Stirling Retirement Village P/l v Dept of Human Services (Chief Executive) No. Scciv-02-294

STIRLING RETIREMENT VILLAGE PTY LTD v DEPARTMENT OF HUMAN SERVICES (THE CHIEF EXECUTIVE)
[2002] SASC 179

BLEBY J This is an appeal from the Magistrate’s Court against both conviction and sentence.
Background
Stirling Retirement Village Pty Ltd (“the appellant”) was at all material times incorporated under the Corporations Law. For the purposes of the Retirement Villages Act 1987, it was the administering authority of the retirement village known as “Sevenoaks of Stirling” (“the Village”).
The appellant was initially charged on complaint with three counts of breaching the Retirement Villages Act 1987 (“the Act”) relating to procedural irregularities concerning the annual meeting of residents which was held on 31 October 2000. Counts 1 and 3 were withdrawn by the complainant, and the trial proceeded on the second count only. That charge was in the following terms:
“On 2 December 2000, the [appellant], in its capacity of administrating authority of a retirement village, ‘Sevenoaks of Stirling’, having presented a statement of income and expenditure for the financial year commencing 1 July 1999 and ending 30 June 2000 (the ‘accounts’) to the residents of the said retirement village for the purposes of an annual meeting which accounts had not been audited at the time of the meeting, namely 31 October 2000, failed to ensure, within one month after the accounts for the said financial year were audited, that a copy of the audited accounts, together with the appropriate notes explaining any differences between the accounts as presented to the residents, and the accounts audited, were sent to each resident of the retirement village.
Contrary to s 21A(1) and s 21A(3) of the Retirement Villages Act 1987 and code 4(1) of the Codes (sic) of Conduct as prescribed by Schedule III of the Retirement Villages Regulations 1987.
Particulars
2.1The administering authority presented to the residents of the retirement village for the purposes of an annual meeting held on 31 October 2000, accounts of the financial year commencing 1 July 1999 and ending 30 June 2000 which accounts had not been audited at the time of presentation.
2.2The accounts for the financial year commencing 1 July 1999 and ending 30 June 2000 which had been audited on or before 31 October 2000 were not presented to the residents at the meeting.
2.3The audited accounts were not provided to each resident of the village within one month after 31 October 2000.”
I will return to these particulars in due course. The appellant pleaded not guilty. The matter proceeded in the Adelaide Magistrates Court on a statement of agreed facts.
The Retirement Villages Act requires the administering authority to convene a meeting of residents annually within four months of the end of the financial year. Section 10 of the Act relevantly provides:
“10.   (1)    The administering authority of a retirement village –
(a)may convene a meeting of the residents at any time; and
(b)shall convene such a meeting on an annual basis.
(2)    The annual meeting must be held not more than four months after the end of the financial year that applies in relation to the retirement village.
(2a) A meeting convened under subsection (1)(b) must be chaired by a representative of the administering authority who is authorised to speak on behalf of the administering authority and to give responses to questions put at the meeting in accordance with the requirements of this section.
……………..
(5)    A notice for an annual meeting under subsection (4) must be accompanied by –
(a)   in relation to the retirement village –
(i)a statement of income received from residents, and expenditure of that income, for the previous financial year; and
(ii)a statement of estimates of income from residents, and expenditure of that income, for the current financial year; and
(iii)a statement of estimates of income (from any source), and expenditure, for the current financial year in respect of any contingency, sinking or other reserve fund or account established for the purposes of capital replacement or improvements, irregular long-term maintenance, or other similar items; and
(iv)such other information as the regulations may require and
(b)   an invitation to residents to submit –
(i)written questions to the administering authority at least seven days before the date of the meeting; and
(ii)    other questions at the meeting.
(6)    The administering authority must ensure –
(a)   that information provided under subsection (5)(a) complies with any standard or principle prescribed by the        regulations; and
(b)   that any resident is afforded, on request, a reasonable    opportunity to inspect, depending on how the administering authority prepares its accounts –
(i)a balance sheet (with appropriate notes) for the retirement village; or
(ii)a balance sheet (with appropriate notes) for the administering authority
as at the end of the previous financial year.
