CATCHWORDS ADMINISTRATIVE LAW - appeal from decision of the Administrative Appeals Tribunal - classification of private hospital for purpose of determining amount of daily bed payment to be made by Commonwealth - recommendation by State Minister for Health - effect of classification on planning of health care services generally and on Commonwealth funding - whether Tribunal failed to consider relevant matters in determining correct classification. ._ . 2 Ss Administrative Appeals Tribunal Act 1975 ss.43,44 we ten eee oa ee - Health Insurance Act 1973 s.31(1) THE MINISTER FOR HEALTH v CHARVID PTY. LIMITED trading as Kirribilli Private Hospital No. G 45 of 1986 Woodward, Sheppard and Neaves JJ. 16 July 1986 Sydney lee gy mine preegre- Fy pe men Sie per er . ye AL toe ey re ae ~~! nes ~-— ~ ny "> ? in Ty Pe ne tg ee ee cree een ee pe eee 7 neat eesti ; cane . IN _THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISTON No. G 45 of 1986 weweww ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BETWEEN THE COURT oi. BY MR JUSTICE B.A. BEAUMONT, SENIOR MEMBER MR_B.J. McMAHON AND MEMBER DR H.W. GARLICK THE MINISTER FOR HEALTH Applicant and CHARVID PTY. LIMITED ; trading as Kirribilli Private Hospital Respondent MINUTES OF ORDER COURT: | Woodward, Sheppard and Neaves JJ. DATE: 16 July 1986 PLACE: Sydney ORDERS THAT: The decision of the Administrative Appeals Tribunal made 24 January 1986 be set aside. The matter be remitted to the Tribunal to be heard and decided again, with the hearing of further evidence at 'the discretiom of the Tribunal. (NOTE: Settlement and entry of orders is dealt with by 0.36 of the Federal Court Rules). — Cowra ge- ' aa weer Se wees rom eee ee mee "shadsaamanenee ata enanec ntenett mon Te te —r oom TLR ry IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 45 of 1986 ) ) GENERAL DIVISION ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY MR JUSTICE B.A. BEAUMONT, SENTOR MEMBER MR_B.J. McMAHON AND MEMBER DR_ H.W. GARLICK BETWEEN : THE MINISTER FOR HEALTH Applicant and - _ CHARVID PTY. LIMITED ee trading as Kirribilli Private Hospital Respondent COURT: "Woodward, Sheppard and Neaves Jd. DATE: 16 July 1986 : | PLACE: Sydney REASONS FOR JUDGMENT: WOODWARD J. This is an appeal on questions of law pursuant to 5.44 of the Administrative Appeals Tribunal Act 1975. The respondent operates the Kirribilli Private Hospital ("Kirribilli"), situated in the Sydney suburb of that nane, on the north shore of Sydney harbour. Pursuant to the Health Insurance Act 1973 ("the Act"), the Federal Minister for Health ("the Minister") determined that for the purpose of calculating the amount of daily bed subsidy a 1S onary te ee em te as 7 t tyes se payable to private hospitals by the Commonwealth, Kirribilli should be placed in a particular category designated as Category 3. Kirribilli unsuccessfully sought a redetermination from the Minister that would have placed the hospital in Category 2, thereby substantially increasing the level of bed subsidy payable to it. Kirribilli then brought a successful application before the Administrative Appeals Tribunal ("the Tribunal"). The Minister's decision was, in effect, reversed by the Tribunal, which set it aside and directed that the category of Kirribilli be determined as Category 2. Section 31(1) of the the Act, which occurs in Part III - Payment for Hospital Services, provides, - . "The..Minister may, by order in writing _ published in the Gazette, specify categories of private hospital for the purposes of this Part and, -in relation to each-category,. an-amount-of daily - bed payment":--- - - - oo On 21 March 1984, the Minister made an order, which was published in the Gazette the following day, specifying those categories for the relevant purposes. They were as follows, "Category 1 private hospitals, consisting of - {a) private hospitals, not being private hospitals referred to in paragraph (b) of Category 2 or _ paragraph (b) of Category 3, having the following characteristics: . (i) a daily average of more than 65 in-patients; (ii) more than 25 per cent of discharges and daily bed payments under the Health Insurance Act 1973 (other than discharges and daily bed payments in respect of nursing home type patients) are in respect of surgical or maternity patients; — 7? rye eo 7 7 he ae eee ae Edad Indat reetelateanall anal ST es gyn rey {b) (iii) more than 5 per cent of such discharges and daily bed payments in respect of surgical and maternity patients are in respect of patients who receive advanced surgery; and (iv) less than 15 per cent of daily bed payments under that Act are in respect of nursing home type patients; and private hospitals each of which, while not possessing all or any of the characteristics referred to in paragraph (a), has been the subject of a recommendation to the Minister by the Minister for Health of a State within the meaning of Part III of that Act that it be determined to belong in Category 1 and in respec* of which the Minister has indicated that, after having regard to the planning of health care services generally and the likely effect of the recommendation with respect to Commonwealth funding, he is prepared to accept the recommendation. Category 2 private hospitals, consisting of - ~(a) (b) private hospitals, not being private hospitals included in Category 1 or referred to in paragraph (b) of