Zayen Nominees Pty Ltd v The Minister for Health

CATCHWORDS

Administrative law - judicial review - application for approval of premises as an approved nursing home - meaning of

'deemed approval' approved nursing home'

and

'proprietor of

premises, being an

- proposal to make application for

approval of premises as an approved nursing home - transferability - power of Minister to review decision of

Permanent Head

- power of Minister to direct Permanent Head.

Administrative Decisions (Judicial Review) Act 1977

s.S(l)(b), (c), (a), (e),

(f) and (h)

National Health Act 1953 ss.4(1), 40AA, 45 and 138

Health Act 1958 (Vic.) ss.179 and 182

ZAYEN NOMINEES

PTY. LTD. v. MINISTER FOR HEALTH

V.G. No. 137 of 1981

Northrop J.	!
Melbourne
25 March 1983.

I .-

IN THE FEDERAL COURT OF AUSTRALIA

)

VICTORIA	DISTRICT	REGISTRY	1	V.G. No. 137 of 19EI'
1

DIVISION	GENERAL	l	1
BETWEEN :

ZAYEN NOMINEES

PTY. LTD.

Applicant

and

MINISTER FOR HEALTH

Respondent

ORDER

CORAM :	Northrop J.
DATE :	25 March 1983
PLACE :	Melbourne

THE COURT ORDERS THAT:

1. The decision of the Minister for Health notified in his letter dated 29 June 1981 viz., "to uphold the

Department's decision

not to grant approval in principle

for	(the applicant's) nursing home proposal at North

Fitzroy" be quashed and set aside.

Leave granted

to each party to move for

an order for

costs.

IN THE FEDERAL COURT OF AUSTRALIA )

VICTORIA DISTRICT GENERAL DIVISION

REGISTRY

)

V.G. No. 137 of 1981

I	1
1

BETWEEN :

ZAYEN NOMINEES PTY. LTD.

Applicant

and

MINISTER FOR HEALTH

Respondent

NORTHROP J.

REASONS FOR JUDGMENT

25 MARCH

1983

Zayen Nominees Pty. Ltd., "Zayen", brings these

proceedings under the Administrative Decisions (Judicial Review) Act 1977, "the Judicial Review Act", seeking an order

review

a decision of the Minister for Health, "the

Minister", expressed in a letter dated 29 June 1981. Zayen claims that the decision was of an administrative character

made under an enactment, namely the National Health Act

1953,

and in particular under either s.45

or s.138

of that Act.

The proceedings relate to whether Zayen is entitled

to have a

proposed nursing home approved under Part

V (sections 39-45B

inclusive) of the National Health Act.

- 2 -

Before turning to the facts of the case, it is helpful to make some reference

to some of the statutory

provisions applicable to nursing homes in the State of Victoria. The control and administration of nursing homes within Victoria are regulated pursuant to the provisions of the Health Act 1958 (Vic. ) , "the Health Act (Vic. ' I , and in particular pursuant to Division 3 of Part X (sections 178-186

inclusive)

that Act. Under the National Health Act,

persons carrying

on the business of a private nursing home

receive the benefit

certain Commonwealth funding if the

nursing home is approved under Part

V of that Act: see also

Parts VA, K3 and VC of that Act.	It follows that from a
commercial aspect, a person is loath	to commence to conduct

the business of a private nursing home unless that person is

assured that approval will

be granted under the National

Health Act. It follows also that there must between the Commonwealth and the Victorian administrations

be co-operaeion

concerning the whole matter

of nursing homes within Victoria.

Under the Health Act (Vic.) a nursing

home is a

private hospital classed by the Health Commission of Victoria, "the Commission", as a nursing home: see s.178(1).

The Commission

was

established under the Health Commission

Act 1977.

The Commission is empowered to class a private

hospital as a nursing home if

"it is of the opinion that the

age, senility, infirmity, chronic ill-health or other

condition of the persons generally received or lodged there

- 3 -

is such that they require the exercise

of nursing supervision

and care with occasional attention by a medical practitioner", s.179(3), and each nursing home must be registered with the Commission: generally see s.179. Upon

any application for registration

of - a nursing home, the

Commission is required to inquire into and take into

consideration, inter alia, whether

or not "in the opinion

I ,

the Cdmmission there already exist

or are planned adeqaate

facilities in the locality

of the [nursing home] seeking

registration to satisfy the purpose of that rnursing home]"

and "the character of the applicant and the fitness

of the

applicant to carry on a [nursing home] and

where the

applicant is a corporation the character and fitness

of those

persons who in the opinion

the Commission have the

effective management and control of the corporation",

s.l79(8)(aa) and relevant parts of s.182 which deal with the power	(b).	It is	necessary to set	out	the
of the

Commission to approve the building

"182.(1) Before commencing the erection

building or rebuilding of any rnursing home]

or any ... alteration . . . of . . . any existing

of nursing homes:

building with the view

of using the same as a

[nursing home] the proprietor shall

(a) submit to the Commission plans and

specifications of the proposed works

together with such other particulars

are

prescribed or

the

CommLssion requires: and

(b) obtain the Commission's approval

such plans and specifications.

- 4 -

(2	1 Subject to sub-section (41, the

Commission may approve of the plans and specifications with or without modifications or conditions: or may disapprove of the same.

( 3 ) No such works shall be undertaken or

carried out except in accordance with the plans and specifications as

so approved or as

modified by the Commission from time

to time.

Where Commission, the proposed works would

the

opinion

of the

( 4 )

be likely

to increase the facilities for patient care in

a locality beyond the needs

of that locality,

the Commission shall not approve the plans

and specifications for the proposed works."

Section 179(8)(aa) and s.182(4) of the Health Act (Vic.) came into operation on 6 December 1978. In s.182 the "proprietor"

of a nursing person having the management or control thereof, s.178(1).

home includes the owner, the occupier or any

A more detailed reference is made to the National

Health Act.

For present purposes it is necessary to set out

the meanings to be given to the following words and phrases,

unless the contrary intention appears, by

s.4(1):

"'approved', in relation to a nursing home, means approved, or deemed to be approved, under Part V, and 'approval' has a corresponding meaning:"

"'nursing home' means premises

(a)

the for purpose of providing

that are fitted, furnished and staffed patients who, by reason of infirmity or

- 5 -

illness,

disease,

incapacity

disability, have a continuing need for

nursing care: and

(b) in which patients of that kind

are

received and lodged exclusively

for the

purpose of providing them

with

accommodation and nursing care,

"'nursing home care' means accommodation and

nursing care of a kind provided in a nursing

...

home, and includes any prescribed service

of a

kind provided in a nursing home."

[Note, the words 'and includes any prescribed service of a kind provided in a nursing home'

were inserted by Act

No. 118 of 1981.1

"'Permanent Head' means the Permanent Head of

the Department

of Health;"

"'premises' includes a part

of premises:"

"'proprietor' means	-
...

(b)

in relation to a private nursing home - the owner of the business or undertaking

carried on at the nursing

home;"

Section

4OAA

is of crucial importance and the

relevant parts are set

out:

"40AA. (1) The proprietor of premises, being

a nursing home, may apply, in the authorized form, for approval of the premises as an approved nursing home.

(2) Subject to this section, where the Permanent Head is satisfied that the premises in respect of which an application is made are

a nursing home, the Permanent Head shall

, ._ . . . .

- 6 -

approve the premises as an approved nursing

home for the purposes of this Act.

( 3 )

Where -

(a)

application is made for approval of premises (not being a Government nursing home) as an approved nursing home, not

being an application made before the commencement of this section by virtue of sub-section ( 2 ) of section thirty-nine of

the National Health Act

1972; and

(b)

the Permanent Head is of the opinion that approved nursing homes (including premises proposed to be approved as nursing homes) in the locality in which

the premises

to which the application

relates are situated make

adequate

provision for Kursing home care in that locality, being an opinion that, where

the premises are in a State, is formed

the Permanent Head after consulting with

the authority in that State responsible

for the administration	of nursing homes
in that State,

may

refuse the application unless the

applicant has, within the period

of twelve

months, or within such longer period as the Permanent Head allows, before the application is made, informed the Permanent Head, in

writing, that the applicant proposes

to make

the application and the Permanent Head has

informed the applicant, in writing, that the

application will not be refused under this

sub-section.

...

It is noted that in

Part V the word "authorized" means

"authorized in writing

by the Permanent Head",

s.39, but the

words "in writing" were inserted by Act No.

118 of 1981, In

.4OAA(3 ) the words " (not being a Government nursing home)

were deleted by Act No. 118 of 1981. There are a- number of other sub-sections to s.40AA but they need not be set out.

I	-- ---
I

- 7 -

Under sub-section

(4 ) the Permanent Head

has a power

refuse an application for approval in circumstances where

existing approval of the premises as a nursing home has been

revoked under s . 4 4 ( 2 ) .

Under sub-section (51, if the

Permanent Head does not grant an appgoval, he shall refuse the application and notify the applicant in writing accordingly. An approval of premises as an approved nursing home is subject to a number of specified conditions; see

s6b-section (5Aj as in force prior to Act

No.

118 of 1981

coming into operation and as substituted

by that Act, and

sub-section

( 6 ) .

For present purposes the relevant parts

of s.45 are

set out:

"45. .

. .

(2)	The proprietor of premises in respect of

which -

(a) an application

for

approval

as an

approved

nursing

home has not been

granted by the Permanent Head:

...

may, by writing signed

by him, request the

Minister to review the matter.

receipt of a request under after such investigation of the matter as he considers necessary, either confirm the

( 3 1 Upon sub-section (1) or (21, the Minister shall,

decision of the Permanent Head

or take such

other action with respect to the approval of the nursing home as he considers justified in

the circumstances of the

case."

- 8 -

I	Section 138 provides:

"138.

The

e x e r c i s e of

power

t h e

Permanent

Head

under

t h i s A c t i s s u b j e c t

the d i rec t ions ( i f any) of the Minis te r . "

t h e

h e a r i n g

o f

t h e

a p p l i c a t i o n

u n d e r

t h e

J u d i c i a l Review

A c t ,

the

p a r t i e s r e l i e d

upon

t h r e e a f f i d a v i t s

sworn by

Brian

William

Hobson,

d i r e c t o r of

Zayen,

and

t h e

exh ib i t s

t he re to ,

t h ree a f f idav i t s

sworn

Peter

Johnstone,

Assistant

Director-General

the

Nursing

Home

Care

and

Benefi ts

Branch

i n t h e

Department of Health, and the exhibits

there to , and a number of

exhibits

tendered

by consent

during

the

course

the

submissions.