(7)    The administering authority must ensure –
(a)     that residents have a reasonable opportunity to put   questions to the administering authority or its   representative at a meeting of residents convened by the                   administering authority; and
(b)     that questions submitted in writing under subsection (5)(b),   or asked at a meeting, are answered –
(i)if possible – in reasonable detail at the relevant meeting; or
(ii)to the extent that compliance with subparagraph (i) is not possible – as soon as is reasonably practicable after the meeting by the presentation of detailed written answers.
…………………..
(11) If a provision of this section is not complied with, the administering authority is guilty of an offence.
Maximum penalty: $20,000.”
It is to be noted that the Act does not require audited statements of account of either the retirement village or of the administering authority to be presented to the annual meeting of residents. What it does require is that a statement of income and expenditure for the previous financial year be sent out with the notice of meeting (subsection (5)), and that residents be afforded, on request, a reasonable opportunity to inspect a balance sheet for the village (subsection (6)).
Section 21A of the Act requires an administering authority to comply with any code of conduct prescribed by the regulations, breach of which is treated as a breach of the regulations. Such a code (“the Code”) is prescribed in Schedule III of the Retirement Villages Regulations 1987. Schedule III of the Regulations provides, in Clause 4:
“4 (1) If –
(a)a statement of income and expenditure for a previous financial year (the “accounts” of a retirement village) presented to the residents of the retirement village for the purposes of an annual meeting have not been audited at the time of presentation;
and
(b)the administering authority has, on a previous occasion, presented audited accounts to residents,
the administering authority must ensure -
(c)within one month after the accounts are audited, that a copy of the audited accounts, together with appropriate notes explaining any differences between the accounts as presented to the residents, and the accounts as audited, are sent to each resident of the retirement village;
and
(d)at the request of at least five residents, that a special meeting of residents is convened, within one month after the request is made, so that the accounts may be discussed.
(2) The administering authority will, in the written notice convening the annual meeting of the retirement village, inform the residents where audited annual accounts that relate to the retirement village are, or will be, available for inspection (such as, for example, at the Australian Securities Commission).”
It will be noted that the clause speaks of a statement of income and expenditure and of accounts as being “presented to the residents ….. for the purposes of” an annual meeting. This is contrasted with a situation where, in certain circumstances, a copy of the audited accounts are “sent” to the residents. Reading the clause in conjunction with section 10(5) of the Act, it seems to me that the act of presentation of the accounts for the purposes of the annual meeting is the sending of the accounts with the notice of meeting as required by s 10(5). Clause 4 does not speak of presenting accounts “at” an annual meeting but “for the purposes of” an annual meeting. This is consistent with the requirements of the balance of subsection (5) and of subsections (6) and (7) of section 10 whereby residents are to be given adequate opportunity to submit questions and to inspect balance sheets before the meeting. As will be seen, this observation has some relevance to what was in fact presented for the purposes of the annual meeting of residents of the Village held on 31 October 2000.
The other observation that should be made about the Act and the Regulations is that nowhere is there any specific requirement to provide audited accounts to the residents other than as required by clause 4(1)(c) of the Code. Nevertheless, there seems to be an implication to be drawn from clause 4(2) of the Code that the accounts of the village must be audited. Otherwise, there would be no point in subclause (2) at all. Whether that is sufficient, in the circumstances, to impose an obligation upon an administering authority to have the accounts of a village audited on pain of committing an offence against the regulations if they are not need not be decided in these proceedings. It is merely indicative of one of a number of difficulties arising out of the regulations as they are presently drafted.
It was an alleged breach of clause 4(1) of the Code with which the appellant was charged in count 2, and of which it was convicted in the Magistrates Court. The Magistrate imposed a fine of $700. The maximum penalty prescribed by s 21A(3) of the Act is $2500. The appellant was also ordered to pay costs and other levies totalling $1112.50
The facts
After the end of the financial year ending 30 June 2000, accounts for the Village were prepared, and despite some concerns about them held by the sole director of the appellant, the accounts so prepared were audited by Mr Andrew Willing, Chartered Accountant. The auditor certified that the audit had been conducted in accordance with Australian Auditing Standards and expressed the opinion that the report “presents fairly the financial position of (the Village) Equipment Replacement and Maintenance Funds as at 30 June 2000 and the results of its operations for the year ended on that date.” The audit certificate was dated 25 September 2000.