Category 3, having the following characteristics t ~~ . (i) more than 15 per cent of discharges and daily bed payments under the Health Insurance Act 1973 (other than discharges and daily bed payments in respect of nursing home type patients) are in respect of surgical or maternity ~ patients; and ~- (ii) not more than 50 per cent of daily bed payments under that Act are in respect of nursing home type patients; private hospitals each of which, while possessing the characteristics referred to in paragraph (a) -of Category 1 or while not possessing all or any of the characteristics referred ta paragraph (a) of this category, has been the subject of a recommendation to the Minister by the Minister for Health of a State within the meaning of Part III of that Act that it be determined to belong in Category 2 and in respect of which the Minister has indicated that, after having regard to the planning of health care services generally and the likely effect of the recommendation with respect to Commonwealth funding, he is prepared to accept the recommendation; and (c) private hospitals that are psychiatric hospitals having more than 70 approved beds. Category 3 private hospitals, consisting of - (a) private hospitals not included in Category 1 or Category 2, and (b) private hospitals each of which, while possessing the characteristics referred to in paragraph (a) of Category 1 or paragraph (a) or (c) of Category 2, has been the subject of " a recommendation by the Minister for Health of a State within the meaning of Part III of the Health Insurance Act 1973 that it be determined to belong in Category 3 and in respect of which the Minister has indicated that, after having regard to the planning of health care services generally and the likely effect of the recommendation with respect to Commonwealth funding, he is prepared to accept the recommendation." Kirribilli fell within paragraph (a) of Category 2, that contention was abandoned before this Court. The application was conducted on the basis that paragraph (b) was the only relevant paragraph. The alleged errors of law of the Tribunal, which would provide the grounds for this Court to intervene, may be summarized under two headings taken from paragraph (b) - "the planning of health care services generally" and "the likely effect of the recommendation with respect to Commonwealth funding". These are the two specified matters which the Minister has to consider in order to determine if Category 2 is appropriate, after he has received a recommendation froma State Minister for Health to that effect. it is not disputed that the New South Wales Minister for Health made such a recommendation in --Although it had been contended before the Tribunal._ that nS ee ere ae wen, pee trn mee e oe Ves at ge i ote ane ver Myo ee ar ta ot o a ad acne "following terms: the present case, though he added a comment that there were at least six other hospitals (most of them in the same Northern Metropolitan Health Region) to which he would give a higher priority "for recategorisation". ' Since the Minister is required, by the definition of categories, to have regard to the two matters cited, it follows that the Tribunal, exercising the decision-maker's powers and discretions (Administrative Appeals Tribunal Act 1975, s.43(1)) must also consider them. And, if it fails to do so, it will have committed an error of law. The planning of health care services generally This matter. was --dealt -with by the Tribunal' in the ! - -"So far as concerns the-planning.. of _health care services generally, there is no reason to question the judgment of the EStateé] Minister and of the regional officers of the State Department of Health on this score. It will be recalled that their collective views, as stated in the letter of 27 March 1985, were that 'on planning grounds' Kirribilli would be more appropriately categorised in category 2. Reliance was placed, in this connection, upon the 'high standard of care' offered by Kirribilli and its 'important role' in taking the overfiow of patients from Royal North Shore. As has been noted, these views were corroborated by the evidence of Dr. Finnegan and Mrs. Truswell and their opinions were not seriously contested by the Minister. It must follow that the applicant should be taken as having satisfied this ingredient of para.(b)..." There are several aspects of this passage which give some cause for concern. In the first place, the opening sentence might suggest that the State Minister's recommendation, based on the views of his officers, is in some way definitive of the issue IIe ree te ngs rere te ores . aime . a - 8 woe voce to be determined. However, I think it would be reading too much into the statement to say that the Tribunal accepted the State Minister's recommendation as satisfying the requirement of considering "the planning of health care services generally". T am prepared to accept that when the Tribunal said "... there is no reason to question ...", it meant, "... we can find no reason to question ...". Nevertheless the Sentence, even when read in its full context, does suggest that the Tribunal took "the planning of heaith care services generally" as requiring no more than a consideration of the place of the particular hospital within a network of regional health services, In correspondence with the Minister, the State