Minister for Community Services and Health v Dibo Pty Ltd

[1992] FCA 389

389    9 2

JUDGMENT No. ,-.a ,-

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY) No NG 184 of 1992

GENERAL DIVISION 1

AND MINISTER FOR COMMUNITY

SERVICES AND HEALTH

Appellant

BETWEEN DIBO PTY LIMITED

Respondent

EX TEMPORE JUDGMENT

EINFELD J SYDNEY 14 APRIL 1992

On 18 March 1992 I gave judgment in matter number G83 of 1988, the effect of which was to set aside a determination of the present appellant of 5 December 1989 fixing the maximum allowable fees to be charged to the patients of the present respondent's nursing home at Pittwater and referring back to the appellant Minister the further fixing of those fees.

certain consent orders made by Justice Hill on 1 May 1989.

The Minister has filed a notice of appeal from that judgment. There are 29 grounds of appeal, a number of which are repetitive or cover the same ground but in substance the appeal will go to the heart of the matters determined in the judgment at first instance, including questions as to the jurisdiction of the Court to entertain that case at all and as to the true construction of section 40AA(7) of the National Health Act 1953 as it stood at the relevant time. Another matter raised in the appeal is the proper construction of

There is no doubt that the notice of appeal raises a number of significant matters. It certainly cannot be said as to the whole of the appeal that there is or is likely to be no substance in many of the matters raised. However, I believe that it would assist the Full Court if there could be some reduction in its size, or at least a gathering together of the points sought to be determined on appeal in a clearcut set of issues for determination.

The appellant Minister moves the Court by notice of motion today for a stay of the orders made on 18 March 1992. In support of the motion for a stay, there are filed two affidavits of which it is for present purposes only necessary to refer to one, namely that of Phillip Sidney Bemrose, assistant area manager of the Aged and Community Care branch of the Department of Health, Housing and Community Services. Mr Bemrose states that the fee levels set for the respondent Dibo's nursing home by the determination in question have already involved the Commonwealth in the maximum statutory

payment for the patients of the home at the relevant time.

As the judgment at first instance makes clear, Dibo's litigation was designed to increase the amount of the allowable or approved fees which it could have charged for the care of the patients at those times. The consequence of Mr Bemrose's affidavit is that even if my decision remains in place after the appeal and a re-determination occurs raising the approved fees which the respondent was entitled to charge its patients between 1973 and 1980, no additional Commonwealth payments will be made because the statutory maximum has already been reached.

If this is correct, the appeal will actually make no difference financially to either the appellant or the respondent and this litigation really does become quite academic. This is because the period in question finished in October 1980 and it is unlikely in the nature of things that any of the patients would now be in a position to pay the balance of the moneys. I shall come later to the possibility of an action for damages by the respondent against the Minister, but that is a long way down the track, if it is at all possible.

The matter is also academic because the legislation in question has now been superseded by amendments which have changed the basis upon which nursing home fees are fixed and determined a new system for the fixing of fees. Thus an

no longer assist in the resolution of other matters.	alternative interpretation of section 40AA(7) of the Act would
In these circumstances, this may not be the best case for the resolution of the jurisdictional questions raised by the appeal, which go to the workings of section 22 of the Federal Court Act and the meaning of the reservation of liberty to apply. If the parties are nonetheless desirous of the matter proceeding, there is certainly a number of questions in the
first instance judgment entitled to go forward for appeal unhindered by practical difficulties.
The appellant says that this is a case of very special circumstances where it is appropriate that a stay be granted. In Federal Commissioner of Taxation v The Mver Emporium Ltd [l9861 160 CLR 220, Justice Dawson said at page 222 that a stay of proceedings pending an appeal:

... is only to be exercised where special

circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal.

His Honour goes on to say that special circumstances justifying a stay will exist where:

there is no reasonable prospect of recovering moneys

paid pursuant to the judgment at first instance.

That was the only example given of the special circumstances

but his Honour generalised the matter by saying at page 223

that these circumstances will exist:

... where for whatever reason, there is a real risk

that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed.

If in fact the Commonwealth cannot be required, under any

consequence of the orders made in the first instance judgment,

to pay any additional moneys, no question can arise of the impossibility of substantially restoring the Minister to his former position if the first instance judgment is executed and later reversed on appeal. In addition, Dibo has placed before the Court evidence that the department has long had a practice of what is called negative loading by which any overpayments at an earlier point of time are credited against payments due at a later period of time, so that the later payments are reduced to the extent of the overpayment. There is also a concept of positive loading when the reverse occurs.

