Chancellor Park Retirement Village Pty Ltd v Retirement Villages Tribunal & Ors [2003] QSC 276 [2004] 1 Qd R 346

SUPREME COURT OF QUEENSLAND CITATION: Chancellor Park Retirement Village Pty Ltd v. Retirement Villages Tribunal & Ors [2003] QSC 276 PARTIES: CHANCELLOR PARK RETIREMENT VILLAGE PTY LTD (applicant) v. RETIREMENT VILLAGES TRIBUNAL (first respondent) and FREDERICK DANIEL CARR and JOYCE CARR (second respondent) and GEOFFREY HAROLD DUDMAN and ELIZABETH ADA DUDMAN (third respondent) and ELMA SCOTT FISHER (fourth respondent) and ROMA LENORA HARVEY and IAN MAXWELL HARVEY (fifth respondent) and JULIE CHRISTINE HILTON (sixth respondent) and CLEM PATRICK KING and JENNIFER MARGARET KING (seventh respondent) and IVOR DELWYN MATSEN and NOELA MARY MATSEN (eighth respondent) and GERALD HENRI PROUDMAN (ninth respondent) and RONALD VINCENT JOHN ROBINSON and RHODA FLORENCE ROBINSON (tenth respondent) FILE NO: 6502/02 DIVISION: Trial PROCEEDING: Review -- 1 of 20 -- 2 ORIGINATING COURT: Supreme Court Brisbane DELIVERED ON: 1 September 2003 DELIVERED AT: Brisbane HEARING DATE: 11 August 2003 JUDGE: Chesterman J ORDER: 1. The decision and orders made by the first respondent on 18 June 2002 adjudicating on the dispute between the applicant and the second to tenth respondents be set aside. 2. Pursuant to the agreement of the parties no further orders are to be made. CATCHWORDS: ADMINISTRATIVE LAW - TRIBUNALS – Retirement Villages Tribunal – Judicial review of decision of the Retirement Villages Tribunal – whether decision can be set aside on for lack of jurisdiction – whether decision can be set aside as an improper exercise of the power conferred on the Tribunal. Judicial Review Act 1991, s20(1), s30 (1) (a) Retirement Villages Act 1995, Part 12, s 7, s 10, s 21, ss 74- 86, s 199, s 170, s 172, s 191, s 193, s 208 Associated Provincial Picture Houses Ltd v. Wednesbury Corporation [1948] 1 KB 223 Attorney General (NSW) v. Quin (1989-1990) 170 CLR 1 Cabal & Ors v. Attorney-General (Commonwealth) (2001) 188 ALR 77 Corporation of the City of Enfield v. Development Assessment Commission & Anor (1999-2000) 199 CLR 135 ex parte Australian Sporting Club Ltd re – (1947) 47 SR (NSW) 283 ex parte Mullin; re Hood (1935) 35 SR (NSW) 289 King v. Hickman & Others; ex parte Fox & Anor [1945] 70 CLR 598 Minister for Immigration and Ethnic Affairs v. Naumovska (1989) 88 ALR 589 Parisienne Basket Shoes ((1938)) 59 CLR 391 Queensland v. Wyvill (1989) 25 FCR 512 Sutherland Shire Council v. Finch (1970) 71 SR (NSW) 315 Timbarra Protection Coalition Inc v. Ross Mining NL (1999) 46 NSWLR 55 COUNSEL: Mr M P Amerena for the applicant Mr F H Dawson for the respondent -- 2 of 20 -- 3 SOLICITORS: Thompson McNichol for the applicant Butler McDermott and Egan for the respondent [1] The applicant is the scheme operator of a retirement village located at Chancellor Park on the Sunshine Coast. The second to tenth respondents (‘the respondents’) were formerly residents in the village. The first respondent is a Tribunal constituted pursuant to Part 12 of the Retirement Villages Act 1999 (‘the Act’) to determine inter alia, disputes between scheme operators and residents. [2] A retirement village scheme is one defined by s 7 of the Act to be a scheme under which a person enters into a resident’s contract, and upon paying a fee, acquires the right to reside in a retirement village and to have performed services necessary for an ordered and comfortable retirement. S 10 of the Act defines a resident’s contract to be a document setting out the mutual rights and obligations of the resident and the scheme operator with respect to occupation of an accommodation unit in a retirement village, and the use of the common property and communal facilities. The scheme operator manages a retirement village scheme. [3] A Retirement Village Tribunal consists of: (i) a lawyer who has been, or is eligible to be, a judge of the Supreme or District courts, (ii) a representative of scheme operators and (iii) a representative of residents of retirement villages. The chairman of a Tribunal is, by s 208, the judge or person eligible to be a judge. [4] The Tribunal is given jurisdiction to determine disputes between scheme operators and residents ‘about the parties’ rights and obligations under the … residents contract or this Act’ per s 21. [5] On 18 June 2002 the first respondent ordered that: ‘(a) That the residents contracts between the applicant and the respondents be set aside as and from 30 July 2002 (b) That the applicant refund to each of the respondents a specified part of the fees paid by them upon becoming residents. (c) That the applicant pay each of the respondents an amount to be agreed or failing agreement assessed by the Tribunal in respect of improvements made to their accommodation units. [6] The applicant has sought judicial review of the Tribunal’s decision. The parties in fact have come to terms with respect to all matters save the applicant’s right to have the decision reviewed. The practical effect is that the respondents have quit the applicant’s retirement village and come to terms with the applicant as to the financial consequences of the termination of their resident’s contracts. They have also agreed that there should be no order as to the costs of these proceedings, no -- 3 of 20 -- 4 matter what their outcome. The respondents do however contest the applicant’s right to challenge the Tribunal decision in their favour. [7] The first respondent took no part in the proceedings. The other respondents accept that the Tribunal’s decision is amenable to judicial review. This seems right: s 199 of the Act expressly recognises the availability of judicial review. It provides: ‘A tribunal’s hearing of the retirement village issue and the tribunal’s order must not be questioned in a proceeding other than a proceeding based on an error of law.’ [8] There is no doubt the applicant is aggrieved by the Tribunal’s decision. Residents’ contracts to which it was a party and pursuant to which it received income have been terminated by the decision. [9] The applicant claims an order pursuant to s 30(1)(a) of the Judicial Review Act 1991 (‘JR Act’) setting aside the decision of the Tribunal on two alternative grounds. The first is that pursuant to s 20(1) of the JR Act the Tribunal lacked jurisdiction to make the orders it did. The alternative ground is that, if the Tribunal had jurisdiction, the decision was an improper exercise of the power conferred on the Tribunal; and/or the decision involved an error of law; and/or there was no evidence to justify the Tribunal’s decision; and/or the decision was otherwise contrary to law. The applicant put this aspect of its argument more bluntly. Its submission is that the decision was so unreasonable that no reasonable Tribunal could have made it: Associated Provincial Picture Houses Ltd v. Wednesbury Corporation [1948] 1 KB 223. [10] The starting point for a consideration of the respective submissions is s 170 of the Act. It provides: ‘(1) This section applies if – (a) A scheme operator … contravenes s 86; and (b) A resident … is materially prejudiced by the contravention. (2) The resident may apply to the Chief Executive for an order by a Tribunal to have the resident’s contract set aside.’ S 172 obliges the Chief Executive to appoint a Tribunal and to give notice to the resident and scheme operator of the appointment of the Tribunal and the composition of its members, within seven days of the application being made under s 170. [11] S 86 is the concluding section of Part 4 of the Act which is entitled ‘Other Documents Relating to Retirement Village Schemes.’ Ss 74 to 83 set out in detail what must appear in a ‘public information document’ which, by s 84, must be given to a prospective resident by a scheme operator prior to the formation of a resident’s contract. S 85 allows a resident to ask a scheme operator to inspect or take a copy of any relevant document in the scheme operator’s possession or control. -- 4 of 20 -- 5 S 86 then provides: ‘A scheme operator must not give the Chief Executive or a resident a document containing information the scheme operator knows is false or misleading. Maximum penalty – 200 penalty units.’ [12] The document in question is the statement of receipts and payments for the Chancellor Park Retirement Village with respect to the year ended 30 June 2000. The accounts were audited but nevertheless contained an error. The scheme operator owned and operated a number of retirement villages in addition to Chancellor Park. It also owned a nursery in which it propagated and grew plants for the gardens and landscapes of its various villages. The nursery was situated adjacent to the Chancellor Park Retirement Village. Electricity consumed by the nursery was charged to the Chancellor Park Retirement Village. The amount expended on electricity consumed by the nursery was recorded as a separate item in the cash book kept by the part-time bookkeeper under the supervision of the manager, Mr Nunn. [13] The cost of maintaining the retirement village, including lighting in common areas was paid rateably by the residents. What happened in fact was that the expenditure on electricity consumed by the nursery was reimbursed to the Chancellor Park Retirement Village by the scheme operator so that the residents did not pay for it. However when the accounts were prepared the reimbursement was overlooked. The item of expenditure appearing in the accounts for common area lighting included the nursery’s electricity charges. The offsetting reimbursement was omitted. The result was to give an inflated impression of the amount, which the residents had to pay, for common area lighting. The error was overlooked by the applicant’s bookkeeping staff and went undetected by the auditors. [14] Mr Nunn was responsible for the preparation of the budget for the following year, that ending June 2001, on which the residents’ contributions to outgoings would be assessed. When preparing the budget Mr Nunn did not work from the audited financial statements but from the applicant’s own accounts which reflected the reimbursement. The budget was therefore not affected by the erroneous inflated expenditure item. The residents were not in fact charged anything for electricity used by the nursery. Both the audited financial statements and the budget were provided to the residents. [15] The Tribunal found that the audited financial statements given by the applicant to the residents contained information which was false or misleading and that the applicant knew information was of that character when copies of the financial statements were given to the residents. It also found that the respondents were materially prejudiced by the provision of the false or misleading information and, as I have mentioned, set aside the respondents’ residents’ contracts. The applicant submits that there was no contravention of s 86 and that the provision of the erroneous financial statements did not cause any material prejudice to any of the respondents. The applicant further submits that the existence of a contravention and resultant material prejudice are facts which must exist before the Tribunal had jurisdiction to embark upon a hearing. The applicant invites the court to examine the evidence and make findings embedded in its submission and then declare that -- 5 of 20 -- 6 the Tribunal had no jurisdiction to make the orders it did. The respondents submit that whether or not there was a contravention of s 86 and whether or not it caused material prejudice are matters committed to the determination of the Tribunal and cannot be the subject of appeal on the ground that the Tribunal erred in finding the facts. [16] This issue must be resolved in favour of the applicant before the court can examine the evidence to determine whether there was a contravention and whether it caused material prejudice. If the respondents’ submissions are right the court is precluded from inquiring into the correctness of the Tribunal’s decision. ‘An authority with a limited jurisdiction cannot give itself jurisdiction by a wrong determination as to the existence of a fact upon which its jurisdiction depends, or by placing a wrong construction upon a statute upon which its jurisdiction depends, unless by a valid provision the authority is given power to act upon its own opinion in relation to the existence of the fact or in relation to the construction of a statute.’ Per Latham CJ in King v. Hickman & Others; ex parte Fox & Anor [1945] 70 CLR 598 at 606. [17] Jordan CJ remarked in ex parte Mullin; re Hood (1935) 35 SR (NSW) 289 at 298: ‘When the jurisdiction of a court is limited, the question whether a particular matter is one the actual existence of which, notwithstanding any decision of that court, is a condition of its having jurisdiction to proceed … or is merely one of the matters which arise for its decision in the exercise of its general jurisdiction, is frequently one of considerable difficulty. It commonly arises in relation to a statute conferring jurisdiction in which the legislature has made no express pronouncement on the subject, and in which its intention has therefore to be extracted from implications found and inferences to be drawn from the language it has used.’ [18] In Corporation of the City of Enfield v. Development Assessment Commission & Anor (1999-2000) 199 CLR 135 Gleeson CJ, Gummow Kirby and Hayne JJ explained that: ‘The term “jurisdictional fact” (which may be a complex of elements) is often used to identify that criterion, satisfaction of which enlivens the power of the decision-maker to exercise a discretion.’ (p.148) Their Honours also pointed out: ‘… Where the question is whether the decision-maker has erred as to the jurisdictional facts … that question has to be answered by the court in which it is litigated upon the evidence before that court.’ (p.146) To the same effect is their Honours’ remark (155): -- 6 of 20 -- 7 ‘Where the question is whether the tribunal acted within jurisdiction, it must be for the court to determine independently for itself whether that is the case.’ Gaudron J was equally emphatic about the responsibility of the court. Her Honour said (at 157): ‘Those exercising executive and administrative powers are as much subject to the law as those who are or may be affected by the exercise of those powers. It follows that, within the limits of their jurisdiction and consistent with their obligation to act judicially, the court should provide whatever remedies are available and appropriate to ensure that those possessed of executive and administrative powers exercise them only in accordance with the laws which govern their exercise. The rule of law requires no less.’ [19] The nature of the debate concerning the distinction between jurisdictional facts which, if found not to exist by a court, deprive the administrative decision-maker of power to make whatever decision was entrusted to it, and those facts which the decision-maker makes in the course of exercising its powers and to which a court may not inquire was helpfully discussed by Weinberg J in Cabal & Ors v. Attorney-General (Commonwealth) (2001) 188 ALR 77 at 89-95. His Honour pointed out: ‘All branches of government routinely go about the task of ascertaining facts. Generally speaking, judicial review is not available to correct factual error save in those rare cases where findings are made which are so irrational as to warrant the conclusion that the impugned decision-maker has misunderstood the nature of the task to be performed. The so-called doctrine of “jurisdictional fact” … represents an exception to the principle of restraint which normally governs judicial review. “Jurisdictional fact” enables such review whenever the court determines for itself that a statutorily required fact does not exist. Parliament can stipulate that any action which it authorises depends upon the existence of various pre-conditions. The legislation may require the existence of those pre-conditions to be established in the mind of the person or body exercising the power, or in the mind of the reviewing court. Where the power depends upon factual requirements being demonstrated to the satisfaction of the person in whom it is reposed, it is that person’s determination of the facts which is decisive. … Where the power depends upon the existence of objective facts, the court on judicial review is given the final say as to whether the required facts exist.’ [20] I agree with this analysis with one minor reservation. The question is not, it seems to me, whether the facts, the existence of which gives rise to the exercise of the power, should be regarded as subjective or objective. Facts which are to be determined by the administrative decision-maker whose decision, if made in good faith and accordingly to law, cannot be challenged have been called ‘subjective’. ‘Objective’ facts is the description which has been given to those which must be -- 7 of 20 -- 8 found by the court. Nor is it right to categorise a fact of the second type as one which must be ‘right’, or be shown to ‘actually exist’ as some text writers and authorities have expressed it. In this context every ‘fact’ is an expression of the opinion of the person charged with ascertaining the facts. Some facts can be proved incontrovertibly; but many others are disputed and some depend upon inferences. Facts which give rise to the exercise of jurisdiction are no different. The ‘facts’ are the expression of opinion of the ‘fact finder’. The question is not as to the nature of facts but whether Parliament intended in any given statute that the existence of facts on which the exercise of a power is contingent is a question which may be litigated in the courts or whether it is committed exclusively to the primary decision-maker. [21] The process of categorisation of a fact, whether as a ‘jurisdictional fact’ or as one about which a finding must be made by a Tribunal in the exercise of its discretion was extensively considered by Spigelman CJ (with whom Mason P and Meagher JA agreed) in Timbarra Protection Coalition Inc v. Ross Mining NL (1999) 46 NSWLR 55. The judgment makes a number of points: 1. Whether a fact is ‘jurisdictional’ so that its existence is a pre- condition to the exercise of jurisdiction by a Tribunal ‘turns, and turns only, on the proper construction of the statute … Parliament can make any fact a jurisdictional fact, in the relevant sense: that it must exist in fact … and that … the absence or presence of the fact will invalidate action under the statute … (p.63-64) 2. Where a reference to facts appears in a statute containing words involving the mental state of the primary decision- maker such as “opinion”, “belief”, “satisfaction”, the construction is usually though not necessarily against a conclusion of jurisdictional fact other than in the sense that the decision-maker must hold the opinion or belief or be satisfied as to the facts. (p.64). 3. An important, and usually determinative, indication of Parliamentary intention is whether the relevant factual reference occurs in the statutory formulation of a power to be exercised by the primary decision-maker or, in some other way, necessarily arises in the course of the consideration by the decision-maker of the exercise of such a power. Such a factual reference is unlikely to be a jurisdictional fact. 4. The conclusion is likely to be different if the factual reference is preliminary or ancillary to the exercise of a statutory power (p.65). 5. A factual reference … relating to the instigation of a statutory decision-making process, is more likely … by reason of its extrinsic nature, to turn on an objective fact, than is a factual reference arising in, or in relation to, the conduct of the decision-making process itself. … The location of the -- 8 of 20 -- 9 relevant factual reference in a statutory formulation concerned with the requirement of an application, is a significant factor suggesting that the factual reference is jurisdictional (p.65-66) 6. In the case of an inferior court, references to fact are not jurisdictional, ‘unless the intention is clearly expressed’: Parisienne Basket Shoes Pty Ltd v. Whyte … 59 CLR … at 391. The rule applies equally to Tribunals given a jurisdiction to hear and decide matters in dispute between parties. However no such rule of construction applies to the exercise of statutory powers by administrative decision-makers which are not adjudicative in nature. See Sutherland Shire Council v. Finch (1970) 71 SR (NSW) 315 at 325-326 per Mason JA. 7. If the fact in question requires the exercise of a broad judgment on matters of potentially significant dispute then the fact is less likely to be intended by Parliament to be a ‘jurisdictional fact’ … nevertheless the proper construction of the statute may be that Parliament did so intend. (p.72) [22] The point summarised in paragraph 21(6) does not exactly reflect what Spigelman CJ said. The relevant passage in the judgment (p. 67) reads: ‘… in the case of an inferior court, references to facts are not jurisdictional, ‘unless the intention is clearly expressed’: Parisienne Basket Shoes … however, no such rule of construction applies to the exercise of statutory powers by administrative decision-makers: Sutherland Shire Council v. Finch … per Mason JA.’ [23] Pincus J made the same point in Queensland v. Wyvill (1989) 25 FCR 512 at 519: ‘ “Jurisdiction” is a term primarily applied to the power of a court but in administrative law it has a well established usage as applying to bodies and persons exercising powers of a non-judicial character. Such bodies and persons cannot, in general, give themselves jurisdiction by an erroneous decision as to matters on which their jurisdiction depends … in the leading case, Parisienne Basket Shoes … Dixon J pointed to the inconvenience of the legislature’s adopting the course of making “the jurisdiction of the court contingent upon the actual existence of the state of facts …” … This presumption is favour of the courts … does not operate in favour of administrative decisions …’ [24] In Finch a public servant employed by the Council was dismissed. He claimed compensation, to which he was entitled if a report obtained by the Minister for local government into his conduct was ‘substantially favourable’ to him. The Minister appointed a magistrate to inquire and report. On receipt of the report he ordered the Council to pay compensation. It applied for a declaration that the direction to pay compensation was invalid because the report was not substantially favourable to Mr Finch. The primary judge made the order which was set aside on appeal on the basis that it was for the Minister to decide whether the report had the necessary -- 9 of 20 -- 10 character and his decision, even if erroneous, could not be the subject of judicial review. [25] What Mason JA said on the point was (325): ‘… In the context of a statute which confers jurisdiction on one of the ordinary courts of justice it has been said that the statute is usually to be regarded as conferring conclusive or exclusive authority to determine existence of a state of facts upon which the jurisdiction conferred may be said to depend (see Parisienne Basket Shoes …) … It may be conceded that a distinction is to be drawn between cases in which a Tribunal is given a jurisdiction to hear and decide matters in dispute between parties and cases in which a mere statutory power is reposed in a … nominated person, conditioned by reference to the exercise of antecedent circumstances. In cases of the second class there is, without more, no adequate foundation for concluding that the repository of the power has a power to determine as against interested parties the existence of the antecedent circumstances which give rise to the exercise of the power.’ [26] The judgment pointed out that the statute conferred upon the Minister a power to make a direction which had legal effect. It obliged the Council to pay compensation which could be recovered as a debt. That power was coupled with a power to inquire into the preliminary circumstances which gave rise to the exercise of the power to direct payment of compensation. Accordingly, although this was said not to be decisive, the consideration that the Minister was empowered to inquire whether there was a report substantially favourable to Finch and that that matter was ‘central to the question’ whether compensation should be ordered, led to the conclusion that the antecedent fact was not ‘jurisdictional’. [27] It is for these considerations that I have expressed paragraph 19(6) as I have. [28] The judgment in Enfield considered it to be important that the section in question was not expressed ‘so as to turn upon the satisfaction or opinion of the relevant authority as to a state of affairs … (the section) stipulates in direct terms a pre-condition which obliges … refusal of … consent.’ [29] In Minister for Immigration and Ethnic Affairs v. Naumovska (1989) 88 ALR 589 the full Federal Court was concerned with s 16(1)(b)(ii) of the Migration Act 1958 which provided that a person should be deemed a prohibited immigrant if he produced to an immigration officer a passenger card that contained information that is false or misleading in a material particular for the purpose of securing entry into Australia. Lockhart J rejected submissions that the section should be construed by notionally including words in it, so that it read, either ‘A passenger card that contains information that in the opinion of an officer is false or misleading …’ or that ‘A passenger card that contains information that is to the knowledge of the person false or misleading …’. His Honour said (601): ‘The sub-paragraph means what it says. … Once a person enters Australia in any of the circumstances mentioned in s 16 … he -- 10 of 20 -- 11 becomes by force of the section a prohibited immigrant. No decision by anybody is required to bring about this change of status. It follows as a matter of law once the facts specified … are satisfied. He is then liable to various sanctions. … A statute cannot interfere with liberty unless the legislature unequivocally enacts that it should … it is for the courts to say whether information in a passenger card produced to an immigration officer by a person for the purpose of securing entry into Australia is false or misleading in a material particular. It is not for immigration officers to determine these matters.’ The seriousness of the consequences for the person should the fact be proved, influenced his Honour to decide that, as a safeguard to liberty, the court should determine the fact. [30] In Cabal Weinberg J reviewed a number of authorities which have considered the tests for determining whether a fact is jurisdictional and expressed some dissatisfaction with the apparent conflict between some of the decisions and the expressed reasons for them. In the end his Honour followed the approach recommended in Timbarra that in each case it is a question of statutory construction whether the particular statute entrusts to the court rather than to the Tribunal the question whether facts giving the Tribunal jurisdiction have been established. This approach seems clearly right. The difficulty of the task which Jordan CJ recognised is no doubt a sufficient explanation for the array of results in the decided cases. [31] Not all of the indications of parliamentary intention which I have summarised will be applicable in every case in which the question whether a fact is jurisdictional in nature will arise. The strength of the indications will no doubt vary from case to case. The indications when applied to a particular statute may conflict. A judgment will be called for by considering the