
On 19 June 1998 Heerey J held that SRP-2 which had recommended that Derwent Court’s approval be revoked had not been validly constituted: Jadwan Pty Ltd v Minister for Health and Family Services [1998] FCA 715; (1998) 51 ALD 245 (Jadwan No 1). His Honour held that Ms Halton’s revocation decision which had, inter alia, relied on the SRP-2’s findings was void in consequence.
The Minister appealed that decision. In Minister for Health and Family Services v Jadwan Pty Ltd [1998] FCA 1549; (1998) 89 FCR 478 (Jadwan No 2) a Full Court of the Federal Court of Australia (Burchett, Drummond and Sackville JJ) allowed the Minister’s appeal in part.
Their Honours concluded that the primary judge had erred when he had concluded that the procedures required by law for the revocation of Derwent Court’s approval had not been followed – the exercise of the Minister’s s 44(2) power to revoke an approval was not conditional on the establishment of a Standards Review Panel. However, then accepting a new argument advanced by Jadwan in the course of the appeal, the Full Court held that by treating the SRP-2’s findings as having been made by a validly constituted Standards Review Panel, the Minister’s delegate had taken into account a materially irrelevant consideration and for that reason the exercise of the power was to be set aside.
The formal orders of the Full Court in Jadwan No 2 as made on 4 December 1998 were:
1.Appeal allowed in part.
2.Set aside Order 2 of the Orders made by the trial Judge on 19 June 1998.
3.In substitution for Order 2, set aside the decision of the Minister, made on 6 August 1997, to revoke the approval of the Derwent Court Nursing Home.
4.The Appellant pay half the Respondent’s costs of the appeal.
The terms of the third order made by the Full Court led Jadwan to anticipate that its status as an approved provider would be restored. However, the Commonwealth declined to act on that basis.
Jadwan therefore commenced further litigation to vindicate its asserted entitlement to operate Derwent Court and to receive Commonwealth funding for its residents.
However Jadwan faced a new problem: the National Health Act upon which its asserted entitlements were premised had by that time ceased to govern nursing home standards. The Aged Care Act repealing it had been enacted on 7 July 1997. A proclamation of 3 September 1997 had fixed the date of its commencement as 1 October 1997. As of that date the Aged Care Act had brought into effect an entirely new system for the regulation and funding of nursing homes. By contrast to the National Health Act that had provided for the approval of premises as nursing homes, the Aged Care Act now provided for the approval of providers of aged care. To succeed in the proceedings Jadwan needed to establish that its rights had been maintained by virtue of the operation of the transitional rules enacted in the Consequential Provisions Act.
Jadwan’s proceedings were thus premised on the Consequential Provisions Act having had the effect of preserving its status. Jadwan submitted that the Consequential Provisions Act had been enacted to permit proprietors of existing nursing homes approved under the National Health Act to transition under the Aged Care Act, as approved providers for the equivalent number of nursing home residents with funding attached as their premises had had approval for under the National Health Act.
Because the Full Court had set aside the Minister’s decision of 6 August 1997 to revoke Derwent Court’s approval as an approved nursing home, Jadwan submitted that the Consequential Provisions Act had grandfathered an entitlement for it to transition to the status of an approved provider under the Aged Care Act. As such it would be entitled to receive Commonwealth subsidies for an equivalent number of nursing home residents (51) as Derwent Court had held approval for.
However, in Jadwan No 3 North J rejected that contention. His Honour held that the Full Court in Jadwan No 2 had expressly set aside Heerey J’s order that the Minister’s decision had been void and had substituted for it an order that the decision be set aside. Because the Full Court had not specified a date of effect for that order, that order as provided for by s 16(1) of the ADJR Act, operated only prospectively and from when it was made. Accordingly it operated from 4 December 1998.
Having so concluded, North J dismissed Jadwan’s application. Derwent Court had not been an approved nursing home for the purposes of the Consequential Provisions Act when the transitional provisions took effect. The Minister’s revocation of Jadwan’s approval had remained in force until 4 December 1998. Jadwan not having been an approved nursing home on 30 September 1997, the day prior to the Aged Care Act coming into force, it could not benefit by reason of the provisions of the Consequential Provisions Act: see s 7.
His Honour added that even if he were wrong to hold that the Full Court’s order had operated from that date, Jadwan would still have fallen outside the operation of the Consequential Provisions Act:
42In the exceptional circumstance that a proprietor happened to have no patients under care on 30 September 1997, the ACA [Aged Care Act] would permit that proprietor to apply for approval as a provider under s 8-2(1) and for an allocation of places to be made under s 14-1(1). If these steps were taken on 1 October 1997, or shortly thereafter, one would imagine that the Secretary would exercise the power given by the Act to preserve the pre-existing position of the proprietor. Jadwan did not take these steps, although invited to do so by the Department.
43On 30 September 1997, Jadwan had no patients at all receiving care at Derwent Court. They had all been removed on 23 July 1997 in anticipation of the revocation decision.
44Ms Mortimer, who appeared as counsel for the respondents, argued that s 7(1)(a) of the CPA [Consequential Provisions Act] required that the Commonwealth benefit be payable in fact, and no benefit was payable to Jadwan in fact because it had no patients under care. Mr Heaton, of senior counsel who appeared with Mr Aghion for Jadwan, contended that it was sufficient if the Commonwealth benefit was payable in law to Jadwan, even if Jadwan had no patients in fact under care. He relied upon a purposive approach to the construction of the Act. He argued that the purpose of the CPA was to recognise the pre-existing status and rights of proprietors, and to provide for the transfer of that status and those rights without diminution or interference. That purpose would not be served, he contended, if Jadwan was not recognised as a provider of aged care under the CPA, and was not entitled to the allocation of fifty-one places.
45I agree that Mr Heaton identified the general purpose of the CPA. However, the means provided by the sections for the recognition and transfer of status are clearly expressed. In particular specific conditions are stipulated in s 7(1) of the CPA as a prerequisite for the transfer of status. I have already explained that the way s 7(1)(a) expresses the condition for transfer of status may reflect a concern with administrative convenience.
46In my view, the subsection is concerned with the factual situation on 30 September 1997. I accept Ms Mortimer’s construction. The concept expressed in the subsection, namely, payment of a benefit in respect of care received by a particular patient on the day, directs attention to an actual occurrence. The absence of all patients from Derwent Court on that date means that Jadwan did not satisfy the requirement under s 7(1)(a) of the CPA.
47But even if this approach is wrong, Jadwan is unable to establish that a Commonwealth benefit was payable in law on that day.
48Mr Heaton first argued that the benefit was payable in law because the revocation decision was void from the date that it was made, and that the decision had no operative effect. I have already rejected this argument in dealing with the effect of the decision of the Full Court.
