Saitta Pty Ltd and Secretary, Department of Health and Ageing
[2007] AATA 1779
•19 September 2007
CATCHWORDS – AGED CARE – stay of sanctions decision – whether necessary to secure effectiveness of hearing – determination of application for review – relevance of breach of Act unrelated to imposition of sanctions - stay granted
Administrative Appeals Tribunal Act 1975 ss 41(1), 41(2)
Aged Care Act 1997 ss 2-1, 2-1(1), 2-1(2), 3-1, 7-1, 8-1(1), 8-1(1)(c), 8‑3, 9-1(2), 9-1(3), 9-1(2)(c), 10A-1(1)(a), 10A-3, 10-2, 10‑3, 10-4,11-1, 11-2, 18-1(1), 18-5(1)(a), 42-1, 41-3(1), 53-1, 54-1, 54-1(d), 96-1, 65-1, 65-2, 67-5, 66‑1, 66-2(1)(a), 66-2(1)(b), 66A-3(2), 67-1, 67-1(2), 67-2, 67-3(1)(b), 67-3(2), 67-4, 67-5, 68-1(1)-(2), 68-2, 80-1, 80-2(1), 86-1(2), 96-1
Commonwealth Authorities and Companies Act 1997
Corporations Act 2001 s 1296(1)
Crimes Act 1958 s 21A
Quality of Care Principles 1997 ss 18.9, 18.8(3)
Sanctions Principles 1997 ss 22.10 - 22.15, 22.17, 22.18 - 22.20
Sentencing Act 1991 (Vic) s 27
Civil Aviation Safety Authority v Hotop (2005) 145 FCR 232; 87 ALD 551
Director-General of Social Services v Chaney Unreported, 4 June 1980
Duncan v Companies Auditors Liquidators Disciplinary Board [2006] FCA 1747; 93 ALD 401
Re Crossan and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 216
Re Kurukkal and Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 482
Re Repatriation Commission and Delkou (1985) 8 ALD 454
Re VBJ and Australian Prudential Regulation Authority [2005] AATA 642; (2005) 87 ALD 747; 41 AAR 97
Riverside Nursing Care Pty Ltd v Honourable Bronwyn Bishop [2000] FCA 1147, 63 ALD 27
Secretary, Department of Health and Ageing v Marnotta Pty Ltd (Receivers and Managers Appointed) [2005] FCA 1395; 88 ALD 720
Shi v Migration Institute of Australia (2003) 134 FCR 326; 78 ALD 281
Yolbir v Administrative Appeals Tribunal (1994) 48 FCR 246; 33 ALD 8
ORDER AND REASONS FOR ORDER [2007] AATA 1779
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2007/3964
GENERAL ADMINISTRATIVE DIVISION )Re:SAITTA PTY LTD
Applicant
And:SECRETARY, DEPARTMENT OF HEALTH AND AGEING
Respondent
ORDER
Tribunal: Deputy President S A Forgie
Date: 19 September 2007
Place: Melbourne
Decision:The Tribunal orders:
1.that upon the applicant’s nominating and appointing an administrator who has been approved as suitable by the Secretary of the Department of Health and Ageing in accordance with the Act:
the operation and implementation of the decisions of the respondent to:
(a)revoke the applicant’s approval under Part 2.1 of the Act as a provider of aged care services;
(b)revoke the allocation of all the places allocated to the applicant under Part 2.2 of the Act; and
(c) restrict the applicant’s approval under Part 2.1 as a provider of aged care services to care recipients to whom care is being provided at the Belvedere Park Nursing Home at 11 August 2007;
is stayed pending the hearing and determination of the applicant’s application for review or until earlier order; and
2.either party has liberty to apply to the Tribunal on giving the other party 24 hours’ notice of the intention to do so.
S A FORGIE
Deputy President
REASONS FOR ORDER
On 22 August 2007, I stayed the operation and implementation of a decision made by a delegate of the Secretary of the Department of Health and Ageing (Secretary). That decision had been to revoke the approval of Saitta Pty Ltd (Saitta) as an approved provider under the Aged Care Act 1997 (Act) as well as to revoke all the places allocated to it under Part 2.2 of the Act and to restrict Saitta’s approval under Part 2.1 as a provider of aged care service to residents for which it was then providing care at Belvedere Park Nursing Home (Belvedere). On behalf of the Secretary, Mr Gunst QC asked me for written reasons for my decision.
LEGISLATIVE BACKGROUND
The Tribunal’s power to stay: s 41 of the Administrative Appeals Tribunal Act 1975
In general terms, s 41(1) of the Administrative Appeals Tribunal Act 1975 (“AAT Act”) provides that:
“Subject to this section, the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.”
Section 41(2) then goes on to provide that:
“The Tribunal may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.”
Broad outline of relevant provisions 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.[1]
[1] Act, 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.”[2]
[2] Act, 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.[3] Only residential care is relevant in this case. It is defined as “residential care” as:
[3] Act, Schedule 1, clause 1
“… 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.”[4]
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.”[5]
[4] Act, s 41-3(1)
[5] Act, Schedule 1, clause 1
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.[6]
[6] Act, 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.[7] 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.[8] In deciding whether a person is suitable to provide aged care, the Secretary must have regard to:
“(a) the suitability and experience of the applicant’s key personnel; and
(b)the applicant’s ability to provide, and its experience (if any) in providing, aged care; and
(c)the applicant’s ability to meet (and, if the applicant has been a provider of aged care, its record of meeting) relevant standards for the provision of aged care (see Part 4.1); and
(d)the applicant’s commitment to (and, if the applicant has been a provider of aged care, its record of commitment to) the rights of the recipients of aged care; and
(e)the applicant’s record of financial management, and the methods that the applicant uses, or proposes to use, in order to ensure sound financial management; and
(f)if the applicant has been a provider of aged care – its record of financial management relating to the provision of that aged care; and
(g)if the applicant has been the provider of aged care – its conduct as a provider, and its compliance with its responsibilities as a provider and its obligations arising from the receipt of any payments from the Commonwealth for providing that aged care; and
(h)any other matters specified in the Approved Provider Principles.”[9]
[7] Act, s 7-1
[8] Act, s 8-1(1)(c)
[9] Act, s 8‑3
Unless an approved provider is a State or Territory, his, her or its “key personnel” are each of the following people:
“(a) a member of the group of people who are responsible for the executive decisions of the approved provider;
(b)any other person who is concerned in, or takes part in, the management of the approved provider;
(c)any person who is responsible for the overall nursing care provided, or to be provided, by the aged care service conducted, or to be conducted, by the applicant;
(d)any person who is responsible for the day-to-day operations of an aged care service conducted by the approved provider, whether or not the person is employed by the approved provider.
…”[10]
A person who is responsible for the overall nursing care provided, or to be provided, within the meaning of s 9-1(2)(c) must hold a recognised qualification in nursing.[11]
[10] Act, s 9-1(2)
[11] Act, s 9-1(3)
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 (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.”[12]
The “accreditation day” was 1 January, 2001.[13]
[12] Act, s 54-1
[13] Schedule 1, clause 1, 42-4(2) and Residential Care Subsidy Principles
Of the responsibilities set out in s 54-1, 54-1(d) appears on its face to be relevant in this case but require a little further consideration. Section 54-1(1)(d) requires an approved provider providing care through a residential care service to comply with the Accreditation Standards. Sections 54-2 provides that the Quality of Care Principles may be set out the Accreditation Standards. Using his power under s 96-1, the Minister made the Quality of Care Principles 1997 (Quality of Care Principles) setting out, among others, the Accreditation Standards. They have been amended from time to time since then.