Minister "had said, on 18 January 1984: ee. "A total of 39 hospitals, including 13 psychiatric hospitals, have made submissions to my Department seeking State support for their reclassification to a higher category. A list of these hospitals and the upgrading they propose are attached. In considering these submissions, the State has had regard for Regional services planning, including the delineated role of each hospital and its place in a network of Regional services. New South Wales has recently undertaken a major role delineation exercise for public hospitals and is now in the process of delineating roles_ for 7 private hospitals. Under the 'Interim Guidelines for Hospital Role Delineation', a hospital's role can be defined in terms of: (a) the range of services it may provide (surgery, obstetrics, psychiatry, urology, etc), and (b) the level of complexity of each service (six ' levels of complexity have been defined for each service category). aT ae ot aon nm pa ere enn ee eee eee ate . i toe B we ya TIT Te ' eh ate ' ? ' we a. followed. things, Aree Services at levels 5 and 6 can be provided only by major specialist hospitals, level 4 services generally relate to base hospitals in country regions or major district hospitals in metropolitan areas, and so on. The determination of a hospital's role is based on consideration of local socio-demographic factors, the level of the hospital's staffing and facilities, the availability of support services (radiology, intensive care, etc), and the hospital''s relationship to other Regional services. In the light of these considerations, the State supports the following hospitals for reclassification." - Ce A list of 15 hospitals recommended for upgrading Kirribilli was not in that list. On 27 March 1985 the State Minister wrote, among other "IT am "greatly concerned that the Order under _Section 31(1) of . the Health Insurance Act appears to shift responsibility for decisions on | 7 recategorisation of individual private hospitals from the Federal to the State Minister, although in many instances the State is not ina position to judge the appropriateness of recategorisation. This is particularly the case where the grounds for . recategorisation relate to the financial viability of the hospitals. co I am also concerned that 'lack of State support' can be used as the primary reason for refusing upgrading of a hospital's category in instances where the Commonwealth would not agree to recategorise a -hospital even 1f positive State support were given. .- . ; . This has been the case in respect of Kirribilli Private Hospital where I understand that you indicated, in making your decision, that you would not be prepared to accept a positive State recommendation. Nevertheless, I note that in the Commonwealth's statement to the Administrative Appeals Tribunal on this matter, lack of State support is given as a primary reason for your decision against Kirribilli Private. oN Soren! The State does not have access to the necessary information nor is it a State responsibility to make judgements on the financial viability of a private hospital nor to pronounce on the relationship between service types and cost structures in private hospitais. State responsibilities for the delivery of health services, enable the State to comment on the role and standards of a private hospital and the importance of that hospital in a Regional network of health services. Previous State advice on recategorisation has been based on these health services planning principles. In the case of Kirribilli Private Hospital, on the advice of the Northern Metropolitan Health Region of the Department of Health, I consider that on planning grounds the hospital would be more appropriately categorised as category 2. The Region advises that Kirribilli Private is one of a number of medical/post operative hospitals in the Region which offer a high standard of care and which play an important role in taking the overflow of patients from Royal North Shore Hospital,.. which_ is the major referral hospital in the Region. -—-.The Region——would——give —higher — priority for recategorisation to several other medical/post operative hospitals in the Region ahead of Kirribilli Private. All these hospitals have been delineated as level 3 for medical services, using the New South Wales hospital role delineation system. This system uses a six point scale ranging from 1 for community health or bush nursing to 6 for teaching hospital services. A level 3 service is generally the level below base hospital or major district hospital. As indicated above, the State is not in a position to comment on the question of the financial viability of Kirribilli Private Hospital nor on the relationship between the level and -standard of service and the hospital's cost structures. These | matters are for the Commonwealth to determine. At the same time, I must observe that the State's first priority for recategorisation continues to be the six hospitals, which were originally supported by the State in the letter of 18 January 1984 and which have not been upgraded." ' me eee ee oer ee ae ee ret . ee Pe eee ma ee ae tem swoon The letter went on to list five psychiatric hospitals, and one maternity and gynaecology hospital, which must be taken to D be additional to the "several other medical/post operative hospitals" referred