Re Marnotta Pty Ltd and Secretary, Department of Health and Ageing

CATCHWORDS – AGED CARE

– approved provider – approval revoked – aged care not provided during a continuous period of six months since revocation – effect of setting aside revocation decision – whether approval lapses in any event at the end of that period even if Tribunal sets aside decision –date of effect of decision setting aside revocation decision – whether lapsing provision has regard to situation as deemed to be or as in fact – approval does not lapse

PRACTICE AND PROCEDURE – identifying decision under review - revocation decision – nature of review of revocation decision – date of effect of setting aside revocation decision – whether operation of Tribunal’s decision may be deferred – effect of deferring Tribunal’s decision

Administrative Appeals Tribunal Act 1975 ss. 29(7), 37, 42(1) and 43(1), (5A), (5B), (5C) and (6)
Administrative Decisions (Judicial Review) Act 1977 s. 16(1)
Aged Care Act 1997 ss. 1-3, 2-1, 2-1(2), 3-1, 7-1, 8-1(1), 8-3, 10-2(1), (2), (3), (4) and (5), 10-3, 10-4, 11-1, 11-2, 15-1(1) and (2), 15-2, 15-6, 15-4, 15-6, 15-7, 18-1, 18-2, 18-3, 18-4, 18-5, 41-3(1), 42-1, 42-4(2), 53-1, 54-1, 65-1, 65-2, 66-2(1), 67-1(1) and (2), 67-2, 67-3, 67-4(1), 2) and (3), 67-5(2) and (3), 68-1(1) and (2), 68-3, 68-4, 85-4(1, 85-1, 85-4(5), 85-5, 85-8, 96-1, 96-4 and Schedule 1 (cl. 1)
Aged Care (Consequential Provisions Act) 1997 s. 7(1)
National Health Act 1953 ss. 39A and 44

BHP Direct Reduced Iron Pty Ltd v Chief Executive, Australian Customs Service (1998) 55 ALD 665
Director General Security v Sultan and Another (1998) 90 FCR 334

Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Freeman v Secretary, Department of Social Security (1988) 19 FCR 342

Griffiths and Migration Agents Registration Authority [2001] AATA 240 (unreported, 27 March, 2001)
Minister for Health and Family Services v Jadwan Pty Ltd [1998] FCA 1549, (1998) 89 FCR 478
Jadwan Pty Ltd v Minister for Health and Family Services (1998) 51 ALD 245
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 and Aged Care [2003] FCAFC 288, (2003) 204 ALR 55
Jebb v Repatriation Commission (1988) 80 ALR 329
Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11, (2002) 209 CLR 597
Nguyen v Minister for Health and Ageing [2002] FCA 1241
Nguyen v Minister for Health and Ageing [2002] FCA 1462
Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2, (2002) 195 ALR 24
Re Easton and Repatriation Commission (1987) 12 ALD 777

Re Fund for Animals Ltd and Minister for Arts, Heritage and Environment (No. 2) (1986) 9 ALD 622

Re Gee and Director-General of Social Services (1981) 3 ALD 132
Re Harts Pty Limited and Tax Agents' Board of Queensland (1997) 97 ATC 2148; (1997) 37 ATR 1075
Re McGourty and Repatriation Commission (1988) 9 AAR 87
in Re Parker and Tax Agents’ Board of New South Wales (1995) 95 ATC 2174
Re Robinson and Department of Employment and Workplace Relations [2002] AATA 715)
Re Strang and Department of Immigration and Ethnic Affairs & Anor (1994) 36 ALD 449 at 469

Re Tiknaz and Director-General of Social Services (1981) 4 ALN N44

Re Webb and Tax Agents’ Board of Queensland (1992) 28 ALD 464

Re Williams and Australian Electoral Commission (1995) 38 ALD 366

Saitta v Commonwealth [2001] FCA 817
Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253

DECISION AND REASONS FOR DECISION [2004] AATA 326

ADMINISTRATIVE APPEALS TRIBUNAL     )
  )          V2003/1152
GENERAL ADMINISTRATIVE DIVISION     )

Re MARNOTTA PTY LTD

Applicant

AndSECRETARY, DEPARTMENT OF HEALTH AND AGEING
Respondent

DECISION

Tribunal:                   Deputy President S A Forgie
Date:  29 March, 2004
Place:  Melbourne

Decision:The Tribunal dismisses the respondent’s application to dismiss the proceedings pursuant to s. 42B of the Administrative Appeals Tribunal Act 1975.

S A FORGIE
Deputy President

REASONS FOR DECISION

On 15 October, 2003, the applicant, Marnotta Pty Ltd (Receivers and Managers Appointed) (“Marnotta”) lodged an application for review of a decision of a delegate of the respondent, the Secretary of the Department of Health and Ageing (“Secretary”) dated 19 September, 2003. The delegate’s decision confirmed two earlier decisions; one was dated 27 May, 2003 and the other 5 June, 2003. In general terms, the earlier decision had revoked a provisional allocation of places to Marnotta and the later decision revoked both its approval as an Approved Provider of aged care services and its allocation of places.

Through her counsel, Mr Gunst QC, the Secretary has asked that Marnotta’s application be dismissed as frivolous and vexatious pursuant to s. 42B of the Administrative Appeals Tribunal Act 1975 (“AAT Act”). She has done so on the basis that, even if Marnotta were successful and a decision were substituted restoring its approval and allocation, the Tribunal’s decision would have no legal effect. That would be so, it is submitted, because of the operation of s. 10-2 of the Aged Care Act 1997 (“Act”). In general terms and subject to certain qualifications, that section provides that an Approved Provider’s approval lapses if it does not provide any aged care during a continuous period of six months. On behalf of Marnotta, Ms Hampel SC with Ms Brophy of counsel submitted that its application is not devoid of any prospect of practical success even in light of s. 10-2 and its application could not be regarded as frivolous or vexatious.

THE ISSUE

The primary issue in this case is whether Marnotta’s application is vexatious, rather than frivolous, and, if so, whether it should be dismissed pursuant to s. 42B of the AAT Act. That requires a consideration of a number of subsidiary issues including the identification of the decisions under review, the nature of those decisions, the manner in which the Tribunal approaches their review, the powers of the Tribunal to defer the effect of any decisions it makes were Marnotta to be successful and the operation of s. 10-2 of the Act.

LEGISLATIVE FRAMEWORK

The scheme of the Act

In general terms, the Act provides for the Commonwealth to give financial support through the payment of subsidies for the provision of aged care and through the provision of grants for other matters connected with the provision of aged care (s. 3-1). Its objects are more specifically set out in s. 2-1:

“(a) to provide for funding of aged care that takes account of:
(i)the quality of the care; and
(ii)the type of care and the level of care provided; and
(iii)the need to ensure access to care that is affordable by, and appropriate to the needs of, people who require it; and
(iv)appropriate outcomes for recipients of the care; and
(v)accountability of the providers of the care for the funding and for the outcomes for recipients;

(b)to promote a high quality of care and accommodation for the recipients of aged care services that meets the needs of individuals;
(c)to protect the health and well-being of the recipients of aged care services;
(d)to ensure that aged care services are targeted towards the people with the greatest needs for those services;
(e)to facilitate access to aged care services by those who need them, regardless of race, culture, language, gender, economic circumstance or geographic location;
(f)to provide respite for families, and others, who care for older people;
(g)to encourage diverse, flexible and responsive aged care services that:
(i)are appropriate to meet the needs of the recipients of those services and the carers of those recipients; and
(ii)facilitate the independence of, and choice available to, those recipients and carers;

(h)to help those recipients to enjoy the same rights as all other people in Australia;
(i)to plan effectively for the delivery of aged care services that:
(i)promote the targeting of services to areas of the greatest need and people with the greatest need; and
(ii)avoid duplication of those services; and
(iii)improve the integration of the planning and delivery of aged care services with the planning and delivery of related health and community services;

(j)to promote ageing in place through the linking of care and support services to the places where older people prefer to live.” (s. 2-1(1)).

In construing these objects, s. 2-1(2) provides that:

“… due regard must be had to:
(a)the limited resources available to support services and programs under this Act; and
(b)the need to consider equity and merit in accessing those resources.”

“Aged care”, for which the Act makes provision for the payment of subsidies, means either residential care, community care or flexible care or any combination of them (s. 1-3 and Schedule 1, clause 1). Only “residential care” is relevant in this case and it is defined as:

“… personal care or nursing care, or both personal care and nursing care, that:
(a)is provided to a person in a residential facility in which the person is also provided with accommodation that includes:
(i)appropriate staffing to meet the nursing and personal care needs of the person; and
(ii)meals and cleaning services; and
(iii)furnishings, furniture and equipment for the provision of that care and accommodation; and

(b)meets any other requirements specified in the Residential Care Subsidy Principles.” (s. 41-3(1))

The word “care” is defined to mean:

“… services, or accommodation and services, provided to a person whose physical, mental or social functioning is affected to such a degree that the person cannot maintain himself or herself independently.” (s. 1-3 and Schedule 1, clause 1)

Payment of subsidies

Subsidies, including residential care subsidies, are paid to approved providers under Chapter 3 but both Chapters 2 and 4 are relevant in determining their payment. They are payable under Part 3.1 of the Act. Subject to certain exceptions that are not relevant in this case, s. 42-1 provides that an approved provider is eligible for residential care subsidy in respect of a day if the Secretary is satisfied that, during that day, the approved holder holds an allocation of places, provides residential care to a care recipient in respect of whom an approval is in force under Part 2.3 as a recipient of residential care and the residential care service through which care is provided meets its accreditation requirement, if any, applying at that time (s. 42-1).

Approval of providers

Among other matters, Chapter 2 provides both for the approval of providers and for the allocation of places. Payments of a subsidy cannot be made under Chapter 3 to a person for providing aged care unless that person is approved under Part 2.1 (s. 7-1). Those who may be approved as a provider of aged care and the manner in which approval is sought are set out in that Part. The Secretary must approve a person as a provider if that person meets the criteria specified in s. 8-1(1). Among those criteria is that the Secretary is satisfied that the person is suitable to provide aged care (s. 8-1(1)(c)). In deciding whether a person is suitable to provide aged care, the Secretary must have regard to the matters set out in s. 8‑3.