The Accreditation Standards, they are “… standards for quality of care and quality of life for the provision of residential care on and after the accreditation day”.[14] They are set out in Schedule 2 to the Quality of Care Principles and deal with management systems, staffing and organisational development, health and personal care, resident lifestyle and physical environment and safe systems.[15] Section 18.9 explains that:
“(1) The Accreditation Standards are intended to provide a structured approach to the management of quality and represent clear statements of expected performance. They do not provide an instruction or recipe for satisfying expectations but, rather, opportunities to pursue quality in ways that best suit the characteristics of each individual residential care service and the needs of its residents. It is not expected that all residential care services should respond to a standard in the same way.
(2) The Accreditation Standards apply equally for the benefit of each resident of a residential care service, irrespective of the resident’s financial status, applicable fees and charges, amount of residential care subsidy payable, agreements entered into, or any other matter.”
[14] Act, s 54-2
[15] Quality of Care Principles, s 18.9
Within each Accreditation Standard is a paragraph describing the principle behind the standard and another setting out the intention of the standard. That is consistent with the requirements of s 18.8(3). That paragraph is followed by a description of the Matter Indicator and the Expected Outcome. I will set out only those relied on by the Secretary in making the decisions under review:
“Part 2 Health and personal care
Principle:Residents’ physical and mental health will be promoted and achieved at the optimum level in partnership between each resident (or his or her representative) and the health care team.
| Col. 1 Item | Column 2 Matter Indicator | Column 3 Expected Outcome |
| 2.1-2.11 | … | … |
| 2.12 | Continence management | Residents’ continence is managed effectively |
| 2.13-2.17 | … | … |
Part 3Resident lifestyle
Principle:Residents retain their personal, civic, legal and consumer rights, and are assisted to achieve active control of their own lives within residential care service and in the community.
| Col. 1 Item | Column 2 Matter Indicator | Column 3 Expected Outcome |
| 3.1-3.5 | … | … |
| 3.6 | Privacy and dignity | Each resident’s right to privacy, dignity and confidentiality is recognised and respected |
| 3.7-3.10 | … | … |
Part 4Physical environment and safe systems
Principle:Residents live in a safe and comfortable environment that ensures the quality of life and welfare of residents, staff and visitors
| Col. 1 Item | Column 2 Matter Indicator | Column 3 Expected Outcome |
| 4.1 | Continuous improvement | The organisation actively pursues continuous improvement |
| 4.2-4.3 | … | … |
| 4.4 | Living environment | Management of the residential care service is actively working to provide a safe and comfortable environment consistent with residents’ care needs. |
| 4.5-4.6 | … | … |
| 4.7 | Infection control | An effective infection and control program |
| 4.8 | Catering, cleaning and laundry services | Hospitality services are provided in a way that enhances residents’ quality of life and the staff’s working environment. |
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.[16] The allocation of places is the subject of Part 2.2 of the Act and is the subject of the Allocation Principles made by the Minister for Health and Aged Care (“Minister”) under s 96-1.[17] 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 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.”
[16] Act, s 11-1
[17] Act, s 11-2
Cessation of approvals and allocations by relinquishment or revocation
In the case of residential care, the Secretary may revoke an allocation of a place if an approved provider has not provided that care for a period of 12 months in respect of that place. That is the effect of s 18-5(1)(a) but it is not relevant in this case. Revocation under Part 4.4 is relevant and I will return to that shortly.
Cessation of approval as a provider
Approval as a provider of aged care ceases in the circumstances set out in s 10-1 of the Act. 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. Under Part 2-1, it may occur on the request of the approved provider[18] 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.[19] 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.[20] We will return to the revocation of an approval under Part 4.4 below.
[18] Act, s. 10-4
[19] Act, s 10-3
[20] See [7] above
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 Part 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.”[21]
[21] Act, 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.”[22]
[22] Act, 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 section 67-5 notice time[[23]];
[23] Act, “section 67-5 notice time” means the time when notice of a sanction is given to an approved provider under s 67-5: Act, Schedule 1, cl 1.
(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 time the 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 time the 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.”[24]
[24] Act, s 66‑1
When does revocation not take effect?
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.[25] The second is that the approved provider so agrees within the specified time.[26] 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 and in accordance with 66A-2, 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 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”.[27]
[25] Act, s 66-2(1)(a)
[26] Act, s 66-2(1)(b)
[27] Act, s 66‑2(1)(a)
Of relevance in this case is the appointment of an administrator. The Sanctions Principles 1997 provide for that. If a person were to be eligible for appointment as an administrator, that person has to meet the eligibility criterion for appointment.[28] They include the person’s having at least three years’ experience in senior positions managing, or providing professional support and advice to, an aged care service or similar undertaking. The person’s appointment has to be approved by the Secretary.[29] The way in which that comes about is the subject of Division 2 of the Sanctions Principles 1997, ss 22.10 to 22.15. The approved provider must first nominate a person as administrator.[30] The Secretary must either approve or refuse to approve the appointment within 14 days after receiving the nomination.[31] Before making a decision, the Secretary may require the proposed administrator to summarise or describe the action that person proposed to take to remedy the approved provider’s non-compliance with the Act. Before approving the appointment of a person as an administrator, the Secretary must be satisfied that the person meets the eligibility criteria for appointment, has a sufficient understanding of the issues to remedy the non-compliance, there would be no conflict affecting the delivery of care or other services and any other of the person’s obligations as an administrator or otherwise and that the proposed administrator has complied with any requirement to summarise any proposed remedial action.[32]
[28] Sanctions Principles, s 22.13(3)(b)
[29] Sanctions Principles, 22.13(3)
[30] Act, s 66A-3(2)
[31] Sanctions Principles, s 22.13(1)
[32] Sanctions Principles, s 22.13(3)
Procedure for the imposition of sanctions
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 67-3(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 in accordance with 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.[33] 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.[34] The undertaking must be in the form set out in s 67-4(3).
[33] Act, s 67-4(1)
[34] Act, s 67-4(2)
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.[35] 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.[36] 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.[37]
[35] Act, s 67-4(1)
[36] Act, s 67‑5(2)
[37] Act, s 67-5(3)
While the notices to which I have referred are usually given, all but that given under s 67-5 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.”[38]
[38] Act, s 67-1(2)
The Full Court of the Federal Court has held that s 67-1(2), when read with ss 67-1, 67-2 and 67-3, clearly excludes the rules of natural justice when the Secretary is satisfied that there is an immediate and severe risk to the safety, health or well being of care recipients.[39] Their Honours went on to explain why that should be so:
“12 There are good policy reasons why, in the circumstances contemplated by s 67-1(2), the right to be heard should be excluded. The exclusion takes place only if the secretary is satisfied that there is an immediate and severe risk to the safety, health or well-being of care recipients. The object of excluding the steps referred to in s 67-1(1) in such circumstances is to ensure that the taking of those steps does not occasion a delay which might imperil the safety, health or well-being of care recipients. Any delay resulting from allowing an approved provider to exercise a common law right to be heard could jeopardise the safety, health or well being of care recipients. There would be no utility in excluding the steps contemplated by s 67-1(1) if a common law right to be heard remained.”