49Mr Heaton then contended that even if my conclusion concerning the operation of the Full Court decision was correct, the Minister nevertheless acted unlawfully in removing the patients prior to the revocation decision. The only reason there were no patients receiving care at Derwent Court on 30 September 1997 was because the Minister removed them, and she had no legal right to do so.
50The proposed amendment to the application by which Jadwan seeks to add paragraph 5A was intended to reflect this part of Jadwan’s claim. As the matter was fully argued I intend to allow the amendment sought.
51Even if there were legal basis for the argument, which I doubt, the contention fails because the evidence does not establish that the removal was unlawful. The patients may have been removed with the consent of all parties. It is telling that there is no evidence that Jadwan sought an injunction on the 23 July 1997, or shortly thereafter, to stop the Minister from, on its view, unlawfully destroying its business. Indeed, Jadwan’s immediate concern was not to preserve the operating nursing home, but rather, to attempt to persuade the Minister to delay any revocation decision in order to allow Jadwan to negotiate a sale of the bed licences. Jadwan took the first formal step to challenge the revocation decision on 1 September 1997 - about five weeks after the patients were removed.
52It follows from the foregoing discussion that, even if I am wrong in my conclusion that the Full Court decision operated from the date of the order, Jadwan would still fall outside s 7(1)(a) of the CPA because no Commonwealth benefit was payable to it in respect of care received by any patient on 30 September 1997.
Jadwan appealed that decision. However, in Jadwan Pty Ltd v Secretary, Department of Health & Aged Care [2003] FCAFC 288; (2003) 145 FCR 1 (Jadwan No 4) a Full Court (Gray and Downes JJ; Kenny J separately deciding) dismissed that appeal.
Rejecting Jadwan’s contention that because the Minister’s decision had been affected by jurisdictional error it should be set aside as void from the date of its making, Gray and Downes JJ reasoned:
44The earlier Full Court did not hold in terms that the decision to revoke Derwent Court’s approval as a nursing home was a nullity. Given that it was exercising jurisdiction under the ADJR Act, it was unnecessary for that Full Court to determine whether the error was jurisdictional or not. The grounds specified in s 5 of the ADJR Act, upon which the Court may make orders in respect of administrative decisions, are not expressed in terms of jurisdictional error. At least in some cases, those grounds include errors that are not necessarily described as jurisdictional errors. An example is the ground in s 5(1)(f), that the decision involved an error of law. See Re Minister for Immigration & Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 at [27] and [57] per McHugh and Gummow JJ. It might be thought that, in enacting s 16(1)(a) of the ADJR Act, which permits the Court to quash or set aside a decision with effect from the date of the order or from such earlier or later date as the Court specifies, parliament was acting on the assumption that even a decision tainted by jurisdictional error could have some force and effect, and leaving it to the Court to decide what force and effect should be accorded to such a decision. It must also be clear that, to the extent to which s 5 of the ADJR Act confers jurisdiction in respect of a ‘decision’, it was intended that there should be jurisdiction, whether or not the decision concerned was subject to jurisdictional error. See Australian Broadcasting Commission Staff Association v Bonner (1984) 2 FCR 561 at 566 per Morling J and Seventh Mingcourt Pty Ltd v Lawrence (1996) 64 FCR 367 at 375 per Branson J. Similar conclusions have been reached in cases concerned with merits review of a ‘decision’ for the purposes of other legislation in Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307 at 313 – 315 per Bowen CJ and 331 – 337 per Smithers J, Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213 at 218 – 219 per von Doussa J (Spender and French JJ agreeing) and, in relation to an appeal to the Court on a question of law from a ‘decision’ of the Administrative Appeals Tribunal, in Clements v Independent Advisory Committee [2003] FCAFC 143 at [36] – [40] per Gray ACJ and North J (Gyles J agreeing).
45The earlier Full Court had some difficulty in characterising the error that it found affected the decision to revoke approval. In the end, it chose to characterise the error as one of taking into account an irrelevant consideration, by treating the findings of the panel as having been made by a properly constituted panel. As the reasons of the Court show, it would have been perfectly proper for the Minister’s delegate to take into account the views of the panel as the collective views of three people. It was only the decision-maker’s ignorance as to the qualifications of a panel member that might have resulted in more weight being given to the views of the panel than would otherwise have been the case. It is not obvious that this is a finding of jurisdictional error. There is no suggestion that the Minister’s delegate failed to understand the task to be performed. There is every reason to suppose that an error in giving too much weight to evidence, because of ignorance as to the true status of the persons providing that evidence, would have been regarded as something less than jurisdictional error.
46There is some support for this view in the orders made by the Full Court. The Court deliberately set aside that part of the order of Heerey J which declared void the decision to revoke approval of Derwent Court. That order tended to suggest that there had been jurisdictional error, although his Honour did not say so in terms. Rather, he characterised the error as a failure to observe a procedure required by law and found a statutory intention that the object of the statute could not be achieved if the procedure were not followed. The Full Court substituted for this order an order setting aside the decision. The learned primary judge was correct to view this as a choice by the Full Court to make an order that would operate from the date of the Full Court’s judgment, and not from the date of the decision of the Minister’s delegate. His Honour was correct to follow Wattmaster in which, at 256, Sheppard and Wilcox JJ, with whom Fox J agreed, said:
Section 16(1) of the Administrative Decisions (Judicial Review) Act gives to the Court a wide discretion as to the orders appropriate to be made. The words “with effect from the date of the order or from such earlier or later date as the Court specifies”, in par (a), are, in our opinion, intended to do no more than to indicate that the Court has a choice from all the available possibilities: the date of the order, an earlier date or a later date. It is true that the effect of the language used is that it is unnecessary for the Court to specify a date, if it is intended that the decision will be quashed or set aside as from the date of the order, whereas specification is necessary in other cases; but specification of a particular date is, in the latter situation, in any event essential. By contrast, in the former situation, express specification is unnecessary; the relevant date appears on the face of the order itself. Neither, we think, is anything to be derived from the circumstance that “date of the order” is first mentioned; the probable explanation of that circumstance is ease of drafting.
47The Full Court’s order is thus to be taken as an order setting aside the decision from the date of the Full Court’s order. It is difficult to conceive that the Full Court would have made the substitution, without exercising the power under s 16(1) of the ADJR Act to set aside the decision from its inception, if it had not intended to change the effect of the order. Unfortunately, the Full Court did not give clear reasons for the orders it made. Its only reason expressed was that it had regard to the ground on which Jadwan had succeeded in resisting, in substance, the Minister’s appeal. The learned primary judge expressed the view that it seemed likely that the Full Court regarded it as just that the revocation decision remain in effect until the date of the appeal judgment because Jadwan had failed to raise before Heerey J the point on which it succeeded in the Full Court. It is at least as likely an explanation that the Full Court had regard to the powers given to the Court in respect of a decision by s 16(1) of the ADJR Act and chose to exercise the power to set aside the decision, pursuant to s 16(1)(a), on the basis that it was not satisfied that there existed jurisdictional error, which might have justified a declaration pursuant to s 16(1)(c) that the decision was void. If the Full Court had regarded the Minister’s delegate as having made a jurisdictional error, it is hard to see how the point of time at which argument came to be directed to that issue could have had any impact upon the form of order that was appropriate, upon the issue being made out.