Dibo is apparently continuing to run its Pittwater nursing home and continues to be entitled to subsidisation by Commonwealth funds in respect of that home. The Commonwealth would thus be in a position to debit against Dibo's future entitlements any payments made pursuant to a redetermination based on or complying with the first instance judgment but later held on appeal to be unjustified or unwarranted. The same situation would apply if that judgment is in some way

were paid in fact.	modified, so that less moneys ought to be payable to Dibo than
If the matter stopped there, the application for a stay would therefore have to fail but I do not think that it can be so simply determined. As the judgment of 18 March points out, this matter goes back a very long time. The first decision which related to the matters in issue was given in October 1980 with effect from January 1973. The consequence is that it has become a matter of enormous complexity because of the passage of time and the difficulty in construing the legislation in the light of a number of decisions by this Court in the meantime.
The present decision requires a redetermination by the Minister within 35 days of 18 March 1992. That period is almost upon us but of course could be extended in order to permit a further period of time to enable the redetermination to be undertaken. The difficulty about proceeding with a regime of that kind is that a number of results could come about, none of which are predictable with any degree of certainty at all. For example, my judgment could be completely overturned by the Full Court in which case the determination in question of 5 December 1989 would be restored and validated. The Full Court might uphold the decision in part and overturn it in another part. It may come to quite a different decision as to how the fee should be fixed; in which case, although the determination under consideration would be set aside, the redetermination would take place on a different basis than is proposed in the first instance
judgment.
If the redetermination goes ahead now, and does not approve fees which fully take into account and allow the amounts sought by Dibo, there could be a fresh application for review of that redetermination. Twenty-eight days are allowed for applications for review so that in the ordinary course of events, an application for judicial review of any redetermination made 35 days from today would probably be before the Court before this appeal could be heard and determined. In such event, it would be difficult to resist an application for the adjournment of the hearing of that new judicial review case until the determination of the appeal, if only for the reason that the whole of those proceedings would become completely academic if the Full Court does anything at all to change the decision made at first instance. It would in fact be a pointless exercise to carry out the redetermination on the basis suggested in my judgment only to find that a redetermination does not have to be done at all or has to be conducted on a different basis as determined by the Full Court.
This matter has not only suffered absurd delay; it has already been the subject of considerable litigation. It would not assist in its efficient and sensible resolution now to have this sad history added to unnecessarily. Quite apart from the
different aspects of litigation on the same matters going on legal costs involved, it is simply not intelligent to have
at the same time. Another case between these parties on the same subject matter would simply add to the existing complexities and doubts a degree of incompetent management. This is to be avoided at all costs. If, notwithstanding the apparent futility of the current proceedings, the parties are intent upon pursuing the litigation, the Court should make no contribution to causing additional delay and cost by reason of the orders which it makes in the matter.
I referred in the first instance judgment to the fact that at an earlier stage in the proceedings, Dibo was seeking damages of not less than $5 million to compensate for the losses incurred in running the home since the inception of fees control for nursing homes in 1973. Although the damages claim was not pursued in the matter litigated before me, it may be that Dibo intends to sue for damages in due course. Assuming that the Court has jurisdiction to entertain such a claim - see contra Chan Yee Kin v Minister for Immiaration, Local Government & Ethnic Affairs (unreported 9 August 1991), and assuming that such an action is still in time, it is certainly not possible that a damages case can be actually litigated until there is a final determination of whether the Minister was in error in the determination of 5 December 1989 and if so, to what extent. There is, therefore, no interference with the progress or possibility of such an action proceeding if a stay is granted of the present orders to permit the Full Court to pass on them.
concerning the entitlement of successful litigants to what his I take specific account of the remarks of Justice Dawson
Honour describes as "the fruits" of their litigation. If no moneys are payable by the Commonwealth to Dibo regardless of the outcome of the present proceedings, there would certainly be no financial fruits of Dibo's success at first instance in this litigation. No doubt this is not the sole matter his Honour had in mind because, in the case with which he was dealing, the matter in issue was whether the Commissioner of Taxation should be required to issue an amended assessment excluding a substantial amount from the taxable income of the taxpayer which had previously been included.
Another of the fruits of that litigation was that the Commissioner pay the taxpayer's costs of the earlier appeal to the Supreme Court of Victoria. Before me, however, Dibo did not rely upon its entitlement to some costs under the orders made at first instance, so that I exclude that matter from my present considerations.
So far as I can see, Dibo's success at first instance here basically entitles it to a redetermination which might have the effect of increasing the approved fees which the respondent was able to charge the patients in its Pittwater nursing home between 1973 and 1980. As this result seems likely to be an entirely academic fruit of the litigation, I believe that it should not be carried out until the need and basis to do so are confirmed on appeal.
the correctness of the Minister's assertion that all I should record that Dibo has made no concession before me of
Commonwealth obligations have been met. It is not that the contrary is contended but merely that as Dibo has not yet had an opportunity to check the matter, it does not concede that the assertion is correct. Indeed when the matter was raised in argument, counsel for Dibo quite understandably observed that it would be surprising if it were the fact because the