[39] Riverside Nursing Care Pty Ltd v Honourable Bronwyn Bishop [2000] FCA 1147, 63 ALD 27, Ryan, Marshall and Emmett JJ
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.[40] Those general provisions do not apply to sanctions revoking the approved provider’s approval under Part 2.1 (revocation of approved provider’s approval) or 2.2 (revocation of allocation of places), revoking the extra service status of a residential care service (or a distinct part of a residential care service) conducted by an approved provider, revoking the certification of the residential care service in respect of which the approved provider has not complied with its responsibilities or requiring repayment of some or all of any grants paid to the approved provider under Chapter 5 in respect of an aged care service in respect of which the approved provider has not complied with its responsibilities.[41] The length of any sanction period is determined by the Secretary having regard to any matters specified in the Sanctions Principles.[42]
[40] Act, s 68-1(1)
[41] Act, s 68-1(2)
[42] Act, s 68-2
The Sanctions Principles 1997 specify that the Secretary must have regard to the following matters in determining the length of a sanction period:
“(a) whether the non-compliance is of a minor or serious nature; and
(b)whether the non-compliance has happened before, and, if so, how often; and
(c)whether the non-compliance threatens or threatened the health, welfare or interests of care recipients; and
(d)whether the approved provider has failed to comply with any undertaking to remedy the non-compliance; and
(e)the period likely to be needed to establish whether any improvement in compliance can be sustained.”[43]
[43] Sanctions Principles, s 22.17
An approved provider may apply to the Secretary for the sanction to be lifted.[44] In deciding whether or not to lift it, the Secretary must have regard to whether the approved provider is complying with its responsibilities under Parts 4.1, 4.2 and 4.3 and any other matter specified in the Sanctions Principles. Under the Sanctions Principles 1997, the Secretary must have regard to the matters specified in s 22.17 in deciding whether it is appropriate to lift a sanction and the requirements that must be met by an application to lift a sanction.[45] In addition, he or she must have regard to whether any changes made by the approved provider are likely to result in a sustained improvement in the approved provider’s compliance with his, her or its responsibilities.[46] Among the matters that the application must deal with are what the approved provider has done to remedy non-compliance for which the sanction was imposed, any assessment carried out while the sanction has been in effect, staffing and organisational development against the Accreditation Standards, consultations with staff and care recipients or their relatives and the approved provider’s proposals for sustaining its compliance with its responsibilities.[47]
[44] Act, s 68-4
[45] Act, ss 22.18 and 22.19
[46] Act, s 22.19(b)
[47] Sanctions Principles 1997, s 22.20
The process of assessing approved provider’s compliance with obligations
Under s 80-1 of the Act, the Secretary may, on behalf of the Commonwealth, enter into a written agreement with a body corporate (“accreditation body”) to give it a grant of money (“an accreditation grant”) in exchange for its carrying out the following purposes:
“(a) accreditation of residential care services in accordance with the Accreditation Grant Principles;
(b)any other purposes specified in the Accreditation Grant Principles, including the performance of any of the functions of the Secretary under this Act that are specified in the Accreditation Grant Principles. ...”[48]
[48] Act, s 80‑1(1)
Examples of the matters with which the Accreditation Grant Principles, which are made under s 96-1, may deal include the procedures to be followed in deciding whether to accredit a residential care service or to revoke or suspend accreditation and in reconsidering decisions, the matters to be taken into account in making and reconsidering decisions and any fees that may be charged on behalf of the Commonwealth for services the accreditation body provides.[49]
[49] Act, s 80-1(2)
An accreditation grant is subject to any conditions that may be set out in the Accreditation Grant Principles and in the agreement under which the accreditation grant is payable.[50] Conditions may relate to the administration and monitoring of the grant and the circumstances in which it is repayable and to reports and other information that is to be provided to the Commonwealth relating to compliance with the Accreditation Standards.[51]
[50] Act, s 80-2(1)
[51] Act, s 80-2(2)
The Aged Care Standards and Accreditation Agency Limited (Agency) is a company incorporated under the Corporations Law in which the Commonwealth has a controlling interest. It is subject to the Commonwealth Authorities and Companies Act 1997. It is the body corporate with which the Commonwealth has entered an agreement under s 80-1 of the Act.
BACKGROUND
For the purposes of determining his application for a stay, I will set out the facts that appear to be supported by the material lodged to date. Whether that continues to be the case, remains to be seen when all the evidence is known.
Saitta Pty Ltd and its operation of Belvedere
Mr Russell Bruce Menere is a director of Saitta Pty Ltd (Saitta) and its Chief Executive Officer. He has been a director since the 1970s when it started to operate an eight bed nursing home in Moonee Ponds. Over the years, it extended its operations and obtained appropriate approvals until it operated a 15 bed nursing home. In 1993, it had approval for 30 high care beds in all and moved its nursing home to a site in Sydenham. It is at that site that Saitta now trades as the Belvedere Park Nursing Home (Belvedere).
Before the Accreditation Standards came into operation on 1 January 2001, Belvedere was found to comply with the Residential Care Standards made under s 54-3 After the Accreditation Standards came into operation on that day, Belvedere was accredited to February 2002. In 2002, it was audited and assessed as compliant with all the items in each of the four standards. It was accredited until February 2006. A further accreditation audit was conducted by the Agency in November 2005 and found to comply with all of the standards. In February 2006, Belvedere was accredited until February 2009.
Mr Menere is also the Chief Executive Officer of Saitta and Ms Theresa Stekly is the Director of Nursing and Nursing Care Manager. Ms Stekly is a Division 1 registered nurse.
The audits and sanctions decisions in 2007 and the relocation of residents
Between 16 and 17 November 2005, and 3 July 2007, it appears from Mr Menere’s affidavit that the Agency did not conduct any support contact visits at Belvedere. It did do so, however, on 3 July 2007. It found that Belvedere was non-compliant in respect of five outcomes. Ms Stekly wrote to the Minister for Health and Ageing regarding the assessors outlining briefly various complaints with the manner in which the support contact visit was conducted.[52]
[52] Affidavit of Russell Bruce Menere (RBM) at Exhibit B
The Agency notified Saitta that Belvedere would receive a further support contact visit on 23 July 2007. That visit occurred and Belvedere was found to be non compliant in respect of six outcomes. The Agency conducted a further support contact visit on 3 August 2007.
On 6 August 2007, the Agency wrote to Saitta advising that it would hold a review audit of Belvedere. The Agency advised Saitta of the personnel who would conduct that review audit. Also on 6 August 2007, Ms Stekly went on sick leave. She was replaced by Ms Veronique Tunaca, who is a registered nurse, division 1. Ms Tunaca has continued to act as the Nursing Care Manager since that date.
The Agency undertook a review audit commencing on 6 August 2007. Mr Menere wrote to Ms Wendy Bateman, the Acting Manager of the Agency, on 8 August 2007 regarding the review.
Ms Barbara Simmonds, is a delegate of the Secretary of the Department of Health and Ageing (Department). On Saturday, 11 August 2007, she telephoned Mr Menere to tell him that the Agency considered that there was serious risk at Belvedere. Ms Simmonds advised Mr Menere that Saitta had five days within which it could respond to the Agency’s audit review. At that time, Belvedere had 25 residents, all of whom were considered to be in need of high level nursing care.
In addition to making the telephone call, Ms Simmonds made a decision to impose two sanctions on Saitta under s 65-1 of the Act. She took a number of reports and notes into account in reaching her decision. These were:
“The Serious Risk Report of 10 August 2007 from the … (Agency). …
An Agency Support Contact Visit conducted at the Service on 3 August 2007 – Service was non-compliant in eleven (11) Items;
An Agency Support Contact Visit conducted at the Service on 23 July 2007 – Service was non-compliant in six (6) Items.
An Agency Support Contact Visit conducted at the Service on 3 July 2007 – Service was non-compliant in five (5) Items.
…An Agency Site Audit conducted at the Service 11 December 2001 to 13 December 2001 – Service was non-compliant in thirteen (13) items.”[53]
Her written decision began with a note that she was satisfied that Saitta had not complied, or were not complying, with one or more of its responsibilities under Part 4.1, 4,2 or 4.3 of the Act in respect of Belvedere. As a result of that non-compliance, there was an immediate and severe risk to the safety, health or well-being of care recipients at the Service to whom Saitta, as an Approved Provider, was providing care. In Ms Simmond’s view, it was appropriate to impose sanctions.
[53] Affidavit of RBM at Exhibit G
The first sanction Ms Simmonds imposed was to revoke Saitta’s approval as an approved provider. If, however, Saitta agreed to nominate and appoint an administrator in accordance with the Act, the revocation would not take effect. If Saitta’s approval were revoked, it would not be entitled to receive Commonwealth subsidy from the day on which revocation took effect. Any revocation would also be taken into account in any consideration of any application Saitta chose to make for approval as an Approved Provider in the future.