Each

o f

t h e

a f f i d a v i t s

contained

material

which

w a s

inadmissible

evidence.

addi t ion ,

number

ambigui t ies

are

contained

the

a f f i d a v i t s and

exhib i t s

and

the re

i s no

evidence

concerning

matters

which

normally

would be

xpected

t o be

within

the

knowledge

one

o r

o t h e r

both

the

deponents

o the r o f f i ce r s

t h e Department o r of

Zayen.

Unfortunately,

neither

deponent

was

cross-examined

and

a s a r e s u l t the

evidence

before

the Court

i s

n e i t h e r a s f u l l n o r a s e x p l i c i t

as it could

have

been.

Further,

the

material

before

the

Court

i l l u s t r a t e s

t h a t

p e r s o n s

a c t i n g

f o r

o r

behalf

Zayen,

wel l

o f f i c e r s of

the

Department,

used

imprecise

and misleading words

and

phrases

in correspondence

and

o ther

documents which

i l l u s t r a t e a

renarkable lack of understanding

- 9 -

of the provisions

of the National Health Act and which led

confusion and misunderstanding arising between Zayen and the

Department. In addition, Zayen was not always

as frank as it

should have been in its dealings with the Department. Notwithstanding all these matters, it is necessary to state the relevant facts and to make the necessary inferences from

the facts so established.

Zayen was incorporated

on 26 July 1973.

In one of

his affidavits

Mr.

Hobson swears that Zayen purchased land

and buildings situated

at and knovn as 191 McKean Street,

North Fitzroy on

14 April 1973, being a date before Zayen was

incorporated. Nevertheless,

at all relevant times Zayen has

been registered as the proprietor in fee simple

of that land,

hereinafter called "McKean Street". At some unspecified time

Zayen decided

use McKean Street for the purpose

conducting a nursing home thereon. Some time in November

1977, unspecified arrangements were entered into between

Zayen and a Mr. and

jointly as "the Matthies", concerning McKean Street. At that

time the buildings then erected on McKean Street were not

Mrs.

Matthies, hereinafter referred to

suitable for the purpose

of conducting a nursing

home and

unspecified arrangements were made between Zayen and a firm

of architects knovm as Genser, Shepherd and Associates Pty.

Ltd. relating

to building works

at McKean Street. A Mr.

Genser appears

t o have been the person exercising authority

on behalf of that firm of architects. The office

of Zayen

- 10 -

and the office

of the architects at all material times appear

to have been situated

at 381 Punt Road, Richmond. Whatever

the arrangements between Zayen, the Matthies and the architects, a letter dated 3 October 1977 was forwarded to the Department of Health. The letter was stated to be from

"K. .S B.

Matthies, c/- 381 Punt Road, Richmond" and appears

to have been signed

on their behalf by

Mr. Genser.

The

letter was stated to be:

"Re: 58 No. Bed Geriatric Private

Hospital at

No. 191 McKean

Street, North Fitzroy."

The reference in that heading to "Private Hospital" appears more appropriate to an application to the Commission under

the Health Act

(Vic.) rather than to the Permanent Head under

the National Health Act, but the heading is

an instance of

the lack of precision and confusion which permeated the whole

of the correspondence and dealings relating	to EIcKean Street.
The letter then stated:

"We wish to make an application to the Department for Approval in Principle to build

and operate a

58 No. Bed Geriatric Private

Hospital at 191 McKean Street, North Fitzroy.

Hoping that this application will meet the

Department's approval."

- 11 -

At this stage it is necessary to digress from the narrative of the facts to make some comment on that letter and on the National Health Act. One thing is clear. The

letter does not and

it could not constitute an application

under s.dOAA(l),

if for no other reasdn than because it was

not in the authorized form. At the very most

it was an

application under the "unless" clause to s.4OAA(3). The phrase "Approval in Principle" is accepted by the Department

and by the applicant as referring

notification in

writing by the Permanent Head under the "unless" clause that an application under s.40AA(1), if made within the specified

time, will not

be refused under the power conferred by

s.4OAA(3).

The phrase "Approval in Principle" creates its

own difficulties and has a tendency

obscure the true

nature

of the "unless" clause. This is illustrated in the

present case

by the contention

of counsel for Zayen that

I ,

because of the defined meaning

of the word "approved",

notification of the information under the "unless" clause was

deemed to be an approval and therefore was

to be treated as

an approval under s.40AA(l).

This contention will be

considered later in these reasons.

Under s.40AA(2) the Permanent Head is obliged to

grant an approval subject

o two conditions precedent, namely

an application in the authorized form being made under

sub-section (1) and his being satisfied that the premises are

a nursing home.

That obligation disappears and is replaced

- 12 -

by a power to refuse an application under sub-section (1) in

two cases, namely under sub-section (4), which

has no direct

relevance to the present case, and under sub-section (3). The power conferred by sub-section (3)(b) to refuse to grant

approval is itself taken away from

the*Permanent Head in the

circumstances described in the "unless" clause. The power

removed, however, only during the period

f twelve months or

during "such longer period as the Permanent Head allows".

Once the specified period has expired, the power conferred by

sub-section 3(b) is revived and may

be exercised by the

Permanent Head. The twelve months period,

or the extended

a .

period, 1s to be calculated from the time that the

applicaticn in the authorized form is made under s.40AA(l).	m 1
By way of parenthesis it is noted that even at the present

time, no application has been made

by Zayen under s.40AA(1)

with respect

McKean Street. In fact no such application

can be made since the building	at McKean Street cannot	be
used as a nursing home.

The letter of 3 October 1977 illustrates also other

logical difficulties arising in the application

f Part V of

the National Health Act. Because

of the meanings to be given

to the phrases "nursing home" and "nursing home care"

application under s.40AA(1) can

be made only when nursing

home care is being provided in premises, or in other words

where a person is carrying on the business or undertaking of

providing nursing home care in a nursing home.

It is clear

- 13 -

t h a t i n carrying on tha t

October

1977 ne i the r

Zayen

nor

the

Matthies

were

bus iness

o r

unde r t ak ing

a t

McKean

S t r e e t .

I n

f a c t , t h e b u i l d i n g s

were

no t su i t ab le

t o be used

for

t h a t

purpose.

The

letter

d id

n o t s t a t e

what

i n t e re s t t he Mat th i e s

had i n McKean S t r ee t .

The Court

does

not

know

what

i n t e r e s t ,

i f any;

the

Mat

ies

had

a t

tha t

t ime

McKean

S t r ee t .

I n

t h e l e t t e r were t h e owners

t h e

words

" to

bu i ld"

sugges t

ha t

Mat

ies

f ee

s imp le

McKean

S t r ee t ,

wh i l e

t he

word

"operate"

suggests

that

hey

were

planning

t o be

the

owners of the

bus iness

o r

under tak ing

ca r r i ed

a t

that

site.

The

d i s t i n c t i o n between

t h e owner

i n fee

simple

premises

on which

nursing home

business or undertaking

is carried on and tine owner of

that

business

undertaking

may be of importance;

see

Nagrad

Nominees

Pty.

L t d .

V .

Howells

(1981)

F.L.R.

170

and

on appeal ( 1 9 8 2 ) 43 A.L.R.

283.

In 54 F.L.R.

a t p.172 I said:

"Under s.40AA t h e p r o p r i e t o r of premises , being a nursing home, may apply for approval of the premises as an approved nursing home:

s . 4 0 A A ( l ) .

I n

t h i s

s u b s e c t i o n

t h e

word

' p r o p r i e t o r '

d o e s

n o t

h a v e

t h e

f i n e d

meaning

b u t r e f e r s

t o t h e owner

premises.

The

approval

sought

i s

w i t h

r e s p e c t

t o

premises ."

A t p.174 I said:

- 14 -

"It should be noted that

approval and

conditions are given and imposed with respect

to premises being a nursing

home.

proprietor, in the defined

sense, of a nursing

home need not be the

proprietor of the

premises in which the nursing home business

being conducted. The

proprietor of

approved nursing home is the owner of the business or undertaking carried on in the nursing home. The fees to be charged are in

respect of accommodation and nursing care

of a

kind provided in a nursing home. The fees are

paid to the' proprietor of that business.

,	give effect to that	concept, S . 4 0 A D provides
for the proprietor,	namely the ovmer of the

business carried

at the approved nursing

home, to make application for an alteration

the conditions applicable to the nursing home. between the owner of the fee simple of the site on which the nursing home is being

conducted and the owner

of the business being

carried on at that

site."

The judgments in the Naqrad cases had

not been

given at the time that the Matthies wrote their letter to the

Department.

Counsel for the Minister submitted that the Court should reconsider the opinion expressed in the passages

quoted from the Naqrad case. On appeal the

Full Court dxd

not consider that matter. The matter	has been reconsidered
and is confirmed.

The defined meaning of the word "proprietor" is

apply unless

a contrary intention appears. In the present

case, in my opinion,

a contrary intention does appear in

s.40AA(l).

The relevant phrases appearing in

s.40?+A(l) are

- 15 -

"a proprietor of premises being a nursing home, may apply for approval of the premises as an approved nursing home".

...

I .

The emphasis is

on the word "premises". Under sub-section

(2) the Permanent Head shall approve "premises as an approved

nursing home".

Consistent

phraseology is used in

sub-sections (3), ( a ) , (5A). both before and after the

1981

Act, and sub-section (61, s.41(1)

and s . 4 5 ( 2 ) .

That

phraseology is

to be contrasted with that used in other

sections contained in Part V, namely the phrases "the proprietor", "the proprietor of the nursing home", "the proprietor of a nursing home" or "the proprietor of an approved nursing home"; see for example sub-sections (5A), both before and after the 1981 Act, s.40AD(l), s.40AE(1) and

(21, s.40AF, s.dOAG prior to its repeal in

1981,

s.41(1),

( 3 )

and (41, s.43, s.43A, s.44 and s.45(1). In s.40A(1), the use of the phrase "the proprietor of premises" suggests that he owner of the fee simple on which the nursing home is being conducted should make the application. Otherwise the word

"proprietor" could have been used simpliciter, or the extended phrase "proprietor of a nursing home" could have

been used.

In either case the statutory meaning

of the word

"proprietor" would have made the position clear. Further,

apart from the special case where an approval has been

revoked under s.44(2), (see s.4OAA(4)), the qualities or

activities of a proprietor, as defined, are not relevant to

- 16 -

I .

the granting of approval under s.40AA(2).