48The judgment of the earlier Full Court cannot be discussed without making reference to the question whether, and to what extent, it is open to Jadwan to canvass these issues in the present proceeding. Whatever may have been the reasons why counsel who then appeared for Jadwan did not make submissions to the earlier Full Court as to the date from which any order it made should operate in relation to the decision, it cannot be denied that it was open to Jadwan to make such submissions. The unsuccessful attempt, during the hearing of this appeal, to reopen the orders of the Full Court only serves to underline the fact that the issue could have been raised in the earlier proceeding. In no sense can this Court sit on appeal from the judgment of the earlier Full Court, for the purpose of altering the orders the Full Court made. There is a danger that, if this Court were to act on the basis that the decision of the Minister’s delegate was affected by jurisdictional error, it would be reconsidering what the earlier Full Court did. If the issue of jurisdictional error had been determined in favour of Jadwan by an explicit finding of the earlier Full Court, there would be nothing to prevent this Court acting on that finding; indeed, it would be bound to do so, by the application of issue estoppel. In the absence of such an explicit determination, any attempt by Jadwan now to obtain such a finding must fall foul of the doctrine of res judicata, on the basis that the issue could have been raised in the earlier proceeding. Even if that were not so, the operation of what is known as Anshun estoppel, derived from the High Court’s judgment in Port of Melbourne Authority v AnshunPty Ltd (1981) 147 CLR 589, would bar Jadwan from raising the issue here. In effect, Jadwan now seeks to assert as correct the view taken by Heerey J, that the decision of the Minister’s delegate should be regarded as void, when that view was specifically rejected by the earlier Full Court. This Court could not accept Jadwan’s argument without giving a judgment that would contradict the judgment of the earlier Full Court.
49If it were open to this Court to look afresh at the effect of the decision of the Minister’s delegate, the proper conclusion is that the decision could not be ignored for all purposes. Nothing in the scheme of the National Health Act at the time required that that be done. It must be remembered that the National Health Act contained no power under which patients could be removed from an approved nursing home, in the event that approval were revoked. There was no statutory bar to Jadwan continuing to provide the care it had provided to the people to whom it had provided it, even after the decision was made. The effect of the decision was only that Commonwealth benefit was no longer payable in respect of persons for whom care was provided. Of course, a decision revoking approval of a nursing home inevitably had the effect of stopping the cash flow of the proprietor. It was probably inevitable that this would require that arrangements be made for the provision of care for the patients by the proprietor of another approved nursing home. Nothing in the National Health Act required that this be done, however. It would have been open to Jadwan to continue to care for the patients in Derwent Court, whilst taking whatever steps were appropriate to have the decision set aside from the date on which it was made. If it had succeeded in doing so, it would have had an entitlement to receive arrears of Commonwealth benefit in respect of each patient for whom it had provided care in Derwent Court in the meantime. Given that scheme, there was nothing about the National Health Act that suggested a legislative intention that a decision revoking approval pursuant to s 44(1) should have no effect if the decision-maker wrongly took into account evidence provided by a panel that had no authority under the legislation.
Kenny J’s reasoning, although concurring with the plurality’s conclusion, differed in emphasis:
68Although the grounds appearing in pars 5(2)(a) and (b) of the AD(JR) Act are “substantially declaratory of the common law” (see Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24, at 39 per Mason J), the AD(JR) Act does not incorporate the common law distinction between jurisdictional and non-jurisdictional errors. The grounds of review specified in s 5 of the AD(JR) Act are not expressed in terms of jurisdictional error. Some of these grounds may include errors that would not be jurisdictional errors in the common law sense: see Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59 at 65 and 72 per McHugh and Gummow JJ. The concept of jurisdictional error played no part in the reasoning of Burchett, Drummond and Sackville JJ, because no question of jurisdictional error arose under the AD(JR) Act. The parties before the Full Court on this earlier occasion quite properly did not make submissions on the existence or non-existence of jurisdictional error.
…
78Since Craig, the High Court has progressively simplified and rationalised the common law principles of judicial review of administrative action. The result is that today many of the common law principles resemble the statutory regime set out in the AD(JR) Act more than twenty years ago. The gravamen of the appellant’s argument in the present appeal concerns the effect of this rationalisation. In the appeal, now some five years ago, Burchett, Drummond and Sackville JJ held that, in revoking Derwent Court’s approval as a nursing home, the decision-maker took into account an irrelevant consideration (within the meaning of par 5(2)(a) of the AD(JR) Act) and that, in consequence, there was an improper exercise of the power (for the purpose of par 5(1)(e) of the AD(JR) Act). Had the proceeding been constituted under s 39B of the Judiciary Act, their Honours might have found that the decision-maker had regard to an irrelevant consideration and that, in consequence, there was jurisdictional error in the sense discussed in Craig and later cases. It does not follow from this, however, that a decision made by the Federal Court of Australia in the exercise of the jurisdiction conferred by the AD(JR) Act can be treated as if it were a decision in exercise of the jurisdiction conferred by s 39B of the Judiciary Act. The statutory regime and the jurisdiction that it confers is not the same as the common law and the jurisdiction that arises by virtue of s 39B of the Judiciary Act.
79Further, in relation to remedies, there remain some significant differences between the AD(JR) Act and the common law. One of these differences is relevant to the disposition of the present appeal. In particular, the remedies available under s 16 of the AD(JR) Act are broader and more flexible than those available at common law. As Sheppard and Wilcox JJ (with whom Fox J agreed) said in Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253, at 256:
Section 16(1) of the Administrative Decisions (Judicial Review) Act gives to the Court a wide discretion as to the orders appropriate to be made. The words ‘with effect from the date of the order or from such earlier or later date as the Court specifies’, in par (a), are, in our opinion, intended to do no more than to indicate that the Court has a choice from all the available possibilities: the date of the order, an earlier date or a later date. It is true that the effect of the language used is that it is unnecessary for the Court to specify a date, if it is intended that the decision will be quashed or set aside as from the date of the order, whereas specification is necessary in other cases; but specification of a particular date is, in the latter situation, in any event essential. By contrast, in the former situation, express specification is unnecessary; the relevant date appears on the face of the order itself. Neither, we think, is anything to be derived from the circumstance that ‘date of the order’ is first mentioned; the probable explanation of that circumstance is ease of drafting.