The second sanction was to restrict approval under Part 2.1 of the Act as a provider of aged care services to care recipients to whom care was being given at Belvedere at the time the sanction took effect. Unless lifted earlier, that sanction would stay in place for six months from 11 August 2007 to 10 February 2008. The consequence of the sanction was that Saitta would not be eligible to receive Commonwealth subsidy for new residents it admitted during the currency of the sanction.
As well as setting out the sanctions, the notice that Ms Simmonds gave to Saitta on 11 August 2007 also detailed the nature of its non-compliance with the Accreditation Standards. She told Saitta that she had found non-compliance with its responsibility with s 54-1(1)(d) of Part 4.1 to comply with the Accreditation Standards under s 54-2. In particular, Saitta had not complied with Item 2.12 (Continence management) of Standard 2, Item 3.6 (Privacy and dignity) of Standard 3, Items 4.4 (Living environment), 4.7 (Infection control) and 4.8 (Catering, Cleaning and Laundry Services) of Standard 4.
By arrangement with Ms Simmonds, Mr Menere attended a meeting at the Department on 14 August 2007. He attended with Mr Gerard Mansour. At the meeting, reference was made by officers of the Department to Mr Graeme Menere in relation to Belvedere. Mr Menere said that he felt threatened and stressed in the presence of four representatives of the Department. This caused him to forget Ms Tunaca’s name for the moment.
Also on 14 August 2007, Mr Menere wrote to the Department nominating Ms Lulu Richer as administrator. She had not been appointed at the time of the hearing as Mr Menere was yet to hear from the Department as to whether the Secretary had approved her appointment under the Act.
On 15 August 2007, Ms Simmonds wrote to the relatives of the residents at Belvedere.[54] She told them of her decision and of a meeting to be held at Belvedere on 20 August 2007. Saitta was to tell them how it would make the improvements that it had to make. The Department, Ms Simmonds told the relatives, would monitor the improvements undertaken at Belvedere as would the Agency.
[54] Affirmation of Mary Catherine Knight (MCK) at Exhibit MCK-2
On 16 August 2007, Mr Menere received a notice of Ms Helen Hambling’s decision after reviewing Ms Simmond’s decision. She advised him that she was satisfied that there was sufficient reason to reconsider the earlier decision. In making that decision, she noted that the Department had received a Serious Risk Report dated 15 August 2007 and the Review of Audit Major Findings Assessment Information from the Review Audit conducted from 6 to 15 August 2007. In her view:
“… The information contained in these documents indicates that non-compliance at the Service is far more widespread, deep-rooted and intractable than was evident at the time of the reviewable decision.”[55]
[55] Affidavit of RBM at Exhibit G
Ms Hambling had relied on the same information as Ms Simmonds had referred to in her decision but also referred to various reports that had been prepared since that decision. That information was:
“The Serious Risk Report of 15 August 2007 from the Aged Care Standards and Accreditation Agency (the Agency). …
The Review Audit Major Findings Assessment Information from a Review Audit conducted from 6 to 15 August 2007. …
File note of a meeting on 14 August 2007 attended by Russell Menere, Gerard Mansour of Aged & Community Care Victoria and Departmental officers;
An Agency Support Contact Visit conducted at the Service on 14 August 2007;
·An Agency Support Contact Visit conducted at the Service on 13 August 2007;
An Agency Support Contact Visit conducted at the Service on 12 August 2007;
An Agency Support Contact Visit conducted at the Service on 11 August 2007”.[56]
On the basis of that material, Ms Hambling formed the view that there had been extensive and major failures to provide appropriate care in breach of its responsibilities under Parts 4.1, 4.2 and 4.3 of the Act. Those failures had led to there being an immediate and severe risk to residents. In addition, she formed the view that Saitta had been in breach of the Sanctions Principles in that one of its key personnel has been convicted of an indictable offence. In doing so, it had been in breach of its responsibility under s 63-1A of Part 4.3 to take all reasonable steps to ensure that none of its key personnel is a disqualified person.[57]
[56] Affidavit of RBM at Exhibit G
[57] Clause 22.3B of the Sanctions Principles specifies those steps that are reasonable for an approved provider to take.
Ms Hambling imposed three sanctions with effect from noon on 23 August 2007. In choosing that time, she said that she had regard to the desirability of allowing sufficient time for the taking of reasonable steps to inform each care recipient and, in summary, their relative or personal representative and any risk to the safety, health or well-being of care recipients to whom Saitta was providing care.
The first sanction was to revoke Saitta’s approval under Part 2.1 of the Act as a provider of aged care services. The second was to revoke the allocation of all places allocated to Saitta under Part 2.2 of the Act. The third restricted Saitta’s approval under Part 2.1 as a provider of aged care services to care recipients to whom care was provided at the time the notice of Ms Hambling’s decision was served on it. The practical effect was that Saitta was not entitled to Commonwealth subsidy under the Act from noon on 23 August 2007.
On 17 August 2007, Ms Simmonds wrote a letter to the residents of Belvedere and another to their relatives. She told them of her decision to revoke Saitta’s approval to provide aged care services with effect from noon on 23 August 2007. She explained that:
“… The consequences of revocation are that the provider loses entitlements to all forms of Australian Government funding under the aged care program. This may have implications for the continued operation of the Home.”[58]
[58] Affirmation of MCK at MCK-3
Ms Mary Catherine Knight is a senior compliance officer/nursing officer in the Quality and Risk Management of the Aged and Community Care Branch of the Department. On the basis of her affirmation, I find that the Department implemented the contingency plans it had developed for situations in which there is widespread non-compliance and sever risk to residents. A preliminary investigation identified available vacancies at a number of appropriate facilities near Belvedere as well as in locations closer to the residents’ relatives. Thirty one beds were found.
The Department also engaged the services of Tender Living Care (TLC), which is experienced in relocating persons seeking residential care. TLC liaised with the families of the residents or with their nominated representatives by coordinating their visits to available facilities, arranging appropriate transportation and liaising with aged care assessment team services. In addition, TLC reassured relatives and their families about relocation and liaised with the Department. TLC’s services were provided at no cost to the residents or to their relatives.
The Department also arranged for a number of nursing agencies to provide additional assistance either at Belvedere or at the nursing homes to which its residents were relocated.
By the end of 20 August 2007, there were 21 residents at Belvedere. One had been hospitalised and later died and another three residents had relocated from Belvedere to other facilities. On that day, Ms Knight received a telephone call from Ms Jillian Slade of TLC to inform her that Belvedere staff had told her that Saitta had obtained an injunction and had questioned her why she was moving residents. Ms Knight told her that the Department had not been notified of any injunction.
Ms Simmonds had told residents and their relatives of a meeting at Belvedere on 20 August 2007. Sometime before that, Mr Russell Menere wrote to them. It read in part:
“The Belvedere Park Nursing Home proprietor has instituted an Interlocutory Injunction Stopping the Department of Health and Ageing from revoking Approved proprietor’s approval to provide aged care service.
The consequence of this injunction is that the Australian Government is obliged to continue funding Belvedere Park Nursing Home under the Aged Care Program. This ensures the home will continue to operate and provide secure care to your family member.
The Proprietor has also sought an injunction to restrain the Department of health and Ageing and any member of the department or any agent of the department from making contact.
The proprietor is preparing an application to review all sanctions imposed upon the Nursing Home to the Administrative Appeals Tribunal.
While this right of appeal is in progress the home will continue to provide care to the residents and receive government funding.
As the Depertment [sic] of health will not be permitted to make contact with you, and the matter is to be reviewed by the Administrative Appeals Tribunal there is little to report to you at this date other than this letter.
Consequently the Meeting on Monday the 20th of August 2007 at Belvedere Park Nursing Home has been cancelled till another date to be advised.