By notice dated 8 October 2000, residents of the Village were given notice of the annual statutory meeting to be held on 31 October 2000. The notice was delivered to residents on 16 October 2000, along with what were described as interim unaudited accounts for the 2000 financial year. They were not given a copy of the audited accounts. For reasons which I have already given, I consider that it was this set of accounts that was “presented to the residents of (the Village) for the purposes of (the) annual meeting” which was in fact held on 31 October 2000.
In addition to the accounts which had previously been circulated to residents, a further profit and loss statement and balance sheet for the 2000 financial year and further interim unaudited accounts for that year were distributed at the meeting. I do not consider that, for the purposes of clause 4(1) of the Code, these accounts had any status. They were not presented to “the residents”, but only to those who chose to attend the annual meeting. The manager of the Village informed residents at the meeting that, in respect of both sets of accounts circulated, there was still an issue in respect of management fees and the amount to be allocated to the Capital Replacement Fund.
The meeting formally received the accounts distributed at the meeting.
On 19 February 2001 at a meeting between members of the residents’ committee of the Village, Mr Willing and the then Village manager, the auditor’s report and the audited accounts were supplied to those present and discussed with the committee members. However, the statement of agreed facts records that the accounts to which the audit certificate was attached had not been approved by the appellant, nor sent to each resident of the Village. The auditor has not been asked to audit either the accounts circulated before the annual meeting or those distributed at the meeting, and they have therefore not been audited.
Finally, it was an agreed fact that prior to 31 October 2000, the appellant, in its capacity of administering authority of the Village, had presented audited accounts to residents (see Clause 4(1)(b), of the Code).
The Magistrate’s conclusion
The prosecution submitted before the Magistrate, as the respondent submitted before me, that no audited accounts having been submitted prior to or at the meeting, there was an obligation imposed by clause 4 of the Code to send to each resident copies of the accounts as audited within one month of the meeting. Hence the allegation that the offence was committed on 2 December 2000. The defendant had submitted that it was only if the accounts presented for the purposes of the annual meeting became the subject of an audit that the obligation arose to send copies of them to each resident of the Village. As those accounts had not been audited, no such obligation arose.
The Magistrate’s conclusion is effectively contained in the following paragraph:
“I reject the defendant’s submission. I find that the defendant company had a duty to present Mr Willing’s audited accounts at the annual meeting or ensure that the accounts presented at the annual meeting were audited and provided to the residents within one month, together with the accompanying documents as set out in code 4(1) of Schedule III of the Regulations.”
The Magistrate speaks of accounts being presented “at” the annual meeting. I have already pointed out that the relevant phrase in the Code is accounts presented “for the purposes of” an annual meeting. That is not necessarily the same as accounts presented “at” the annual meeting. Leaving that aside, however, if the Magistrate intended that accounts presented for the purposes of the annual meeting were to be sent within one month of the annual meeting, then there was no justification for such finding. If anything is clear in clause 4 of the Code, it is that the obligation to send to residents copies of audited accounts arises within one month after the accounts are audited, and not one month after the annual meeting.
The Magistrate’s reasons may also be construed as requiring the accounts presented for the purposes of the annual meeting, if not audited at that time, to be so audited. In the circumstances it is not necessary to decide whether such an obligation existed. There is no doubt that those accounts could have been audited, and if they were audited before the annual meeting and sent to residents within one month of being audited, no offence would have been committed. However, that did not occur. In the circumstances, it is not necessary to decide whether there was an obligation on the part of the appellant to have audited the accounts which were in fact presented for the purposes of the annual meeting.
Conclusion - conviction
I reject the appellant’s argument that no offence was committed because the accounts presented for the purposes of the annual meeting were not audited, and that no obligation to send to residents copies of audited accounts could arise until they were audited. I accept that there was no obligation to present audited accounts for the purposes of the annual meeting. That was not required by section 10 of the Act or by the Code. Indeed, the Code contemplates the possibility that the accounts so presented may not be audited.
Central to the appellant’s argument is that if unaudited accounts are presented for the purposes of the annual meeting, it is only if those accounts are audited that the obligation under clause 4(1)(c) of the Code arises. The appellant argues that it is the “statement of income and expenditure” which is defined in par (a) as the “accounts” of the Village, and that the reference in par (c) to “the accounts” refers to that statement. The drafting of clause 4 leaves much to be desired, but I do not accept that argument for a number of reasons.
