Is the Minister's Power under s 44 Conditional on the Establishment of a Panel?
The Minister's power under s 44, to revoke or suspend an approval, is not subject to an express requirement that the Minister appoint or receive a report from a Standards Review Panel. The Minister is empowered to act only if he or she considers that the nature of the approved nursing home has changed since the date of approval (s 44(2)(a)) or a condition applicable to the home has not been complied with (s 44(2)(b)). However, once those conditions are satisfied, the Minister has a broad discretionary power to vary, revoke or suspend the approval "as the Minister considers justified in the circumstances of the case". There is nothing in s 44 itself to suggest that the Minister's power of revocation is conditional on the establishment of a Standards Review Panel. Mr Sealy did not suggest otherwise.
Section 45E(10) prohibits the Minister making a declaration under s 45E(1) in respect of a nursing home unless a Standards Review Panel has been established and the requirements of the Regulations have been satisfied. Since such a declaration is a precondition to the exercise of the power in s 45E(2) to withhold Commonwealth benefit for future patients, it follows that that financial sanction cannot be imposed without a Panel being established and making a report. However, the language used in s 45E(10) restricts only the Minister's power under s 45E(1) to make a declaration. It does not prevent the Minister from forming the view that the nursing home care does not satisfy the standards determined under s 45D. Much less does it prevent the Minister from being satisfied that a condition applicable to an approved nursing home has not been complied with, even where the condition is one that requires nursing home care to satisfy the standards determined under s 45D. It follows that s 45E(10) cannot of itself limit the Minister's power to suspend or revoke an approval to circumstances in which a Panel has been appointed. Again, Mr Sealy did not suggest otherwise.
Is the position altered by s 45E(12)? Section 45E(12) addresses a situation in which the Minister "is satisfied of the matter referred to under [s 45E(1)]". That "matter", plainly enough, is that the nursing home does not satisfy the standards determined under s 45D. In these circumstances, s 45E (12) is not to be taken as implying that the Minister may not suspend or revoke the approval in respect of the nursing home if she considers that a "more appropriate course of action". This is so whether or not the Minister has taken any action under s 45E(1). The sub-section is not expressed as a limitation on the power conferred by s 44(2). It merely negates an implication that the drafter thought might otherwise flow from s 45E.
The evident purpose of s 45E(12) is to ensure that the Minister's power under s 44 to revoke or cancel an approval is not restricted by the detailed procedures applicable to the more limited sanctions provided for in s 45E. The intention is certainly not to make the Minister's power under s 44 conditional on the appointment of a Panel. This conclusion is consistent with the general structure of the legislation which (as we have explained) clearly distinguishes between the two sources of Ministerial power, and provides different remedies by way of review where the powers are exercised. It is also consistent with the Explanatory Memorandum to the National Health Amendment Bill 1991. Clause 15 of the National Health Amendment Bill 1991(which became s 45E(12)) was explained as follows:
"This clause amends section 45E of the Principal Act to make it clear that irrespective of any action the Minister may take under section 45E of the Principal Act in regard to a nursing home that does not satisfy standards, the Minister may still proceed to take action under section 44 of the Principal Act against a home which may be in breach of the conditions of its approval."
Mr Sealy contended that this result is anomalous because it would mean that the legislation provides elaborate safeguards for the lesser sanction (denial of Commonwealth benefit for new patients), but affords fewer safeguards for the more severe sanctions (cancellation or suspension of approval). It is true that there are fewer initial constraints on the Minister's power to cancel or suspend an approval than are imposed on the power to deny benefit to new patients. One reason for this is that the power of suspension or even revocation may have to be exercised in circumstances of urgency, for example, where the safety or well-being of patients is in immediate peril. However, the legislation provides important safeguards to a proprietor adversely affected by a cancellation or suspension decision, although they differ from those available in respect of decisions under s 45E. In particular, as we have noted, a proprietor is entitled to seek review on the merits in the AAT of a Ministerial decision to cancel or suspend an approval, while a proprietor threatened with a denial of benefit for new patients is limited to a review by a Panel.