As you may well be aware, the staff and the proprietor disagree with the Agency report as does an expert Agent of the Accreditation Agency of who made the report and deny ever having put residents in any Immediate and Serious risk of any injury and there is no cause for concern as the staff will continue to properly care for your family member.
…”[59]
[59] Affirmation of MCK at MCK-5
Despite this letter, the meeting went ahead on 20 August 2007 although no longer at Belvedere. It was well represented by relatives and by officers of the Department and representatives of TLC and aged care and health interest groups. The minutes of the meeting record Ms Hambling as chairing the meeting. In summary, she explained that the sanctions had been imposed after the Agency had identified serious risk after conducting an unannounced audit at Belvedere.
On 21 August 2007, another six residents relocated to other facilities and fifteen then remained at Belvedere. The next day, the majority of those residents remaining at Belvedere relocated and the final residents did the same on 23 August 2007.
The impact of the sanctions decisions
There is no question that the effect of the sanctions decisions on Saitta is that it will not receive payment of subsidies from the Commonwealth to be used for the provision of aged care at Belvedere. Saitta is wholly dependent on the daily care fee paid by each resident together with a daily income tested fee, if any, paid by each resident. For the purposes of this hearing, I accept that evidence without question and accept that Saitta is unlikely to be able to offer aged care services at Belvedere for any length of time. Saitta will not be able to service its loans or pay its staff. That will lead to the denigration of a saleable asset.
Mr Graeme Menere’s role in Belvedere and its management
Mr Graeme Menere said in his affidavit dated 21 August 2007 that he is employed by Saitta to manage the payroll and to provide administrative support for Belvedere. He has no other role.[60]
[60] Affidavit GPM at [1]
Mr Menere said in his affidavit that he received a telephone call from Ms Tunacao on 8 August 2007. Ms Tunacao told him that Ms Stekly was suffering from pneumonia, would be away from work for four weeks and that she could not find where Ms Stekly kept the audit files and the training records. She also told him that the Agency wanted to speak with him.
Mr Graeme Menere said that he spoke with Ms Lynne Sellers from the Agency. Ms Sellers told him that there were difficulties in finding documents to assist with their audit. He said that he explained that he held a purely administrative position and was not one of the key personnel as defined in the Act. His usual practice was to courier the staff pay records to Belvedere. Despite that, he offered to go to Belvedere as he might be able to find the missing documentation. He said that he was familiar with the documentation system and the manuals as he had been involved in establishing the system years before. The next few weeks were quiet for him. Mr Graeme Menere denied that he told Ms Sellers that he would be acting in Ms Stekly’s position. He is not a clinical nurse and cannot fulfil the position of Nursing or Care Services Manager.
Mr Graeme Menere said that he assisted two of the Agency’s officers, Ms Sellers and Ms Clarke, with Belvedere’s documentation system. He did so by showing them an audit plan included in a manual he had in front of him. When Ms Sellers told him that she had spent the day looking for that manual, he offered it to her but she did not take it then or ask for it the following day. Mr Graeme Menere understands that Ms Tunacao also showed Ms Sellers the manual. He believes that it is the same manual as was in use when Belvedere was last accredited by the Agency.
Mr Graeme Menere said that Ms Sellers invited him and Ms Tunacao to receive the exit report after he had informed her that he was not a key person. He said that he had told Ms Clarke that he attended to administrative duties and reported to his brother, who is one of the directors, but that he is not a key person. Mr Graeme Menere said in his affidavit that at no time did he make any executive decisions or give instructions in relation to Belvedere. Over the past six months, he has visited the service on only a few occasions. On those, he has been in the company of his wife and has been visiting his father in law, who lives near Belvedere. There is a clear management structure according with the Act. It is:
“Mr Russell Menere and Mrs Joan Menere, Directors, are the key personnel responsible for managing the company in accordance with the Companies Act.
Theresa Stekly is the Care Service Manager responsible for the day to day management of the service … and she is also a registered nurse … Ms Stekly has held the position as the person responsible for overall nursing care in this small facility …
Veronique Tunacao is currently filling the key position as Nurse Unit Manager responsible for the nursing care … and is a qualified registered nurse … while Theresa Stekly is incapacitated.
Ms Lulu Richer is filling the position as Acting Care Service Manager and Administrator …”[61]
[61] Affidavit of GPM at [18]
The issue of whether Mr Graeme Menere is, or is not, one of Belvedere’s key personnel is relevant because he was, on 1 May 1998, convicted of one count of stalking and eight counts of stalking another person. He was sentenced to a three month term of imprisonment on the charge of stalking but it was suspended for two years under s 27 of the Sentencing Act 1991 (Vic). On the remaining charges he was fined $2,000.[62] Through its solicitors, Saitta advised the Department that Mr Graeme Menere was no longer one of its directors and was no longer one of its key personnel for the purposes of the Act. It did so in a letter dated 23 January 2001[63] after receiving advice from the Department regarding a change in the law concerning disqualified individuals.[64]
[62]Affidavit of Andrew Robert Westcott (ARW) at ARW-13
[63] Affidavit of ARW at ARW-15
[64] Affidavit of ARW at ARW-14
In his affidavit, Mr Russell Menere said:
“23 Graeme Menere is not a key personnel not [nor] does he act in any way as a key personnel of Belvedere. Graeme Menere is limited to clerical assistance at an office located in Dandenong where he provides assistance with the payroll. Graeme Menere is a shareholder in the business and as such he is kept informed of all aspects of the business.
24The email address referred to in the letter from the Department dated 16 August 2007 reflects [email protected] which is a centralised point of communication to the Dandenong office. The initials GPM do not refer to a position description in relation to Graeme Menere nor are they an indication of any involvement in the organisation.”
An internal contact list[65] contains the line “Management: Graeme Menere Proprietor” immediately under the name, address and telephone numbers of Belvedere. Under the word “Management”, Mr Russell Menere’s name has been handwritten as has his mobile telephone number. Other names on the list are those of the Care Service Manager, Registered Division 1 Nurses and the Social/DT Coordinator. Mr Graeme Menere’s name also appears as the person authorising the roster for the fortnight beginning 2 September 2007.[66]
[65] Affidavit of ARW at ARW-17
[66] Affidavit of ARW at ARW-18
Ms Knight said in her affirmation that Mr Graeme Menere was present at the meeting of relatives held on 20 August 2007. She said that she had overheard Mr Graeme Menere’s telling a relative that he looked after the funding at Belvedere. During the meeting, she thought that Mr Graeme Menere had appeared to prompt a relative to ask questions. Mr Russell Menere had appeared to gesture to his brother to tell him not to do that.[67]
[67] Affirmation of MCK at [33]
Ms Katrina Sharp’s evidence regarding lack of serious risk at Belvedere
Ms Katrina Sharp is an aged care consultant. She is a registered nurse in New South Wales and holds two degrees: a Bachelor of Health Science and a Master of Health Administration. She is an aged care quality assessor registered with the Register Accreditation Board Quality Society of Australasia. In that capacity, she has undertaken approximately 300 assessments for the Aged Cared Standards and Accreditation Agency Limited (Agency) including accreditation audits, review audits and support contacts. In addition, Ms Sharp manages an 83 bed high care facility in Sydney.
At Mr Russell Menere’s request, Ms Sharp reviewed Belvedere on 20 August 2007. Before her visit, she was given the Agency’s Serious Risk Reports dated 10 August 2007 and 15 August 2007 as well as the Notice of Decision on Review dated 16 August 2007. In all, she spent 4.5 hours at Belvedere. During that time, she spoke with staff members occupying a range of positions at Belvedere. She also reviewed documentation such as a number of patient files, medication charts, diabetic management charts and wound charts. Ms Sharp observed notices relating to matters such as handwashing, storage of chemicals, infection control procedures, residents’ diet and preference lists and cleaning procedures.