The power

conferred by s.40AA(3) is related to "premises" within which

nursing home care is provided.

Section 40AA contains no provisions relating to the

procedures to be followed when a request is made under the "unless" clause of sub-section ( 3 ) . In paragraph ( 3 ) (b) the

words in parentheses "(including premises proposed

approved as nursing homes)" refer

to premises with respect to

which the Permanent Head has notified an applicant in writing

that an application under

s.40RA(1! will not

be refused under

sub-section (3) if made within the specified period. Where

request is made under the "unless" clause, the Permanent the matters referred to in paragraph (53) of that sub-section.

The exercise of the power conferred accelerated and the facts existing at the time

by sub-section ( 3 ) is

of the request

are the facts relevant to

be considered by the Permanent

Head. To informs the person making the request that

that extent, if the Permanent Head in writing

n application in

the authorized form, if made within the prescribed time, will

not be refused under sub-section

(3) it can be

said truly

that the premises, the subject

of the request, are "premises

proposed to be approved" as a nursing home. They are to be

taken into account

the Permanent Head in any relevant

subsequent exercise of power conferred by paragraph

(b) of

sub-section ( 3 ) with respect

to other premises.

To that

- 17 -

extent, the financial interests of the proprietor of premises

are protected and expenditure can be incurred in building the

nursing home in the knowledge that provided the constraints

time

are obligation to approve the premises as a nursing

satisfied,

the

Permanent

Head

under

home with all

the consequential benefits that follow therefrom.

In administers nursing homes. The National Health Act contalns

Victoria,

the Commission

controls

and

provisions under which proprietors

nursing homes are

entitled

receive

payments

from

the

Commonwealth.

necessity, there must

be active co-operation between the

State and Commonwealth administrations. One aspect

of this

is illustrated by the requirement that before forming

opinion under s.40A?+(3)(b),

the Permanent Head

is required to

consult with the authority

in the relevant State, in the

Commission,

administration of nursing homes in that State. In practical

terms, that prior consultation is effected through a

Federal/State Co-ordinating Committee for Nursing Home

Accommodation comprising officers from the Victorian Division

responsible

for

the

present case

the

of the Department, an officer of the Department

of Social

Security and officers

of the Commission. In considering

requests under the "unless" clause to s.40AA(3) the same procedures are followed as in an application under

s.40AA(l).

- 18 -

In the present case, the Co-ordinating Committee at

a meeting held

on 21 October 1977 considered the Matthies’

application as contained in the letter

of 3 October 1977.

Some of the material before the Co-ordinating Committee was

set out in a document headed “Application

for Approval in

Principle - Summary“. That summary is set out:

“APPLICATION FOR APPROVAL IN PRINCIPLE -

SUMMARY

NAME :

Mr. 6- Mrs. K. Mathies [sic]

ADDRESS: C/-

381 Punt Road, Richmond

PROPRIETOR: -

APPROVED BED CAPACITY:

PROPOSAL:

To construct a 58 Bed Nursing Home

at 191 McKean Street, North Fitzroy

D.U.R.D. REGION: Central Melbourne

Area,

Region 11, L.G.A. 20

8 OF AGED

POPULATION:

11%

34921

NO.

NURSING

HOME

BEDS

AREA:

1363

PRIVATE	307
RELIGIOUS/CHARITABLE 499

STATE

557

RATIO OF BEDS EXISTING: 39.03

ADDITIONAL BEDS APPROVED IN PRINCIPLE:

166(43.78)

RATIO OF BEDS IF APPROVED (TOGETHER WITH

RICHMOND

PROP SAL)

48.02(1677)

STATUS OF NURSING HOME:

RECOMMENDED/NOT RECOMMENDED

COMMENTS

1. Proprietors of Canterbury

Nursing

Home

and

Masada

Private

Hospital.

- 19 -

2 . Approval in principle recently granted to construct an 87 bed nursing home in Essendon.

3 .

Further

application

for

approval

principle to erect a 90 bed nursing home

in Richmond under consideration."

By way of explanation the "D.U.R.D." region refers to groupings of Local Government Areas within regions under the

now defunct Department

Urban and Regional Development.

Region 11 is known as the

Central Melbourne Area

and

comprises the eight municipalities

of the Cities of

Melbourne, Port Melbourne, South Melbourne,

St. Kilda,

Prahran, Richmond, refers to the municipality

Collingwood

and

Fitzroy.

"L.G.A.

20"

of the City of Fitzroy. The

percentage of aged population refers

to the estimate of

persons aged sixty-five years

over residing within the

region or,

that percentage, being 11%. produces the estimate of 34,921

aged persons in the Central Melbourne Area Region. The ratio

in appropriate cases, the L.G.A. In this case

is the number

of nursing home beds per 1,000 aged persons and

for this purpose the private nursing home beds only are

considered. At that time the Matthies, again pursuant

some unspecified arrangement

with Zayen, had made application

under the "unless" clause with respect to proposed nursing

homes in Richmond and Essendon. The Richmond proposal was

for ninety beds. The Co-ordinating Committee considered the

application with respect to McKean Street and the following

is an extract from the minutes

of that meeting:

- 20 -

"3.	The application for approval in principle

as per the

attached summary sheet

were

considered as follows:-

3. Applicant

Mr.

& Mrs. K. Mathies

[sic],

C/- 381

Punt

Road,

Richmond.

Proposal

To construct a 58 bed nursing home at 191 McKean Street, North Fitzroy.

Comments

North

Fitzroy

is in

the

same D.U.R.D.

region as

the previous proposal

i.e.

Central Melbourne Area,

Region 11, L.G.A. 20.

There are 1363 nursing

home beds in the area for

an aged

population

totalling

11%

of the

population for the area.

The ratio of beds

currently 39.03 and additional beds approved in principle 43.78. Should this proposal and

the Richmond proposal be

approved, the ratio would

increase to 48.02. As

indicated for the previous

proposal, Mr. & Mrs.

Mathies rsicl satis-

factorily

operate

Canterbury Nursing Home

and	Masada Private

Hospital and have gained approval in principle for an 87 bed nursing home in Essendon.

Recommendation There is [sic] currently

no nursing

home beds in

North Fitzroy and in view

of	the need for nursing

home accommodation in the

approval

area,

principle is recommended

for this proposal." -

- 21 -

The reference to the fact that the Matthies satisfactorily operate other nursing homes may have been relevant to an application under the Health Act (Vic.) but it is difficult

to know its relevance under the "unless" clause which was

made pursuant to the National Health Act. Unfortunately

the time of granted to another proposed nursing home in the North Fitzroy

the meeting "approval in principle" had been

locality, now known as the "Harold McCracken", but for some

reason the number

of beds

approved in principle for that

nursing home was not included in the figures in the number

additional beds approved in principle put before the

Co-ordinating Committee. From the recommendation it appears

that the Co-ordinating Comnittee considered the North Fitzroy

area as being the relevant locality for the purposes	of
s.40=(3) .

Acting on the recommendation of the Co-ordinating Committee, the Permanent Head decided to inform the Matthies

that an application under

a.*O?iA( l),

if made within the

specified period of twelve months, would not be refused under

s.4OAA(3).

The information was conveyed in writing by a

letter dated 5 December 1977 signed by an officer of the Department on behalf of a Director (Victorian Division) of

the

Department

(hereinafter

called

"the

Director").

The

letter was addressed

to Mr. K. Matthies only and was

follows :

- 22 -

"Re: Proposed Nursing Homes at Richmond

and North Fitzroy

You are advised that approval in principle

has

been granted for

you to construct a

90 bed

nursing home

3 3 Bendigo Street, Richmond

and a 58 bed nursing home at 191 McKean Street, North Fitzroy. Such approval is

current

for

twelve

months and is

not

transferable.

Would you please advise this Department when

construction of

the nursing homes has been

completed so that inspections may be arranged

prior to final approval being granted for the

payment of Australian Government Benefits."

This letter also illustrates the reckless disregard

of the

provisions of Part V of the National Health Act adopted

the Department.	It purports to be an approval in principle
to Mr. Matthies	"to construct" a 5 8 bed nursing home at

McKean Street. It is not in the form that if an application

in the authorized form is made under s.4OAA(1) within the

twelve months period referred to in the "unless" clause, or

such longer period as the Permanent Head allows, approval

will not be refused under s.40AA(3). In all the

circumstances it is difficult to see how the Permanent Head

has power to impose a condition under the "unless" clause of

s.40AA(3) that the approval is not

transferable. The

condition appears to place a restriction a person and not

upon premises and questions may arise as

to its validity.

Further, the final paragraph

of the letter appears to

misconceived. In the absence of an application being made in

the authorized form under s.40~?+(1), the Permanent Head has

no power to approve premises as an approved nursing home.

- 23 -

Before he is obliged to grant the approval,

he must be

satisfied that the premises in respect of which the

application is made are a nursing home as defined.

It may

be, as a matter of practical consideration, that if premises

are fitted out and staffed and are waiting to receive

patients, they may be considered to be a nursing home

so as

to enable the Permanent Head

to grant the approval, but even

then the grant of approval is dependent upon an application

in the authorized form having been made.

The

use

the

words "final approval" illustrates the confusion arising from

the use of the phrase "approval in principle". In truth, the

two matters are separate and distinct.

Following the letter

of 5 December 1977 there

developed a long, sorry and confusing saga between Zayen, Mr. Matthies and the Department. Zayen did not keep the Department fully informed of what it was doing. The

arrangements between appear to have varied and changed. Decisions within the

Zayen,

Mr.

Matthies

and

Mr.

Genser

Department were being made but

not always communicated

Zayen. Zayen had

to obtain town planning approval to enable

McKean Street to be used as a nursing home. Zayen had

appeal to the Town Planning Appeals Tribunal from a decision

of the Fitzroy City Council

to refuse planning permission.

At the time of the hearing of the appeal in November 1978,

Zayen was proposing to construct a

44 bed nursing home on the

McKean Street site,

but apparently it did

not notify the

- 24 -

Department of that alteration to its proposal. The existing building at McKean Street was subject to preservation

conditions imposed

by the Historic Buildings Preservation

Council. A Permission had to be obtained under the Health	building	permit	was obtained	in	June	1979.
Act (Vic.)

before the building work could be commenced, s.182(4).

That

approval was obtained in July

1979.

Complying with all these

requirements occupied considerable time and was costly. For

the purpose of the application under the Judicial Review Act,

it is not necessary	to	refer to all those matters in any
detail.