Where the term “approved provider” is used in the Act, it is defined to mean, unless the contrary intention appears:

“… a person or body in respect of which an approval under Part 2.1 is in force, and, to the extent provided for in section 8-6, includes any State or Territory, authority of a State or Territory or local government authority.” (s. 1-3 and Schedule 1, clause 1)

Allocation of places

Even if a person is an approved provider, a subsidy may only be paid to that person under Chapter 3 for providing aged care in respect of which a place has been allocated (s. 11-1). A “place” is defined as “… a capacity within an aged care service for provision of residential care, community care or flexible care to an individual” (s. 1-3 and Schedule 1, clause 1). The allocation of places is the subject of Part 2.2 of the Act and is also the subject of the Allocation Principles made by the Minister for Health and Aged Care (“Minister”) under s. 96-1 (s. 11-2). Part 2.2 deals with matters such as the Commonwealth’s planning its allocation of places, how people apply for allocations and how they are decided, the transfer of allocations and the variation of conditions for the allocations of places.

Division 15 is concerned with the time at which allocations take effect. Pursuant to s. 15-1(1):

“An allocation of places to an approved provider takes effect when the Secretary determines that the approved provider is in a position to provide care, in respect of those places, for which the subsidy under Chapter 3 may be paid.”

The Secretary may determine that the approved provider is in that position at the time that she allocates the places (s. 15-1(2)). If she does not do so, the allocation is taken to be a provisional allocation (s. 15-1(2)).

Once made, a provisional allocation generally remains in force until the end of the provisional allocation period (s. 15-2). The provisional allocation period is the period of two years after the allocation is made (s. 15-7(1)) but that period may be extended pursuant to the provisions of s. 15-7. If granted, the period or extension is 12 months unless increased or decreased by the Secretary (s. 15-7(6)).

A provisional allocation ceases to have effect if the Secretary determines under s. 15-1(1) that the approved provider is in a position to provide care in respect of those places (s. 15-2(a)), the provisional allocation is revoked under s. 15-4 (s. 15-2(b)) or it is surrendered under s. 15-6 (s. 15-2(c)).

Division 18 of Part 2.2 is concerned with when allocations cease to have effect. Of relevance in this case is s. 18-1(1), which provides that the allocation of a place ceases to have effect if either of the following happens:

“(a) the place is relinquished (see section 18-2);
(b)the allocation is revoked under section 18-5 or Part 4.4.”

Responsibilities of approved providers

Chapter 4 of the Act is headed “Responsibilities of approved providers”. Approved providers, s. 53-1 provides, “… have responsibilities in relation to aged care they provide through their aged care services.” The section then provides that those responsibilities relate to:

“·the quality of care they provide (see Part 4.1);
·user rights for the people to whom care is provided (see Part 4.2);
·accountability for the care that is provided and the basic suitability of their key personnel (see Part 4.3).”

In so far as quality of care is concerned, the responsibilities of an approved provider are set out in Part 4.1 of the Act. Section 54-1 sets out the responsibilities and they are expanded upon in the remaining sections in the Part. The responsibilities of an approved provider in relation to the aged care it provides are:

“(a) to provide such care and services as are specified in the Quality of Care Principles in respect of aged care and the type in question;
(b)to maintain an adequate number of appropriately skilled staff to ensure that the care needs of care recipients are met;
(c)to provide care and services of a quality that is consistent with any rights and responsibilities of care recipients that are specified in the User Rights Principles for the purposes of paragraph 56-1(1), 56-2(i) or 56-3(j);
(d)if the care is provided through a residential care service after the accreditation day – to comply with the Accreditation Standards made under section 54-2;
(e)if the care is provided through a residential care service before the accreditation day – to comply with the Residential Care Standards made under section 54-3;
(f)if the care is provided through a community care service – to comply with the Community Care Standards made under section 54-4;
(g)if the care is provided through the flexible care service – to comply with the Flexible Care Standards (if any), made under section 54-5, that apply to a flexible care service of that kind;
(h)such other responsibilities as are specified in the Quality of Care Principles.” (s. 54-1)

The “accreditation day” was 1 January, 2001 (s. 1-3 and Schedule 1, clause 1, 42‑4(2) and Residential Care Subsidy Principles). The various standards and principles to which reference is made in s. 54-1 have been made by the Minister under s. 96-1.

Cessation of approval as a provider

Approval as a provider of aged care ceases in the circumstances set out in s. 10-1. Those circumstances are:

“(a) the approval lapses under section 10-2; or
(b)the approval is revoked under section 10-3 or 10-4; or
(c)the period (if any) to which the approval is limited under subsection 8‑1(3) expires; or
(d)the approval is revoked under Part 4.4.”

Revocation is relevant in this case in so far as the reviewable decisions have revoked Marnotta’s approval. Under Part 2-1, it may occur on the request of the approved provider (s. 10-4) or on the initiative of the Secretary. If the latter, the Secretary may revoke the approval in the circumstances set out in s. 10‑3. Among those is the Secretary’s being satisfied that the approved provider has ceased to be suitable for approval (s. 10-3). Before being so satisfied, the Secretary is required to have regard to the matters set out in s. 8-3 in relation to the approved provider (see paragraphs 11 above). I will return to the revocation of an approval under Part 4.4 below.

Of primary importance in this case is s. 10-2. Section 10-2(1) provides that:

“If an approved provider does not provide any aged care during a continuous period of 6 months, the approval lapses on the day after the end of that period. However, any period during which the operation of this subsection is waived under subsection (3) is not to be counted towards the 6 months.”

In relation to care, the word “provide” includes the meaning given by s. 96-4 (s. 1-3 and Schedule 1, clause 1). Section 96-4 provides that a reference to an approved provider’s providing care includes a reference to the provision of that care by another person on the approved provider’s behalf. That may occur by virtue of a contract or arrangement entered between the approved provider and the other person. For the purposes of s. 10-2(1), s. 10-2(2) provides that:

“… an approved provider is taken to be providing aged care at all times while there is in force an allocation of places to the approved provider that, under Division 15, has the status of a provisional allocation.”

The operation of s. 10-2(1) may be overcome for a specified period if its operation is waived by the Secretary. The Secretary may waive it if:

“(a) the approved provider has applied to the Secretary, in writing for a waiver; and
(b)there is in force an allocation of places to the approved provider that has taken effect under section 15-1; and
(c)the Secretary is satisfied that the approved provider intends, and will have the capacity to, provide aged care by the end of the period of waiver.” (s. 10-2(3))

The application for waiver must be made at least 28 days before the end of the six month period referred to in s. 10-2(1) (s. 10-2(4)) and the Secretary must either waive the operation of s. 10-2(1) or reject the application at least 14 days before the end of that six month period (s. 10-2(5)).

Cessation of allocations

An allocated place may be relinquished by an approved provider if it either no longer conducts an aged care service that includes that place or no longer includes that place in an aged care service that continues to be conducted. It does not mean that the place has been transferred (s. 1-3 and Schedule 1, clause 1). The manner in which an approved provider relinquishes places is the subject of s. 18-2, 18-3 and 18-4.

Revocation of allocations is also the subject of s. 18-5 and Part 4.4. Section 18-5 provides the means by which the Secretary may revoke the allocation of places if the approved provider has not, for a continuous period of 12 months, or such other period as is set out in the Allocation Principles, provided care in respect of that place. We will consider revocation under Part 4.4 in the following paragraphs.

Revocation of an approval as a provider or of allocation of places under Part 4.4

Part 4.4 sets out the consequences of an approved provider’s not complying with its responsibilities under Parts 4.1, 4.2 or 4.3 of the Act. In general terms, those consequences include the imposition of sanctions, undertakings in lieu of sanctions or agreements to undertake specified courses of action.

Revocation of an allocation may also occur under Part 4.4 as it may in the case of the approval of the provider of aged care. That part provides that the Secretary may impose sanctions if:

“(a) the approved provider has not complied, or is not complying, with one or more of its responsibilities under Part 4.1, 4.2 or 4.3; and
(b)the Secretary is satisfied that it is appropriate to impose sanctions on the approved provider (see section 65-2); and
(c)the Secretary complies with the requirements of Division 67.” (s. 65-1)

In deciding whether or not to impose sanctions in respect of an approved provider’s non-compliance with his, her or its responsibilities, the Secretary must consider:

“(a) whether the non-compliance is of a minor or serious nature;
(b)whether the non-compliance has occurred before and, if so, how often;
(c)whether the non-compliance threatens the health, welfare or interests of care recipients;
(d)whether the approved provider has failed to comply with any undertaking to remedy the non-compliance;
(e)any other matters specified in the Sanctions Principles.” (s. 65-2)

The sanctions that may be imposed by the Secretary include:

“(a) revoking or suspending the approved provider’s approval under Part 2.1 as a provider of aged care services;
(b)restricting the approved provider’s approval under Part 2.1 as a provider of aged care services to aged care services that are being conducted by the approved provider at the the [sic] section 67-5 notice time;
(c)restricting the approved provider’s approval under Part 2.1 as a provider of aged care services to either:
(i)care recipients to whom the approved provider is providing care at the the [sic] section 67-5 notice time; or
(ii)care recipients other than those to whom the approved provider commenced providing care, through one or more specified aged care services, after the the [sic] section 67-5 notice time;

(d)revoking or suspending the allocation of some or all of the places allocated to the approved provider under Part 2.2;
(e)varying the conditions to which the allocation of some or all of those places is subject under section 14-5;
(f)prohibiting the further allocation of places under Part 2.2 to the approved provider;
(g)…
(h)…
(i)…
(j)…
(k)…
(l)such other sanctions as are specified in the Sanctions Principles.” (s. 66‑1)