In Ms Sharp’s opinion, Belvedere was non-compliant in a number of outcomes but not such that there was serious risk, let alone immediate and severe risk. She set out her reasons for coming to that conclusion in her affidavit. They are presented in point form in single spacing and occupy a little over two pages of her affidavit.[68] While she was at the facility, Ms Sharp said, she spoke with Mr Gerard Barry from the Agency. He told her that there were no new areas of concern and that he would record all areas of improvement in his report. In addition, Ms Sharp met with three representatives of the Department. She expressed her view to them that there was no serious risk at Belvedere. Ms Sharp understood them to respond that it is not their role to form an opinion about serious risk as that is a matter for the Agency.
[68] Affidavit of Katrina Sharp at [5]
Mr Barry has been a grade one quality assessor employed by the Agency for the past two years. Previously, he undertook quality assessment work for the Agency on a contract basis. He has a Bachelor of Science in Applied Chemistry and an Postgraduate Diploma in Quality Management. Mr Barry has lectured on the subject of quality management for diploma and certificate courses at TAFE college level.
Mr Barry said in his affirmation that he had visited Belvedere on five occasions during 2007. After his two most recent visits, on 20 and 21 August 2007, he prepared support contact records. He spent two hours at Belvedere on the first occasion and two hours on the second. Mr Barry had seen Ms Sharp’s affidavit but had not had time to make a detailed response. In his opinion, the time that Ms Sharp spent at Belvedere would not have been sufficient time for her to make the observations and conduct the enquiries necessary to deal with the matters dealt with in the Agency’s audit during the period from 6 to 15 August 2007. By way of contrast, the Agency audit was prepared by a team of people, each of whom spent several days at Belvedere. Since 15 August 2007, the Agency has made daily visits to Belvedere. Mr Barry agreed with Ms Sharp’s view that some deficiencies identified in the Agency’s audit have now been addressed. He disagreed with her conclusion that Belvedere did not present as a serious risk let alone a severe and immediate risk. In his view, Saitta had not, as at 21 August 2007, addressed its systemic and widespread failures to comply with the Accreditation Standards set out in the Agency’s serious risk report dated 15 August 2007.
CONSIDERATION
Section 41(2) of the AAT Act: general principles regarding the matters to which the Tribunal must have regard in exercising its power
Both Mr Hanks QC on behalf of Saitta and Mr Gunst QC on behalf of the Secretary referred to a number of authorities relating to the scope of the power given to the Tribunal by s 41(2) and the principles that it should apply.
I will begin with the judgment of Davies, Burchett and O’Connor JJ in Yolbir v Administrative Appeals Tribunal.[69]Their Honours examined a number of authorities considering whether the Tribunal was reviewing the operative decision or the decision that simply affirmed or varied the operative decision. They agreed with those authorities that it was the operative decision that was the subject of review and not the affirmation or variation decision. Turning to s 41 of the AAT Act, their Honours then came to the following conclusion:
“ It seems to us that the terms of subs (1) of s 41 confirm that subs (2) must have the broad meaning attributed to it in these decisions. Plainly, subs (1) refers to the operative decision upon which action may be taken to implement it. It is that decision which subs (2) then permits the tribunal to say. Furthermore, subs (2) speaks of ‘the decision to which the relevant proceeding relates’, which may be stayed ‘for the purpose of securing the effectiveness of the hearing and determination of the application for review.’ A stay of a non-operative decision would plainly have nothing to do with securing the effectiveness of the hearing or the Tribunal’s determination.”[70]
[69] (1994) 48 FCR 246; 33 ALD 8
[70] (1994) 48 FCR 246; 33 ALD 8 at 249; 11. In Shi v Migration Institute of Australia, Tamberlin J came to a conclusion consistent with that reached in Yolbir: (2003) 134 FCR 326; 78 ALD 281 at 332; 286.
Bearing in mind the breadth of interpretation that must be accorded s 41(2), it remains clear that the Tribunal may make an order affecting the operation or implementation of the decision only if it is of the opinion that it is desirable to do so after taking into account the interests of any persons affected by the review. If it forms that opinion, it may make an order staying the operation or implementation of the decision, or part of it, to which the proceeding relates. That order, however, must be one that it considers appropriate to secure the effectiveness of the hearing and determination of the application for review.
Taking first the word “desirable” in s 41(2), I considered it in Re VBJ and Australian Prudential Regulation Authority.[71] I concluded that it meant “what is worth having” and that what was worth having had to be assessed after taking into account the interests of any persons who might be affected by the review of the decision. Those persons whose interests might be affected will include the parties to the application but will go beyond them to include those whose interests were taken into account in making the decision or whose interests were taken into account by Parliament in giving APRA the power to make the decision as part of its regulatory role.[72] Other persons who have had a banning order made against them will not be persons whose interests are affected by the decision under review simply by virtue of their having been the subject of such an order. They may have an interest in the outcome so that they may compare the outcome with the outcome in those circumstances. That, however, is not an interest that may be affected by the particular review to which s 41(2) refers.
[71] [2005] AATA 642; (2005) 87 ALD 747; 41 AAR 97
[72] Those persons may not be able to apply for review of the decision under s. 27(1) of the AAT Act as they may not be “persons … whose interests are affected by the decision” (emphasis added). That does not mean that they are not “persons who may be affected by the review” (emphasis added).
The next aspect of s 41(2) that should be considered in this case concerns the principles that can be drawn from the previous authorities. Although pre-dating Yolbir and Shi v Migration Institute of Australia[73] by almost ten years, Deputy President Hall’s analysis of the authorities in Re Repatriation Commission and Delkou[74] relating to stay provisions is consistent with both of them and remains relevant today:
“(8) The power conferred by s41(2) of the Act is a power to make an order ‘staying or otherwise affecting the operation or implementation of the decision or a part of the decision’ sought to be reviewed. It is a power that enables the Tribunal to preserve the status quo pending the hearing and determination of the application for review where the ‘effectiveness’ of the review may be jeopardized if the decision, in the meantime, is carried into operation. Thus the power may be exercised when it is appropriate to do so to ensure that the application for review, if successful, is not rendered nugatory: cf Polini v Gray (1879) 12 Ch D 438 at 446 per Colton LJ; cf J C Scott Constructions v Mermaid Waters Tavern Pty Ltd [1983] 2 Qd R 243.
(9) The Tribunal commonly grants a stay in respect of deportation orders. Otherwise the effectiveness of the review would almost certainly be jeopardized because the applicant would be unable to attend the hearing and to enjoy the benefits of his application for review, if successful: cf Kioa v West (1984) 6 ALN N21. On occasions, the Tribunal has stayed the operation of decisions cancelling social welfare benefits where, deprived of that support, the applicant faces serious hardship. Notwithstanding the possibility that, if the application for review is unsuccessful, benefits may be paid in the meantime to which the applicant was not entitled and which may be irrecoverable, the Tribunal has recognized that, in a very practical sense, the review may be rendered nugatory unless the applicant is provided with the means of sustenance pending the hearing: cf Re Dart and Director-General of Social Services (1982) 4 ALD 553.
(10) However, the Tribunal has also recognized that the power conferred by s41(2) needs to be construed broadly and that it must be capable of adaptation to the wide variety of situations that arise in its diverse administrative review jurisdictions. Thus in Re Dekanic and Tax Agents’ Board of New South Wales (1982) 6 ALD 240 at 241, the President said: ‘In applying s41, the principles which are adopted in other places for other purposes have no direct relevance. Moreover, the jurisdiction of the Tribunal is wide and diverse and it is not practicable to lay down a principle or a set of specific principles applicable to every type of case in respect of which there may be an application for a stay.’