By letter dated 22 March 1978 Zayen wrote to the

Director as follows:

“ R e : Proposed Nursing Home situated at

191 McKean Street, North Fitzroy

The Owners of the above-mentioned property hereby request that the permit to build a Geriatric Nursing Home be issued in the name of Zayen Nominees Pty. Ltd.

The previous applicant,

Mr. K. Matthies, is no

longer a member of this Company and

it is

therefore requested that

the

permit

amended rsicl and issued in the name of Zayen Nominees Pty. Ltd. of 381 Punt Road,

Richmond. The reference in that letter o “the permit to build“ and the

“

request that the “permit be amended” are completely misleading and erroneous in law. Further, it is. not clear

what is meant by the passage “the previous applicant,

Mr. K.

- 25 -

Matthies, is no longer a member

this Company". This

letter, however, raised a.

red herring which was pursued for

some time, but the waters remained muddy as a result of the lack of understanding and compliance with the provisions of the National Health Act.

By an undated letter above the name

of the Director

and received

by Zayen on

4 April 1978, the Department

acknowledged receipt of the letter of	22 March 1978 and then
continued:

"You are advised that approvals-in-principle

granted by this Department to any individual

or organisation to construct	or extend Nursing
Homes ars not transferable.

The approval-in-principle to construct a 58 bed nursing home at 191 McKean Street, North Fitzroy was granted to Mr. and Mrs. K. Matthies. If Mr. K. Matthies was acting on behalf of Zayen Nominees Pty. Ltd., the approval-in-principle will be re-issued in the

company name. If this

the case please

advise the nature of Mr. Matthies' involvement

with the Company.

If Mr.

Matthies was not acting

on behalf of

the Company a further application lodged

behalf of Zayen Pty. Ltd. will be necessary."

The errors and misconceptions contained in that letter need

not be stressed. Zayen replied by letter dated 12 April	1978
as follows:

"In answer to your letter

of the 31.3. '-78

wish to advise you Mr. Matthies

was at all

times acting on behalf

OF Zayen Nominees Pty.

- 26 -

Ltd. in endeavouring to obtain a permit for a

GO bed Nursing Home at

191 McKean Street,

Fitzroy.

Mr. Matthies was to become a director

of Zayen

Nominees Pty. Ltd. but this did not

eventuate.

The reference

to " 6 0 bed" must be a mistake. In

reply, a

letter dated	23 May 1978 above the name	of the Director
read:

"Thank you for your letters

of 12 May,

1978.

You

are

advised

the

that

approvals-in-principle

granted

are

transferable to the company name	of Zayen
Nominees Pty. Ltd."

On the copy

of that letter retained by the Department,

some unidentified time an unidentified person had written

"Reverted back to Mathies"

[sic].

By letter dated 6 Movember 1978 the Director wrote

to Zayen as follows:

"Approval In Principle Dated

21.11.77

North Fitzroy

- 58 bed nursing home.

Recently it was agreed by Commonwealth and

State Health Authorities

that

current

approvals in principle for the construction

new nursing home accommodation should be

reviewed by Commonwealth/State Co-ordinating

Committees in each State.

Consequently all applicants

who were granted

I	approval in principle are requested to provide the following information regarding:-

- 27 -

(a) Actions

taken to commence your

project:

(b) Details

of funds already expended

on this proposal:

(c)

It is requested that the above information is

[sic] received by this Department no later

than Friday, 17 November 1978."

Details of the people who will operate the nursing home.

Zayen replied by letter dated

9 November 1978 as follows:

In reply to your letter of 6th November,

1978:

We have appealed

to The Town Planning

Tribunal in reference to the Council's refusal to grant a Town Planning Permit.

The date

set

for the appeal is 27th

November, 1978.

Funds expended:

Cost

( 5 )

Land

$160,000

(ii)

Fees

& Expenses

$ 25,000

The Nursing Home will

be operated by

K. & B. Matthies,

Suite 3003, 3rd Floor,

Westfield Shopping Tower,

Doncaster.

3108.

Hoping that they are in order."

Even though this letter was written about the time

the

appeal being heard before the Town Planning Appeals Tribunal,

no reference

was made to the change in proposal from a

58 bed

- 28 -

nursing home to a 44 bed	nursing	home.	The	heading	of	the
l e t t e r is misleading.

It should

noted

that

wi th

respect

McKean

Street ,

period

twelve

months.

r e f e r r e d

t o

i n

t h e

"unless"

clause

s.40AA(3)

expired

on 5 December 1978,

being

twelve

months

a f t e r

t he

da t e

o f

t he

l e t t e r

i n fo rming

M r .

Mat thies of

the

"approval

in pr inciple" .

no t c l ea r

where the da t e i n p r i n c i p l e r e f e r r e d t o i n t h o s e

2 1 November

1977,

being

the

date

approval

two

l e t t e r s ,

was

obtained.

l e t t e r d a t e d

November

1978

the Director wrote

t o M r .

Matthies

seeking

information

relating

a number of

proposed

nursing

homes

inc iuding

three

which Zayen had

i n t e r e s t ,

namely

McKean

S t r e e t ,

Richmond

and

Essendon.

l e t t e r d a t e d

November

1978 M r .

Matthies replied,

b u t t he re

is no

evidence

that

Zayen knew of

the

contents

that

l e t t e r .

The

r e l evan t pa r t s

t h a t

l e t t e r a r e s e t o u t :

"Fur the r

t o

y o u r

l e t t e r

d a t e d

the

23 rd

November,	1978, you are advised as	follows -
...

3 ) The Nursing Home i n Essendon will be

conducted

son M r .

John

Matthies

205	Bridport Street , Alber t Park.

4 ) The Nursinq Home a t Richmond will be

operated hy

myself

K .

Matthies

Simpson St ree t , Eas t

Melbourne.

5 )

The Nursing Home

i n Fitzroy

has

been

reduced t o 44 beds and approval

for .

this

has j u s t been

obtained

from

t h e Town

and

- 29 -

Country Planning Authority. This Nursing

Home will be operated by Sister Betty

Matthies of 52 Sirnpson Street, East

Melbourne.

Details of the three remaining Nursing Homes

referred to in your letter, could be obtained by writing to Mr. A. Genzer [sic] of 381 Punt Road, Richmond.

I was the original Applicant

for Richmond

and Fitzroy.

It should be noted that in paraqraph

5 reference is made to

the proposed reduction in the number

of beds to 44.

There is

a slight difference between the contents

of that paragraph

and the letter from Zayen with respect	to	the proposed
"operator" of the nursing home.

On any view, after

December

1978

the power

conferred upon the Permanent Head by s.40AA(3)(b) was operative with respect to McKean Street, the prohibition on that power being exercised under the "unless" clause having expired.

In the present case what happened after the letter

of 29 November 1978 discloses confusion and uncertainties.

Grave concern must

be expressed as to the level

of competence

the administration in Victoria

by the Department in

relation to Part V of the National Health Act. AK the same time grave suspicions arise with respect to the motives of

Zayen.

In the absence of evidence, however, no. concluded

opinion can

be expressed on these matters.

- 30 -

For the purposes of the application under the

Judicial Review Act

it is sufficient to say that during the

months following November 1978 the correspondence and

evidence disclose that confusion reigned as to whether there

was to be a 44 or 58 bed nursing home at McKean Street, the

basis of recommendations made by the Co-ordinating Committee

purporting to act under s.40~~(3)

and the slavish adherence

to D.U.R.D. regions and Local Government Areas. There was a faFlure to consider what was the "locality" for

the purposes

of s.40AA(3)(b)

of the National Health Act and whether in

that locality approved nursing homes, including premises

proposed to provision for nursing home care. There

be approved as nursing homes, made adequate

was failure also EO

consider properly what was adequate provision for nursing home care in that locality. There was confusion relating to legal advice received and apparent confusion between the

Department and the Commission. There are obvious differences

in the wording of s.4OAA(3)(b)

ss-l79(8)(aa) and s.182(4) of the Health Act (Vic.), but when

the Commission has approved plans and specifications for

of the National Health Act and

proposed works, as

it did with respect

to McKean Street,

thereby being of the opinion that the proposed nursing home at McKean Street would not be likely to increase the facilities for patient care in the locality beyond the needs

of that locality, it is difficult to see how existing

approved nursing homes, including premises proposed to be

- 31 -

approved as nursing homes in the same locality, made adequate

provision for nursing home care in that locality. However,

it is not for this Court

to express an opinion

on those

matters. The material before the Court is sufficient to

I	justify grave doubts as to the csmpetence of the Government departments administering nursing home legislation in Victoria.

It must be remembered that much

of what was being

done within the Department

was not known to Zayen. There is

no evidence of what consultation, if any, was taking place between Zayen and the Matthies, but as late a s January 1979

Mr. Matthies, as proprietor,

was writing to the Department

I .

with respect to the proposed 44 bed nursing home at McKean

Street. In April 1979, Mr. Matthies was interviewed by the Co-ordinating Committee concerning the extension of the

period referred

to in the "unless" clause

of s.40AA(3).

Following that interview and

on the recommendation

of the

Committee, the Permanent Head,

by means of a letter dated 10

April 1979 above the name of the Acting Director (Victorian Division) informed Mr. Matthies that "approval in principle"

in relation to a

44 bed nursing home at

191 McKean Street had

been renewed to

30 September 1959.

The letter stated that

the approval was not transferable.

- 32 -

By letter dated 23 July 1979 above the name

of the

Director, the Department wrote to Zayen

outlining the

position as seen by the Department.	The letter contained the
following paragraphs:

“It is understood that the site at 191 McKean Street, North Fitzroy has been cleared presumably to commence construction of a nursing home. Consequently, I think you should be made fully aware of the conditions pertaining to approvals in principle to

establish

nursing

home

accommodation.

Section 4OAA(3

)

the National Health Act

1953 ptovides that the proprietor who applies

for approval of premises as an approved nursing home, may be refused approval unless

the applicant

has, vithin

12 months, been

advised by

this

Department

hat

the

application for approval as a nursing home

will not be refused.

‘Proprietor’ is define6

in this Act as the owner

of the business or

undertaking carried on at the nursing home.

To assess applications for approval in

principle for premises to be approved as been established.

nursing homes, a Federal/State Co-ordinating

...

The approvals in principle in respect of the

proposed nursing home accommodation at

191

McKean Street, North Fitzroy and 10 Fletcher Street, Essendon are in the name of Mr. & Mrs. K. Matthies on the basis that they will apply

for approval

the nursing homes as the

proprietors of the premises.

