(1) Whether the wrong test was applied
11 The issue before the Tribunal involved the amount of kitchen wages claimed by Milstern. The applicable law is s 115(4) of the RVA. Milstern, the operator, claimed $150,544 expenditure for kitchen wages. This matter was heard on 19 January 2005, 13 April 1005 and 3 May 2005. I shall return to earlier hearings under the heading "Denial of natural justice".
12 Section 115(4) reads:
"In determining an application made by the operator under this section, the Tribunal may review any expenditure made under subsection (3) and may order that the operator is liable for so much of that expenditure as it considers was not reasonable or necessary."
13 That is, the Tribunal Member stated the correct test.
14 At the hearing on 3 May 2005, the Tribunal Member stated:
"So I start on that basis, however, I have to say there were a number of items which in the course of considering the evidence given by the parties I've determined is not reasonable and should not be allowed." (Ex EAD1 p 2)
15 At the hearing, the Tribunal Member referred to the determination of what expenditure should be allowed as being that which is "fair and reasonable" and, later, the Tribunal Member referred to expenditure as "being not reasonable and should not be allowed".
16 Although the Tribunal member gave his reasons on 3 May 2005, the written reasons were not published until 9 November 2005. In the written reasons the Tribunal Member stated "Section 115(4) of the Act requires the Tribunal to consider whether expenditure incurred in accordance with the provisions of subsection (3) is reasonable or necessary in the operating of the village." (Ex PB22 p 393). This statement is not entirely correct.
17 In relation to the kitchen wages, the Tribunal Member, after noting that the residents were receiving two hot meals per day and that they had expressed a wish that such service continue to be provided, stated (at Ex PB22 p 396):
"The operator employs a full-time cook to prepare meals seven days a week. The manager does assist in preparation of food on weekends.
The residents said that in fact the manager prepares meals on weekends.
In addition, the operator says that it is necessary to engage a dinning (sic) room assistant and kitchen hand.
The Tribunal is not satisfied that it is necessary to service a dining room for a maximum of twenty nine people with the compliment of staff engaged by the operator in the year in question. There is a necessity for a full-time cook given that residents were not prepared to countenance precooked meals in the particular year. The extent of the manager's involvement in cooking meals on weekends is unclear and no deduction is allowed for what might otherwise be a reduction of the cost reasonably incurred. It would appear to the Tribunal that it would be sufficient for the kitchen to be operated by a full-time cook and a dinning (sic) room assistant providing services of waiter and kitchen hand.
On the material available the Tribunal finds that an amount of $100,000.00 for this line item is an amount to be allowed as reasonably incurred in the year in question."
18 Milstern submitted that before the Tribunal could order that Milstern, as the operator of the retirement village, was liable to bear $50,544 of the costs of expenditure incurred in regard to kitchen wages, the Tribunal had to reach an affirmative state of satisfaction that such expenditure was "not reasonable or necessary". Milstern referred to Minister for Immigration & Multicultural Affairs v Lay Lat [2006] FCAFC 61 where the Full Court made observations about s 65 of the Migration Act 1958 (Cth). The Full Court stated:
"[72] In VSAF, Black CJ, Sundberg and Bennett JJ pointed out at [16]-[17] that s 65 of the Act, and the decision of the High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 274-275, make it clear that the section requires the decision-maker to refuse to issue a visa in the absence of a positive finding of satisfaction.