Having in mind what is involved in “setting aside” or “quashing” (as to which see Commissioner for Railways v Cavanough (1935) 53 CLR 220 at 225) it may, at first sight, seem strange to speak of setting at naught a decision as at a particular date. However, it is consonant with the general scope and purpose of the Act and its varied application that there may be cases in which a decision is to be set aside, and, according to ordinary understanding, to become a nullity, but in which the nullifying should nevertheless take effect from some later date. The provision of such an option provides greater flexibility than is available with a writ of certiorari, which quashes a decision ab initio … . The processes of the Court when granting relief under the Administrative Decisions (Judicial Review) Act are very wide and considerations going to the date as at which an order is to take effect quite naturally fit the general scheme.
80In the earlier appeal, Burchett, Drummond and Sackville JJ expressly set aside the trial judge’s declaration that the decision to revoke the approval of Derwent Court was void. In place of this declaration, the Full Court ordered that the revocation decision be set aside. The primary judge in this proceeding was plainly correct to view this as a choice by the Full Court to make an order that would operate from the date that it was made and not from the date of the decision of the Minister’s delegate.
The plurality also addressed the further question considered by North J as to whether the relief Jadwan had sought could, in any event, have restored its position. They did so in the following terms:
51Even if Jadwan were able to establish that the decision to revoke the approval of Derwent Court should be treated as a nullity, this would establish only one element of s 7 of the Consequential Provisions Act. It would establish that Jadwan was the proprietor of an approved nursing home immediately before the commencement day. Section 7 would operate to deem Jadwan to be an approved provider only if one of the alternatives in s 7(1)(a) and (b) applied. No attempt was made to establish any grant of a certificate under s 39A of the National Health Act, so alternative (b) could not apply. Alternative (a) applied only if Commonwealth benefit was payable to Jadwan in respect of an approved nursing home patient under the National Health Act, for nursing home care received by the patient on the day before the commencement day.
52By its terms, s 7(1)(a) directs attention to factual reality. Before it can apply, there must have been at least one patient actually receiving nursing home care on 30 September 1997. There must have been the actual receipt of, or entitlement to receive, Commonwealth benefit in respect of such a patient. The words of s 7(1)(a) are plain. If it is necessary, confirmation of their intention to apply to a factual situation is provided by s 7(2)(a)(i), which is designed to ensure the continuity of the operation of a nursing home, to the extent to which it is operating.
53Treating the decision to revoke the approval of Derwent Court as a nullity would not assist Jadwan to satisfy the requirement of s 7(1)(a). As a matter of fact, on 30 September 1997, there were no patients receiving nursing home care in Derwent Court and no Commonwealth benefit was paid or payable in respect of any such patient. The entitlement to receive Commonwealth benefit in respect of an approved nursing home patient, pursuant to s 47(1) of the National Health Act, was dependent on the actual receipt of nursing home care in the particular approved nursing home.
54Jadwan’s submission that treating the decision to revoke approval as a nullity is enough to cause s 7(1)(a) of the Consequential Provisions Act to apply must be rejected. To the extent to which it is based on the existence of a cause and effect relationship between the revocation decision and the removal of the patients, the submission is not made out. On the facts, the removal of the patients began and was completed before the revocation decision was made. It was effected during a period when Jadwan had an entitlement to make submissions to the Minister’s delegate about whether the intention to revoke, notified on 20 July 1997, should be carried into effect. No reason was advanced for this Court to overturn the finding of the primary judge that the evidence did not establish that the removal of the patients was unlawful. The situation appears to have been that, in anticipation of the formal revocation of the approval of Derwent Court, Jadwan cooperated with officers of the Department to effect the removal of patients to nursing homes where Commonwealth benefit would continue to be payable in respect of them. In doing so, it acted in the interests of both itself and the patients. As has already been pointed out, there was nothing to prevent Jadwan continuing to provide nursing home care for the patients at Derwent Court, even after the approval under the National Health Act had been revoked. The only consequence of the revocation was that Jadwan could not receive Commonwealth benefit or other benefits under the National Health Act in respect of any patient for whom it was providing nursing home care in Derwent Court. Any attempt to continue to conduct the nursing home would have been to the financial detriment either of Jadwan or of the patients who would have had to pay the full cost of their care. There is no issue of penalising Jadwan for its cooperation in the removal of the patients. The result would have been the same, in terms of the application of the National Health Act, if there had been a power to compel their removal and they had been removed against Jadwan’s will.
55To say that the impending revocation of approval was the reason for the removal of the patients was one thing. To say that treating the revocation as a nullity requires that the removal be treated as if it had not happened is quite another. The likelihood is that Commonwealth benefit was paid in respect of each of the patients removed. It was paid to the proprietor or proprietors of some other approved nursing home or homes. To suggest that it should be treated as having been payable also to Jadwan on the basis of notional patients on 30 September 1997 would be to rewrite s 47(1) of the National Health Act.
56Irrespective of the outcome of the argument about causation, the position remains that, on 30 September 1997, there were no patients receiving nursing home care in Derwent Court. Whatever the reason for the absence of patients, it is that absence that prevents Jadwan taking advantage of s 7(1)(a) of the Consequential Provisions Act. Section 20 of the Consequential Provisions Act had nothing on which to operate.
The complexities revealed by, and the errors apparently made by lawyers much more skilled than Mr Wicks as revealed by the tortured course of litigation in Jadwan No 1, Jadwan No 2, Jadwan No 3 and Jadwan No 4 reinforce that point.
Moreover, success in setting aside Ms Halton’s revocation decision, as Mr Pearce acknowledges, would have been insufficient for Jadwan to have successfully transitioned to become an approved provider under the Aged Care Act in respect of Derwent Court’s 51 residents. To succeed in that objective Mr Pearce accepts Jadwan also needed to have obtained an order setting aside Ms Halton’s sanctions decision with effect from a date prior to 1 October 1997. I have given reasons at [591] to [622] why the Court is not satisfied on the balance of probabilities that Jadwan would not have been granted leave to pursue such relief out of time. I have given reasons at [623] to [627] why even if that conclusion is in error the Court is not satisfied on the balance of probabilities that an injunction would issue.
In those circumstances I do not find that Mr Wicks was in breach of his duty when he advised Jadwan that an application for an injunction was risky.
Having regard to the above findings I reject that I am entitled to be satisfied on the balance of probabilities that any breach of duty in Mr Wicks giving affirmative advice as pleaded by Jadwan caused it to lose its business.
9.19 A tactic to persuade the Commonwealth
The Court has given its reasons for concluding that the Department intended its offer of 48 hours for Jadwan to sell Derwent Court’s bed licences to be final and non-negotiable.
Once that period had expired it had offered Jadwan funds to meet the cost of Derwent Court’s staff redundancies – it being implicit that Jadwan would dismiss them and close Derwent Court as a nursing home.