terms of the statute against the gauge provided by the indications. [32] The first thing to notice is the structure of s 170. A resident may apply to a Tribunal for an order that a resident’s contract be set aside if a scheme operator has contravened s 86 and the resident has suffered material prejudice thereby. The right to apply for relief is made to depend upon a contravention giving rise to material prejudice. S 170 is found in Part 10 ‘Applications to Tribunal’. The powers conferred on the Tribunal which embarks upon hearing a retirement village issue are found in Part 11, ‘Tribunal Hearings’. The relevant sections are 191 and 193. This structure suggests that the facts giving rise to jurisdiction are pre-conditions to its existence and are antecedent and ancillary to the role of a Tribunal which is to decide whether a contract should be set aside and, if so, on what terms. The determination of the facts referred to in s 170 do not necessarily arise in the course of the Tribunal’s decision-making. The necessary subject matter for the Tribunal is whether a contract should be set aside. The matters are different and can be decided separately. [33] It will be observed that s 170 does not in terms make jurisdiction depend upon the Tribunal forming the opinion that there has been a contravention of s 86 giving rise to material prejudice. The section does not say that if the Tribunal is satisfied that, or forms the opinion that, there has been a contravention giving rise to material -- 11 of 20 -- 12 prejudice it may set aside a resident’s contract. The absence of such a formulation has been of significance in a number of cases. [34] The migration cases, involving as they do personal liberty, may give particular force to an argument that the court rather than a government functionary should be satisfied of the facts which can give rise to detention or deportation. There are similar, though admittedly lesser, considerations in this case. The first is that the Tribunal’s decision can have a profound economic consequence for the scheme operator. In this case in fact some nine couples, the occupants of nine occupation units, have been allowed to terminate their contracts and recover substantial payments from the applicant. There are sound reasons for thinking that a citizen should not be exposed to the loss of profitable contracts by the determination of what is essential a lay Tribunal (although the chairman must be legally qualified decisions may be by majority – s 182) except where the Tribunal’s jurisdiction to make the order is undoubted. The converse is also true. The rights of a resident to apply to be discharged from his contract is important. The rights should not be made to depend on the Tribunal’s opinion, unless the Act clearly says so. [35] A similar point is that s 86 is effectively concerned with discouraging and punishing fraudulent misstatements to residents or prospective residents. In prohibits a scheme operator disseminating information he knows to be false or misleading. An offence may be prosecuted before magistrates under the Justices Act. No doubt for the purposes of seeking relief under the Act the contravention, or fraud, need only be proved on the civil standard of proof but nonetheless the fact that fraud must be established indicates the factual basis described by s 170 as giving rise to a right to apply to a Tribunal is of such importance that ultimately it must be decided by a court, if there is a challenge as to its existence. [36] The respondents advance two reasons why s 170 should not be construed so as to make the factual basis for the Tribunal’s jurisdiction a pre-condition to its exercise the existence of which may be challenged in the Supreme Court. The first depends upon the provisions of s 174 pursuant to which the chairman of the Tribunal may hold directions hearings prior to embarking upon the hearing of ‘a retirement village issue.’ By subsection 4 the Tribunal is constituted by the chairman only for the purposes of giving directions and ‘the Tribunal may make the decisions and give the directions it considers appropriate.’ Subsection 5, which is critical to the respondents’ argument provides: ‘Without limiting subsection (4), the Tribunal may make decisions and give directions about – (a) Questions of law; and (b) The Tribunal’s jurisdiction; and (c) Discovery and inspection of documents.’ [37] The submission is that by allowing the Tribunal to make decisions it considers appropriate ‘about (its) jurisdiction’ the section, when read with s 170, makes jurisdiction depend upon the opinion of the Tribunal as to the matters which must exist before it has jurisdiction. The Act is thus to be seen as conveying a clear indication that it is the Tribunal’s opinion about the facts rather than the facts as determined by the court which determine whether it has jurisdiction. -- 12 of 20 -- 13 [38] I cannot accept the submission. For a start s 174 empowers the chairman of the Tribunal to make appropriate decisions and give appropriate directions, not the Tribunal as it must be composed for the hearing of a dispute between a scheme operator and residents. It would make sense for the legally qualified member of the Tribunal, its chairman, to give directions about the preparation of the dispute for hearing but it would be unusual, to say the least, that a majority of those who constitute a Tribunal should be excluded from determining whether it has jurisdiction, when that depends upon a point of fact rather than law. Putting the matter differently, a statute may confer on a Tribunal power to decide whether it has jurisdiction to make a decision but it is unlikely to confer that power on part only of the Tribunal. [39] Another answer to the respondents’ submission is that there is no self-evident reason why s 170 and s 174 should be read together. A more natural construction of the Act is that s 170 specifies the circumstances giving rise to the Tribunal’s jurisdiction to embark upon hearing a retirement village dispute. Once it has jurisdiction Part 11, which includes s 174, sets out the manner in which jurisdiction is to be exercised. S 174, as I read it, does not, and does not purport, to, affect the terms of s 170. It does not import into that section a qualification that jurisdiction exists if the Tribunal is satisfied that there has been a contravention of s 86 which has caused material prejudice. [40] The second argument is that the ‘fresh evidence’ rule should apply to proceedings where, as here, an applicant contends that the factual pre-condition to the exercise by a Tribunal or other administrative decision-maker to the exercise of its powers did not exist. [41] The point is that the applicant should be restricted in its challenge to the existence of the jurisdictional facts to the evidence relevant adduced before the Tribunal. The ‘fresh evidence’ rule is submitted to apply to these proceedings to as to preclude