There is therefore nothing anomalous in concluding that the exercise of the Minister's power under s 44(2) of the National Health Act to cancel or suspend an approval is not conditional upon the appointment of a Panel pursuant to the National Health Regulations.
The Alternative Argument: ADJR Act, s 5(1)(b)
It follows from what has been said that the Minister's delegate was neither bound nor entitled to direct a Standards Review Panel to review the nursing home care provided by Derwent Court for purposes not connected with the exercise or possible exercise of the powers conferred by s 45E. The direction given on 1 May 1997 accordingly was not authorised by the National Health Act or the National Health Regulations. In substance, what happened in the present case was that the delegate mistakenly assumed that a Panel could be directed to prepare a report under reg 26 for purposes unconnected with the proposed exercise of powers under s 45E.
The mere fact that the delegate mistakenly assumed that such directions could be given to a Panel, does not mean that there was a failure to observe procedures that were required by law to be observed in connection with the making of the revocation decision. Doubtless the words "in connection with", as used in s 5(1)(b) of the ADJR Act, are to be read widely: Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 (Wilcox J), at 479-480. But there could be no contravention of s 5(1)(b) in this case unless the delegate failed to observe procedures she was required to observe in connection with the decision to revoke Derwent Court's approval.
Neither the National Health Act nor the National Health Regulations required that a Panel should be established and should make a valid report before a decision to revoke Derwent Court's approval could be made: cf Peninsula Anglican Boys' School v Ryan (1985) 7 FCR 415 (Wilcox J), at 428. The failure to establish a Panel in accordance with the Regulations did not constitute a failure to observe any procedure required by law in connection with the revocation decision. Whatever other consequences might flow from the delegate's reliance on an improperly constituted Panel, the ground of review specified in s 5(1)(b) is not made out.
Did the Delegate Fail to Take into Account a Relevant Consideration or Take into Account an Irrelevant Consideration?
It follows from what has been said that the Minister's delegate is not required or indeed entitled to adopt the Panel procedure, when making a decision to cancel or suspend an approval of a nursing home under s 44(2) of the National Health Act. However, it may well have been open to the delegate, when considering whether she should cancel Derwent Court's approval, to seek the advice of the three individuals comprising the Panel. Mr Bell contended that the fact that the three individuals had not been properly appointed as members of the Panel did not detract from the proposition that the delegate could take into account their views on the standard of care provided by Derwent Court, when making her decision under s 44(2) of the Act.
This argument would have some force as a factual matter, if the decision-maker had recognised that the Panel not been validly appointed. Had she appreciated the correct position, she might nonetheless have decided to take into account the views expressed and give them such weight as was appropriate. But she would have done so simply on the basis that three individuals, with specific qualifications and experience, had formed those views. She would not have given weight to their findings because they were clothed with the authority of the Act and the Regulations.
In fact, the delegate relied heavily on the findings of the second Panel when making the revocation decision. She repeatedly referred to the confirmation by the second Panel of findings made by a Standards Monitoring Team, that urgent action was required to ensure that Derwent Court achieved compliance with the relevant standards. The delegate also expressly accepted the findings of the second Panel, and did so without close analysis of its reasoning or of the nature of its investigations.
The delegate took this course because she assumed that the second Panel had been validly appointed under the Regulations. So much appears from the definition of "second Panel" in her reasons. There is nothing in the reasons to suggest that the delegate adverted to the possibility that the Panel had not been validly constituted under the Regulations. It is an obvious and, indeed, almost inescapable inference that the delegate gave weight to the Panel's confirmation of adverse findings precisely because she thought that it had been validly appointed under the Regulations and that it had conducted its inquiries pursuant to the authority conferred by the Regulations. The delegate did not treat the Panel's findings as simply made by three individuals having no authority under the Act or Regulations and lacking, as a Panel, the full range of qualifications a validly constituted Panel would have had.
It will be recalled that the trial Judge was told that there was no difference between the revocation decision, made on 6 August 1997, and the reconsideration decision, made on 13 October 1997. In fact, the reconsideration decision-maker was in a somewhat different position than the delegate. Prior to the reconsideration decision, the respondent made written submissions. In those submissions, it specifically contended that the Panel had not been properly constituted and that one member did not have the experience prescribed by reg 11.