A stay order may therefore be appropriate to ensure that the hearing takes place at a suitable time after there has been adequate preparation for the hearing by both parties: see RC and Director-General of Social Services (1981) 3 ALD 334 at 341; cf Re Dart at 556.”[75]
[73] (2003) 134 FCR 326; 78 ALD 281
[74] (1985) 8 ALD 454
[75] (1985) 8 ALD 454 at 457-458
In each case, the principles are fashioned to securing the effectiveness of the hearing and determination of the application for review. For the reasons I gave in Re Kurukkal and Minister for Immigration and Multicultural and Indigenous Affairs,[76] I do not consider that the principles should be fashioned on the narrower basis of securing the processes of the hearing and the processes of the determination as decided in Re Crossan and Minister for Immigration and Multicultural and Indigenous Affairs.[77]
[76] (2004) 38 AAR 482
[77] [2002] AATA 216 at 27
What orders can the Tribunal can make to secure the effectiveness of the hearing and the determination of the application for review? These were considered by Siopsis J in Civil Aviation Safety Authority v Hotop[78] when considering whether the Tribunal could not only make an order staying a decision by the Civil Aviation Safety Authority’s (CASA’s) to cancel an Air Operators’ Certificate (AOC) but also make an order extending that AOC until the hearing of the application for review. His Honour decided that the order extending the AOC was within the Tribunal’s power to make. He did so first on the basis of the principles in Yolbir and Shi, to which I have already referred, and on the basis of there being nothing in s 41(2) to prevent such an order. His third basis was that a contrary interpretation “… would substantially undermine the Tribunal’s capability to provide effective relief in cases where the operation of the impugned decision would result in the applicant for review having to cease carrying on an existing business pending the hearing of the application for review. ...”.[79] Siopis J found his fourth basis in the judgment of Yolbir when the Full Court of the Federal Court referred with approval to a decision by Bowen CJ in Director-General of Social Services v Chaney.[80]Bowen CJ had relied on s 44A(2) of the AAT Act to make an order directing the payment of a pension to a respondent until the hearing of the appeal. Section 44A(2) gives the Federal Court on an appeal a power similar to that given to the Tribunal on the initial application for review.
[78] (2005) 145 FCR 232; 87 ALD 551
[79] (2005) 145 FCR 232; 87 ALD 551at 241; 559
[80] Unreported, 4 June 1980
Although Emmett J made no reference to Civil Aviation Safety Authority v Hotop when he decided Duncan v Companies Auditors Liquidators Disciplinary Board,[81] his reasoning and conclusion are consistent with the earlier case. Emmett J decided that the Tribunal had power under s 41(2) to obviate the obligation of the Companies Auditors Liquidators Disciplinary Board under s 1296(1) of the Corporations Act 2001 to publish a notice of a decision to suspend Mr Duncan as a liquidator. He did so on the basis that such obviation is an example of an order affecting the operation of the decision. In reaching that decision, Emmett J had regard to the objects sought to be achieved by the disciplinary provisions relating to liquidators.
[81] [2006] FCA 1747; 93 ALD 401
In Re VBJ and Australian Prudential Regulation Authority, I considered a number of authorities relating to s 41(2) of the AAT Act. I did so in the context of an order made by APRA under ss 120A(2) and (3) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) disqualifying VBJ from being a trustee, investment manager or custodian of a superannuation entity. I decided that s 41(2) of the AAT Act required me to include among the matters I took into account the following:
“(1)the prospects of success of VBJ’s application for review of APRA’s decision;
(2)the consequences for APRA in carrying out its functions under the SIS Act and for those whose interests are affected by the review of the decision if the stay were, or were not, granted;
(3)the consequences for VBJ if the stay were, or were not, granted;
(4)any conditions, such as undertakings, that could ameliorate any consequences of either granting or refusing a stay; and
(5)whether review is sought of APRA’s reviewable decision or of its decision after its own review.”[82]
[82] [2005] AATA 642; (2005) 87 ALD 747; 41 AAR 97 at [47]
Section 41(2): applying the general principles to the circumstances of this case
The first four of the matters, to which I refer in the previous paragraph, remain equally applicable to this case as they did in Re VBJ and Australian Prudential Regulation Authority. The second and fourth, however, require further explanation in this context. Beginning with the second matter, the context is that of the Secretary’s responsibilities in relation to the administration of a scheme that provides for the payment of financial subsidies to those who care for Australia’s elderly and who do so at levels meeting the standards prescribed by the Minister. That means that regard must be had to the consequences for the Secretary in carrying out those responsibilities. It also means that regard must be had to the interests of those for whom the approved provider is providing care or for whom it may provide care.
The fifth matter referred to in the previous paragraph is not relevant in this case. It applies to the particular circumstances of the SIS Act that permit the Tribunal to exercise its powers under s 41(2) of the AAT Act in relation to APRA’s initial decision (which the Tribunal may not review) as well as its decision after its internal review of that decision (which the Tribunal may review).
The particular circumstances of the Act require me to have regard to another matter. That matter centres on s 10-2(1). It 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.”
The Secretary’s discretion to waive the operation of s 10-2(1) is not relevant in the circumstances of this case. Its exercise is dependent on the Secretary’s being satisfied that the approved provider not only intends to provide aged care by the end of the period of the waiver but that the approved provider will have the capacity to do so.
Section 10-2(1) was considered by North J in Secretary, Department of Health and Ageing v Marnotta Pty Ltd (Receivers and Managers Appointed).[83] I had declined to dismiss the application made by Marnotta Pty Ltd (Marnotta). The Secretary had asked that it be dismissed because Marnotta had not provided any aged care during the six month period preceding the hearing of the application. On 12 May 2005, a differently constituted Tribunal ultimately heard the application and set the decision aside and substituted a decision to the effect that the provisional allocation of places to Marnotta with effect from the date of the Secretary’s decision to revoke the provisional allocation of provisional places i.e. 27 May 2003.
[83] [2005] FCA 1395; 88 ALD 720
North J rejected Manotta’s argument that the effect of the Tribunal’s decision on review was to reinstate the Secretary’s decision and the six month period commenced from that time. He also rejected an argument that s 10-2(1) applied only to an approved provider. As it was not an approved provider at that time, it could not operate and so time could not start to run until after the Tribunal’s decision on 12 May 2005. He saw the purpose of s 10-2(1) as establishing a general rule of forfeiture. Its purpose was to ensure continuity in the provision of aged care. That rationale was equally important whether any lack of continuity was due to an approved provider’s having a break from the “industry”[84] or because of proceedings in the Tribunal or Court. It was a rationale consistent with one of the objects of the Act to promote a high quality of care and accommodation for the recipients of aged care services meeting the needs of individuals.[85] The interests of those receiving aged care must be put ahead of those providing it, North J said.[86]
[84] [2005] FCA 1395; 88 ALD 720 at [40]; 729
[85] Act, s 2-1(1)(b)
[86] [2005] FCA 1395 at [40]
The relevance of North J’s judgment in Secretary, Department of Health and Ageing v Marnotta Pty Ltd (Receivers and Managers Appointed) is that s 10-2(1) may need to be taken into account in considering whether an order should be made under s 41(2) in order to secure the effectiveness of the hearing and the determination of the application for review. I will return to this later in these reasons.
Should an order be made under s. 41(2) in this case?
I should mention at the outset that there is no question that the objects of the Act are to provide care for Australia’s aged. In doing so, it seeks to promote a number of objects but, in general terms and in so far as residential care is concerned, they are all directed to ensuring that the recipients of that care receive a high quality of care and accommodation, that the care is available to those who need it and that there are effective plans for the delivery of aged care services in a manner promoting the greatest need for those services, avoiding duplication and promoting their integration with existing community services.[87] The recipients of aged care are clearly at the heart of the Act.
[87] Act, s 2-1(1)
I do not have the Agency’s various reports prepared after its site visits and audits of Belvedere but I do have the Secretary’s two decisions based on them. They do raise concerns about the care received by Belvedere’s residents. I acknowledge that Ms Sharp is not of the same view as the Agency or the Secretary. She identified a number of shortcomings at Belvedere but nothing that she would regard as entitling her to form the view that there was a serious risk at Belvedere let alone a severe and immediate risk. This is not the occasion to attempt to make findings of fact on these matters but even with the countering evidence of Ms Sharp, I must be mindful to protect the interests of those who may be residents of Belvedere.