the reception of Mr Nunn’s affidavit as well as those of Mrs Roberts, Mrs Poulsen and Mr Schellenberger. No authority is cited for the submission which appears wrong in principle. The ‘fresh evidence’ rule, that an appellate court does not allow an appellant to adduce evidence beyond what was led at trial unless that evidence could not have been obtained for the trial by the exercise of reasonable diligence and where it is of such a nature that it would probably have influenced the outcome, is an incident of the law regulating civil appeals. Such proceedings are rehearings of the dispute on the materials relied on by the parties at first instance, with the exception just mentioned. The present proceedings are not in the nature of an appeal from the Tribunal. The jurisdiction which the court exercises in determining whether the Tribunal had jurisdiction is original, not appellate, and the court is not restricted ‘to examining the material which (the Tribunal) had before (it) …’ per Jordan CJ in ex parte Australian Sporting Club Ltd re – (1947) 47 SR (NSW) 283 at 284. Moreover the suggested restriction would contradict the emphatic assertion by the High Court, and the (NSW) Court of Appeal that where jurisdictional facts are called in question it is the court which must examine the evidence and make the necessary finding of facts. Its role would be unduly restricted and its capacity to perform its obligation curtailed if such a rule were introduced. [42] I turn then to consider whether the applicant did in fact give the respondents copies of the audited financial statements knowing that they were false or misleading, and whether the respondents thereby suffered material prejudice. There is no doubt that -- 13 of 20 -- 14 both elements must exist before the Tribunal had jurisdiction. The resident must be materially prejudiced ‘by the contravention’ of s 86. The preposition clearly imports the requirement of causation. [43] The annual meeting of residents of Chancellor Park Retirement Village was scheduled for 17 August 2000. Residents were given adequate notice of the meeting. Mr Nunn had hoped to obtain the audited financial statements at least a week before the meeting to make them available to residents. In fact they were delivered to the applicant’s office at 4.00 p.m. on the day before the meeting. According to Mr Nunn’s affidavit he instructed his staff to contact members of the residents’ committee (a representative body of residents) to come to his office to be given copies of the financial statements. Mr Nunn collected the statements from Mrs Roberts, the general manager. They briefly discussed cancelling the meeting because of the late receipt of the financial statements but decided to hold it as planned because otherwise there would be a substantial delay in reconvening the meeting. At about 4.30 p.m. Mr Nunn gave copies of the statements to members of the residents’ committee. He explained that because of their late delivery he had not himself had a chance to read them. There was some discussion about the budget which he also distributed, but not about the financial statements. [44] The annual meeting commenced at 9.00 a.m. on 17 August. Mr Nunn was the only representative of the applicant present. He was asked some questions about the amount shown to have been spent on electricity but was unable to give an intelligible explanation. The meeting was heated. That year had seen the introduction of the GST with its attendant increases in rates and Government charges. The residents were hostile to any suggestion of increased expenditure which they would have to fund. The meeting declined to accept the financial statements because ‘they had only just received them and there may be errors in them.’ A motion was passed that a special meeting be held in the future to consider the statements. A similar fate met the proposed budget for 2001. The meeting ended ‘just before lunch time.’ [45] That afternoon Mr Nunn went through the accounts to ascertain the reason for the excessive electricity charge. He discovered the error I have described by an examination of the cash book. He immediately consulted the general manager to whom he explained the erroneous entry in the financial statements. He also told her that he had been asked about the point at the meeting. Mr Nunn remarked that the applicant would look ‘like a … fool with something like this being put in front of the residents.’ Matters were left on the basis that the mistake could be explained to the residents at the special meeting which they had decided to call early that morning. [46] Mr Nunn gave written notice to all residents that he would be available in the community hall for a whole day to answer questions about the financial statements for the year ended June 2000 and the budget for 2001. He could not recall the date of the meeting but it was a Friday in September. About 50 or 60 residents attended with various questions which he answered. Some of them asked about the electricity account and he ‘explained what had happened regarding the nursery expenditure and that the 2000 statements were incorrect.’ [47] Mr Nunn died suddenly in 2003 and could not, obviously, be cross-examined on his affidavit. -- 14 of 20 -- 15 [48] Attention was focused on that part of s 86 which provides that a scheme operator must not give a resident a document containing information which he knows is false or misleading. The applicant had conceded before the Tribunal that the financial statements contained information that was false or misleading and it did not seek to withdraw the admission in these proceedings. It also conceded that the residents had been prejudiced by the provision of the financial statements though it did not concede that the prejudice was material. [49] If Mr Nunn’s affidavit is accepted the scheme operator did not know that the financial statements were false or misleading. There was an error which had its origins in a mistake in the bookkeeping, the reimbursement not being brought to account. Mr Nunn who was the relevant officer of the applicant responsible for the preparation of the accounts was not aware of the falsity of the relevant expenditure item. [50] The Tribunal found the applicant had requisite knowledge by relying upon Mr Nunn’s testimony given to a differently constituted Tribunal in an earlier application by another resident to have his resident’s contract set aside. Mr Nunn’s evidence on that occasion is reproduced in the Tribunal’s reasons relevant to this application. According to the Tribunal Mr Nunn said: ‘What happened then was that there was the AGM, I researched this matter that afternoon, I went and immediately across to Head Office and saw, ah, I produced some written notes obviously. Just to substantiate what I had found, and I went straight across and I saw Mrs Roberts and I saw Mrs Poulsen at the same time. Mrs Poulsen being the Accountants, and the Staff Accountant. I