I do not consider that “the statement” in par (a) is defined as the “accounts” for the purposes of the clause. If it were so, it would have been more appropriate to use the singular “has” in par (a) rather than the plural “have”. The word “accounts” can equally refer to “income and expenditure” for a particular financial year. As we have seen in this case, there can be more than one “statement” of the income and expenditure for a financial year. What is important is that the “accounts”, when audited, be copied and provided to the residents. It follows that the requirements of par (c) are that if and when the “accounts” of income and expenditure are audited, a copy of them must be sent out within the required time. Those accounts may be contained in a statement different from that referred to in par (a).
The other reason for rejecting the appellant’s argument is that, if it is correct, and if, as Mr White, counsel for the appellant, contended, there is no obligation to have the accounts presented for the purposes of the annual meeting audited, some of the provisions of clause 4(1)(c) of the Code would become otiose. Paragraph (c) contemplates that there may be a difference between the accounts as presented and the accounts as audited. If there is, there must be a note provided explaining the difference. If Mr White’s argument is correct, there can never be a difference. The Code is to be construed as a whole, and in accordance with the requirements of the Act. If so, some meaning must be given to that part of par (c) which imposes the obligation to provide notes of explanation for a difference.
Accordingly, the “statement of income and expenditure” referred to in par (a) is not to be construed as the same as the copy of the accounts referred to in par (c).
In my opinion, on the material before the Magistrates Court, the appellant committed an offence, but not because, as the respondent contended, it failed to provide to residents copies of the audited accounts as presented to the meeting within one month of the meeting. The fact of the matter is that there existed, as from 25 September 2000, a set of audited accounts of the Village for the year ending 30 June 2000. They were not disclosed to anyone, other than to a select group of residents in February 2001. The appellant chose not to place those audited accounts before the annual meeting held on 31 October. Instead, it chose to present for the purposes of the meeting a set of unaudited accounts, being those distributed with the notice of meeting.
The appellant was entitled to present unaudited accounts to the annual meeting. Having done so, however, there then being audited accounts in existence, it placed itself in breach of clause 4(1)(c) of the Code by not sending copies of those audited accounts to residents within one month of those accounts being audited. In my opinion an offence was crystallised on 26 October 2000, by the failure, between 25 September and 25 October, to send a copy of the audited accounts to the residents. The requirements of the Code could have been complied with if, at any time before 26 October, copies of the audited accounts had been sent to residents or if the audited accounts had been presented to the residents for the purpose of the annual meeting, by enclosing them with the notice of meeting. That would not have precluded the appellant from presenting or distributing at the meeting a set of unaudited accounts which it considered were more reliable. The residents would then have been fully informed and could have decided for themselves whether they preferred the expression of opinion of the auditor or that of the manager of the Village. As the audited accounts had not been presented, or sent within one month of the audit, the condition contemplated by clause 4(1)(a) of the Code applied. It was an agreed fact that the condition referred to in clause 4(1)(b) applied. The obligation in Clause 4(1)(c) thereupon arose. It was not complied with, and an offence was committed.

This is a regulatory offence. It is not to the point that the director of the appellant had reservations about the accounts as audited by Mr Willing or that between that time and the annual meeting there had been a change in management of the Village. If there were genuine reservations about the accuracy of the accounts as audited, there was plenty of time for that to be drawn to the attention of the auditor to enable him to reconsider his certificate if he thought appropriate or to add some further qualification. Even without that, the explanation of the administering authority for the difference between the audited accounts and the presented accounts could have been given. Nor does it matter that there was no intention on the part of the appellant or its officers to deceive the residents by not placing before them the audited accounts. The fact of the matter was that a properly qualified auditor had certified the correctness of one set of accounts. No external auditor had certified the other accounts presented. What the legislation does require is openness and frankness with the residents of a village as to all aspects of the village’s financial management. It is only when they have all the information before them with appropriate explanations that they are in a position to ask questions, to seek explanations and ultimately to decide whether they are satisfied that the accounts properly record relevant transactions relating to the operation of the village.