I have concluded that Jadwan would not have risked receipt of those funds by re-engaging staff before those entitlements were settled. The Court has concluded that Jadwan fails on the balance of probabilities to establish that Jadwan would have pursued judicial review proceedings with the objective of continuing to operate Derwent Court and rebuilding on a greenfield site.
However, on the findings the Court has made, Mr Wicks was also responsible for Jadwan not proceeding with the “tactic” Mr Hogan had recommended – to seek an injunction in respect of Ms Halton’s revocation decision. That would have had a more limited aim (to back the Department against the wall) in an effort to put pressure on it to allow Jadwan more time to sell its bed licences.
This proposition does not require Jadwan to have had the real intention of continuing to operate Derwent Court, or the Department to accept it had. It requires an assessment of whether, if Jadwan had commenced legal proceedings seeking injunction(s), giving at least the appearance of it having that intention, that might have (to use Mr Hogan’s language) backed the Department up against the wall, such that, in the circumstances then applying (including the political support Jadwan had gathered, the campaign mounted by Dr Timmins and other doctors, and the pressure from residents’ families) it would have yielded to pressure and allowed Jadwan to sell its bed licences to quell the controversy.
I have noted that on 30 July 1997 Mr Dellar further indicated that he might look favourably on a possibility of transferring the beds to the North West of Tasmania (where bed ratios were below those in the South).
However, I am satisfied that Ms Hefford’s reply of 1 August 1997 to Mr Hogan (copied to Mr Wicks) effectively ruled out the Department further extending the offer Mr Dellar had earlier extended to Jadwan.
But even if Jadwan had commenced proceedings prior to then I do not accept that Mr Pearce can make good his case that a different outcome would then have prevailed.
I do not discount the possibility that legal proceedings commenced prior to Ms Hefford’s letter of 1 August 1997 might have increased pressure on the Commonwealth to secure Jadwan’s desired outcome while the issue was controversial and in the public domain.
I accept the premise that commencing judicial review proceedings would have brought increased pressure on the Department. Having to deal with those proceedings would have been at best a distracting issue, and at worst it would have identified significant, albeit technical rather than substantive, flaws in the decision made by Ms Halton.
However I am unpersuaded on the balance of probabilities that even as a tactic, bringing review proceedings seeking injunctive relief would have forced that outcome. I am not persuaded that Mr Dellar’s offer would have been extended.
The Court has earlier found that Jadwan would have facilitated the transfer of Derwent Court’s residents before the end of Ms Halton’s notice period to secure the “bird in the hand” of the Commonwealth’s offer to meet the cost of staff redundancies.
The Commonwealth would have known that once the residents of Derwent Court were relocated, pressure to accommodate Jadwan would lessen. In any event, the Department had other pressing demands to take account of. I infer the Department had to deal with an expectation on the part of Southern Cross Homes (where most of Derwent Court’s residents had been or would be relocated) that it would be allocated some or all of Derwent Court’s 51 beds (Ex A1 p 2411).
The Department had given Jadwan a last chance to sell its bed licences. I have inferred that the Department had offered Jadwan funds to meet the cost of retrenching its staff in recognition that it had lost that chance. In those circumstances, the Department would have been most reluctant to allow Jadwan to sell the same licences it would have viewed Jadwan as having been already compensated for.
I reject that Jadwan establishes on the balance of probabilities that, but for Mr Wicks’ action in not proceeding with Mr Hogan’s tactical strategy, Derwent Court would have been granted further time by the Department.
For completeness I add that had Jadwan moved to re-engage staff to provide care to residents at Derwent Court after the Department had paid out all of the funds it had committed to meet the cost of their redundancies to give verisimilitude to its “tactic” that would have removed the last of any sympathy the Department might have had for it. I reject that that would have put greater pressure on the Department to yield. I infer instead that it would have steeled its determination to resist.
9.20 Conclusion
For the above reasons the case pleaded against the Second Respondent by Jadwan, on each of the premises upon which it is articulated in its Second Further Amended Statement of Claim, fails.
10. JADWAN’S CASE AGAINST THE THIRD RESPONDENT (12 SEPTEMBER 1997 ONWARDS)
On or about 12 September 1997 the firm of Wilson Dowd split. There is a paucity of evidence regarding the circumstances of that split, but it appears uncontentious that Mr Toomey left Wilson Dowd to re-establish his own legal practice under the name of Toomey Maning & Co (the Third Respondent). He was its sole principal (transcript p 1517 lines 35-39; p 1572 line 6). Mr Wicks continued with that firm as an employed solicitor.
Mr Wicks gave evidence that Mr Toomey had exercised “a fair degree of supervision across all work that was being done when he was the sole principal of the firm, and he used to do that by means of a regular fortnightly work report” (transcript p 1572 lines 22-24). However, Mr Toomey’s supervision had not extended to the day to day operation of Mr Wicks’ files. Mr Wicks gave evidence that he had no record or recall of ever having sought counsel or a second opinion from Mr Toomey in the Jadwan matter. There was no practice that all correspondence sent on behalf of Toomey Maning containing legal advice had to be signed by Mr Toomey as the firm’s sole principal (transcript p 1572 lines 46-47).
The commencement date of 1 October 1997 for the Aged Care Act had been proclaimed on 3 September 1997. That Act was therefore law when Mr Wicks became an employee of the Third Respondent.
As in the instance of the Second Respondent, I accept that Jadwan proves that, while in the employ of the Third Respondent, Mr Wicks did not provide the advice that a solicitor employing due care and skill on his or her client’s behalf would have. Contrary to his duty he failed to identify the existence and consequences of both the Aged Care Act and the Consequential Provisions Act.
However I do not accept that Jadwan establishes that Mr Wicks’ failure to advise it of the consequences of the effect of the provisions of s 7(1)(a) of the Consequential Provisions Act while an employee of the Third Respondent cost it the chance to relocate its business.
The Court has given its reasons for concluding that Jadwan had never committed itself to that course. It has given reasons for concluding that even before Jadwan had received notice of Ms Halton’s intention to revoke Derwent Court’s approval as a nursing home, Jadwan had decided to “get out” of operating a nursing home at those premises.
By the time Mr Wicks became an employee of the Third Respondent, all of the residents of Derwent Court had departed. Jadwan had dismissed Derwent Court’s entire staff. It had not recruited a new Director of Nursing. Jadwan had not undertaken the significant works that the TFS had identified as required if Derwent Court were to house frail aged residents even in the short term.
Despite such circumstances, Mr Pearce submits that if Jadwan had received competent advice from Mr Wicks regarding the existence and consequences of the Aged Care Act and the Consequential Provisions Act it would have persuaded at least one former resident to return to Derwent Court before 1 October 1997 and brought judicial review proceedings. Mr Pearce submits that if Jadwan had been successful in overturning both the revocation and the sanctions decisions, Jadwan would have been entitled to rebuild its business, keeping Derwent Court open while it relocated.