left the matter in her hands immediately to check out because there was an obvious challenge there with one Accountant talking to another and professional ah matters and so forth. And I expressed at that stage fact that the whole company would look like a damn fool, with something like this being put in front of the residents. What actually occurred with that meeting was that I spoke to Mrs Roberts on the afternoon when I got those accounts, which was approximately 4pm. That was the day before the meeting, and we had two options. One was to continue with the meeting, and the other one was to call if off. Calling it off was not really an option, because at that time of afternoon there was no way of notifying a large retirement village, with people all in their homes at that time of day, so we decided to proceed with it. (The Tribunal’s highlighting) What then happened was I met, while I was away getting those accounts, I had a message go out to the Residents Committee calling as many of them as were available in. The Residents Committee than came in, I met with them, I showed them the Budget. I showed them the papers, I said ‘There hot off the press, I haven’t had time to go through them”, I gave them each a copy. In fact I was talking to them while the copies were being printed, I pinned a copy of the Notice Board outside. We printed copies so that the residents coming to the meeting next day could get them. The residents were -- 15 of 20 -- 16 already upset in relation to matters of GST etc., so they were justifiably angry before this occurred. It could only be described as a pretty hostile meeting, and after that Mrs Roberts instructed me to make myself available for residents to come and talk to. I put a notice up for the residents, saying they could come and talk to me, and I would sit down and explain what had happened to them. I would give the, try to answer all of their queries. If I could not answer their queries I would take their questions and get answers provided for them. (emphasis in the original) [51] The Tribunal then found: ‘Mr Nunn gave different evidence in his statement to this Tribunal in that he said he first became aware of this error the afternoon after the audited statements were presented … at the annual meeting. He said that he was asked a question at the annual meeting which he could not answer but investigation after the meeting revealed the error.’ [52] The Tribunal noted that Mr Nunn had denied giving contradictory evidence though he admitted that he may have given evidence ‘in such a manner that (he) confused the Tribunal …’ The chairman invited counsel for the applicant to call evidence corroborating Mr Nunn’s evidence. The invitation was declined. The Tribunal said it: ‘… prefers Mr Nunn’s evidence given in the Schintler matter … set out above to his evidence given in this matter.’ It accordingly found that Mr Nunn knew of the error before the financial statements were given to the residents. [53] It is apparent that it was the Tribunal, not Mr Nunn, who was confused. The passage relied on refers to two meetings, not one, although the meeting which occurred first in point of time is dealt with after the narration of the second meeting. This is clear from the evidence: ‘What happened then that there was the AGM, I researched this matter that afternoon, I went … immediately across to Head Office …’ The meeting was in the morning. The discovery of the error occurred in the afternoon, after the meeting had terminated. The second paragraph deals with the meeting which occurred the previous afternoon, 16 August, when Mr Nunn discussed with the general manager a postponement of the annual meeting. [54] The Tribunal wrongly concluded that there was only one meeting between Mr Nunn and the general manager, and that was in the afternoon preceding the annual meeting, and that Mr Nunn and the general manager discussed postponing the meeting because they knew about the erroneous entry. This comprehension of the -- 16 of 20 -- 17 evidence cannot stand with the assertion that ‘… there was the AGM, I researched this matter that afternoon, I went … immediately across to Head Office …’ [55] I was provided with a copy of the transcript of Mr Nunn’s evidence before the Tribunal hearing Mr Schintler’s application. The transcript was tendered by consent. The chairman on that occasion was the chairman of the Tribunal whose decision is under review. Mr Nunn was asked: ‘How long ago did you discern that the accounts were not particularly accurate?’ And he replied: ‘On the afternoon of the AGM last year.’ [56] There is some corroboration for Mr Nunn in the affidavits of the applicant’s general manager, Mrs Roberts and the accounting officer, Mrs Poulsen but it is not definite and may explain the decision not to have called them before the Tribunal which heard Mr Schlinter’s application. [57] Mr Dawson, who appeared for the respondents, argued that Mr Nunn’s admitted remark to Mrs Roberts that the applicant would look foolish if ‘something like this’ were given to the residents is only explicable if it refers to the accounts which were known to be wrong, so that the remark is seen as an attempt to conceal the error. The argument is not convincing. It is at least as likely that Mr Nunn was saying that the applicant would look foolish when the error in the accounts was pointed out to the residents. [58] The circumstances of the meeting provide important support for the applicant. If, as the respondents contend, Mr Nunn was aware of the error and he and Mrs Roberts had resolved to present the accounts as accurate, and to conceal the misstatement, Mr Nunn would not have answered questions as he did, by saying that he did not know the answer to the question – why are electricity charges so high – and promised to answer it after he had examined the accounts. Mr Schellenberger corroborates Mr Nunn in this regard. If Mr Nunn knew of the error and had resolved to conceal it he would have given some explanation. More likely, if he knew of the error, he would have placated the residents’ anger by pointing out the error and assuring them they were not paying excessively for electricity. [59] There is no reason to doubt Mr Nunn’s affidavit that he discovered the error after the meeting and because of the questions directed to him by the residents at the meeting. Likewise there is no reason to doubt that because of the residents’ concerns about their financial commitment a meeting was convened in September 2000 to answer their questions about the contents of the financial statements including electricity charges and that that aspect of things would have been unnecessary had Mr Nunn known of the error prior to the meeting. Although he has not been cross-examined the affidavit was prepared in the expectation that he would be. No affidavits have been filed by the respondents in response to Mr Nunn’s contending that this part of his affidavit, about which they