to in the third-last paragraph quoted. The Tribunal accepted the accuracy of the facts, and the reasonableness of the opinions, expressed in this correspondence. Probably the key passage init is the opinion of the State Minister expressed in the words "I consider that on planning grounds the hospital would be more appropriately categorised as category 2". It was pointed out by counsel for the applicant Minister that consideration of "the planning of health care services generally" is the responsibility of the Federal Minister under the gazetted order; the grounds upon which a 'State Minister may or should make a recommendation are not specified. --- ee ee However it would seem entirely appropriate that the State Minister should base his recommendation upon the requirements of planned health services within his state. He has accepted the views of his own officers in the Northern Metropolitan Health Region, but I think it would be wrong to assume that he has overlooked the implications of his recommendation for health care services in. the rest of the State, and particularly in neighbouring regiaqns of . the Northern Metropolitan Region. Counsel for the applicant Minister argued that the Tribunal was guilty of an error of law because it interpreted too narrowly the phrase "the planning of health care services bard - 10 ~ generally" in looking only at the useful role played by Kirribilli within the network of services in the Northern Metropolitan Health D Region of Sydney. However the main thrust of the Minister's case was that the Tribunal had failed to consider other relevant evidence before it. Counsel relied, in this connexion, on s.43 of the Administrative Appeals Tribunal Act 1975, which requires the Tribunal to give reasons for its decision, which, if in writing, "shall include its findings on material questions of fact and a reference to the evidence ... on which those findings were based". Arising from this requirement, it is to be assumed that any matters not dealt with in the Tribunal''s reasons must have been found to be not material to its decision (Sullivan v Department _of fransport (1978) 20 ALR 323 at 353). There could, however, be two reasons for a matter raised in the hearing not being dealt with in the decision. It could be that the Tribunal took the view 'that, whatever the state of the evidence, the matter was not important or "material" to the issues which it had to determine; or it could be that, although the matter was potentially important, the evidence on it was so skimpy or uncertain that no useful conclusion could be drawn. The Tribunal need not attempt, in its reasons, to deal with every matter which has been covered by evidence before it, or even every matter dealt with in counsel's arguments. The requirement of s.43 is, in my view, that the Tribunal should deal with all the matters which it is bound by relevant legislation to consider, or Which it has found persuasive, or which have been urged upon it and would have been persuasive had they been established by the evidence (see Steed v Minister for Immigration (1981) 37 ALR 620 at 621). , . ' fo tees g mene a ar . haat medi ryrTy Pas a uo, MT on pee pt ac ree on, > anaes r, I b- i fi Pe eee -lli - There were a number of allegedly material matters which, counsel for the Minister submitted, the Tribunal failed to D consider. I find it necessary to deal with only four of then. The first was "the existence of other comparable hospitals in the area", providing services similar to those of Kirribilli, which were not operating at full capacity. It was argued that these hospitals could absorb more patients if the Kirribilli property was sold, and put to other purposes, aS a result of allegedly inadequate returns from the hospital business. (I note in passing that the Tribunal made no positive finding on the likelihood of the hospital closing if it remained in Category 3. This alleged omission was criticised by counsel for the Minister, but I do not find it necessary to deal. with the point beyond saying that it would have been helpful if the Tribunal had felt able to express itself more clearly on the issue than it did). There was a good deai of evidence on the availability of other hospital beds. On behalf of the Minister, statistical evidence of bed occupancy rates in other hospitals was produced, while witnesses for Kirribilli sought to establish that there was only one other hospital in the near vicinity which was capable of giving the type of care offered by Kirribilli, and that it was working at a high level of bed occupancy. Although it would have been helpful if the Tribunal had dealt directly with this issue, I am prepared to accept that the references in its'decision to "the high standard of care 'offered , wa mae, meni Speers - aleatenia axel) -12- by Kirribilli and its important role in taking the overflow of patients from Royal North Shore ...", amounted to an implicit D finding in favour of the hospital's argument that its services could not readily be replaced. There was sufficient evidence to justify such a finding. The second matter alleged to have been overlooked by the Tribunal was the question of the number of hospital beds in the region being higher than the planning figures usually adopted of 4.0 or 4.5 beds per 1000 population. Evidence showed that the ratio in the relevant region was 5.1 