Plaintiff v Defendants

Plaintiff v Defendants - [2013] VSC 464 - VSC 2013 case summary — Zoe

[200]

As to paragraph 13 [of the statement of claim]:

(a) they admit the written terms of the lease to the extent that the same are accurately replicated, but otherwise do not admit the allegations therein;

(b) further, they say that at the time of entry into the lease and at all material times thereafter it was known and intended by the parties to the lease that:

(i) the tenant from time to time conducting the business of a residential aged care facility at the Preston Nursing Home would have statutory obligations to care for the residents of the nursing home;

(ii) the tenant from time to time conducting the business of a residential aged care facility at the Preston Nursing Home would have contractual obligations to care for the residents of the nursing home;

(iii) the proper and reputable conduct of the business of a residential aged care facility would require, conformably with the statutory and contractual obligations owed by the business operator to facility residents, the re-location of residents to another facility or other facilities in good time before the effluxion of the lease;

(iv) the lease did not require the tenant to cede its business to the landlord on the effluxion of the term of the lease; and

(v) the proper and reputable conduct of the business of a residential aged care facility required the disclosure to residents and applicants for accommodation of the pending expiration of the lease, and the assumption of new care obligations of indefinite duration only where alternative premises were available to the operator after the expiry of the lease for the discharge of those obligations.

(c) accordingly, they say that the obligations of the tenant under the lease are to be construed on the footing, alternatively it was an implied term of the lease that, the tenant from time to time (and hence RCAthe first defendant) was entitled to commence re-locating residents of the aged care facility conducted at the Premisesston Nursing Home within a reasonable time before the expiry of the lease with a view to the complete re-location of all residents before the expiry of the lease.

PARTICULARS

The term was implied by law and/or in order to give business efficacy to the lease (implied term);

(d) further, they say that a reasonable time within which to commence relocating residents of the aged care facility was 6 months before the expiry of the lease, taking account of time of the year.

(e) in any event Fenridgethe Plaintiff was not in a position lawfully to carry on a residential aged care facility at the Premisesston Nursing Home before the expiry of the lease as Fenridgethe Plaintiff was not registered as an approved provider in respect of residential care service within the meaning of the Aged Care Act 1997 (Cth).

[210]

141 As to the possibility that another approved provider may have been entitled to conduct an accredited residential care service from that time, whether Fenridge or another lessee, RCA could, and in my opinion should, have informed residents that the owner of the premises (Fenridge) had informed it that it intended to continue a nursing home business at the premises from the end of the lease, and that it had made the necessary applications to become an approved provider and for allocated places. It would then have been a matter for the residents and their families to make an informed choice. They could either choose to leave the premises and find suitable alternative accommodation elsewhere or, if they wished to remain at the premises if possible, deal directly with Fenridge and make their own decision as to whether Fenridge was likely to be in a position to conduct an accredited residential care service at the premises from the time the lease ended. In the meantime, in order to have complied with the continuing business obligation and other relevant obligations under the lease, RCA could and should have: (1) continued to liaise with Dr Santini with a view to a smooth handover of remaining residents from one accredited service to another at the end of the lease, if that were possible; and (2) kept the nursing home open for business - even if that meant caring for only a few remaining residents or, if there were no residents at any time, standing ready to accept residents who were seeking short-term accommodation, on the express understanding that they may have to leave the premises on or before 28 February 2008 if they could not make arrangements with another approved provider who was entitled to conduct an accredited residential care service at the premises from that time. Such a course of conduct would have given proper recognition to RCA's obligations to treat the interests of residents as paramount and involved compliance with its continuous business obligation.

[220]

But it is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick:

as a general rule ... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.

It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith C.J. said in Butt v M'Donald:

It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.

It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself.[39]

[228]

The effect of these provisions was to tie the approval of the nursing home to particular premises. If the premises were sold or leased, the buyer or lessee would need to arrange for the existing approval to be terminated and for a fresh approval in the name of the buyer or lessee to be obtained. Under these arrangements, it was not possible for the approval or licence in respect of the nursing home beds to be disposed of separately and apart from the approval in relation to the premises themselves.
If therefore, under the National Health Act provisions, the defendants had made a decision at the expiration of the lease to cease to conduct the Nursing Home business, it would not have been possible for them to keep the Nursing Home approval separately and apart from the other assets which would have to be handed back to the plaintiff.
It seems to me that the expression 'bed licence' so far as it related to a particular bed in the Nursing Home was a misnomer and found no mandate for its use in s 40AA and the following sections of the National Health Act. In a sense, the Nursing Home approval under that Act was indivisible. There did not appear to be a separately identified piece of property relating to a particular bed in the Nursing Home. Under the National Health Act, the only licence involved was the nursing home approval itself. If a person wished to set up a nursing home, a nursing home approval would need to have been obtained, one of the conditions of which would have been a restriction on the number of beds in the nursing home. The only way a bed could have been transferred to the proprietor of some other approved nursing home would have been for the nursing home approval in one case to be altered by increasing the number of beds and in the other to be altered by decreasing the number of beds. Such an arrangement could only have been given effect to by enlisting the co-operation of the Secretary for the Department of Health and Family Services. A transfer as such was not involved.[41]

[308]

...we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s. 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.

On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.

The conclusion which we have reached on this question finds support in other considerations. The approach results in fair compensation whereas the all or nothing outcome produced by the civil standard of proof would result in the vast majority of cases in over-compensation or under-compensation to an applicant who has been deprived of a commercial opportunity. Furthermore, it is an approach which conforms to the long-standing practice of taking into account contingencies in the assessment of damages.[82]

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Legislation Cited (8)

Cases Cited (30)