I reject that Jadwan would have made such a decision.
The reasons I have given at [574] to [590] above with respect to the Second Respondent as to why Jadwan would not have pursued that course are equally relevant to the Third Respondent.
In some regards the difficulties would have been even greater. The further unexplained delay before commencing proceedings would have been an added problem in terms of the prospects of success of proceedings to set aside the revocation decision.
Nor had the financial calculus altered. To provide care for even a single resident Jadwan would have had to recruit new staff and to meet not insignificant payroll costs for at least some period of time. Mr Pearce does not dispute that Derwent Court could not claim a subsidy for that single resident’s care while the Department’s decision stood.
Jadwan had no history of committing to large expenses without the assurance of a positive outcome. Jadwan still had not developed any plans other than to “get out” and sell its bed licences. The idea that if Jadwan had on 12 September 1997 received from Mr Wicks the advice it had been entitled to it would have completely changed its business model, committed itself to the major works that the TFS was demanding so that it could operate Derwent Court in the interim and a rebuilding project costing in the order of $3 million, recruited new staff to meet, without subsidies, the cost of running Derwent Court for some unspecifiable time, and instructed lawyers to bring review proceedings (not as a strategy to put pressure on the Department to give it more time to sell its bed licences but as a committed challenge to the Department’s intent to require Derwent Court to close) is implausible.
Moreover as I have already concluded there would have been a threshold problem for such a strategy. So long as the sanctions decision stood, a returning resident would not have been a person in respect of whom “a Commonwealth benefit … is or was payable … for nursing home care received by the patient on the day before [1 October 1997]” for the purposes of s 7(1)(a) of the Consequential Provisions Act. Assuming that to be correct, as I find it to be, Jadwan would have needed to secure a decision setting aside or quashing the sanctions decision prior to their re-admission.
Nor does the Court find on the balance of probabilities that Mr Wicks’ failure to provide such advice during his employment with the Third Respondent caused Jadwan to lose an opportunity to sell its bed licences. I adopt and repeat the reasons I have given at [651] to [666] for that conclusion with the added observation that by 12 September 1997, with all of Derwent Court’s residents having been relocated for some weeks, any pressure on the Commonwealth to make such a payment by reason of public controversy would have much lessened.
For the above reasons I reject the case pleaded by Jadwan against the Third Respondent.
11. JADWAN’S CASE AGAINST THE FOURTH RESPONDENT
The Fourth Respondent is the executrix of the estate of Mr Hogan. Mr Hogan was a solicitor practicing as Coltmans Price Brent in Melbourne. There is no explanation of why he rather than that firm was proceeded against by Jadwan but that appears to be of no significance in these proceedings.
Prior to his death Mr Hogan confirmed in an answer to interrogatories administered on behalf of Jadwan that in 1997 he had had expertise in advising clients in relation to the statutory requirements concerning the conduct of nursing homes in Tasmania.
The evidence does not make clear how he had come to the attention of the directors of Jadwan but it is uncontentious that he was sought out by Jadwan and retained because of his expertise. I have set out the evidence as it relates to the circumstance of his having been retained by Jadwan at [393] to [395] above. I need not repeat it.
Mr Hogan’s answers to Jadwan’s interrogatories ([13(a)] and [14(a)]) assert that his agreement with Jadwan was wholly oral. He stated that the substance of the relevant part of the conversation between himself and Mr Jeff Alexander had been that it “may be possible to negotiate an agreement with the Commonwealth which enabled [Jadwan] to sell for relocation its 51 bed licences, to which Jeff Alexander indicated that he wished me to attempt to do so” (Ex A1 p 165). He denied having been instructed to any wider extent.
Given the critical importance of the scope of Mr Hogan’s retainer it is appropriate, notwithstanding his evidence that the agreement was wholly oral, to have regard to the terms of Mr Alexander’s letter dated 28 July 1997. That letter set out the history of Derwent Court’s interactions with the Department from Jadwan’s perspective. It then brought Mr Hogan up to date as follows (Ex A1 p 2370):
7.Residents have been progressively moved to Southern Cross Homes in Newtown since Thursday last week.
8. Unions have given us 100% support.
9.Our staff have been given notice and redundancy provisions are being negotiated. Southern Cross Homes are employing some of our staff.
10.The move of residents has been well orchestrated by DH&FS to the point where residents or relatives have no choice but to transfer to Southern Cross Homes; much to their displeasure and anger.
Under the heading “CONCLUSION” Mr Alexander had written as follows:
CONCLUSION
With our residents’ and staffs’ [sic] future now set we are looking to save the bed licenses. As stated previously our genuine intentions were two-fold:
1. Immediately update fire safety and care standards.
2. Rebuild an accredited first class aged care facility.
We believe we have completed 1. It seems we have been denied the chance to complete 2.
We now seek natural justice by being given the opportunity to sell the bed license [sic] without pressure and in an orderly manner.
In my opinion the evidence is entirely one way. In that letter Mr Alexander was informing Mr Hogan that Jadwan’s previous intentions had been (contrary to what I find to be the fact) to update fire services and rebuild a new first class facility but “with our residents’ and [staff’s] future now set [I interpolate that to mean relocated and made redundant respectively] we are looking to save the bed licences”. I find Mr Alexander’s letter to be entirely consistent with Mr Hogan’s evidence (as given by his answer to Jadwan’s interrogatories) that his retainer had been confined to him doing what he could to help Jadwan obtain approval to sell its bed licences.
In that context I note that by the date of Mr Alexander’s letter, 18 of Derwent Court’s residents had left over the prior weekend. At the time it was written only 15 of Derwent Court’s residents remained (Ex R1-3 X6).
I am satisfied that Mr Hogan’s instructions were that Jadwan did not dispute Derwent Court had to close and that all of its residents would be relocated. Jadwan was not seeking Mr Hogan’s advice as to how to prevent that occurring, or how Derwent Court might later relocate. Jadwan was retaining Mr Hogan to assist it, if possible, to sell Derwent Court’s bed licences without pressure and in an orderly manner.
It is in that context that Mr Hogan advised Mr Wicks on 30 July 1997 that Jadwan should seek an injunction to, in his words, back the Department against the wall. Taking that action was to be deployed as a tactic to put pressure on the Department to secure that objective.
I note in that regard that notwithstanding that advice, Mr Hogan answered “no” to Jadwan’s interrogatory [13(g)] as to whether he had advised Jadwan to seek an injunction against the Minister or the Commonwealth restraining them from (inter alia) revoking Derwent Court’s approval under s 40AA of the National Health Act.
Mr Hogan is no longer alive to permit examination of what on its face appears to be an inconsistency.
It is plain that Mr Hogan did give advice to Mr Wicks that an injunction be sought.