or a little less (perhaps about 5.0) while the average metropolitan figure was 5.2 and the overall average for the State 5.4. In my view the Tribunal was fully entitled, on the evidence before it, to regard these figures as unpersuasive and immaterial to it in reaching its decision. The third matter relied upon is more difficult to deal with because, although quite significant, very little was made of it and it would have been a difficult consideration for the Tribunal to grapple with. This was the question of the effect on private health fund benefits of a change in category. The matter seems to have been dealt with, in one paragraph of a statement by the Minister's chief witness, in the following terms: "21. The implications to private health fund contributors, are that they would be required to pay the increased contribution rates necessary to finance the additional fund benefits payable at the Category 2 rate. The cost to private health funds under the requirements of the National Health Act had been assessed at about $216 000 per annum. The Commonwealth Government has a general policy to encourage and support private health insurance through the operation of its regulatory controls ¢ ~ poe — Pa ree ee ee er en Pay 7 ser - 13 - over the industry, and also through policies designed to maintain contribution rates at an affordable level." D I am inclined to the view, though not without some hesitation, that the Tribunal was entitled in the present case to regard this matter by itself as being too remote from its considerations. If it was otherwise persuaded that a change of category was appropriate, the fact that this would require higher payments under benefit schemes, and thus play some small part the next time state-wide contributions were assessed, should not, I think, have deterred the Tribunal. If it had accepted evidence of a flow-on effect, the position might well have been different; but the question of flow-on is more important in other connexions. The fourth matter said to have been overlooked by the Tribunal was the need to preserve a distinction between Category 2 and Category 3 hospitals in the overall scheme administered by the applicant Minister. Here, in my view, the Tribunal did fail into error. It did not consider this question at all under the present heading of planning of health care services, and only touched on it under the heading of Commonwealth funding in order to reject it as a relevant issue. - There was evidence led, on behalf of the Minister, to the effect that there are at present nine Category 3 private hospitais in the Northern Metropolitan Health Region of New South Wales offering the same type of services as Kirribilli. Of these, four are of comparable size with Kirribilli. Detailed evidence was given about these four, designed to show that there was no ' atk wee peg eee ar MF cD 7 ee ATA LS TI RR rg teers ee gy egcen nto we - 14 - reason why Kirribilli should be preferred to them for raising to Category 2. There was also evidence of substantial differences between Kirribilli and existing Category 2 hospitals. Gvidence of differences between Kirribilli and other nearby hospitals was called on behalf of the hospital. In my opinion, this evidence was of great importance to the proper planning of health care services by way of allocating hospitals to categories. The Minister, and therefore the Tribunal, must work to a demonstrable and understandable pattern. If a special exception is to be made, the reasons for departing from the norm should be capable of explanation and, where the decision is made by the Tribunal, should be set out. I believe that the Tribunal made an error of law when it failed to consider the appropriate boundaries between Category 2 and Category 3 hospitals and the implications of its decision for othér sinilar hospitals and thus for the general system of putting hospitals into categories. In my view, the Tribunal was bound to take these considerations.into account if it was to exercise its power validly (see Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363, at 375). . In fairness to the Tribunal, it should be said that there is a probable explanation why these, and other matters yet to be dealt with, were not adverted to in its reasons for decision. | oo m4, en aa were ie - 15 - The bulk of the hearing before the Tribunal was taken up with issues which are not before the Court. In particular, a great deal of time was spent on the question whether a person recovering in Kirribilli from surgery conducted at another hospital is a 'surgical patient' within the meaning of paragraph (a) of the description of Category 2 hospitais (see above). Counsel for the Minister made submissions in writing to the Tribunal at two stages of the hearing, which between them occupied some 25 pages. Only a little over one page dealt with the issues now before the Court. Counsel for the hospital provided 23 pages of written submissions and supplemented them with oral submissions occupying some 35 pages of transcript. In the course of these, the matters now before the Court were dealt with more thoroughly, and arguments were put, designed to show that patients displaced by closure of Kirribilli "could not simply be transferred to other private hospitals", and that the immediate region of Kirribilli "has an ageing population anda relatively low proportion of hospital beds to population". These submissions were developed with references to the relevant evidence before the Tribunal. Counsel for the Minister were content to tell the Tribunal: "27. The consideration is whether the hospital is likely to close in the absence of re-categorisation and if so, whether that circumstance would involve an adverse effect on planning or Commonwealth funding. 