The reconsideration decision-maker, however, rejected this submission. He expressly found that the regulations permitted the Panel to proceed, even without the minimum membership required by reg 12. He also rejected the submission that other members did not meet the requirements of the Regulations. In taking this course, he relied on arguments that were adhered to by the Minister in the proceedings at first instance. The trial Judge, as has been seen, rejected the arguments and they are no longer pressed. Nonetheless, they plainly impressed the reconsideration decision-maker, who acted on the basis that the arguments were correct.
It follows that if the reconsideration decision-maker approached the question of cancellation of Derwent Court's approval on the same basis as the delegate, namely, that the Panel had been validly appointed and thus its findings had been made pursuant to the authority conferred on it by the Regulations. It is true that the reconsideration decision-maker said that, even if one member did not have the requisite experience, that could not "diminish the findings". But that observation does not detract from the basis upon which the reconsideration decision-maker clearly proceeded.
In supplementary written submissions, Mr Bell argued that the revocation decision-maker, although entitled to take into account the legal constitution or status of the Panel, was not bound to take that factor into account: cf Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, at 39-40, per Mason J. He contended that, where the power exercised by the Minister is that conferred by s 44(2)(b) of the National Health Act, the only considerations that the Minister is bound to take into account are those bearing on the standard of nursing care provided by the home and the nature and degree of non-compliance with the relevant condition (in this case compliance with s 45D standards). The Minister was free to consider or ignore the legal status (or lack of it) of the Panel. The fact that the Panel had not been properly constituted and had not received a lawful direction from the Minister, was not a matter the delegate was bound to take into account.
In our view, this submission pays insufficient attention to the relationship between s 44 and 45E and to the fact that the Minister's power under s 44(2) is not untrammelled. The Minister's power to establish a Panel and to give it directions is, for reasons we have given, limited to a review of nursing home care for purposes connected with the exercise or possible exercise of powers conferred by s 45E. The legislation, in particular s 44, does not permit the Minister to establish a Panel and give it directions for the purpose of considering whether or not to cancel the approval of a nursing home. Much less does the legislation authorise the Minister to treat an invalidly constituted Panel as a duly constituted body, clothed with the authority of the Act and the Regulations.
It is, perhaps, arguable as to whether the case should be characterised as one whereby the delegate took into account an irrelevant consideration (treating the findings of the Panel as having been made by a properly constituted Panel) or as one in which the delegate failed to take into account a relevant consideration (that the findings upon which she relied so heavily were not made by a properly constituted Panel, but by three individuals having no authority under the Act or Regulations). We think the former view is preferable, since the delegate was not entitled, as a matter of construction of the Act, to treat the findings of the Panel in the way in which she did. In any event, subject to the issue of materiality considered below, the revocation decision constituted an improper exercise of the power conferred by s 44 of the National Health Act. For the reasons that have been given, the flaw in the revocation decision was not cured by the reconsideration decision.
Finally, Mr Bell argued that, even if the delegate had taken into account irrelevant considerations, it was not conduct that gave rise to an entitlement to judicial review. In our view, this is not a case in which the factor taken into account was so insignificant that it could not have materially affected the decision: cf Peko-Wallsend, at 41, per Mason J; Otter Gold Mines Ltd v Australian Securities Commission (1997) 15 ACLC 1732 (FCA/FC), at 1741, per Merkel J. The findings of the second Panel were plainly given weight, at least in part, because the delegate thought it had been validly established and had acted pursuant to a valid direction. It is not possible to say what conclusion the delegate might have reached, or even if the three individuals would have been appointed to advise her, had the true position been appreciated prior to the revocation decision. Similarly, it is not possible to say what effect an appreciation of the true position would have had on the reconsideration decision.
It follows that the respondent has made out its case that the making of the revocation decision was an improper exercise of the power conferred by s 44 of the National Health Act, as was the making of the reconsideration decision.