The only plausible explanation is that he answered “no” to interrogatory [13(b)] because the purpose of his advising Jadwan to seek an injunction was unconnected to any intent to restrain the Minister from revoking Derwent Court’s approval.
In any event I am satisfied that the advice Mr Hogan provided to Jadwan and Mr Wicks was confined to seeking an injunction as a tactic to put additional pressure on the Department to secure a quite different objective: consent to Jadwan being granted additional time to sell its bed licences.
I have earlier set out my reasons for coming to the conclusion that before Jadwan had consulted Mr Hogan, its directors had made the key decision to accept the Department’s offer to meet Derwent Court’s liability for redundancy payments. Jadwan had dismissed all of Derwent Court’s staff. Mr Alexander’s letter of instruction had referred to those events as settled (see [394] and [689] above).
The Department was also aware of those circumstances. Mr Hogan’s reasoning and advice was not implausible but I have rejected finding on the balance of probabilities that seeking an injunction in that context would have led to the Department extending its 48 hour window for Jadwan to transfer its bed licences.
But in any event, Mr Hogan was not responsible for Mr Wicks’ later decision (based on his understanding of Mr Porter’s advice) not to proceed in that regard. On 31 July 1997 Mr Wicks had informed Mr Hogan of Mr Porter’s “tactic” to seek an injunction. Mr Hogan’s retainer was terminated on 5 August 1997. As at that point in time it had been his understanding, as conveyed by Mr Wicks, that Jadwan’s lawyers in Hobart had agreed to file an application for an injunction immediately upon confirmation of Ms Halton’s revocation decision. That they did not do so was not his responsibility. He was never advised of any change of plans.
I am therefore not satisfied, even had such a course been likely to have achieved its objective of persuading the Department to allow Jadwan a further opportunity to sell its bed licences (which I have rejected as an available finding) that there is any basis for holding Mr Hogan liable for failing to provide advice to Jadwan to seek such an injunction for that purpose. I reject that Mr Hogan caused Jadwan the loss of the chance it pleads on that basis.
I reject it was within Mr Hogan’s retainer or any perambulatory duty associated with his retainer to have provided advice as to how Derwent Court might continue to operate. Mr Hogan had been given express instructions that Jadwan accepted Derwent Court would have to close. He had been told that Jadwan had given notice to its staff at Derwent Court and the residents were leaving.
Accordingly I reject Jadwan’s case that the failure of Mr Hogan to give advice with respect to the existence and consequences of the Aged Care Act and the Consequential Provisions Act caused Jadwan to suffer the loss of its chance to continue and ultimately to relocate its business.
For completeness I note that Mr Pearce does not identify in his submissions any advice alleged to have been given by Mr Hogan that could have caused Jadwan to suffer the loss of its business. In any event the Court is satisfied that there is no evidence to support such a contention.
12. JADWAN’S CASE AGAINST THE FIFTH RESPONDENT
The Fifth Respondent is a firm of solicitors. It is unnecessary to refer in detail to the facts Jadwan pleads in respect of the Fifth Respondent’s alleged negligence. It is not disputed that Jadwan originally intended to join Mr Porter as a party to these proceedings. Prior to the expiry of the limitation period it issued a writ for that purpose. Counsel for the Fifth Respondent did not dispute that the Fifth Respondent had been relevantly instructed to serve Jadwan’s writ on Mr Porter but had negligently failed to do so before the expiry of time for doing so provided for by the Rules of the Supreme Court of Tasmania.
Nor is it in dispute that the writ was unable to be revived.
For those reasons Mr McElwaine accepts that in these proceedings the Court is entitled to proceed on the basis that the Fifth Respondent would be liable in damages if Mr Porter’s negligence caused Jadwan to suffer loss.
However the Court is satisfied, having regard to the findings I have previously recorded, that even assuming Mr Porter failed in his duty as a barrister to have identified the existence and consequences of the Aged Care Act and the Consequential Provisions Act, Jadwan cannot establish on the balance of probabilities that Mr Porter’s negligence caused Jadwan to lose a chance to continue to operate Derwent Court while it rebuilt a replacement facility on a greenfield site.
The history of Mr Wicks having engaged Mr Porter and the events that then transpired between them has been set out above at [357] to [360] above. It is unnecessary to repeat all of that detail. However from that account it is clear that before Mr Porter was engaged, Jadwan had formed a firm resolve to “get out” and, without reference to its legal adviser, its directors had asked the Department to meet Jadwan’s redundancy obligations. Having secured the Commonwealth’s agreement to do so, at or about the same time on 24 July 1997 as Mr Wicks was meeting with Mr Porter in chambers for the first time, Jadwan gave notice of termination to all of Derwent Court’s staff.
If Mr Porter’s advice had been negligent and caused Jadwan to lose a chance to better that position he would be liable.
I have concluded Mr Porter’s advice when initially consulted by Mr Wicks, despite that advice not having then been informed by an awareness of the existence of the Aged Care Act and the Consequential Provisions Act, was not negligent.
It will be recalled that Ms Halton gave Jadwan notice of her intention to revoke Derwent Court’s approval as a nursing home on 20 July 1997.
I am satisfied that Mr Porter’s preliminary advice provided on 24 July 1997 that then seeking an injunction would be “a high risk application” was not negligent. His opinion, expressed as his preliminary view, was entirely justifiable given what had been identified by at least three inspection reports as fire safety issues relevant to the care of the non-ambulant residents of Derwent Court located on the second floor.
What had then been in issue was the possibility of Jadwan applying for an injunction prior to Ms Halton making her final and operative decision.
The Court has given reasons at [476] to [492] above for having concluded that Jadwan fails to establish on the balance of probabilities that applying for an order pursuant to s 6 of the ADJR Act could have prevented Ms Halton making a final and operative decision to revoke Derwent Court’s approval.
I further note that Mr Porter was not then purporting to express his concluded opinion. Rather, he had told Mr Wicks that he would continue to research and consider the position.
It had been Mr Wicks who had called Mr Porter on 28 July 1997 to inform him that Jadwan had accepted Derwent Court’s closure and had decided not to seek an injunction.
I have noted at [387] that Mr Porter, correctly in my view, expressed some scepticism regarding the reasoning Mr Wicks advanced to explain Jadwan’s decision. However Mr Wicks had reconfirmed the next day that Jadwan was not seeking an injunction. As an indicator of the finality of that position, Mr Wicks had asked Mr Porter to return his copy of the National Health Act.
It was only after Mr Wicks had been persuaded by Mr Hogan that to convince the Department to permit Jadwan to sell its bed licences Jadwan should seek an injunction to “back the [Department] against the wall” that Mr Wicks reverted to Mr Porter. He had done so late on the afternoon of 30 July 1997. He had asked Mr Porter if he would assist in preparing the necessary application.