28. Consideration must also be given to the positive effects of re-categorisation upon planning and funding. . it ar oe ye yn tee ee a - 16 - 29. The Respondent will submit that the evidence that Kirribilli may close is unpersuasive. It is perhaps not necessary to decide this point, as the evidence establishes that even if the hospital closes, the licence will be transferred, and no nett loss of beds will occur. Further, the evidence established that even were there a nett loss of 32 beds, ample excess capacity exists within the area." The matters which the Tribunal could be required to consider under the heading of "the planning of health care services generally" are many and complex. If it is to be asked to reject an application for change of category on such grounds, it is entitled to expect a reasonably detailed exposition of the significance of the matters being put. If the case for the Minister is argued in the economical terms quoted, it is not surprising that the Tribunal should express itself in similarly laconic terms. However "the conduct of the party's case before the Tribunal goes to this Court's discretion as to what course it will take given that there has been an error rather than to the question as to whether the Tribunal really made an error" - per Bowen CJ in Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 186 at 195. In the present case I believe the question of consistency in allocating hospitals to categories is so important that the matter should_be remitted for rehearing in spite of the very limited assistance given to the Tribunal. The likely effect of the recommendation with respect to Commonwealth funding The applicant Minister's complaint under this heading about the Tribunal's finding is rather different. Here the submission put on the Minister's behalf, that a favourable result ' Te ego uA TE fu ah -17- for Kirribilli would open the floodgates for other expensive claims, was considered but rather summarily rejected by the Tribunal. The Tribunal had evidence, upon which it made a finding, of an increased cost to the Commonwealth of $95,000 per year in bed subsidies for Kirribilli, if the change of category were granted. The submission on behalf of the Minister to the Tribunal on this matter was even more cryptic than its argument under the previous heading. It was in the following terms: "30. So far as funding is concerned, the evidence established that even if the unlikely scenario painted by Dr McEwin came to pass this arrangement for funding as between the Commonwealth and New South Wales are Lis3 fixed, and unaffected in any way by movements of the type which Dr McEwin foresees." The reference to Dr McEwin''s evidence is, apparently, to an argument developed by that witness that it would cost the Commonwealth more if Kirribilli closed than if it were 'recategorised'. The only quantitative evidence adduced by the Minister of the likely flow~on cost of granting the Kirribilli application, was that they could not be "readily quantified", but if all Category 3 private hospitals were moved to Category 2 it would cost the Commonwealth Slim per year. One might ask rhetorically what the Tribunal was supposed to make of that piece of information. - 18 - What the Tribunal actually said was, "The Minister's third point is in the nature of a 'floodgates' argument. But whether the other hospitals should be elevated to category 2 is a matter to be determined, in each instance, upon the merits of the particular application." In my view, it is not sufficient to look at the cost of each application in isolation in considering "the likely effect e.- With respect to Commonwealth funding". In the absence of any useful assistance, it is not surprising that the Tribunal took the course which it did, but I think it was bound to have regard to the need for consistency in allocation of hospitals to categories. It could not properly ignore the wider implications of its decision. It had evidence that the State Minister regarded five psychiatric hospitals, one maternity hospital, and several medical/post-operative hospitals, all in the same region, as having a higher priority than Kirribilli for reclassification to Category 2. Although this view could not be conclusive of the ultimate fate of those applications, it was a matter proper to be considered. The Tribunal also had evidence, on which it made no findings, of close comparability between Kirribilli and four other nearby hospitals. If asked, the Minister's witnesses could presumably have made some estimate of. the number of _hospitals elsewhere in New South Wales, or in Australia, which they would have regarded as having an arguable case for being raised to Category 2 if Kirribilli succeeded and was seen as setting a precedent. The weight to be given to any such evidence or submissions would, of course, be a matter for the Tribunal. It <a eee he —Pr-; -19 - might not have been persuaded that there would be any serious