If revocation of an approved provider’s approval as a provider of aged care services is imposed as a sanction, the revocation does not take effect if two things happen. The first is that the Secretary specifies in the notice imposing the sanctions that the sanctions will not take effect if the approved provider agrees to a course of action specified in the notice (s. 66-2(1)(a)). The second is that the approved provider so agrees within the specified time (s. 66-2(1)(b)). The courses that may be specified are set out in the remainder of the sub-section and are:

“(i) providing, at its expense, such training as is specified in the notice for its officers, employees and agents;
(ii)providing such security as is specified in the notice for any debts owed by the approved provider to the Commonwealth;
(iii)appointment by the approved provider, in accordance with the Sanctions Principles, of an adviser approved by the Commonwealth to assist the approved provider to comply with its responsibilities;
(iv)appointment by the approved provider, in accordance with the Sanctions Principles, and in accordance with section 66A-3 of an administrator approved by the Commonwealth to administer an aged care service in respect of which the approved provider has not complied with its responsibilities;
(v)transferring some or all of the places allocated to the approved provider under Part 2.2 to another approved provider;
(vi)such other matters as are specified in the Sanctions Principles”. (s. 66‑2(1)(a))

The procedure for the imposition of sanctions is the subject of Division 67 of Part 4.4. Section 67-1 provides that the Secretary must not impose sanctions on an approved provider for non-compliance with one or more of its responsibilities under Part 4.1, 4.2 or 4.3 unless the Secretary has completed each of the steps set out in s. 67-1(1). Those steps include giving the approved provider notice of non-compliance, a notice of intention to impose sanctions or to remedy the non-compliance or both and notice of the Secretary’s decision whether to impose sanctions. Each notice is detailed in following sections in the Act.

The Secretary may give an approved provider notice of his or her intention to impose sanctions in respect of its non-compliance with its responsibilities under Part 4.1, 4.2 or 4.3. He or she may do that if the approved provider has not made any submissions addressing the issues in response to a notice given to him, her or it under s. 67-2 or has made submissions but are unsatisfactory for one of the reasons specified in s. 67-3(1)(b)). The notice must set out the details included in s. 67-4(2) and the Secretary is required to consider any submissions made by the approved provider.

If the Secretary considers that the submissions provided by the approved provider pursuant to a notice under s.67-2 propose appropriate action to remedy the non-compliance, set out sufficient reason for the non-compliance or are otherwise satisfactory, the Secretary may give the approved provider a notice to remedy the non-compliance with his, her or its responsibilities under Part 4.1, 4.2 or 4.3 (s. 67-4(1)). That notice must inform the approved provider that, within 14 days after receiving the notice, or within a shorter period specified in the notice, it must give the Secretary a written undertaking to remedy the non-compliance. It must also inform the approved provider that the Secretary may impose sanctions on the approved provider if the undertaking is not given or complied with (s. 67-4(2)). The undertaking must be in the form set out in s. 67-4(3).

The Secretary must give the approved provider written notification of whether he or she intends to impose a sanction for non-compliance with responsibilities under Part 4.1, 4.2 or 4.3 (s. 67-4(1)). If a sanction is to be imposed, the Secretary must give the approved provider a notice setting out the nature of the non-compliance, the sanction to be imposed, the consequences of the imposition of the sanction, the sanction period and the reasons for the sanction’s imposition (s. 67‑5(2)). If the Secretary decides not to impose a sanction, the notice must specify the nature of the approved provider’s non-compliance and the reasons for not imposing a sanction (s. 67-5(3)).

While the notices to which I have referred are the usual procedure, all but the notice given under s. 67-5 of the Secretary’s decision on whether to impose sanctions may be dispensed with. The effect of s. 67-1(2) is that all but that notice may be dispensed with if:

“… the Secretary is satisfied that, because of the approved provider’s non-compliance, there is an immediate and severe risk to the safety, health or well-being of care recipients to whom the approved provider is providing care.”

In general terms, a sanction imposed for non-compliance with responsibilities under Part 4.1, 4.2 or 4.3 remains in effect until either the sanction period determined under s. 68-2 ends or the Secretary decides under s. 68-3 that it is appropriate for the sanction to be lifted (s. 68-1(1)). Those general provisions do not apply to sanctions specified in s. 68-1(2). Among those sanctions to which the general provisions do not apply are sanctions revoking the approved provider’s approval under Part 2.1 or revoking the allocation of some or all of the places allocated to the approved provider under Part 2.2. The consequence is that the provisions of Division 68 of Part 4.4 regarding such matters as the fixing of the sanction period by the Secretary (s. 68-2), the lifting of sanctions (s. 68-3) and applications for lifting of sanctions (s. 68-4) do not apply to them.

Review of decisions

The Secretary may reconsider a reviewable decision if she is satisfied that there is sufficient reason to do so (s. 85-4(1)) or a person whose interests are affected by a reviewable decision may request the Secretary to reconsider the decision (s. 85-5). A “reviewable decision” is a decision specified in s. 85-1 (s. 1-3 and Schedule 1, cl. 1). Among those specified is a decision under s. 65-1 to impose a sanction on an approved provider.

If the Secretary reviews a reviewable decision she must:

“(a) confirm the decision; or
(b)vary the decision; or
(c)set the decision aside and substitute a new decision.” (s. 85-4(4))

The Secretary’s decision on review to confirm, vary or set aside and substitute a new decision takes effect either on the day specified in the decision on review or, if a day is not specified, on the day on which the decision on review was made (s. 85-4(5)).

Section 85-8 provides for review of the Secretary’s reconsideration when it provides that:

“An application may be made to the Administrative Appeals Tribunal for the review of a reviewable decision that has been confirmed, varied or set aside under section 85-4 or 85-5.”

BACKGROUND

For the purposes of deciding the Secretary’s application, there is no dispute as to the facts. In light of that, I will set them out in the following paragraphs.

Marnotta was an approved provider of aged care services at the residential care service known as Tangerine Lodge. It held that approval pursuant to s. 8-1 of the Act. Pursuant to s. 14-1, it also held an allocation of 45 places to provide aged care services. In addition, it had on 11 January, 2001 also been allocated an additional five low care places. As the Secretary had not then determined under s. 15‑1(1) when the allocation was to take effect, the allocation of those five places was a provisional allocation. The provisional allocation period in respect of those five places had been extended beyond the two year period to 9 January, 2004.

On 27 May, 2003, a delegate of the Secretary decided to impose sanctions on Marnotta pursuant to s. 65-1 of the Act. That sanction was to revoke the provisional allocation of five low care places made on 11 January, 2001 and so was a sanction provided for in s. 66-1(d). Relying on s. 67-1(2), notice was not given to Marnotta as required by s. 67-1(1). Marnotta sought review of that decision on 23 June, 2003. On 5 June, 2003, the delegate decided to revoke Marnotta’s approval as a provider under the Act and to revoke all places allocated to it. The sanctions were provided for in ss. 66-1(a) and (d). Again, the procedure provided for in s. 67‑1(2) was followed. Marnotta sought review of that decision on 21 July, 2003.

On reviewing the decisions, which were reviewable decisions, the delegate of the Secretary expressed her decisions in the following terms:

“I have decided to confirm the decision of 27 May 2003 and impose the following sanction:
Revoke some of the places allocated to Marnotta, being the provisional allocation of 5 low care places allocated to Marnotta on 11 January 2001.”

“I have decided to confirm the decision of 5 June 2003 and impose the following sanctions:
1.Revoke Marnotta’s approval under Part 2.1 of the Act as an Approved Provider of aged care services (s. 66-1(a)); and
2.Revoke the allocation of all of the 45 places allocated to Marnotta (s. 66-1(d)).”

Although entitled to do so but without benefit of any payment under the Act, Marnotta has not provided aged care services to any person since 5 June, 2003.

CONSIDERATION

I will begin with the scope of the power that I have to dismiss an application that is frivolous or vexatious before considering each of the subsidiary issues that is relevant to the manner in which, in the context of this case, I may exercise that power.

The Tribunal’s power to dismiss an application that is frivolous or vexatious

Section 42B(1)(a) of the AAT Act provides:

“Where an application is made to the Tribunal for the review of a decision, the Tribunal may, at any stage of the proceeding, if it is satisfied that the application is frivolous or vexatious:
(a)dismiss the application; …”

This provision was considered by the Tribunal in Re Williams and Australian Electoral Commission (1995) 38 ALD 366 (Mathews J, President, Beaumont and Hill JJ, Presidential Members) where the following general principles were stated:

“(30) The power for peremptory dismissal of proceedings is to be exercised cautiously and sparingly: per Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) [1965] ALR 636; (1964) 112 CLR 125. The mere fact that a proceeding is shown to have no foundation in fact is insufficient to justify a finding that it was commenced vexatiously or without reasonable cause: Per von Doussa J in Hatchett v Bowater Tutt Industries Pty Ltd (No 2) (1991) 28 FCR 324.
(31) The manifest untenability of a proceeding provides one ground for finding that the proceeding is a vexatious one. …” (page 372)

The Tribunal went on to consider the relevance of futility in the context of s. 42B. In that case, it had decided that, whatever the outcome of any review, that review could not have any effect upon the matter of concern to Mr Williams. The decision under review was a decision that a certain name be entered in the register kept under the Commonwealth Electoral Act 1918 as the registered officer of the Greens. At the time of the hearing, that person was no longer the registered officer of the Greens. Had Mr Williams been successful in having that name removed from the register, the effect would have been that the position of registered officer of the Greens was vacant for a period of time. As no election had been called during that period and the registered officer had not been called upon to perform his sole function under the Commonwealth Electoral Act, the vacancy was of no consequence at all. The Tribunal concluded that Mr Williams’ application would be futile.