would know, was incorrect. [60] I conclude that the Tribunal did not fairly evaluate Mr Nunn’s evidence and unfairly, and wrongly, concluded that he had given inconsistent accounts of the -- 17 of 20 -- 18 relevant facts. I am satisfied that the applicant did not know of the error in the financial statements and that there was, accordingly, no contravention of s 86. It follows that the pre-condition required by s 170 of the Act had not been made out and the respondents were not entitled to ask the chief executive to appoint a Tribunal to determine whether their residents’ contracts should be terminated. [61] Accordingly I order that the decision and orders made by the first respondent on 18 June 2002 adjudicating on the dispute between the applicant and the second to tenth respondents be set aside. Pursuant to the agreement of the parties no further orders are to be made. [62] Although this disposes of the application so that it is unnecessary to consider the applicant’s subsidiary point, that the decision was unreasonable, I propose to say something briefly about it in the hope that it may discourage further litigation. The argument is that the Tribunal unreasonably (in the Wednesbury sense) misunderstood the connection between the (assumed) contravention of s 86 and the material prejudice suffered by the respondents. As well it is submitted that there was no reasonable basis for a finding that any of the respondents had been materially prejudiced by the promulgation of the erroneous financial statements. [63] In Attorney General (NSW) v. Quin (1989-1990) 170 CLR 1 at 36 Brennan J explained: ‘Acting on the implied intention of the legislature that a power be exercised reasonably, the court holds invalid a purported exercise of the power which is so unreasonable that no reasonable repository of the power could have taken the impugned decision or action. The limitation is extremely confined. As Professor Wade explains … “… Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion. If it passes those bounds it acts ultra vires. The court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion. It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which the legislature is presumed to have intended.” ’ [64] The finding of prejudice made by the Tribunal was in these terms: ‘48. … The (applicant) has admitted that the residents who attended the meeting were denied the opportunity to properly consider and seek professional advice on the reports due to their late provision. 49. The (applicant) has admitted that the (respondents) did suffer prejudice but denies that it was material prejudice. 50. The Tribunal finds that the (respondents) have been materially prejudiced by the (applicant’s) contravention of the Act because they were denied the benefit required by the Act of having audited statements, which could be relied upon. Further, because of the (applicant’s) failure to make full and -- 18 of 20 -- 19 proper disclosure of the errors, they were denied the opportunity to properly question the scheme operator about the accounts. This also has relevance to the payments required by the budget for the year ending 30 June 2001. 51. The fact that the meeting was required to be held by the Act … once each year is significant … The annual meeting is the only formal opportunity where the … residents have the financial statements given to them … when the (applicant) is then available to publicly respond to questions …’ [65] What is required for the exercise of the Tribunal’s jurisdiction is material prejudice to a resident caused by a scheme operator knowingly providing false or misleading information. It is the provision of such information which must give rise to the material prejudice. The finding in para 50 of the reasons say no more than that the respondents were prejudiced because the accounts were unreliable. It did not describe how or why the prejudice occurred. The Tribunal’s emphasis on the late provision of the accounts and the lack of opportunity to question them is misplaced. It is irrelevant to the only matter for the Tribunal’s consideration: did the overstatement of expenditure on electricity in the accounts give rise to material prejudice? This point the Tribunal did not answer. It did not show that it understood that that was what it had to consider. The statement that the respondents were denied the opportunity to properly question the applicant about the accounts because there had not been ‘full and proper disclosure of the errors’ shows the extent of the Tribunal’s misunderstanding. Had the errors been fully and properly disclosed the information would not have been false and misleading. The point is not whether a failure to correct the error, or a failure to provide an opportunity to discover the error, led to prejudice, but whether the false and misleading information in fact given caused material prejudice. [66] I cannot see how that question could reasonably have been answered in the respondents’ favour. The term ‘material prejudice’ has no special meaning. Prejudice in this context means disadvantage. It is material if it is substantial or of much consequence. The misstatement in question was the omission in the accounts of the receipt of income which would have entirely offset an item of expenditure which, on the face of the accounts, the residents would have had to meet. There was no error in the actual amounts received and spent. The residents did not pay out more than they should have. The accounts did, however, wrongly, give rise to the belief that the residents had paid or were obliged to pay more than they were legally obliged to pay. However, a belief inculcated by a misstatement does not ordinarily cause disadvantage or prejudice, let alone of a substantial sort, unless it is acted on to one’s detriment. [67] The Tribunal noted that: ‘80. … It is necessary for scheme operators and village residents to have an ongoing relationship … Here the relationship has broken down entirely.’ Accepting the force of this observation it may be the case that misstatements made by a scheme operator which are not acted upon to the residents’ detriment may nevertheless be destructive of that relationship of trust. The Tribunal did not, -- 19 of 20 -- 20 however, find that the misstatement in question had that consequence or that the material prejudice required by s 170 was constituted by the respondents losing their trust in the applicant by reason of the overstatement of electricity charges in the accounts. Such a finding would, no doubt, have been difficult given the evidence of Mr Nunn that in September 2000 he answered all questions put to him by residents about the electricity charges. [68] Accordingly I would have found that the Tribunal could not reasonably have determined that the error in the accounts caused material prejudice to the respondents. [69] For the reasons I have indicated the order of the Tribunal will be set aside. -- 20 of 20 --