flow-on. But, I believe, the expression "the likely effect of the recommendation with respect to Commonwealth funding" is apt to include any reasonably anticipated flow-on effects of a change in category; the possibility must be considered. Words such as "the cost to the Commonwealth of the recommendation" might not have had the same effect had they been used. But the very use of the word "funding" suggests larger and less certain amounts than the immediate costs concerned. For this reason aiso I think that the Tribunal failed to take into account a matter it was bound to consider, and thus fell into error of law. Its decision should therefore be set aside, and the matter remitted to it to be heard and decided again, with the hearing of further evidence to be at the discretion of the Tribunai. Because I believe that the Tribunal was led into error by the way in which the case for the Minister on these issues was presented to it, there should be no order as to costs. I certify that this and the eighteen (18) preceding pages are a true and accurate copy of the oe __ Reasons for Judgment herein of The Hon Mr Justice Woodward Cpe Associate Dated: 16 July 1986 oe ate nn ne ree i ee ee as ly =" eee ee ene _ , 1 4 onerpcen ae sho ay aa eoseyoe corr ete te aes TN_THE FEDEREL COURT OF AUSTRALIA } TEW SOUTH WALES DISTRICT REGISTRY 3) Wo. G45 of 1986 , GENERAL DIVISTON ) ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISTON OF THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN : THE MINISTER FOR HEALTH Applicant AND: CHARVID PTY LIMITED trading as Kirribilli Private Hospital Respondent CORAM: Woodward, Sheppard and Neaves JJ. DATE : 16 Julv 1986 PEASONS FOR JUDGMENT SHEPPARD J.: In-this matter---I have had-the advantage of reading the judgment to be delivered by Woodward J. I agree in his reasons and conclusions and with the orders he proposes. I do not wish to add anything in relation to the substance of the matters which were arqued, but I do wish to say this. The submissions made to the Tribunal on behalf of the Minister - see pp. 15-16 and 17 of the judgment of Woodward dU. - were so perfunctory and elliptical that. if this had been a case in which wre rn re re er er Psa, y an Hoy a ches mens wh re 7 road a ae rar aid aa peed ae cad eer gear te ST we an wee Hy ee ne the onlv major concern was the private interest of the respondent, I would have had little difficulty in reaching the conclusion that the Minister should be refused relief on discretionary grounds. But, as Woodward J. has shown. there are wider considerations. These involve aspects of the overall administration of the Act which may have implications for the funding of hospitals at least in the region in which the respondent's hospital is situated, if not in other areas as well. In the unusual circumstances of the case it was not sufficient for the Tribunal to treat the matter as if it were ordinarv adversary litigation. In the absence of adequate evidence and submissions from the Minister. the Tribunal was required to seek further assistance in order to put itself in a position to give appropriate consideration to the matters it was bound to take into account. That being the case, the only way in which this Court can mark its disapproval of the lack of assistance qiven the Tribunal by those advising the Minister is to deprive him of his costs of the appeal to which. in ordinary circumstances, he would have been entitled." ~~ | egitity that this and he preceding - ~~ - : - pace are é us copy-c cfthereasonsfor _- : judgment harem cf The Renee radle : Mr Justice Sheppard. , Associate Dated [6 TLLY 1786 apart TIS ao eer ee ag nn ary TTT IN _THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G 45 of 1986 ~we ww GENERAL DIVISTON ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN : THE MINISTER FOR HEALTH Applicant , AND: CHARVID PITY. LIMITED trading as Kirribilli Private Hospital Respondent CORAM: Woodward, Sheppard and Neaves JJ. DATE: 16 July 1986 REASONS FOR JUDGMENT Neaves J. T agree that, in the respects identified and for the reasons given by Woodward J., the Administrative Appeals Tribunal erred in law in failing properly to have regard, as it "was obliged to do under par.(b) of the Minister's gazetted description of Category 2 private hospitals, to the planning of health services generally and to the likely effect with respect to Commonwealth funding of the recommendation by the Minister for Health of the State of New South Wales that Kirribilli ~-+ ri aaa Tre re eae are meee a cans - 2. Private Hospital be determined to belong in that categorv. The decision of the Tribunal should, therefore, be set aside and the matter remitted to the Tribunal to be heard and decided aqain upon such evidence as the Tribunal in its discretion sees fit to receive, I further agree that, in all the circumstances, it is appropriate to make no order as to costs. I certify that this and the preceding page are a true copy of the Reasons far Judgment herein of the Honourable Mr Justice Associate Dated: 16 July 1986 1 7 —-— yes oe "on wg oe a —y ae ta (Coe pay oy we Date of hearing: 12 dune 1986 Counsel for the applicant: Mr D.G. Hill 9C and Mr R.B. Wilson Solicitors: Australian Government Solicitor Counsei for the respondent: Mr T. Simos QC and Mr R. Sackville Solicitors: Freehill Hollingdale and Page we net re Se 9 eof bt ~———