Despite its conclusion on that point, the Tribunal also accepted that Mr Williams genuinely believed that the contrary was the case and his application for review was not futile. The Tribunal then went on to distinguish between a genuine but mistakenly held mistake of fact and one of law:

“(37) The genuineness of the applicant’s belief might well have been a relevant factor in his favour – and possibly a decisive one – had the subject of his mistake been a factual one rather than a matter of law. As von Doussa J commented in Hatchett, an applicant who genuinely holds a mistaken belief as to a state of facts which, if correct, would support the claim which is made in the proceedings, is ordinarily entitled to ‘a day in court’. In that event, it could operate very unfairly to an applicant to prejudge the issues without affording him/her an opportunity to support his/her case with appropriate evidence. But where, as here, the significant factual matters are agreed between the parties, and the only issues in dispute relate to the legal consequences which follow, the genuineness of the applicant’s legitimacy of his claim must bow before a finding that, as a matter of law, no legitimate purpose can be achieved by continuing with the proceeding. …” (page 374)

In adopting this approach, the Tribunal took the same path as that later taken by Sundberg J in Director General Security v Sultan and Another (1998) 90 FCR 334. In the Sultan case, review by the Tribunal would not lead to Mr Sultan’s being able to obtain the visa he sought even if he were successful in every respect on that matter that was within the Tribunal’s jurisdiction to review. Both Sundberg J and the Tribunal looked to the practical outcome of the review.

This is a case that falls squarely within the scenario contemplated by the Tribunal in Re Williams in that all turns upon the application of the law. If it should be that s. 10-2(1) operates so that Marnotta’s approval has lapsed because it has not provided any aged care since 5 June, 2003 and no decision that the Tribunal may make is able to alter that result, Marnotta’s application must be treated as vexatious even though it was made in good faith. If that is not the inevitable result of the operation of s. 10-2 then Marnotta’s application is not vexatious. It and the Secretary may take a different view of the facts and the decisions that should be made on those facts but Marnotta is, as is the Secretary, entitled to have the reviewable decisions reviewed. Both are entitled to have their views of the facts and of the manner in which any discretions should have been exercised considered by the Tribunal.

What is the decision under review?

Although I do not consider that my decision turns on this issue, I note that the parties did not agree upon the decision that is under review. Ms Hampel submitted that it is the Secretary’s decision on reconsideration that is under review whereas Mr Gunst submitted that it is the original decision that is under review. In some of the Tribunal’s jurisdictions, the legislation conferring jurisdiction clearly provides that it is the reconsideration decision that is reviewed by the Tribunal (e.g. Social Security (Administration) Act 1999, s. 179 and Safety, Rehabilitation and Compensation Act 1988, ss. 60(1) and 64). In others, the legislation conferring jurisdiction provides that it is the original decision as affirmed, varied or substituted on reconsideration that is reviewed by the Tribunal (e.g. Veterans’ Entitlements Act 1986, s. 175). Even when the legislation adopts the former formulation, the case of Re Gee and Director-General of Social Services (1981) 3 ALD 132 (Davies J, President, Mr Cusack and Mr Prowse, Members) makes it clear that the Tribunal reviews the operative decision and it is that operative decision that must be identified. In the case of a decision to affirm an earlier decision, for example, it is not the decision to affirm that is under review but the operative decision i.e. the decision as affirmed. When the decision on reconsideration sets aside the earlier decision and substitutes another, it is the substituted decision that is under review. What is clear is that the decision under review must be determined according to the relevant legislation and the facts of each case.

Section 85-8 of the Act adopts neither formulation. It provides that an application may be made for the review of a reviewable decision that has been confirmed, varied or set aside under ss. 85-4 or 85-5. On its clear words, it is providing for review of the reviewable decision and so of the initial decision. It is not providing for review of the decision to affirm, vary or set aside that initial decision. Nor is it providing for review of the decision as affirmed, varied or, if the initial decision has been set aside, as substituted on reconsideration. Section 85-8 provides for review of the reviewable, and so initial, decision. In providing that an application may be made for the review of a reviewable decision that has been confirmed, varied or set aside, the section is providing that the reviewable decision must have undergone a necessary process before it may be reviewed. The necessary process is confirmation, variation or setting aside under ss. 85-4 or 85-5 but it is no more than that. Section 85-8 does not take the right to make an application for review from a right to have the reviewable decision that has undergone that necessary process reviewed to a right to have the reconsideration decision (which would have required a consideration of the operative decision) reviewed.

In the case of a reviewable decision that has been varied or set aside and another substituted for it, the formulation adopted by the legislature in s. 85-8 is curious. It would normally be expected that it would be the decision as varied or as substituted that would be reviewed by the Tribunal. That would, after all, be the final view taken by the Secretary or her delegates as to the correct or preferable decision in the circumstances. Whatever the sense of this approach, that does not seem to be the approach that has been adopted and I am bound by the plain meaning of s. 85-8. Applying that meaning, I consider that the decisions under review are the reviewable decisions made on 27 May, 2003 and 5 June, 2003 as confirmed by the decisions dated 19 September, 2003.

How does the Tribunal approach the review of such a decision?

The role of the Tribunal was succinctly stated by Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 when they said:

“The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal.” (page 589)

While that is the Tribunal’s role, regard must also be had to the nature of the decision under review. In this case, regard must be had to the fact that the delegate’s reviewable decisions were revocation decisions. They revoked an approval and allocations previously held by Marnotta. They effectively cancelled Marnotta’s ongoing entitlements and are to be distinguished from decisions refusing to approve a person as an approved provider or to make an allocation of places to an approved provider.

The distinction between the cancellation of an ongoing entitlement and a refusal to give an entitlement has been drawn in a number of cases for the Tribunal must approach the review of each in a different way. Some of those cases were brought together by Davies J in Freeman v Secretary, Department of Social Security (1988) 19 FCR 342. His Honour was concerned with a decision to cancel a widow’s pension and he reviewed the earlier decisions of Re Tiknaz and Director-General of Social Services (1981) 4 ALN N44 (Davies J, President, Senior Member Ballard and Dr Garlick, Member), Jebb v Repatriation Commission (1988) 80 ALR 329 (Davies J), Re Easton and Repatriation Commission (1987) 12 ALD 777 (Davies J) and Re McGourty and Repatriation Commission (1988) 9 AAR 87 (Davies J). He said:

“The jurisdiction of the Tribunal arose from the application made to it to review the decision of the delegate who, on 18 August 1987, affirmed the decision of the officer made on 19 May 1987. The function of the Tribunal was therefore to reconsider the decision of 19 May 1987 and to determine whether the decision to cancel Mrs Freeman’s widow’s pension at that time was the correct or preferable decision to have been made. In coming to its decision, the Tribunal was entitled to take into account all the facts proved before it. But the issue was whether, having regard to those facts, the decision to cancel made on 19 May 1987 was the correct or preferable decision, not whether Mrs Freeman had an entitlement to a widow’s pension as at the date of the Tribunal’s decision.
Regard must always be had to the nature of the decision which is under review. In Re Tiknaz, in Re Easton, in Jebb’s case and in McGourty’s case, the decision under review was a decision refusing to grant a pension or benefit that had been applied for. In each case, it was held that there was jurisdiction to consider entitlement not only as from the date of the application but also entitlement up to the date of the Tribunal’s decision. This was because the function of the Administrative Appeals Tribunal formed part of an administrative continuum and, in reviewing a refusal to grant a pension or benefit that had been applied for, it was proper for the Tribunal to consider the entitlement to the pension not only as at the date of the application for the pension or benefit or at the date of the decision refusing to grant it but also up to the time of the Tribunal’s decision.
However, in the present case, the decision under review was not a decision refusing to grant a pension but a decision cancelling a pension as from 19 May 1987. After the decision in Re Tiknaz was handed down, the Act was amended by the insertion of ss 158(2) and 159(2). Those sections provide that the grant or payment of a pension shall not be made except upon the making of a claim for that benefit or allowance, which claim is to be in writing and lodged in accordance with s 158(1) and s 159(1). One effect of these provisions is that once a pension or benefit has been cancelled, the previous recipient has no entitlement to restoration thereof until he or she has lodged a further claim in accordance with s 158(1) and s 159(1).
The ambit of the jurisdiction of the Administrative Appeals Tribunal in relation to the review of a decision to cancel a pension or benefit is therefore less than would be the jurisdiction of the Tribunal in respect of a refusal to grant a pension or benefit or a decision suspending the payment of a pension or benefit. In the latter cases, there may well be an ongoing entitlement to a pension or benefit which the Tribunal should recognise when formulating its decision. However, if the Tribunal comes to the view that the decision to cancel was the correct or preferable decision, then no further matter remains for the Tribunal’s consideration. Any entitlement of the applicant to a pension or benefit at a subsequent time must be the subject of a further claim which, having been made, would only become the subject of review within the Tribunal’s jurisdiction once a decision with respect to it had been made by an officer of the Department of Social Security and that decision had been the subject of appeal and reconsideration in accordance with s19.” (pages 344‑345)

I have also considered the principles in these cases in Re Webb and Tax Agents’ Board of Queensland (1992) 28 ALD 464, Re Harts Pty Limited and Tax Agents' Board of Queensland (1997) 97 ATC 2148; (1997) 37 ATR 1075 and Griffiths and Migration Agents Registration Authority [2001] AATA 240 (unreported, 27 March, 2001). Those cases were not concerned with a person’s entitlement to a pension (either because a pension had been sought and refused or because a pension had been cancelled) as was the case in Freeman and those cases considered by Davies J. Rather, they were concerned with a person’s entitlement to be registered in order to carry out a task. In Re Webb, the applicant’s registration as a tax agent had been refused and in Re Harts the applicant’s registration as a tax agent had been cancelled. In Re Griffiths, the applicant’s registration as a migration agent had been cancelled. Subject to any legislative variation, the general principles are, rather, those enunciated in Drake and Freeman, to which I have referred. Where the decision under consideration is a cancellation decision, the Tribunal must consider whether or not that decision was correctly made at the time it was made. Where the decision under consideration relates to an entitlement (be it a pension or registration), the Tribunal may consider whether that entitlement exists at any time up to the date of the hearing.