As I have already indicated, I consider that on the evidence before the Court, it was clear that by 26 October 2000 an offence had been committed. The allegation in the complaint is that the offence was committed on 2 December 2000. It is not clear from the particulars when it is suggested that the accounts were “presented” to the residents for the purposes of the annual meeting, and par 3 of the particulars suggests that the relevant failure occurred by not providing the audited accounts to each resident within one month after 31 October 2000, the date of the annual meeting. It is not entirely clear to me why the offence was alleged to have occurred on 2 December. I think what the complainant meant to allege was that the failure to send copies of the audited accounts occurred between 1 November and 30 November. That is certainly the way the case was put at trial and on the appeal.
Having published to the parties some draft reasons embodying the substance of these reasons now published, and before making any orders, I re‑listed the matter to give counsel for the respondent an opportunity to seek leave to amend the complaint. Application for leave to amend was made by deleting from the body of the complaint the date “2 December 2000” and by inserting in lieu thereof “26 October 2000”, and by amending the particulars in the following manner. Proposed additions appear in bold, with deletions as indicated:
“Particulars
2.1The administering authority presented to the residents of the retirement village for the purposes of an annual meeting held on 31 October 2000, accounts of the financial year commencing 1 July 1999 and ending 30 June 2000 which accounts had not been audited at the time of presentation on 16 October 2000.
2.2The accounts for the financial year commencing 1 July 1999 and ending 30 June 2000 ~~which~~ had been audited on or before ~~31 October 2000 were not presented to the residents at the meeting.~~ 25 September 2000.
2.3The audited accounts were not provided to each resident of the village within one month after ~~31 October 2000~~. 25 September 2000.”
Counsel for the appellant opposed the application. There is no doubt that I have power to amend the complaint. Section 181 of the Summary Procedure Act 1921 authorises the Magistrates Court to amend a complaint “to cure a defect of substance or form (but if the defendant has been substantially prejudiced by the defect, no amendment may be made)”. Section 182 confers a similar power with respect to a summons. Rule 97.18(a) of the Supreme Court Rules provides that on the hearing of an appeal of this nature, the Court has all the powers and duties as to amendment and otherwise as the Court or Tribunal appealed from had.
An amendment of the type now sought could have been made at the trial, depending upon the stage at which the application was made. However, it cannot be allowed at this stage of an appeal if it would cause prejudice to the defendant. In considering whether an amendment should be allowed, it is necessary to consider what was the “pith and substance of the charge”: Camilleri v Wilkinson (1983) 35 SASR 270 at 284. Mohr J, with whom King CJ agreed, said at 284:
“In my opinion the true test is that so long as the core offence remains untouched an amendment can be made to a particular so long as by so doing the defendant is not prejudiced in his defence. In the subject case, I regard the naming of the drug as a ‘particular’ and not as an allegation going to the ‘pith and substance’ of the case.”
It was no doubt with that concept in mind that Cox J in Schultz v Pettitt (1980) 25 SASR 427 declined to intervene where there had been an amendment to a summons as to the date of the alleged offence. Section 183 of what was then the Justices Act 1921 allowed an amendment if it appeared to the Court that the complaint –
“(a)fails to disclose any offence or matter of complaint, or is otherwise defective; and
(b)ought to be amended so as to disclose an offence or matter of complaint, or otherwise to cure such defect.”
Cox J said, at 433:
“… A complaint may not be amended, under s 183 or any other power, if the result would be to convert a bad complaint into a good one, or to charge the defendant with a different offence. There is a sense, of course, in which to vary the allegation at all is to charge a different offence, but the cases show that what is meant here is a change in the essential elements of the charge – a change in its ‘quality or effect’ (Williams v Wight [1943] SASR 301 at 304), or in its ‘pith and substance’ (Crafter v McKeough [1943] SASR 371 at 375). Often a question of degree will be involved (Warner v Sunnybrook Ice Cream Pty Ltd [1968] VR 102 at 105).………. The common law rule is that the date of an offence is not material unless it is of the essence of the offence. See, for example, R. v James (1923) 17 Cr App R. 116 and Wishart v Fraser (1941) 64 CLR 470, at 478..….. Certainly, if the effect of an amendment or a variance would be to take the offence outside the relevant limitation period, that would provide a compelling reason why an amendment to the complaint should not be made or a variance disregarded. However, there is plenty of authority for the proposition that, generally speaking, the date is not a material allegation, even where the offence in question must be charged within a particular time. See, for example, R v Wakeley [1920] 1 KB 688; Curyer v Foote [1939] SASR 203; Wright v O’Sullivan [1948] SASR 307; and Okmasich v Evans (1980) 25 SASR 481 and cf. Reg v Bartlett [1972] Qd R 337 at 342.”