Having identified the heart of the Act, there is a context in which that heart is to be found. That context is the scheme established by the Act in order to promote its objects. The scheme uses Commonwealth funding as a tool to promote the provision of aged care in centres and to do so at a standard considered appropriate by the Secretary. It does not do so by engaging the Commonwealth directly in the provision of aged care services directly. Instead it uses the Commonwealth’s funds to monitor the quality of aged care that is provided by private enterprise. The scheme does so by regulating those who receive it through a process of approvals and accreditations and by withdrawing it if certain standards and conditions are not met.
That wider context means that the Commonwealth has an interest in private enterprise continuing to provide aged care and in there being sufficient private enterprise providers of aged care to meet the demand. The failure of private enterprise, and so of an aged care provider, to provide aged care at the level required by the Act runs counter to one of the objects of the Act, which is to provide access to care that is accessible to those who need it.[88] Failure of an individual approved provider to meet the standards required of it must necessarily place pressure, if only in the short term, on the existing resources of the aged care services to meet the demand to care for Australia’s aged.
[88] Act, s 2-1(1)(iii)
It follows from this that the financial viability of the approved provider, in this case Saitta, is a relevant matter to consider. That is not because the Act is about generating income for aged care providers. Providing Commonwealth funding to them is an incident of a wider concern. The reason for Saitta’s financial viability being relevant is found in the part it can play, albeit as one of many and perhaps in the future, in providing aged care services.
Mr Gunst QC submitted that Saitta could continue to provide aged care to residents even without enjoying the status of an approved provider under the Act. That is no doubt so but I feel that it ignores the practical realities of the situation. There is no evidence that Belvedere provides extra services accommodation. The only conclusion that can be drawn from that is that, apart from the Commonwealth funding under the Act, it is relying on the standard daily fee and the income tested fee that each resident pays under that Act. Without the funding, I accept the evidence of Mr Russell Menere that Saitta will not be viable as an ongoing concern. It will not be able to engage in the provision of aged care services in the foreseeable future even if it were ultimately to be successful in having the Secretary’s decision under review set aside. Pursuit of its application for review would be an exercise in futility both for it and for the Commonwealth which could not take advantage of its being in the market as a provider of aged care.
Having regard to the matters to which I have referred, I concluded that it was desirable to make an order under s 41(2) in order to secure the effectiveness of the hearing and the determination of the application for review. Taking into account the interests of the recipients of aged care, I could not make an order that was unqualified. To do so would have set at nought the conclusions reached by the Agency and the concerns of the Secretary. It would have set at nought the scheme of the Act which is intended to ensure that proper standards are met in the provision of aged care and that Commonwealth funding is only given to those who do meet those standards. It seemed to me that proper regard could be given to these interests while giving Saitta the opportunity to remain as an approved provider of aged care services if I were to grant a conditional stay of the operation and implementation of the Secretary’s decision. That condition was the appointment of an administrator. The process of the appointment of an administrator necessarily means that the Secretary has a role in assessing the appropriateness of the nominee’s proposals to remedy Saitta’s non-compliance. That comes about by virtue of the Secretary’s ability under s 22.13(2) of the Sanctions Principles to ask the proposed administrator for such proposals. Once an administrator is appointed, it can be expected that the standards of care provided at Belvedere will be brought into line with those required under the Act.
The appointment of an administrator also sufficiently addresses the concerns that Mr Gunst QC raised regarding Mr Graeme Menere. On their face, Mr Graeme Menere appears to have been convicted of an indictable offence even if I take only one of his convictions as an example. He was convicted of stalking under s 21A of the Crimes Act 1958 (Vic). In light of s 2B of that legislation and in the absence of any contrary intention in s 21A, the offence of stalking is an indictable offence for the purposes of the Victorian legislation. As an “indictable offence” includes, for the purposes of the Act, “an indictable offence against the law … of a State …”.[89] In view of that Mr Graeme Menere is an “disqualified individual” within the meaning of s 10A-1(1)(a) of the Act.
[89] Act, s 10A-1(2)(a)
Whether he is one of the “key personnel” of Saitta depends on whether he is:
“(a)a member of the group of people who are responsible for the executive decision of the approved provider;
(b)any other person who is concerned in, or takes part in, the management of the approved provider;
(c)any person who is responsible for the overall nursing care provided, or to be provided, by the aged care service conducted, or to be conducted, by the approved provider;
(d)any person who is responsible for the day‑to‑day operations of an aged care service conducted by the approved provider, whether or not the person is employed by the approved provider.
…”[90]
[90] Act, s 9-1(2)
This is a matter contested by Saitta but I do not propose to decide it at this stage. If Mr Graeme Menere has been acting as one of Saitta’s key personnel, it will be a breach of one of its responsibilities as an approved provider if it did not take reasonable steps to ensure that none of its key personnel is a disqualified person. If he has been, it would appear that he has been doing so as a person who is concerned in the management of Saitta rather than as a person responsible for the overall nursing care provided at Belvedere. If Mr Graeme Menere has been acting as one of the key personnel in Saitta’s management, it may impinge on its ability to provide a clear management structure and one that comprises those regarded by the Act as qualified and appropriate to make decisions about the provision of care services to the aged. That is quite apart from the consequences that may face Mr Graeme Menere under the Act which provides for an offence if a disqualified individual is a key personnel.[91] It is also quite apart from s10A-3 which enables the Secretary to apply to the Federal Court for an Order if a disqualified individual is one of the key personnel of, as in this case, an approved provider which is a corporation.[92]
[91] Act, s 10A-2(1)(b)
[92] Act, s 10A-3
The appointment of an administrator cannot remedy the defects in Saitta’s management structure but it can ameliorate them in the short term while Saitta works to become compliant with its obligations. It can ameliorate them to the extent that the provision of care services to the aged is not compromised.
At the time I made the stay order, there were no residents remaining at Belvedere. Assuming that Saitta is otherwise financially viable, its ongoing financial viability and its ability to operate Belvedere will depend in the first instance on the appointment of an administrator and on that person’s success or otherwise in remedying Saitta’s non-compliance. In the second instance, it will depend on whether or not the residents and their relatives decide that the administrator and Saitta have been successful in their efforts to address Belvedere’s shortcomings. Only if they, or new residents, judge them has having been successful will they return. Only then will Saitta be giving care and receive Commonwealth funding in respect of the allocated places in respect of which it is doing so. For all practical purposes, it must address its problems and attract a resident or residents within six months whether or not Saitta’s application for review has been heard in that time. If it fails to do so, the effect of s 10-2(1) of the Act is that its approval lapses at the end of six months after the departure of the last resident on 22 August 2007.
For the reasons I have given, I ordered:
1.that upon the applicant’s nominating and appointing an administrator who has been approved as suitable by the Secretary of the Department of Health and Ageing in accordance with the Act:
the operation and implementation of the decisions of the respondent to:
(a)revoke the applicant’s approval under Part 2.1 of the Act as a provider of aged care services;
(b)revoke the allocation of all the places allocated to the applicant under Part 2.2 of the Act; and
(c) restrict the applicant’s approval under Part 2.1 as a provider of aged care services to care recipients to whom care is being provided at the Belvedere Park Nursing Home at 11 August 2007;
is stayed pending the hearing and determination of the applicant’s application for review or until earlier order; and
2.either party has liberty to apply to the Tribunal on giving the other party 24 hours’ notice of the intention to do so.
I certify that the one hundred and seven preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Jayne Haydon Associate
Date of Hearing 22 August 2007
Date of Decision 19 September 2007
Solicitor for the Applicant Mr P. Hanks QC
Ms J. McDonnell of counsel
Solicitor for the Respondent Mr C. Gunst QC
Richard Knowles of counsel
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