The Tribunal’s powers on review of the decision: the provision

As I understand the decision under review in this case, it is the initial decision to revoke Marnotta’s approval as a provider of aged care. If Marnotta were ultimately successful on the substantive review of its application, the Tribunal’s powers would be those set in s. 43(1) of the AAT Act:

“For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing:
(a)affirming the decision under review;
(b)varying the decision under review; or
(c)setting aside the decision under review and:
(i)making a decision in substitution for the decision so set aside; or
(ii)remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.”

When the Tribunal’s decision comes into operation: the provisions and authorities

Section 43 of the AAT Act sets out the Tribunal’s powers when reviewing a decision and in that regard I have already referred to s. 43(1). The date when the Tribunal’s decision is to come into operation is the subject of ss. 43(5A), (5B) and (5C). Section 43(5C) is concerned with a situation in which the Tribunal has earlier made a stay order under s. 41(2) that remains in force immediately before it gives its decision on the review. That is not the situation in this case and is not relevant.

Sections 43(5A) and (5B) are relevant and provide:

“(5A) Subject to subsection (5B), a decision of the Tribunal comes into operation forthwith upon the giving of the decision.
(5B)The Tribunal may specify in a decision that the decision is not to come into operation until a later date specified in the decision and, where a later date is so specified, the decision comes into operation on that date.”

The “decision” to which reference is made in these provisions is the decision of the Tribunal and not the decision under review or the decision that has been set aside. The power to specify a later date may be used by the Tribunal when, for example, the effect of its decision is to give an applicant access to documents under the Freedom of Information Act 1982 and it wishes to give the respondent an opportunity to consider whether or not to lodge an appeal and to lodge any appeal before it is required to give access to those documents (e.g. Re Strang and Department of Immigration and Ethnic Affairs & Anor (1994) 36 ALD 449 at 469 (Senior Member Dwyer) and my own decision in Re Robinson and Department of Employment and Workplace Relations [2002] AATA 715).

The limits of the power were explored to some extent by the Tribunal in Re Fund for Animals Ltd and Minister for Arts, Heritage and Environment (No. 2) (1986) 9 ALD 622 (Gallop J, Senior Member Balmford and Mr Williams, Member), the Tribunal decided that any exercise of its power under s. 43(5B) would be of no effect. That was because deferring the operation of the Tribunal’s decision would be ineffectual when the decision, which the Tribunal found had been made on a basis that did not exist, had been made without power. It was not the Tribunal’s decision that rendered the decision under review ineffective but the basis upon which it had been made (pages 662-3). The power was again considered by Deputy President McMahon in Re Parker and Tax Agents’ Board of New South Wales (1995) 95 ATC 2174 when he had decided to affirm a decision cancelling the applicant’s registration as a tax agent. He considered submissions made on the applicant’s behalf that the operation of his decision should be stayed for six months to enable the orderly winding up of the applicant’s practice. Were her registration to be withdrawn, she would be in an invidious bargaining position. In any event, some credit should be given to the applicant’s having accepted the allegations made against her and that to accept immediate deregistration would be a harsh penalty. Deputy President McMahon considered the applicant’s acceptance of the allegations to be irrelevant as, unlike a criminal trial in which a guilty plea saves the costs of the trial, the respondent had incurred considerable expense in preparing for the hearing and the applicant’s acceptance was belated. Her acceptance occurred only after many requests made by her for adjournments and extensions of time within which to fulfil her obligations. He also took into account the purpose of the registration scheme. That purpose was not to punish the individual tax agent but to protect the public. His decision on her application was adverse to her fitness and propriety to conduct herself as a tax agent. Even if a postponement of six months were to lead to the orderly disposition of her practice, Deputy President McMahon said that:

“… such a consideration is clearly subordinated to public considerations.
25. There is a public and urgent interest in the normal course being followed. If the past is any guide to the future, no one can be confident that in the next 6 months further conduct would not take place indicative of the lack of the applicant’s fitness and propriety to be registered as a tax agent. The arguments for delay are unconvincing and are contrary to the policy considerations arising from the operation of Part VIIA of the Income Tax Assessment Act dealing with registration of tax agents to which I must have regard. It could well be argued that once having found the applicant not to be a relevantly fit and proper person, there is no scope to allow such a person to do for the next 6 months what she is patently unfit to do. My decision will therefore simply be that the decision under review is affirmed.” (page 2,178)

The date of effect of the decision as reviewed by the Tribunal: the provision and authorities

The cases in the previous paragraphs bring into focus the difference between the Tribunal’s decision and the date of its operation and the date of effect of the decision that the Tribunal substitutes for the decision under review of the decision that it varies. The date of effect of those substituted or varied decisions is the subject of s. 43(6) of the AAT Act, which provides that:

“A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect.”

This provision requires an analysis of the decision made by the Tribunal following its review of the substantive merits of the application. That is so as its operation is limited to decisions that are substituted or those that are varied. In relation to those decisions, the Tribunal may order that they have effect from a day other than the day on which the decision under review has or had effect. That makes sense for, as Davies J said in Jebb v Repatriation Commission:

“… However, the general approach of the tribunal has been to regard the administrative decision making process as a continuum and to look upon the tribunal’s function as a part of that continuum so that, within the limits of a reconsideration of the decision under review, the tribunal considers the applicant’s entitlement from the date of application, or other proper commencing date, to the date of the tribunal’s decision. That function was enunciated in Re Tiknaz and Director-General of Social Services (1981) 4 ALN No 44.” (page 333)

It may be that the Tribunal has decided that a person’s entitlement varies from time to time during the period under consideration and so either varies the decision to put that into effect or sets aside the decision under review and substitutes another with effect from the date or dates it specifies in its order.

What are the limits, if any, on the Federal Court’s power to order the date of effect of an order quashing or setting aside a decision under s. 16 of the ADJR Act?

Before asking whether the Tribunal has power to defer the operation of any decision it may make in this case or to defer its effect, I will explore the principles that have been formulated by the Federal Court in exercising somewhat related powers. Those powers are found in s. 16(1) of the Administrative Decisions (Judicial Review) Act 1977 (“ADJR Act”). That provision raises the date of effect of any order the Federal Court may make quashing or setting aside a decision when it reviews a decision as opposed to when it reviews conduct or the failure to make a decision. It provides:

“(1) On an application for an order of review in respect of a decision, the Federal Court or the Federal Magistrates Court may, in its discretion, make all or any of the following orders:
(a)an order quashing or setting aside the decision, or a part of the decision, with effect from the date of the order or from such earlier or later date as the court specifies;
(b) an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the court thinks fit;
(c) an order declaring the rights of the parties in respect of any matter to which the decision relates;
(d) an order directing any of the parties to do, or to refrain from doing, any act or thing the doing, or the refraining from the doing, of which the court considers necessary to do justice between the parties.”

The power in s. 16(1) is to be contrasted with that given by s. 16(4). It relates not to the date of effect of the order but to the operation of its own order. In this regard, it has some similarity to s. 43(5A) and (5B) of the AAT Act although the Tribunal’s powers are far more limited than those of the Court. Section 16(4) provides that:

“The Federal Court or the Federal Magistrates Court may at any time, of its own motion or on the application of any party, revoke, vary, or suspend the operation of, any order made by it under this section.”

The Jadwan cases

Both Ms Hampel and Mr Gunst referred to the Jadwan line of cases in the Federal Court with regard to s. 16. Two of the cases in that line represent the only two authorities that have directly considered s. 10-2 of the Act and they also referred to them with regard to that. I will make reference to that provision in this section but return to consider it further later in these reasons. The line of cases has arisen in relation to a Tasmanian nursing home, Derwent Court Nursing Home (“Derwent Court”), that was operated by Jadwan Pty Ltd (“Jadwan”) but they are only two of four cases decided by the Federal Court in relation to that nursing home. In order to understand the principles established by those cases, it is necessary to have regard to all four.

Derwent Court had been approved as a nursing home by a delegate of the then Minister for Health and Family Services under now repealed provisions of the National Health Act 1953 (“NH Act”). On 3 February, 1997, there was a declaration pursuant to s. 45E of the NH Act that Derwent Court did not satisfy the standards that had been determined under s. 45D. A delegate of the Minister notified Jadwan on 1 April, 1987 that she would have the care provided by Derwent Court reviewed. Then, on 20 July, 1997, a delegate of the Minister notified Jadwan of her intention to revoke Derwent Court’s approval as a nursing home under s. 44(2)(b) on the ground that it had failed to meet the standards required by s. 45D of the NH Act. On 23 July, 1997, the Department of Health and Family Services, which is now known as the Department of Health and Aged Care (“Department”), began to coordinate the transfer of residents from Derwent Court to other approved nursing homes in Tasmania. The transfer was completed within a few days. On 6 August, 1997, a delegate of the Minister relying on s. 44(2)(b) of the NH Act revoked Derwent Court’s approval as a nursing home.

Jadwan sought reconsideration of the decision but the decision was affirmed. On 7 November, 1997, Jadwan applied to the Tribunal for review of the decision but its application was ultimately withdrawn. On 21 January, 1998, Jadwan lodged an application under the Administrative Decisions (Judicial Review) Act 1977 (“ADJR Act”). Its application was heard by Heerey J, who decided that the Minister’s decision to revoke Derwent Court’s approval as a nursing home was void. The application was heard on 2 June, 1998 and the judgement delivered on 19 June, 1998 (Jadwan Pty Ltd v Minister for Health and Family Services (1998) 51 ALD 245).

An appeal was lodged and the Full Court delivered its judgement on 4 December, 1998 (Minister for Health and Family Services v Jadwan Pty Ltd [1998] FCA 1549, (1998) 89 FCR 478, Burchett, Drummond and Sackville JJ) (“Jadwan No. 2”). The appeal was allowed in part in so far as the Full Federal Court decided that there had been no failure to follow the proper procedures prior to the making of the revocation decision of 6 August, 1997. It did, however, decide that there had been an improper exercise of the power conferred by s. 44 of the NH Act when the decision was made in so far as the Minister had taken into account an irrelevant consideration. Rather than ordering that the revocation decision was void as Heerey J had done, the Full Court ordered that it be set aside.