There is

guarantee that these proposed nursing homes

will be approved unless

an application for

approval is received from Mr. & Mrs. K.

Matthies as proprietors	of the premises.
...

- 33 -

As declaration that the letter from the Department dated

will

appear

later,

Zayen

is seeking a

23 May

1978 constituted information given by the Permanent Head that

an application for approval under

S .40AA(l),

if made by

Zayen, would not

be refused under s.40AA(3).

Even if the

Court had power to make such a declaration under

S .16(1)

(c)

Judicial Review	Act, no such declaration would	be made. That
letter stated:

"Approvals-in-principle granted are transferable to the company name of Zayen Nominees Pty. Ltd."

Even if it is possible in

law to transfer any benefit

privilege arising under the "unless" clause

of s.40-(3)

the

subsequent facts confirm that

no transfer took place. The

words of the letter cannot in their ordinary meaning

constitute a transfer.

They do not state that the approval

was transferred. The subsequent expiration

of the period

within which the application under

s.4OAA(1) could have been

made without being capable

of being refused under sub-section

( 3 1 , was granted to and apparently accepted

by Mr. Matthies.

Its non-applicability

Zayen was made abundantly clear.

Further, the word "application" in the "unless" clause must

refer to an application under s.40AA(1) and

the word

"applicant" must refer to the person who subsequently makes the application under s.40AA(1). The question of

transferability arises only because

of the failure of the

- 34 -

Permanent Head

to give information to an applicant in the

form stated in the “unless:‘ clause.

, ’

By letter dated

September 1979,

the solicitors

for Zayen wrote to the Director concerning “Nursing Home at 191 McKean Street, North Fitzroy”. Enclosed with the letter

was a copy of the certificate

of title to McKean Street

showing Zayen as the registered proprietor f the land and a copy of the plans and specifications of the proposed nursing

home in the name of Zayen.

In all probability those plans

showed a 44 bed nursing home. The letter stated also that an application “For Approval of Premises“ was enclosed, but in fact no such application was enclosed. It stated that “the clearing of the site has been completed and a contract has

been let“ for the construction

of the building.

It stated

that negotiations had taken place with the Matthies

but had

proved to be fruitless, that Zayen was the owner

of the site

and would “own the business of conducting a 44 bed nursing home on“ the site and requested that Zayen “be recognised as the proprietor of the undertaking to be carried on at the nursing home under the National Health Act“. The Department

treated this letter as

an application under the “unless“

clause of s.40AA(3) but

for

some

unexplained reason

considered it referred to a

58 bed nursing home.

- 35 -

The further period allowed

to Mr. Matthies under

the "unless" clause expired

on 30 September 1979.

There is

no evidence that Mr. Matthies made

an application under

s.40AA(1) before that date.

The request contained in the letter

of 6 September

1979 was considered at a meeting of the Co-ordinating

Committee

held on 18 September 1979. The

Committee

considered the existing "approval in principle" under the

heading "B.J. h K.M. Matthies" and the relevant part of the

minutes is set out:

"191 McKean Street North Fitzroy:

(A.I.P.

expires 30.9.79)

I 1

As the approval-in-principle was due to

expire, and that

B . J .

& K.M.

Matthies had made

no progress, on the above sites the Committee

recommended that the applications for renewal

of approval not be granted."

I ,

The Committee considered the request	by Zayen under the	i
!

heading "Zayen Nominees Pty. Ltd.	" and the relevant part of	I I
the minutes is set out:	!
I
I

"(b)	Construct a 44 Bed Nursinq Home at
191 McKean Street Fitzroy

The	Committee regarded this as a new

application for approval in principle.

The Commonwealth Department of Health was advised that little progress had been made.

It was noted that this

is the same proposal

for which B.J. and K.M. Matthies were granted

approval in principle on 21 November 1977.

- 36 -

Zayen Nominees Pty. Ltd. have the legal right

to proprietorship on the property. The

Committee considered that in view of the

moratorium on new applications explained in

the minutes of the meeting 31 July 1979, and

the fact that the L.G.A. is adequately

serviced by the Mount Royal Nursing Home, this

application is not recommended.	Zayen
Nominees Pty. Ltd. were advised in letter

dated 20 July

1979

(copy enclosed) that they

had no guarantee under Section AOAA3

of the

National Health Act 1953 in respect	of this
proposal. "

With respect

to each of those matters the Committee had

before it a summary in a form similar

to that set out earlier

in these reasons.

In the Matthies' summary the proposal was

stated as "To renew approval for 44-bed Nursing Home at 191 proposal was stated as "To conduct a 44-bed Nursing Home at

191 McKean Street, North Fitzroy"	.	In each summary the
details of numbers were the same:

"D.U.R.D.

REGION : Region 11 (Central

Melbourne)

% OF AGED

POPULATION	: 12.0
NO. OF NURSING

AREA:

P VATE

BEDS

HOME

344

RELIGIOUS/CHARITABLE 524

STATE -

519

1387

RATIO OF EXISTING

BEDS

: 44.4

NUMBER OF ADDITIONAL BEDS APPROVED

PRINCIPLE	: 282
RATIO OF EXISTING AND A.I.P. BEDS	: 53.4
RATIO IF PROPOSAL APPROVED	: 54.8

MUNICIPAL AREA

: L.G.A. 20 (Fitzroy)

% OF AGED POPULATION: 9.7

. .

- 37 -

NO. OF NURSING HOME

BEDS IN AREA

: PRIVATE

RELIGIOUS/CHARITABLE

STATE

TOTAL

Ni 1

RATIO OF EXISTING

BEDS

. -

NUMBER OF ADDITIONAL BEDS APPROVED

PRINCIPLE

: 54

RATIO OF EXISTING BEDS AND A.I.P. BEDS :

27.3

RATIO IF PROPOSAL

Comments were made in each summary, namely in the Matthies'

summary, "This approval was originally granted on 21 November

1977 and is due to expire on 30 September 1979", and in the

Zayen summary, "This approval had been granted to K. & B.

APPROVED

: 49.5"

Matthies and expires on 30 September 1979".

It is not clear

whether the additional beds approved in principle in the

local government area

of Fitzroy refers to McKean Street or

to the proposed Harold McCracken Home which had been

overlooked in 1977.

In the recommendation relating to Zayen, reference

is made to the

Mount

Royal

Nursing

Home.

There

is no

evidence of its type, its location

or the number of beds

provided in it or whether it had been taken into account when

the first McKean Street request was made.

It is not within

the municipality

of the City

of Fitzroy, but from the bar

table it was stated

to be situated at Poplar Road, Parkville.

The reference to "the moratorium" is to a decision taken by

the Co-ordinating Committee at its meeting held on 31 July

1979:

- 38 -

' I . . .

'that a moratorium be established in

relation to new applications to provide nursing home accommodation in Victoria, due to

the ratio of nursing home beds in the State

Victoria now having exceeded 50 beds per

thousand aged

65 and over, and because the

Health Commission is continuing its review	of
hospital beds throughout the State'.''

The moratorium was to apply

for a period of three months.

By letter dated 26 October 1979, being almost

Director-General, Insurance, Hospitals and Nursing Home

the end of the moratorium period, the First Assistant relevant times has been a member of the Co-ordinating

Committee, informing him in substance that the moratorium

was

not authorized under the National Health Act and that each individual application f o r approval should be considered on its merits:

...

As you are aware the Commonwealth/State

Co-ordinating Committees were established in

each State

agreement

between

the

Commonwealth Minister for Health and each

the State H alth Ministers. These Co-ordinating Committees were established for the purpose of advising the Permanent Head and

enabling him to assess each individual

application for approval in accordance with

the requirements of section 40AA of the

National Health Act and section 4 of the

Nursing Homes Assistance Act.

I	- 39 -
I I

The relevant sections

of the Acts concerned

specifically require the Permanent Head to assess applications on the basis of need for additional nursing home beds in the locality

in which the premises

to which the application

relates are to be located. In

these

circumstances it is considered that a moratorium cannot be declared on applications

to provide nursing home accommodation simply

because the average ratio

of nursing home beds

per 1 000 persons aged 65 years and over for	a
state as a whole exceeds the statistical

guideline of 50 beds per 1 000 aged.

There

may still

be regions within the State where

additional nursing home beds are required.

There may also be cases, such as those

involving continuity of

care,

in which

applications in areas with more than

50 beds

per 1 000 aged merit the support

of the

Committee.

An application for additional nursing home

beds should not therefore

be refused under

Commonwealth legislation purely on the basis of a moratorium on the provision of new nursing homes, imposed by the Co-ordinating

Committee. If the

Co-ordinating

Committee

wishes to make a negative recommendation an individual proposal it must be based on an

assessment of the need

for the nursing home

beds in accordance with the current guidelines

issued for the assistance

of the Co-ordinating

Committees.

In this regard it is noted that your Committee

still using the

1976

Census population

figures in determining bed ratios, and does

not appear to be taking account

of excess

recognised hospital beds available for the

accommodation of nursing home type patients or

existing long stay patients in approved

hospitals. It is pointed out that the revised

guidelines issued in late

1978 provide for

current population estimates

to be used and

for Committees to take into account available

recognised hospital beds as well as nursing

home type patients currently accommodated in

approved hospitals.

Accordingly, it would be appreciated if the individual proposals listed in the attached

schedule could

be referred back

to the

Committee for further consideration in the

light of the current guidelines with emphasis

.... .

- 40 -

on the specific comments made in respect

each

proposal.

this

connection

it is

important that the views

of the parties on the

Committees are clearly set

out, particularly

if there are various views expressed. If this

is not included, all parties must accept that

the views expressed are unanimous.

...

Zayen was not informed	of what was being done within the
Department.

By letter dated

19 Deceinber 1979,

the solicitors

I .

for Zayen wrote

to the Director regarding the nursing home at

191 McKean Street, North Fitzroy. Reference

was made to

previous correspondence and telephone conversations between a

member of the firm of solicitors and Mr. Hede, an Assistant

Director, Victorian Division, of the Department at Melbourne

and the fact that further consideration

was being given by

the Department to the approval of the application by Zayen. The letter contained a summary of the history of the matter set out in nine numbered paragraphs. Three of those paragraphs are set out:

It would appear that the only change in the situation or circumstances since the Department's letter of April 10, 1979 is the cessation of Mr. and Hrs. Matthies to have any involvement in the above project

and the change in the identity

of the

applicant from Mr. and Mrs. Matthies

our client.