If it were merely a change of date for the commission of an offence in this case, the amendment would probably be allowed. However, it is more than that. The nominated date of the offence, or strictly speaking the period of the failure which constituted the offence, was dictated, for the purposes of the complaint, by an event, being the annual meeting. I have found that the relevant event which caused the time to run during which the audited accounts should have been circulated was the completion of the audit, coupled with the decision to “present” on 16 October 2000 for the purposes of the meeting the unaudited accounts. Those are very different events, and for the purpose of alleging an offence, it is necessary that the right one then be selected. That was not done.
In my opinion this case more closely resembles the situation in O’Hair v Killian (1971) 1 SASR 1. So far as is relevant the defendant in that case was charged with hindering a member of the police force in the execution of his duty, namely whilst dispersing a crowd pursuant to s 59 of what was then the Police Offences Act 1953. The police officer had given a lawful direction pursuant to s 59 of the Police Offences Act for a crowd to disperse. The evidence before the Court showed that the defendant had hindered the police prior to the direction to disperse, but there was no evidence of any act of hindering after the direction to disperse. The defendant had been convicted. On appeal, the question arose whether the conviction should be amended under what was then s 185 of the Justices Act 1921. A majority of the Full Court (Hogarth and Mitchell JJ) held that the conviction could not be amended at that late stage. Hogarth J said (at 10 – 11):
“In my view, a defendant is prima facie prejudiced if he is brought before the court to meet a charge based upon certain conduct which is identified in the charge, and the case proceeds on that basis; and at the end, when the evidence fails to establish an offence within the terms of the complaint as brought, he is called upon to meet an allegation of another offence against the terms of the same section, but based upon different conduct committed at a different time. In such a case he should not be convicted unless the complaint is amended so as to define adequately the conduct finally relied upon by the prosecution. In the present case the whole of the emphasis of the matters in dispute in the Court below was directed to the action taken by Superintendent Calder in purported compliance with s 59 of the Police Offences Act. I do not think that this is of the same ‘pith and substance’ as a charge relating to the appellant’s conduct before any direction was given under the section. That was different conduct committed at a different time. ..………
The question before this Court, whether the conviction should be amended under the provision of s 185, is analogous to that which would have come for consideration by the Special Magistrate if the question had been raised before him, and application had been made at the close of the evidence for such an amendment of the complaint. Such an amendment might properly have been allowed (perhaps on terms) if made at an early stage in the proceedings in the Magistrates’ Court. But it seems to me that it would be contrary to natural justice for the appellant to be brought to Court to face a charge in respect of his conduct following upon the making of the first announcement under s 59 by Superintendent Calder, and then, after the close of the evidence, and after he had elected to call no evidence in relation to the events which formed the basis of the charge against him, to find himself facing the danger of conviction in respect of conduct which did not fall within the particulars named in the complaint. I think, therefore, that it would not be proper for this Court to amend the first count under s 185, …”
This case proceeded on agreed facts and was conducted in a manner rather different from that in O’Hair v Killian. There was no suggestion of the appellant not giving evidence at the close of the prosecution case based on the particulars then alleged and the evidence led by the prosecution. Nevertheless, the periods of time alleged are quite different. The conduct focused upon in the prosecution case post-dated the annual meeting, whereas the only conduct giving rise to the relevant offence occurred well before the meeting.
It is not sufficient answer to say that all the relevant facts were agreed. It is not for me to speculate what attitude the appellant might have taken to the agreement of facts, its plea or any other aspect of the conduct of the prosecution if the offence had been alleged as the respondent now seeks to amend the complaint. By proceeding with the case as alleged in the complaint, the appellant was required to meet a case different from that which the respondent now seeks to allege. In all those circumstances, the application for leave to amend must be refused.
It follows that the applicant was not properly convicted of the offence alleged, and as it is now too late to amend the complaint, the appeal must be allowed and the conviction set aside.
In the circumstances it is not necessary to deal with the appellant’s appeal against sentence.
I will hear counsel as to costs of the appeal and as to the costs of the trial.

[2002] SASC 179

19 June 2002