In the meantime, on 1 October, 1997, the scheme of approval established under the NH Act had been repealed and the Act had come into operation. The Aged Care (Consequential Provisions) Act 1997 (“Consequential Provisions Act”) also came into operation on the same day and provided for those who had been the operators of approved nursing homes under the NH Act on 30 September, 1997 to be approved as providers of aged care under the Act. It also provided that those operators be allocated places under the Act equivalent to the number of beds set for their respective nursing homes under the NH Act on 30 September, 1997.

On 9 March, 2001, Jadwan filed an application in the Federal Court seeking various declarations (Jadwan Pty Ltd v Secretary, Commonwealth Department of Health & Aged Care and Another [2002] FCA 1052, (2002) 71 ALD 520) (“Jadwan No. 3”). Among them was a declaration that, by operation of s. 7(1) of the Consequential Provisions Act, it was taken to be an approved provider of aged care within the meaning of the Act. Jadwan contended that its approval was in existence on 30 September, 1997 because the decision of the Minister had been avoided from the day that it had been made i.e. 6 August, 1997. As the decision had been made as a result of an improper exercise of a power, it was a nullity, Jadwan submitted and so the decision must be treated as invalid from the date upon which it was made.

North J did not accept that submission as he noted that the application heard by Heerey J had been made pursuant to the ADJR Act. The powers that the Federal Court had to grant relief in the context of the application it had before it are set out in s. 16(1) of that legislation. North J considered the effect of the order made first by Heerey J and then by the Full Court on appeal and said:

“… the Full Court deliberately changed the formulation of the order made by Heerey J. The formulation by Heerey J declared that the revocation decision was void. That form of order demonstrated an intention that the revocation decision would be avoided from the date that it was made. The Full Court, however, directed specific attention to the form of the order. The Full Court order set aside the revocation decision of the Minister, but expressly deleted the reference made by Heerey J that the revocation decision was void. In the concluding paragraphs, the Full Court discussed the circumstances which caused the Court to make the order. Although the reasoning for the change in formulation is not explicit, the discussion which led to the change recounted that Jadwan had succeeded on the appeal on grounds which were not raised before the primary judge, and which were ventilated on the appeal only by reason of an amendment allowed by the Full Court to the original application made to the primary judge. Further, the Minister was successful on the only ground on which the appeal was instituted. It seems likely that the Full Court regarded it as just that the revocation decision order remain in effect until the date of the decision on the appeal because Jadwan failed to raise the point on which it succeeded before the Full Court in the proceedings before the primary judge.
It follows that the approval of Derwent Court as a nursing home was not in effect on 30 September 1997, and consequently the CPA did not apply to transfer the status of Jadwan from the NHA to the ACA. Similarly, the CPA did not operate to allocate places to Jadwan under the ACA in place of the approved number of beds under the NHA.” (paragraph 37, 38)

Although his Honour went on to consider other matters addressed by the parties, his reasoning on this aspect of the case led to the conclusion that Jadwan must fail on its application. Among those other matters was the application of s. 10-2 of the Act and I will consider that below. North J agreed with the submission made on behalf of the Secretary that it would be contrary to the provisions of the Act make a declaration that, by operation of s. 7(1) of the Consequential Provisions Act, Jadwan was taken to be an approved provider within the meaning of the Act or that, as a consequence of the earlier Full Court’s decision, it was deemed to be such an approved provider.

Jadwan appealed against North J’s judgement (Jadwan Pty Ltd v Secretary, Department of Health and Aged Care [2003] FCAFC 288, (2003) 204 ALR 55 (Gray, Downes and Kenny JJ) (“Jadwan No. 4”). Its first contention was that the result of the Full Court’s judgement in the earlier appeal was that the decision revoking Derwent Court’s approval was a nullity and was to be regarded in law as no decision at all. In the alternative, Jadwan contended that it was open to the Court to determine that the revocation was a nullity and that it should do so. The majority of the Full Court (Gray and Downes JJ) restated the argument in the following terms:

“The argument put by counsel for Jadwan on this appeal can be stated in the form of a syllogism. The major premise is that, where an administrative decision-maker makes a jurisdictional error, the decision is a nullity and must be treated as never having existed for any purpose. The minor premise is that the decision of the Minister’s delegate, cancelling the approval of Derwent Court, was subject to jurisdictional error. The conclusion is that the decision is to be treated as never having been made for any purpose. From that conclusion, it follows that Jadwan is to be treated as the proprietor of an approved nursing home on the eve of the coming into operation of the Aged Care Act. Section 7 of the Consequential Provisions Act therefore entitles Jadwan to be treated as having an allocation of places in existence under the Aged Care Act from the date of its operation.” (paragraph 28)

Their Honours said that the basis for the major premise is the judgement of the High Court in Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11 (2002) 209 CLR 597. In that case, the High Court considered a situation in which the Immigration Review Tribunal (“IRT”) had overlooked a request for an adjournment and proceeded to hear an application. After attention was drawn to the request, the application was re-heard. Gray and Downes JJ in Jadwan No. 4 analysed the judgements delivered by the six judges in the majority (Kirby J dissenting) and concluded that:

“This analysis shows that the judgment in Bhardwaj rested clearly upon the proposition that the relevant legislation did not give the first decision of the IRT force and effect such as to require the IRT to treat that decision as precluding it from exercising its statutory function. All six judges who formed the majority did so on that basis. Only Gaudron and Gummow JJ, with the agreement of McHugh J, as part of their reasoning, relied on the proposition that jurisdictional error on the part of the decision-maker causes an administrative decision to be of no legal effect. Gleeson CJ, Hayne J and Callinan J do not appear to have embraced that proposition. Kirby J in his dissenting judgment clearly did not. Gaudron and Gummow JJ did not explain in detail the consequences of the proposition that a decision has no legal effect. They did not deal with issues such as the status of the first decision of the IRT if the IRT had not chosen to ignore it and make another. Indeed, their Honours did not discuss what might be the factual, as distinct from the legal, consequences attaching to an administrative decision if no challenge to its validity is ever made, or if any challenge to its validity is made out of time, or is made in proceedings to which someone bound or otherwise affected by the decision is not a party. Nor did their Honours say anything about the possible effect of an administrative decision after a court proceeding in which a party has made out a case of jurisdictional error on the part of the decision-maker, but the Court has declined to grant relief in relation to the decision by reason of discretionary considerations. The facts of Bhardwaj did not call for pronouncement upon these issues. The IRT had itself chosen to ignore its previous decision. The validity of that decision was in issue in the very proceeding with which the High Court was dealing.” (paragraph 40)

Gray and Downes JJ went on to consider the case of Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2 (2002) 195 ALR 24 heard by all seven of the High Court Judges. In considering the application of privative clauses in s. 474 of the Migration Act 1958, the High Court had, Gray and Downes JJ said, decided that “… a decision affected by jurisdictional error cannot be regarded as ‘a decision … made … under this Act.’” (paragraph 41, page 63). Therefore, a jurisdictional error affecting a decision takes that decision outside the scope of a privative clause. In their joint judgement, Gaudron, McHugh, Gummow, Kirby and Hayne JJ had said in Plaintiff S157/2002 v Commonwealth of Australia:

“This court has clearly held that an administrative decision which involves jurisdictional error is ‘regarded, in law, as no decision at all.” (paragraph 76)

Gray and Downes JJ in Jadwan No. 4 noted that their Honours:

“… did not deal in S157 with the possible status of an administrative decision affected by jurisdictional error in the absence of a challenge to its validity, or after a court has found such error to have existed, but has declined to treat the decision as a nullity.” (paragraph 41)

Gray and Downes JJ then went on to conclude that:

“In our view, Bhardwaj cannot be taken to be authority for a universal proposition that jurisdictional error on the part of a decision-maker will lead to the decision having no consequences whatsoever. All that it shows is that the legal and factual consequences of the decision, if any, will depend upon the particular statute. As McHugh, Gummow, Kirby and Hayne JJ said in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 388 – 389:

‘An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition.’” (paragraph 42)

In examining the orders made by the earlier Full Court, Gray and Downes JJ said that it was unnecessary for the earlier Full Court of the Federal Court to consider whether the error made by the delegate had been jurisdictional or not. That was because it had been considering the matter under the ADJR Act and the grounds specified in s. 5 of that legislation upon which orders may be made are not expressed in terms of jurisdictional error. As to what the earlier Full Court had in fact done, their Honours were not clear but thought:

“… It is at least as likely an explanation that 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.” (paragraph 47)

If it had been open to the Full Court to consider afresh the effect of the decision made by the Minister’s delegate, Gray and Downes JJ were of the view that the decision could not be ignored for all purposes:

“If 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.” (paragraph 49)

In summary, the majority of the Full Court expressed their conclusion in the following terms:

“For all of these reasons, the minor premise of Jadwan’s syllogism cannot be supported. As both premises are not justified, the conclusion, that the decision of the Minister’s delegate to revoke the approval of Derwent Court as a nursing home under the National Health Act was a nullity, must be rejected. The consequences said to flow from that conclusion cannot be sustained for that reason. …” (paragraph 50)

Although not necessary to their decision, they then turned to consider what would have been the effect of their finding that the decision was a nullity had they considered that course open to them. The effect, they found, would have been that Jadwan would have been the proprietor of an approved nursing home within the meaning of s. 7(1) of the Consequential Provisions Act. That, however, would not have been sufficient to bring it within s. 7(1) for it had to come within the terms of either ss. 7(1)(a) or (b). That is to say, either a Commonwealth benefit is or was payable to Jadwan within the meaning of s. 4 of the NH Act for nursing care received by the patient on a day before 30 September, 1997 or Jadwan had been granted a certificate under s. 39A of the NH Act and that certificate was in force on 30 September, 1997. As Jadwan had not been granted a certificate, only s. 7(1)(a) was relevant. Of it, Gray and Downes JJ said:

“By 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.
Treating 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.” (paragraphs 52-53)

The Nguyen cases

After North J had delivered his judgement and before the Full Court had heard the appeal, Weinberg considered a similar issue in Nguyen v Minister for Health and Ageing [2002] FCA 1462. He had earlier heard the case of in Nguyen v Minister for Health and Ageing [2002] FCA 1241 on 24 September, 2002. On 10 October, 2002, he delivered a judgement in which he decided that the Minister had exercised her discretion under s. 133(2) of the NH Act to revoke Ms Nguyen’s approval as an approved pharmacist upon an erroneous basis. He set aside the Minister's decision but, although he had been asked by Ms Nguyen to set it aside with effect from 4 September, 2002, had not expressed a date upon which his decision was to come into effect.