8. Having regard to the fact that the Department has approved our client's

application

with

reference

to the

- 41 -

proposed nursing home at 3 3 Bendigo Street, Richmond (now in actual operation) and has very recently approved

our	client's application with reference

to the proposed nursing home at 10

Fletcher Street, Essendon, it would appear that the change in the identity of the applicant should not meet with the

disapproval of the Department and cause

it to refuse or fail to approve our

client's application under Section 40AA

of the National Health Act in respect

the proposed nursing home	at the above
premises.

9. Our client is prepared (and indeed

has

been

prepared

for

some

considerable

time)

to continue with the construction

of the

nursing home immediately upon the approval of its application with a view

to having the home in operation and

admitting people as residents

o the home

upon completion of construction and

registration by the State Authorities."

The letter then concluded:

"We now respectfully request on behalf of our

client that the Department give sympathetic

consideration to its application and await

your advice herein.

By another letter dated 29 January 1980, the solicitors wrote to the Director referring to McKean Street and a further telephone conversation with Mr. Hede and gave

details of expenditure incurred by Zayen with respect

McKean Street. By another letter dated

4 February 1980, the

solicitors wrote

to the Director regarding McKean Street

enclosing a testimonial in favour

of Zayen.

- 42 -

By letter dated 6 February 1980 above the name of

the Director, receipt of the letter of 4 February 1980 was

acknowledged.

The letter then stated:

“Your application on behalf of your client

Zayen Nominees Pty. Ltd.,

to construct a

bed nursing home at

191 McKean Street North

Fitzroy will be considered at the next meeting

of	the Federallstate Co-ordinating Committee

on Nursing Home Accommodation and

you will be

notified when a decision is made.

‘I

Zayen’s application was considered

at a meeting of

the Co-ordinating Committee held on 7 February 1980. The

’

Director and Mr. Hede were present as members. The Committee

expressed concern at the delays

occurring within the

Department with respect to confirmation

of recommendations

made by the Committee and in particular that confirmation

8 .

the recommendations made at meetings held on

25 October 1979

and 13 December 1979 had not then been received. Under the

heading “Zayen Nominees Pty. Ltd.”

the minutes stated:

“The applicant’s proposal to construct a 58 bed nursing home, at 191 McKean Street, North Fitzroy was reviewed by the Committee. The Approval in Principle, originally held for a

44 bed Nursing Home by B.J. and K.M. Matthies

at this address, M ~ S not recommended for reapproval at the 18 September 1979 meeting,

as little progress had been made.

Health

Commission

representatives

mentioned

that they had passed plans for the	58 bed
nursing home proposal.

Department of Health representatives stated

that as the original approval in principle was

- 43 -

granted to B.J. and K.M. Matthies this proposal should be treated as a new application.

The Committee considered that in view of the

L.G.A.

being adequately serviced by the Mount

Royal Nursing Home and that no additional information to the original application has

been supplied this

application is

not

recommended for approval.

The minutes in evidence

do not include a summary

of the

application by Zayen. In view

of the history of the matter

and particularly the letters from Zayen's solicitors of 6 September 1979, 19 December 1979 and 29 January 1980, and the telephone conversations between Mr. Hede and a solicitor for

Zayen, the statement set out in the minutes that no additional information had been supplied can only be said to

' ,

be remarkable.

Some

three

months

after

the

meeting, the

Department, by

letter dated

1 2 May

1980, wrote to Zayen's

I 1

solicitors as

follows:

"I refer to your letter of 6 September 1979,	!
on behalf of Zayen Nominees Pty. Ltd.. which

detailed

proposal

to establish

nursing

home of 44 beds at	191 McKean Street, North
Fitzroy.

The National Health Act requires that, in considering an application for approval for

the construction

or acquisition of new nursing

home accommodation or for the provision

of any

additional nursing

home accommodation at an

existing nursing home, regard shall

be had to

the adequacy

of the existing accommodation

available (including premises proposed to	be
approved as nursing homes) in the area in

- 44 -

which the additional accomnodation	is to be
provided.

It is also necessary under that legislation

consult with the State authority responsible

for the administration of nursing homes. For

this purpose a Commonwealth/State

Co-ordinating Committee on Nursing Home

Accommodation has been ,established in

Victoria. This Committee

has examined your

application and made its report to the

Director-General of Health.

Your application has been considered in

8 accordance with Section 40AA of the National Health Act but I have to inform you that the

application has not been approved.

The reason for reaching this decision

is that,

in the area in which North Fitzroy

is located,

it is considered that an adequate number

nursing home beds already

exists or has

already been approved

to be established to

cater for the needs

of the aged population.

I must advise that, if you were to proceed

with

the construction

of this nursing home,

patients accommodated in the nursing home

would not be eligible to attract Commonwealth

Government financial assistance.

With reference to your letters of 19 December 1979 and 4 February 1980, it is advised that

the proposal has

now been reconsidered and

you

will be further advised when a decision

has

been made.

It is not clear whether the letter was written with reference

to the decision made

by the Permanent Head following the

recommendation of the Co-ordinating Committee meeting held

18 September 1979. The minutes

of the meeting held on 7

February 1980 and in evidence,

do not contain, on their face,

a recommendation. The letter in its first paragraph refers

to the letter from Zayen's solicitors

of 6 September 1979

only.

The

last

paragraph

refers

two of rhe

three

- 45 -

subsequent letters and states that the proposal has now been

reconsidered and advice will

be given when a decision

has

been made, presumably

some time in the fucure, by the

Permanent Head. The minutes of the meeting of the Committee

held on 7 February 1980 make no reference to these letters.

By letter dated 16 May 1980 the solicitors for Zayen	l
acknowledged receipt of the letter of 12 May 1980 and stated

that since it contained no reference

to their letter of 29

January 1980, they enclosed a copy thereof and looked forward	I
to receiving advice when a decision had been made.

The matter came

before the meeting of the

Co-ordinating Committee held

on 29 May 1980.

The Director

and Mr. Hede were at the meeting. The format

of the minutes

and the summaries

of applications had been altered from those

previously used. The letter of 16 May 1980 was treated as a

new proposal with respect to McKean Street. It was given

Application No. 20 and a Registration No. V56. Under the

heading "Application and Proposals" the following appears

"Application f o r Reapproval of 44 beds previously not approved. Additional

information now provided in support

of 58 bed

nursing home.

Under the heading "No. of beds" appears the number "58" and

under the heading "Recommendation" appear the words "Not

Approved". The detailed information concerning Zayen was set

out in an attachment. It included the proposal number,

V56,

- 46 -

and date

of application, 16 May 1980.

It gave details of

other "Nursing Homes owned/operated" by Zayen. The proposal was stated to be for a new nursing home of 58 beds and the purpose of the proposal was stated to be the need for

additional beds in the area based

on beds to aged population

ratio. It privately financed and that finance was available. Another

was stated

further

that

the

home

was

to be

comment made was that a previous application

for 44 beds at

the site had not been approved. The Committee's comments are

set out:

that the application was being reconsidereci

due to a letter from Macpherson and Kelley

Solicitors acting on behalf of Zayen Nominees

"Department of Health representatives advised in conjunction with Zayen Nominees Pty. Ltd.

application at the 7.2.90 Meeting.

inspection of

the

site

departmental

officers ascertained that the site

has

not

been cleared.

The reference in these comments to the failure

to clear the

site is misleading. The existing building is subject to

restrictions by the Historic Buildings Preservation Council

on its demolition. Parts of the building had to be

incorporated in the new nursing home to be erected on the

site. This should have been made clear from a consideration

the plans and specifications supplied

the Health

Commission and which formed part of the material before the

Commission prior to it agreeing to the construction	of the
nursing home. The site had been "cleared" preparatory to

- 47 -

construction work being commenced,

but the existing building

had not been completely demolished.

It could not

be so

demolished. This persons who inspected the site did not

gave

rise

to misunderstanding

because

know fully the facts

relating to the proposed nursing

home when they reported to

the Committee the

result

their

inspections.

The

recommendation of the Committee is set out:

"The committee reaffirmed

it rsicl previous

decision not to recommend approval in principle because of lack of progress with the

proposal.

In reality, there was "lack of progress" because "approval in principle" had not been given.

Before the Committee also

was a page listing

bed/population statistics. These were based on an estimation

of persons aged

65 and over as

at June 1979 and were

calculated pursuant to an undisclosed formula

on figures

taken from the June 1976 Census. The Committee did not base

its

recommendation

these

numbers.

the' L.G.A.

Fitzroy, the estimated aged population was

1748.

existing

beds (Harold McCracken Home) 50 being a ratio of 28.6, no approvals in principle had been granted, the current application for 58 beds constituted a ratio of 33.2, and if granted, then a combined figure of 108 beds with a ratio of

61.8 would result. Similar figures were given

with respect

to the D.U.R.D.

region of Melbourne and with respect to

- 48 -

F i t z r o y

ar.d

t h e

s u r r o u n d i n g

L.G.A.'s

t h e

C i t i e s

Melbourne,

Brunswick,

Northcote

and

Collingwood

individually

and

co l l ec t ive ly .

l e t t e r

d a t e d

June

1980,

Zayen wrote t o

t h e

Permanent Head in

Canberra.

The

l e t t e r

r e f e r r e d

t o

t h e

l o n g

delay

deciding

the

request

and

asked

t h a t

t h e

m a t t e r

expedited.

The

l e t t e r

con ta jned

a l so

summary

the

h is tory of the mat te r .

rep ly

having

been

rece ived ,

the

so l ic i tors

for

Zayen

l e t t e r

d a t e d

September

1980 wrote

again

the

Permanent

Head.

The

l e t t e r

r e f e r r e d

t o

t e l ephone

conversation

held

on 18

September

1980

between

a member of

t h e

f i r m of

s o l i c i t o r s

and

M r .

Corcoran

i n

Canberra

concerning

the clear

ing of

the

s i te

and

confirmed

d e t a i l s

expenditure

and

t h e e f f e c t o f

t h e d i r e c t i o n

the Hi s to r i c

Buildings

Preservation

Council.

The

l e t t e r

s e t

o u t

a l s o

de ta i led h is tory of

the mat te r

which

was

subs t an t i a l ly

c o r r e c t i n s o f a r occurred and d i d not

a s

t h e

s o l i c i t o r s

had

knowledge

what

had

have

knowledge

the

machinations

within

the

Department

and the

Co-ordinating

Committee.

The

l a s t

paragraph of the le t te r

i s

se t ou t :

"We a r e a t c l i en t ' s app l i ca t ion hav ing r ega rd to the f ac t

loss

t o unders tand the d i f f icu l ty

of the Department t ha t t he re has

grant

ing approval

our

been

change

in c i rcumstances

s ince

the

appl ica t ion

made by Mr.