However it is important to emphasise that the application Mr Wicks was asking Mr Porter’s assistance to prepare was to be deployed merely as a stratagem to put pressure on the Department. No one, least of all Jadwan (which by then had dismissed all of its nursing staff), then had any illusions that such an application was to be brought with the purpose of allowing Jadwan to continue to operate Derwent Court while it proceeded to build a new facility on a greenfield site.
That Mr Porter was so instructed is confirmed by Mr Wicks’ note of his penultimate conversation with Mr Hogan in which he refers to Mr Porter’s “tactic” of preparing an application with the intention of it being filed after Ms Halton had made a final and operative decision.
That the true aim of that application was to put pressure on the Department to sell Derwent Court’s beds is also confirmed by the cover sheet of Mr Wicks’ facsimile of 4 August 1997 (Ex R1-3 X6 marked 4607) in which, in relation to Ms Julie Alexander’s draft affidavit, Mr Wicks seeks Mr Porter’s advice as to the extent that affidavit should set out “the deponents [sic] grievances as to the way in which they have been treated, the financial effects, the fact that they want to sell the ‘beds’ and so on”.
Mr Porter continued with those preparations, including asking Mr Wicks to check the availability of a judge to hear an application. I accept that those preparations were not complete by the time Ms Halton’s revocation decision of 6 August 1997 was notified to Jadwan.
But such delay as then occurred was inconsequential. I have concluded at [599] to [627] above that, whenever such an application might have been brought, Jadwan cannot establish on the balance of probabilities that such an injunction would have resulted in the Department granting Jadwan any further opportunity to have sold its bed licences.
I therefore turn to the advice that Mr Porter gave Mr Wicks on 11 August 1997. Mr Wicks’ understanding of that advice is set out at [436] above.
The substance of Mr Wicks’ note is that Mr Porter had advised that an injunction to secure a stay was unnecessary.
I accept that there is no evidence to suggest that prior to then Mr Porter had identified the existence or consequences of the Aged Care Act or the Consequential Provisions Act. I therefore accept that if Mr Wicks’ note expresses the true sense of what Mr Porter conveyed to him that Mr Porter would have failed in his duty to exercise reasonable skill and care by not adverting to the potential consequences of those Acts. However, for the reasons I have given at [631] to [650] I would reach the identical conclusion as I have in the Second Respondent’s instance that Jadwan thereby did not suffer a loss of its chance to continue its business and relocate in consequence.
However as I noted at [437] there are significant reasons to doubt that Mr Porter gave the advice that Mr Wicks had understood him to give. On 19 August 1997 Mr Porter had written to Mr Wicks in the following terms:
I refer to our telephone conversation of 11 August 1997. I note that we discussed whether the need to maintain the approval status, pending any review of the determination, was sufficiently imperative to warrant proceeding with the ADJR application and associated stay.
As I advised you, it seems to me that the only way a stay can presently be obtained is by way of the ADJR proceedings. This is because until the Minister reviews the determination there is no decision reviewable by the AAT, and hence no stay could be obtained by that means. The scenario was to obtain the stay (hopefully), then to adjourn the ADJR proceedings sine die and to pursue the AAT remedy.
I note that you were in fact to proceed with the application for review by the Minister in any event. Not having heard further from you I assume that the ADJR proceedings are not to be pursued, at least for the time being, and that AAT proceedings will be instituted at the relevant time following the Ministerial review. My principal purpose in writing to you is to advise that I will be absent from Chambers from 25 August to 12 September 1997 and would of course be happy to speak to you further about this matter upon my return.
In the meantime I thank you for your instructions and enclose a memorandum of my fees to date.
(Ex R1-3 X6)
Despite it being an obvious inference that Mr Wicks had misconstrued Mr Porter’s advice, Mr Wicks took no steps to seek further opinion or advice from Mr Porter. In those circumstances I reject that Jadwan can establish on the balance of probabilities that Mr Porter gave negligent advice.
In any event I have rejected that Jadwan makes out its case against any Respondent that had it been provided with the advice it was entitled to that it would have sought and obtained injunctions and ultimately been able to relocate.
Had Jadwan been provided with the legal advice it was entitled to receive, I have concluded that Jadwan would have chosen to cut its losses at that point, having already decided to “get out”, rather than throwing good money after bad to chase what would have been in the circumstances no more than a theoretical and entirely undeveloped option involving attracting back at least one resident to Derwent Court before 1 October 1997, and recruiting new staff to care for such a resident or residents, and operating Derwent Court for the foreseeable future without Commonwealth subsidies, in order that, if it could survive the many legal and practical obstacles in its path, it might later relocate.
I find on the balance of probabilities that Jadwan’s case against the Fifth Respondent has not been made out.
13. SUMMARY
I have concluded that Jadwan must fail in these proceedings as against all Respondents. However, the Court accepts Jadwan and its surviving directors may be excused for having a sense of grievance.
The Court acknowledges that when Jadwan appeared to have been successful in restoring its position in Jadwan No 1, Ms Julie Alexander then bought some land at Geilston Bay in July 1999. She was asked why she had done so. Ms Alexander gave evidence:
Because we won the Federal Court cases. We won the – it was the decision by Heerey J in the appeal and we believed we could reopen Derwent Court.
(transcript p 551 lines 28-30)
However Ms Alexander’s and Jadwan’s state of mind at a later point in time is not material to these proceedings. Moreover, the fact that Ms Alexander bought that land in her own name might suggest there was still some uncertainty about Jadwan’s plans.
But in any event, at the time material to these proceedings, her father Mr Jeff Alexander was the directing mind of Jadwan. Ms Alexander’s then reservations as a director about the business judgements Jadwan was making remained private.
The Court would understand if Jadwan’s directors were to think that their company has become the magic pudding of the legal profession – cut and come again.
Had Jadwan received timely advice about the existence and consequences of the Aged Care Act and the Consequential Provisions Act it could have “got out” without squandering its resources on its many subsequent legal proceedings.
But Jadwan does not plead that its then legal advisor’s negligence in failing to advise it of the Aged Care Act and the Consequential Provisions Act led it later to pursue fruitless judicial review proceedings. Quite to the contrary it pleads that, had Mr Wicks made it aware of the consequences of those Acts, on the balance of probabilities Jadwan would have obtained injunctions against both the sanctions and the revocation decisions and would have been able to maintain its business at Derwent Court while building new premises and relocating.
For the reasons the Court has stated, that proposition has been rejected.
I dismiss Jadwan’s application as against each Respondent. The Applicant must pay the First, Second, Third, Fourth and Fifth Respondents’ costs as assessed or agreed.
I certify that the preceding seven hundred and forty-two (742) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kerr. Associate:
Dated: 29 June 2018
SCHEDULE OF PARTIES
TAD 39 of 2016 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)
0
14
9