In the later proceedings, Weinberg J said that, when delivering his earlier judgement, he had not understood the importance to the parties of the time at which the Minister’s decision was set aside. It transpired that, between 4 September, 2002 and 10 October, 2002, Ms Nguyen, who is a qualified pharmacist, had conducted business at a pharmacy even though she was not, according to the Minister an approved pharmacist in relation to the relevant premises. As she was not regarded as an approved pharmacist, she was not entitled to recover money from the Commonwealth in respect of pharmaceutical products she had dispensed. Ms Nguyen submitted that the Minister’s decision to revoke her approval was a nullity and should be set aside as though it had never been made. That would enable her to apply for the payment of pharmaceutical benefits under the NH Act.

Weinberg J noted that s. 16(1)(a) of the ADJR Act specifically empowers the Court to set an operative date for an order quashing or setting aside a decision. There is no presumption either for, or against, the date’s being the date of the impugned decision or the date of the judgement impugning it (Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253 (Fox, Sheppard and Wilcox JJ)). Citing BHP Direct Reduced Iron Pty Ltd v Chief Executive Officer, Australian Customs Service (1998) 55 ALD 665 (Carr J), Weinberg J noted that:

“…Carr J noted at 695 that the section confers “a considerable degree of flexibility on the court when it comes to framing orders”. His Honour also observed at 695 that the date from which a particular decision should be quashed should be “that which will best do justice as between the parties and any other affected persons”: see also Wattmaster (supra) at 257-258 and the cases referred to therein.” (paragraph 9)

He also noted that:

“In Bhardwaj Gaudron and Gummow JJ, in a joint judgment, expressed the view that it is neither necessary nor helpful to describe erroneous administrative decisions as “void”, “voidable”, “invalid”, “vitiated” or even as “nullities”. Their Honours went on to say that there is no reason in principle why the general law should treat administrative decisions involving “jurisdictional error” as binding or having legal effect unless and until set aside. A decision that involves “jurisdictional error” is a decision that lacks legal foundation, and is properly regarded, in law, as no decision at all.” (paragraph 12)

Weinberg analysed the competing factors in deciding the date from which his order should take effect:

“In my opinion, the question to be determined involves a balancing of the factors in favour of, and against, setting aside the Minister’s decision retrospectively. As noted earlier, the discretion which s 16(1)(a) confers upon the Court is a wide one. Among the factors which tell most strongly in favour of retrospective nullification is that the Minister’s decision involved not merely an error of law (which would still render it reviewable under the ADJR Act) but what would classically be regarded, under the general law, as jurisdictional error.
I accept that in Jadwan the Full Court chose not to set aside retrospectively a decision which was tainted because it involved the decision-maker in taking into account irrelevant considerations. I also accept that merely because jurisdictional error has been established does not of itself lead to the making of orders having retrospective effect. Nonetheless, the fact that jurisdictional error has been demonstrated is, in my view, a relevant matter when determining whether to nullify a decision from the date that it was purportedly made: Bhardwaj (supra).
Other factors in favour of retrospective nullification include the fact that the applicant sought an order in these terms in her written submissions, and the fact that she could have sought injunctive relief, had she wished to do so, and could thereby have achieved that objective. Because the Court was able to provide an expedited final hearing, the issue of interlocutory relief did not arise.
I am not persuaded by any of the matters raised on behalf of the Minister in opposition to retrospective nullification. The period during which the applicant operated the pharmacy, supposedly without an approval, but only because the Minister had unlawfully revoked it, was relatively short. There was little risk that such regulatory supervision as the HIC might have sought to impose was in any way frustrated. Even if there was some such risk, that was the product of the Minister’s own error. I can see no reason why the applicant should be deprived of her right to seek to recoup from the HIC the monies that she expended in running the pharmacy during the relevant period given that the revocation of her approval was done without legal foundation. In accordance with the principles stated in Bhardwaj, that revocation should be properly regarded, in law, as no revocation at all.” (paragraphs 19-22)

The principles governing the operation of the Federal Court’s discretion under s. 16(1) of the ADJR Act

When read with the High Court case of Minister for Immigration and Multicultural Affairs v Bhardwaj, it seems to me that the Jadwan and Nguyen lines of cases show a subtle change in the Federal Court’s approach to its power under s. 16(1)(a) of the ADJR Act. I have considered first what appears from the face of the order made by Burchett, Drummond and Sackville JJ in Minister for Health and Family Services v Jadwan Pty Ltd in 1998 and without the benefit of Gray and Downes JJ’s explanation for the reasons behind it. When I do that, it seems that the fact that a decision has been made on the basis of any error, be it jurisdictional or not, is simply one of the matters to be taken into account in deciding whether or not to exercise the discretion under s. 16(1)(a). This also appears to have been the approach adopted by Weinberg J in the second Nguyen case. Although his Honour had regard to Bhardwaj, he seems to have been of the view that jurisdictional error was “a relevant matter when determining whether to nullify a decision from the date that it was purportedly made …” (paragraph 20). He did not appear to regard it as determinative of the issue. In that regard, the judgement of Gray and Downes JJ represents a shift of position in setting the boundaries of the discretion under s. 16(1)(a). Having analysed Bhardwaj and then the earlier Full Court’s judgement in Minister for Health and Family Services v Jadwan Pty Ltd, it appears that their Honours distinguished between decisions made as a result of jurisdictional error and those made as a result of an error that cannot be categorised as jurisdictional. In the case of the former, there can be no room for any date of effect of an order quashing or setting aside such a decision other than the date of the decision itself. Such a decision would be a nullity and would always have been a nullity from the date it was made. It was only in relation to the latter decisions that an order could be made by the Federal Court with a date of effect at some time other than the date of the decision under review. Relevant factors affecting the date selected by the Federal Court depended on the scheme of the NH Act and any intention inherent in that scheme as to whether a decision should have effect if it were made in error.

Does the Tribunal have the power to defer the effect of any decisions it may substitute for the reviewable decisions?

Clearly, the role of the Tribunal in reviewing the merits of a decision is different from that of the Federal Court in reviewing a decision under the ADJR Act. For all that, there is some assistance to be gained from the approach of the Federal Court in relation to s. 16(1)(a) of the ADJR Act as well as in the Tribunal’s decisions to which I have referred above. That is that regard must be had to the nature of the decision under review and to the legislative framework in which the power to “affect” that decision is exercised. In the context of this case, the legislative framework comprises two pieces of legislation: the AAT Act and the Act.

Beginning with the nature of the decisions under review, each is a revocation decision. Applying the principles in Drake and Jebb to them, it seems to me that the reviewable decisions are decisions cancelling or revoking an entitlement rather than deciding whether a person has an entitlement. I will refer to them as “revocation decisions”. I must consider whether or not they were the correct or preferable decisions at the time that they were made. If they were not the correct or preferable decisions on that day, that is an end of the matter. I cannot consider whether they might have been on a subsequent day. As far as the Tribunal’s role in the administrative continuum is concerned, it comes to an end at that point. The reviewable decisions are restored. If it should transpire that the Secretary decides that the approval and the allocations should again be revoked but from a later date, it is for her to make that decision and so opening the way for the Tribunal to resume its role in the administrative continuum but in relation to fresh reviewable decisions.

If Marnotta were successful in relation to its applications for review regarding each reviewable decision, the Tribunal would have regard to s. 43 of the AAT Act in deciding the decision it could make. Assuming that there are no powers or discretions conferred by the Act to vary the operation of the provision, it appears from the wording of s. 43(1) that the Tribunal must take one of the three courses it sets out. If Marnotta were not successful, the first option of affirmation under s. 43(1)(a) would be appropriate but I am not considering that course in this proceeding. If it were successful and given the fact that the reviewable decisions are revocation decisions, the appropriate course would not be to vary the decisions under s. 43(1)(b) for they were either the correct or preferable decisions to have made on the day or they were not.

That leaves the course under s. 43(1)(c). It would be to set aside the decision and either substitute decisions or remit the matter for reconsideration in accordance with directions or recommendations. In strict theory, s. 43(1)(c) does not entertain decisions to simply set a decision aside for, if a decision is not substituted, s. 43(1)(c)(ii) envisages that the Tribunal will remit the matter for reconsideration in accordance with its directions or recommendations. In practice, there are decisions which are appropriate to set aside but in relation to which there is no point in remitting them for reconsideration. That is so because there is nothing left for the decision-maker to reconsider. That situation arises, for example, in relation to business visas under the Migration Act 1958. If a business visa has been cancelled and the Tribunal decides that the correct or preferable decision was that business visa should not have been cancelled, its decision setting aside the cancellation restores the business visa. Logically, it must do so from the very instant that it was previously cancelled. There is nothing left for the Tribunal or the decision-maker to do in relation to the decision itself although there may, of course, be something left for the decision-maker to do with regard to the implementation of the decision or in attending to matters consequential upon the decision’s having been made. In the same way, there is nothing left for the Tribunal or the decision-maker to do in relation to a decision when it has been affirmed by the Tribunal.

The same reasoning applies in relation to a decision that would be made by the Tribunal were Marnotta to be successful in its application. The revocation decisions would be set aside as having not been the correct or preferable decision on the day that they were made. If s. 43(1)(c)(ii) were strictly followed, the matter would also be remitted to the Secretary.