Matthies

o ther

han

a lcera t ion

the

p ropr ie tor .

- 49 -

Accordingly, for the reasons set

out in our

letters of December 19, 1979, January 29,

1980

and in this letter, we earnestly request that

the Department give sympathetic and speedy

consideration to our client's application for

approval under the National Health

Act."

By letter dated 17 November 1980, the Director advised the solicitors that the Permanent Head had directed the

Co-ordinating Committee

reconsider the application "re:

Zayen Nominees Pty. Ltd.,

58 bed nursing home proposal"

McKean Street "in view

of additional information which had

been submitted to the Department" and that the matter would

included in the agenda

of the meeting scheduled for

December 1980.

The Committee met on 19 December 1980. The

Director

and

Mr.

Hede

attended.

Under

"New

Proposals",

appeared V155, Construct a 58 bed nursing home at North Fitzroy", a

"Zayen

Nominees

Pty.

Ltd.

Resubmission.

58 bed

proposal and a recommendation "not approved". The detailed

information given was similar

to that given to the Committee

on 29 May

1980 except the date

of the application was stated

to be "14 November 1980".

It is not clear how that date was

ascertained. The following comments appear:

"29.5.80 Meeting

- This case not recommended

for approval. Central office wants Committee

to reconsider matter due to additional

information.

"Department of Health

representatives

explained

the

history

of this

case.

The

- 50 -

Committee noted that Zayen Nominees Pty. Ltd. has never been qranted approval to establish nursing home accommodation at 191 McKean

Street, North Fitzroy. The Committee was informed that the digging of foundation trenches had commenced the day before the

Committee meeting which would indicate that

some funds vere being spent by the applicant.

Representatives of the Health Commission advised that plans for the building had been approved in 1979 and that the matter is to be

further examined by

the

State Crown

solicitor.

“

The recommendation

was :

“The Committee members were unanimous in their

recommendation that this proposal not be

approved due to the bed ratio exceeding

SO/lOOO in the DURD Region and due to the

adequacy of beds in the

L.G.A. and surrounding

areas.

”

The decision of the Permanent Head was conveyed

the solicitors by letter dated

12 January 1981 above the name

o f the Director. The letter is set

out:

“I refer to your letter of 22 September 1980

which detailed a proposal

by Zayen Nominees

Pty. Ltd.

to establish a nursing home

of 58

bed6 at 191 McKean Street, North Fitzroy.

The National Health Act requires that, in considering an application for approval for

the construction or acquisition

f new nursing

home accommodation or €or the provision

of any

additional nursing home accommodation at an

existing nursing homo, regard shall be had to

the adequacy

of the existing accommodation

available (including premises proposed

to be

approved

nursing homes) in the area in

which the additional acconmodation is	to be
provided.

- 51 -

It is also necessary under that legislation	o
consult with the State authority responsible

for the administration of nursing homes.

For

this purpose a Commonwealth/State Co-ordinating Committee on Nursing Home Accommodation has been established in Victoria. This Committee has examined your application and made its report to the Director-General of Health.

Your application has been considered in accordance with Section 40AA of the National

,	Health Act but I have to inform you that the application has not been approved.

The

reason

for

reaching

this

decision

is that,

in the area in which North Fitzroy

is located,

it is considered that an adequate number

nursing home beds already exists

or has

already been approved

to be established to

cater for the needs

of the aged population.

I must advise that, if you were

to proceed

with the construction of this nursing home, patients accommodated in the nursing home wou1.d not be eligible to attract Commonwealth

Government financial assistance.

The stated reason for the refusal

to grant the

"approval in principle" is

set out in the penultimate

paragraph of

that

letter.

The

contents

of the

letter

disclose a number of misconceptions held by the Department concerning the application of the "unless" clause of

s.4OAA(3).

The Judicial Review Act had come into operation on

1 October 1980. In all probability Zayen could have sought

under that Act an order of review of that decision of the Permanent Head. However, Zayen decided to seek a- review of

that decision under

s . 4 5

the National Health Act. By

- 52 -

letter dated 27 June 1981, the solicitors wrote to the Minister, "pursuant to the provisions of section 45 of the

National Health Act, we write

for the purpose of requesting a

review of the decision not to approve the above premises

an approved nursing home". The letter set out in some detail

a history of the whole matter commencing with the original

"approval in principle" notified in the letter to Mr.

Matthies dated 5 December 1977. The letter concluded:

In summary, we are at a loss to understand the failure of the Department to grant its approval of our client's application having

regard to the fact that there has been no

change in circumstances since the initial

approval was granted to Mr. & Mrs. Matthies

and renewed by the Department

on April 10,

1979 other than an alteration in the identity

of the applicant.

For all of the foregoing reasons, we ask you

to review the decision

f the Department.

We have attempted to summarize the history

the site, the time effort and monies expended

by our client to date, and the reasons why it

feels that the failure of the Department to

grant approval are not justified. We would be

prepared and indeed request an opportunity to

meet with you for the purpose

of answering any

queries you may have

and expounding

on the

items contained in this letter.

We now await your decision herein."

Officers of the Department prepared for the Minister a summary of the matter described as "Appeal under

Section 8 5 of the

National Health Act

- Ministerial

representations by Nacpherson

& Kelley, Solicitors, on behalf

of Zayen Nominees Pty. Ltd.

l ' .

The summary had an attachment

- 53 -

to it setting out the background to the matter. These were

lengthy documents. It is not necessary to quote them.

It is

sufficient to say misconceptions and errors which are made apparent from the

that

they contained a number of

facts already set out relating

to reports on the work done on

the site as discovered on inspection and were confused by lack of understanding of the requirements of the Historic Buildings Preservation Council. The following paragraphs are

taken from the attachment:

"The Committee after reconsidering the proposal reaffirmed its previous recommendation that approval-in-principle not

be granted on the

basis that the area is

adequately serviced for nursing home

accommodation.

The relevant bed/population statistics advised by the Committee are:-

Without 58 Bed

With

58 Bed

Proposal

Beds

Ratio

Beds

Ratio

L.G.A.	50 28.6	108 61.8
L.G.A. and

Environs 1078 57.6 1282

68.5

1541

Region

53.6

63.

1838

The following paragraphs

are taken from the summary:

"5.

complication in this proposal is that

the Health Commission

of Victoria have advised

that their Crown Solicitor

has

stated the

Commission's approval of the Matthies' plans on 25 June 1979 remains valid for Zayen Nominees. As a result, the Commission has

stated, on legal advice, that

i must stand by

its decision to approve registration and

has

- 54 -

requested that 'earnest consideration

be given

the

approval-in-principle' by this

Department. However, the question

State

registration is

quite

separate from

Commonwealth approval-in-principle for nursing

home benefit purposes.

There are already

adequate beds in the North Fitzroy area and

the recurrent cost o the Commonwealth of each

bed in Victoria is some

$12 000 per annum.

6. The Department has supported the

Committee's recommendations

in this case and

after further examination

of the case, the

decision not

to grant approval-in-principle

Zayen Nominees is endorsed. In light

of the

circumstances outlined it is recommended that

the

Department's

decision

upheld

and

that

you disallow the appeal under Section	45 of
the National Health Act.

7. An appropriate response to the Solicitors, Mac2herson and Kelley is attached for	your
signature should you concur."

By letter dated 29 June 1981, the Minister replied to the request for review under	s . * 5	of the National Health
Act as follows:

"I refer to your recent letters on behalf

Zayen

Nominees

Pty.

Ltd.,

concerning

their

application for approval in principle to construct a nursing home at 191 ElcKean Street,

North Fitzroy, Victoria.

I regret the delay

in finalising this matter

but you will

appreciate that the detailed matters

raised by

you necessitated careful examination

of the

facts and obtaining reports	within my
Department.

The National Health Act provides that

considering an application for approval of proposed new nursing home accommodation, regard shall be had to the adequacy of the

existing

accommodation

available

(including

premises proposed

to be approved as nursing

homes) in the area in which the additional

accommodation is to be provided. Provision is

also made for consultation with the State

- 55 -

Government authority responsible for the

administration of nursing

homes.

For

this

purpose a Commonwealth/State Co-ordinating Committee on Nursing Home Accommodation has been established in each State consisting of representatives of my Department, the

Commonwealth Department

of Social Security and

the relevant	State	Government	health
authorities.

These Co-ordinating Committees

consider

applications and submit a report and recommendation to my Department for final

, decision on each

individual

proposal.

While

the Committees operate with a considerable

degree of flexibility it has been necessary

issue broad guidelines to

be followed by each

Committee, in order that a uniform approach

may be achieved throughout the Commonwealth.

In assessing the need for proposed new nursing

home accommodation, the Committees

have regard

to	the situation existing in the relevant

region and where appropriate the

local

Government area or surrounding areas.

Another important factor, and one that is used by the Co-ordinating Committees as the main guideline in assessing the need for additional

nursing home beds in a particular locality, is

that

where

the

ratio

of existing beds

(including those that have previously received approval in principle) exceeds 50 per thousand

persons aged

65 years and over, approval in

principle should

not be recommended unless

there are special circumstances. This ratio

is recognised as

one of the highest in the

world.

My Department informs me that an approval in

principle

was

originally granted to Mr. and

Mrs. B.J. Matthies in November 1977 in respect

of a nursing home proposal involving 58 beds

at the North Fitzroy address. Upon review in

March, 1979, the approval in principle for

this proposal	was extended with a reduced
number of beds	( 4 4 ) .

However, following the severing of the

business arrangements between the Matthies and

your clients, Zayen Nominees Pty. Ltd., in mid

1979, the approval in principle granted to the

Matthies was not renewed in September. 1979

after consideration by the Co-ordinating

Committee.

- 56 -

I am also informed that on 20 July 1979, the

Victorian Divisional Office of my Department advised your clients that in terms of the relevant Commonwealth legislation, approvals

in principle are not transferable and that any

application by them (Zayen Nominees) for

approval in principle in respect of a nursing

home proposal on the North Fitzroy site, would

need to be considered separately on its

merits. In other

words, there could

be no

guarantee that an application by them for

approval in principle

of such a proposal would

, be granted.

Accordingly, your clients, through your office, submitted an application for approval

in principle for

a proposed 58 bed nursing

home on the North Fitzroy site. The Victorian

Co-ordinating Committee considered the

application and following its recommendation,

approval was not granted

on the basis that an

adequate number of nursing home beds already existed in the area to cater for the needs of the aged population. Formal advice of this decision was conveyed by the Victorian Divisional Office of my Department on 12 May

1980.