- l0 -

whole of the litigation would then appear to be of little
moment.

On the other hand, the determination of the Minister under consideration in this matter contained specific reference to the fact that the maximum Commonwealth liability had been or might have been met. As I pointed out, it is also expressly stated in Mr Bemrose's affidavit in support of this motion. I would certainly agree that as Dibo's permitted fees were fixed during the relevant period at the state standard fee, the Commonwealth would seem to have paid the maximum benefit it is able to pay. This follows from section 57B(2) of the National Health Act which I referred to in my judgment at first instance at page 8.

For these reasons it seems to me this case provides special circumstances to justify departure from the ordinary rule enunciated by Justice Dawson and derived from other cases set out in his Honour's Mver Em~orium judgment. I therefore grant

the stay in terms that the parties will submit in a moment.

The question arises as to whether this appeal should be expedited. There is no application by either party for expedition but I raised it in the course of discussion this morning. There is no need for me to emphasise any more than I have done today and in the first instance judgment the very unsatisfactory history of this case and the need for its determination as promptly as possible. Those matters are given additional weight by the matters of hardship which are referred to in the affidavits filed on behalf of Dibo, including a statement by its principal shareholder that the company has been making losses on the Pittwater nursing home for many years and that these losses have had to be subsidised by the income from other nursing homes which the company has been operating.

If no additional moneys are likely to flow from the result of this case whatever it is, there will be a regrettable consequence that those losses may not be at all recoverable, except in any possible action for damages. The matter should nonetheless be brought to a head as soon as is reasonably practicable.

I therefore order that the hearing of the appeal be expedited and that the earliest possible date for the settling of 'the index be set by the Registrar in consultation with the parties. In this regard I urge that consideration be given by

the parties and by the Registrar to the possibility of

constructing a notice of appeal so that the reprinting of

large quantities of unnecessary documentary material can be avoided. Most relevant facts appear to be agreed. If these can be set out in one document, a bulky appeal book or set of appeal books can be avoided. As I said earlier, it ought also to be possible to construct or reconstruct the notice of appeal so as to set up a series of questions for the Full Court to determine. This would assist the earlier fixing of the appeal for hearing by reducing the period needed for producing the appeal books, by shortening the hearing time needed, and for making it easier for the Full Court to come to grips with the real issues in the litigation.

Following the conclusion of these ex tempore reasons, counsel for the respondent said that he had intended to argue that the costs order below was a fruit of the litigation on which he did in fact rely. It seems to me, having regard to the central matters in issue in this litigation, that whilst costs are normally a fruit of successfully conducted litigation, the way in which this hearing was conducted was such that in balancing the special circumstances against the fruits of the successful litigation, the costs order should not be regarded as of such importance as to outweigh the circumstances in favour of the stay. If I take into account the particular order made for costs in this matter, and make a rough assessment of what that is likely to involve, that particular aspect of the respondent's success below is not sufficient to replace the conclusion that this is a case of special circumstances where a stay should be granted.

[After submissions on the particular orders to be made:]

1.	I order that the orders made on 18 March 1992 be stayed pending the determination of the appeal.
2.	I order that the appeal be expedited.

3.   I direct that the Registrar set the earliest possible date for the fixing of the appeal index.

4.   I direct that the parties give consideration to the question of whether matters of facts can be agreed and questions posed for the Full Court.

5 .    The cost of this motion for a stay will be costs in the appeal.

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