As to the date of effect of that decision, there is no power in s. 43(6) to make an order as to the date of effect of a decision that sets another aside and remits the matter to the decision-maker. It applies only to decisions that have been varied by the Tribunal or that have been substituted by the Tribunal. That it does not makes sense for it reflects the differences between the types of decisions that may come to the Tribunal and to the different manner in which the Tribunal must approach their review. If the Tribunal could decide that a revocation decision were not the correct or preferable decision and do so, as it must, at the time that the revocation decision was made and yet defer the date of effect of its decision, there would be a gap in the administrative continuum. There would be a period in which the cancellation decision were regarded as incorrectly made but regarded as effective.

Does the Tribunal have the power to defer the operation of its decision and, if so, would it be of any effect?

That leaves the power of the Tribunal to make an order under s. 43(5B). I have given examples above of the circumstances in which the Tribunal has used this power. In the circumstances of this case, its exercise would not advance either parties’ cause or assist in any way in the resolution of the matter or the orderly resolution of their affairs.

The operation of s. 10-2 of the Act

In his judgement in Jadwan No. 3, North J considered ss. 10-2 of the Act. He noted that Jadwan was then out of time to make an application for waiver of the operation of s. 10-2(4) and considered that it would be contrary to the provisions of the Act to make a declaration that Jadwan be taken to be or be deemed to be an approved provider for the purposes of s. 10-1.

In their judgement in Jadwan No. 4, Gray and Downes JJ also considered the operation of s. 10-2 of the Act . They said:
“If Jadwan had succeeded in availing itself of s 7 of the Consequential Provisions Act, it would then have to overcome s 10-2 of the Aged Care Act. Again, that provision is directed to a factual, and not a theoretical, situation. Approval under the Aged Care Act lapses if an approved provider does not provide aged care during a continuous period of six months. It could hardly be contended that this provision is intended to refer to anything other than the actual provision of aged care. Its strictness is underlined by the specific provisions relating to waiver, found in s 10-2(3) and (4). Those provisions require application in writing, at least 28 days prior to the end of the six-month period. There was no application for waiver of the period in the present case.Jadwan’s argument that s 10-2 was intended to apply only when a provider was in a position to provide aged care cannot be sustained.
Jadwan provided no aged care for well over six months from 1 October 1997, when the Aged Care Act commenced operation, until 9 March 2001, when it filed its proceeding that led to the judgment of the primary judge, and thereafter. To attribute its failure to provide such care to the revocation decision, so as to require that the Court act on the assumption that aged care would have been provided if there had been no revocation of approval is to ask too much of the principles of causation. It is to ignore the actual proceedings that Jadwan took, and the opportunities it had to take other proceedings. It is to ignore the possibility that, if it had been appreciated that the revocation decision was a nullity, the Minister might have taken steps to have a new determination made as to whether the approval of Derwent Court should be revoked under the National Health Act, or whether some steps should be taken pursuant to the Aged Care Act to revoke any approval of Jadwan as a provider of aged care, pursuant to s 10-3 of the Aged Care Act. Another event that might have broken the chain of causation could have been the sale by Jadwan of its entitlements to receive Commonwealth benefit in respect of a number of patients, a sale it was apparently desirous of effecting in September 1997.
It follows that, even if Jadwan had been entitled to declarations of the kinds sought in pars 1 – 4 of its amended application before the primary judge (set out at [14]), it would not have been entitled to the order sought in par 5 of that amended application, directing the allocation of the places. Section 10-2 would have caused any approval inherited from the previous system to have lapsed well before Jadwan began the proceeding at first instance. It was also appropriate for the primary judge to treat as a discretionary ground for refusing to grant the declaratory relief sought the fact that approval had lapsed under s 10-2 of the Aged Care Act.” (paragraphs 57-59)

It must be remembered that, on the view that Gray and Downes JJ took of the previous Full Court’s orders, the date of effect of those orders was the date of its judgement i.e. 4 December, 1998. The decision under review had been made on 6 August, 1997. Gray and Downes JJ handed down their judgement on appeal from North J on 12 December, 2003. Having regard to their analysis of the Full Court’s order and assuming that Jadwan had availed itself of s. 7 of the Consequential Provisions Act, Jadwan’s approval as an approved provider of aged care was revoked from 6 August, 1997 until 4 December, 1998. That revocation remained unaffected by the Full Court’s order. With effect from 4 December, 1998 when the Full Court set aside the decision made on 6 August, 1997, Jadwan’s approval as an Approved Provider was restored. The effect of these orders, then, meant that, for the purposes of s. 10-2 of the Act, Jadwan was not an Approved Provider within the period from 6 August, 1997 until 4 December, 1998 and so could not be affected by it. Once the Full Court had set aside the decision revoking its approval, it was an approved provider. During that period, it was not providing aged care and so was subject to the self-executing effect of s. 10-2(1) unless it applied pursuant to ss. 10-2(3) and (4) for its effect to be waived. It did not make that application. Consequently, by the time Gray and Downes JJ handed down their joint judgement on 12 December, 2003, Jadwan had been an approved provider that had not been providing any aged care during a continuous period of six months. Consequently, its approval had lapsed by virtue of the operation of s. 10-2(1).

What is clear from the judgement of Gray and Downes JJ is that regard is to be had to “… a factual, and not a theoretical, situation.” (paragraph 57). If Marnotta were to succeed on the substantive hearing of its application, the Tribunal’s decision would be to set aside the reviewable decisions. The consequence of that would be that Marnotta would be regarded as not having had its approval as an approved provider or its allocation of places revoked in the first place. That, however, would be the theoretical situation. The fact, though, would be something different. The situation in fact, and the situation in which Marnotta has had to conduct its affairs since 5 June, 2003, would be that the Marnotta would not have been an approved provider since that date. That would have followed from the fact that its approval as an approved provider had been revoked. Even though it lodged an application for review of that reviewable decision, the effect of s. 41(1) of the AAT Act is that the decision continues to operate and the Secretary is not prevented from implementing it. Marnotta did not make an application to the Tribunal to ask for an order under s. 41(2) staying or otherwise affecting the operation of either of the reviewable decisions. Consequently, Marnotta was not an approved provider. Therefore, even though it did not provide any aged care after 5 June, 2003, s. 10-2(1) would not apply to it because it was not in fact an approved provider.

Once the Tribunal set aside the reviewable decisions, Marnotta would then in fact as well as in theory be an approved provider from the date of the Tribunal’s decision as well as an approved provider in theory from 5 June, 2003. If Marnotta did not provide any aged care during the six months following the Tribunal’s decision and did not apply for waiver under ss. 10-2(3) and (4), the effect of s.10-2(1) would be that its approval would lapse on the day after the end of a six month period from the date of the Tribunal’s decision.

Although I regard this approach to the interpretation of s. 10-2(1) as consistent with the reasoning of Gray and Downes JJ in Jadwan No. 4, I also consider that it is consistent with the scheme of the Act. It is clear from s. 10-2(2) that a person who is an approved provider and who is not in fact providing aged care will be deemed to be providing that care if he, she or it has a provisional allocation of places. Both on its face and from the text of the Explanatory Memorandum relating to the Act, it is clear that this provision is directed to ensure that a person who is an approved provider has a proper opportunity to establish the facilities at which aged care will be provided. That provision does not, however, throw any light on the situation that would arise in this case if Marnotta were successful. Derwent Court was a service that had already been established but was no longer providing aged care.

The effect of s. 10-2(3) and (4) is that an application to waive the operation of s. 10-2(1) may only be made by an approved provider. It follows that a person whose approval as an approved provider has been revoked and who seeks review of that revocation is unable to seek waiver of the operation of s. 10-2(1). His or her having sought review of the decision does not of itself affect the operation of that decision or prevent the taking of action to implement the decision (AAT Act, s. 41(1)). The decision’s operation or implementation may only be affected if the Tribunal makes an order under s. 41(2) of the AAT Act. The Act has not varied the operation of s. 41. That makes sense in the scheme of the Act. In cases in which approval as an approved provider has been revoked, the Secretary may continue to implement the decision by ceasing payment under the Act. The supervision of an approved provider that is provided for in the Act also ceases.

The Act has not affected the operation of s. 29(7) of the AAT Act. Under that provision, the Tribunal has power to extend the time within which an application for review may be made. Subject to any extension, a person has 28 days within which to lodge an application for review. The Secretary has a further 28 days under s. 37(1) of the AAT Act within which to lodge various documents and statements. Given that an application to waive the operation of s. 10-2(1) of the Act must be made at least 28 days before the end of the six month period (ss. 10-2(3) and (4)), the parties and the Tribunal would effectively have only a three month window from the receipt of the documents under s. 37(1) to the beginning of the 28 day period under s. 10-2(4) within which to prepare and present their cases and to have the matter determined. Given the often factually complex nature of cases involving the provision of aged care, this is not a feasible timetable from anybody’s point of view be it the parties, the Tribunal, or most importantly, the public for, as Gray J said in Saitta v Commonwealth [2001] FCA 817 at [36]:

“It is plain that the Aged Care Act is directed to the benefit of those receiving and requiring care. ….”

On my analysis, s. 10-2(1) would not lead to the result that, were Marnotta to be successful in its application to the Tribunal, its approval would lapse in any event because it had not provided aged care for a continuous period of six months. It follows that I consider that a legitimate purpose could be achieved by continuing the proceeding and so that Marnotta’s application for review is not frivolous or vexatious.

For the reasons that I have given, I dismiss the respondent’s application to dismiss the proceedings pursuant to s. 42B of the Administrative Appeals Tribunal Act 1975.

I certify that the ninety eight preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie

Signed: ...............................................................
R. Crook Associate

Date of Directions Hearing           12 March, 2004
Date of Decision  29 March, 2004
Counsel for the Applicant             Ms FP Hampel SC with Ms E Brophy
Solicitor for the Applicant            Ms J Thomson, Mills Oakley Lawyers
Counsel for the Respondent         Mr C Gunst QC
Solicitor for the Respondent         Mr T Mosby, Clayton Utz

[2004] AATA 326

29 March 2004