A further application for approval in principle submitted by your office on behalf of Zayen Nominees was received by my Department on 16 May 1980. Additional information in support of the application M ~ S

also forwarded	by your office in September
1980.

This detailed information together with the relevant facts of this proposal were closely considered by the Victorian Co-ordinating Committee. However, approval was not granted, again on the basis of adequacy of beds in the

area.

It was noted that should the proposal

be approved, the ratio of beds

to the aged

population in the local government area

Fitzroy and surrounding areas would

be well in

excess of the guideline ratio of 50 per 1000

aged population.

In view of your representations

to me on this

matter, I have examined carefully all the

relevant facts of the case. However, I

consider that the

existing beds in the

locality are now adequate

o meet the needs

- 57 -

the aged population

and that the circumstances

of the case do not

justify the granting

of an

approval in principle. Consequently,

1 must

uphold the Department'

S decision not to grant

approval in principle for the Zayen Nominees'

nursing home proposal at North Fitzroy.

Finally, I have noted your request for an opportunity to personally discuss this matter with me, however, due to the pressures of parliamentary business, I am unable to accede

to your request.

I	I regret therefore that I am unable to be of
further assistance to you and your clients,

Zayen Nominees Pty. Ltd., in regard to this

proposal.

This letter reflects much	of what appeared in	the summary and
its attachments.

The application under the Judicial Review Act in

its original form

was as follows:

"Application

review the decision of the

respondent dated 29th June,

1981 pursuant to

s.45(3) of the National Health Act 1953

confirming the decision of the Permanent Head

of the Department of Health to refuse the

application of the applicant made pursuant

s.4OAA of the National Health Act 1953 seeking

approval of the premises

of the applicant

situate at 191 McKean Street, Fitzroy North

an approved nursing

home

pursuant

sub-section (3) of s.40AA of the said Act."

During the course of the hearing and as the issues became

clearer, leave was granted to Zayen

to amend the application

to read as

follows:

- 58 -

"APPLICATION to review the decision	of the
Respondent dated 29th June 1981 under the

National Health Act 1953

(a) confirming the decision

of the Permanent

Head of the Department of Health refusing

to inform the applicant that if it made an

application under S . 40AA(1) for approval of premises known as 191 McKean Street, Fitzroy North as an approved nursing home it would not be refused under S . 40AA(3 ) ; and

(b) refusing to direct the Permanent Head

to inform the Applicant."

It was not disputed that the decision

of the

Minister set out in his letter of 29 June

1981 was a decision

of an "administrative character" made under an enactment and

thus could be made the subject

of an order of review under

s.5 of the Judicial Review Act.

During the course whether the Minister had jurisdiction to make a decision

of the hearing the question arose

of the National Health Act. This matter has been adverted to already. Counsel for Zayen contended that

under

S .45(3

)

in s.45(2) (a) the words

"an application for approval as

approved nursing home" were, on their proper construction, sufficiently wide to include the case where a person has

informed the Permanent Head in writing that

he proposes to

make an application,

i.e. under s.4OAA(l), and requests the

Permanent Head to inform him, in writing,

that

the

application will not

be refused under s.$OAh(3)

if made

within twelve months of that notification by the- Permanent

- 59 -

Head or within such longer period

as the Permanent Head

!	allows (the "unless" clause	of s.40~A(3)).
I
I

I	That contention is not accepted. Section 40AA has been analysed earlier in these reasons. The provisions
I I

the "unless" clause

of sub-section ( 3 ) are designed to grant

a benefit to a person who proposes to conduct a nursing home.

If	the Permanent Head gives the required information, the

power conferred

by that sub-section to refuse

to grant an

application under sub-section (1) is suspended during the relevant period referred to in the "unless" clause. The

power to refuse to grant the application

conferred by

sub-section (4) remains.

The true position is illustrated

the opening phrases of paragraph (b) of sub-section ( 3 ) wherf a distinction is drawn between "approved nursing homes" and "premises proposed to be approved as nursing homes". In my opinion, it cannot be said that the words "an application for

approval as an approved nursing home" in

S .45 (2

) (a), which

mirror the words of S .~OAA(

l),

include a request under the

"unless" clause of s.40AR(3).

In law, a person proposing to

make an application under s.4OAA(1) is free to construct a nursing home, provided the consent of the Commission under the Health Act (Vic.) is first obtained, and then make the application. If granted, he obtains the benefit of receiving

Commonwealth funding. review under s.45(2), but in law there

not

granted,

may request a

is nothing to prevent

- 60 -

him from carrying

on the nursing home business

or undertaking

without an approval under the National Health Act.

Counsel for Zayen next contended that the "approval

in principle" contained in the letter

of 5 December

1977

constituted McKean Street an approved nursing home within the

extended definition of the word "approved" since

it was then

"deemed to be approved" as a nursing home and that "approval

in principle" under the "unless" clause

of s.4OAA(3)

was a

deemed approval.

It followed, so it was contended, that a

refusal to give the information under the "unless" clause

w s

a refusal to grant

an approval under s.45(2)(a) since

amounted to a refusal to grant an application for approval,

albeit a "deemed" approval.

That contention is not accepted. A reference

other provisions in the National Health Act and to the

history of those provisions illustrates that "deemed"

approvals refer to those nursing homes which

by the National

Health Act itself are expressly deemed

to be approved nursing

homes. This is made clear

by reference

the National

Health Act 1962,

s.4,

which first inserted the definition

"approved", and s.12 which inserted Part

V into the National

Health Act.

In particular s.dO(5) as contained in Part V

provided that a certain type of nursing home "shall .

. .

deemed to be an approved nursing

home" even though not

approved under the provisions

of s.40, which in form

was

- 61 -

similar to the present s.40AA although

that time the

provisions relating to "approvals	in principle" had not been	I
l

included. Those provisions were inserted into the National

Health Act with operation from

January 1973; see

s . 8

National Health Act 1972. Sections 39 and

40 of the 1972 Act

also made provision that certain types

of	nursing homes

"shall . . . be deemed

to have been approved". Special

reference is made

to those provisions by

s.40~~(3)

(a) of the

National Health Act.

In my opinion the extended definition

of the word "approved" is directed to include those nursing

homes which by the Act are expressly deemed to

be approved.

Further, consequences which flow from an approval being granted.

reference

has been made to

the

Those consequences

do not flow from the granting

of an

"approval in principle". Similarly,

if the contention was

correct, the words in parentheses in s.40AA(3)(b) would	be
unnecessary.

The

difficulty of treating an

"approval in

principle" as an approval under

s.4OAA(2)

is illustrated

further by a consideration

of the orders sought by Zayen. At

the request of the Court, counsel for Zayen formulated those

orders as follows:

"A.

DECLARATION

that on 23rd May 1978 the

Applicant

was informed by the Permanent

Head of the Department of Health that if

it made an application under

S. 40AA of

- 62 -

the said Act for approval

of premises

situate at

and known a s 191 McKean

Street, Fitzroy North such application

would not be refused under S . 40AA(3).

ORDER that the decision

of the respondent

dated 29th June 1981 be quashed and the

matter be remitted to the said respondent

to be dealt with according

to law and

subject to the following directions:

1. That the applicant’s Application be treated before the Respondent as a

proposal in respect

of a 44 bed

nursing home.

2. That the Respondent have regard in deciding the relevant locality for

the purpose of S. 40AA(3) (b)

of the

National Health Act 1953 to the area

from

which

the

nursing home

described in the said Application,

when in operation, is likely to

attract at any one time, the

substantial proportions of its

patients.

3 . The Respondent have regard to the

1981 Census population figures when

considering whether approved nursing

homes (including premises proposed

to be provided as nursing homes) in

the locality in which the said premises are situated make adequate provision for nursing home care in that locality within the

meaning of S . 40AA(3)(b) of the said

Act.

4. The Respondent have regard in

considering the

applicant‘s

Application to Exhibit H dated 23rd May 1978 and to the applicant‘s actions after that date in reliance

thereon.

”

A perusal of those proposed orders, the PrOViSiOnS

of s . 4 5 ( 3 )

and the provisions the substance of the complaint by Zayen is directed to the

of s.40AAmakes it

clear that

- 63 -

"approval

pr inc ip le"

no t

be ing

iven

and

n o t

t o

t h e

r e f u s a l t o g r a n t

an approval under

S .4OAA(2).

Alternat ively, counsel

for

Zayen

contended

t h a t t h e

decis ion of

the M i n i s t e r was

made

under s.138 of the National

Health Act. contention b u t t h a t does not

Counsel

for

the

Minister

did

not

dispute

that

end	the mat te r .

It t h e power conferred by s.45 of the

is c l ea r

t ha t

t he

Min i s t e r

pu rpor t ed

t o

exe rc i se

National

Health

Act.

Although nothing

i n t h e

body

t h e l e t t e r d a t e d

29 June 1981

from

the Minis te r re fers to s .45 ,

a l l

materials placed before

the Minis I n making

spec i f ica l ly

adver ted

review

under s.45.

h i s

decis ion,

d id

n o t

t u r n h i s

mind

t o

S .138.

That section t o review a decis ion

does

not

confer

d i r e c t

power

the Minis te r

a l ready

made by

t h e Permanent

Head

pu r suan t t o the exe rc i se o f

power

conferred

upon

him

under

the

National

Health

Act.

the

sec t ion

had

t h a t

meaning,

s.45 would be

unnecessary.

For

another

example

r e l a t ed

power which would be

unnecessary

see

s.58F

as contained

Pa r t VB

the National Health Act.

opinion,

the power

conferred by

l38 does not authorize the Minister to review

the decision of the Permanent

Head.

S e c t i o n

1 3 8

e n a b l e s

t h e

M i n i s t e r

t o

i m p o s e

r e s t r i c t i o n s

the

exerc ise

o f

a power conferred upon t h e

Permanent Head.

A donee

a power may have

Gnfettered

- 64 -

discretion conferred upon him by legislation. The legislation may impose express restrictions on the exercise

of a power. An illustration of a restriction

on the exercise

power is contained in s.BOAA(G)(c)(i) and

(7) of

the

National Health Act.

on a number of	grounds	pecified	in	s . 5 ( 1 )	J u d i c i a l Review
A c t ,

d i squ ie t i n r e l a t ion to the admiRis t r a t ion o f t he	Department.
for costs.

[1983] FCA 48

25 Mar 1983