NSW Health has revealed that legal liabilities are a key reason why it rejected a $2 offer to buy the private arm of the Calvary Mater Newcastle.
The disclosure comes amid concerns that this private arm - run by Sydney-based company Novacare Health - will soon be placed in voluntary administration.
The Mater hospital public-private partnership (PPP) involves the Novacare consortium and NSW Health's Health Administration Corporation (HAC).
As the Newcastle Herald reported last week, Novacare offered the private arm of the PPP to the government for $2.
A PPP document from 2005 - when the deal was agreed - shows this private arm is tied up in a web of business entities, including the Novacare Solutions Trust.
A NSW Health letter tabled to the parliamentary inquiry into the Mater mould and maintenance scandal said "NSW Health is not in a position to accept any of the Novacare entities' liabilities".
The letter was signed by NSW Health Infrastructure chief executive Emma Skulander and Hunter New England Health chief executive Tracey McCosker.
It added that the PPP involved "various disputes" of which "the legal and cost implications" were not fully understood.
The NSW Health letter said the disputes were "over significant matters" between the Novacare entities and HAC, including the Mater building's cladding, mould and "other operational/facilities management issues".
"It is inappropriate for any solution to require NSW Health to assume responsibility for legal disputes," the NSW Health letter said.
The letter added that "the principal beneficiaries in such circumstances" would appear to be the directors of the Novacare entities.
It alleged that these directors "are purported to have caused the problems [at the Mater] in the first place".
Novacare has denied this.
However, the company said it was headed for voluntary administration, amid a dispute over who would pay for a new or upgraded HVAC (heating, ventilation and air-conditioning) system at the Mater hospital.
This failure of this system is at the root of the mould contamination scandal that led to the inquiry, amid allegations that the Novacare consortium did not properly maintain it.
The NSW Health letter said the health bureaucracy was assessing "more beneficial options" for the future of the Mater, "having regard to legal, operational, technical and commercial considerations".
The Health Services Union and doctors' union have called for the Minns government to end the Mater PPP.
The Herald has reported that two legal firms are investigating mould-related infections and deaths at the Mater.
Novacare offered the $2 Mater deal to the state on March 13 and April 13.
Director Victoria Rigg revealed Novacare's position at last week's second hearing of the Mater inquiry.
Ms Rigg said she couldn't "envisage a circumstance" where the Mater PPP "doesn't land back in state hands".
She said about $50 million of Novacare's liabilities were for "outstanding bonds", which appear to relate to investors who loaned money for the PPP.
She said the state government's response to the $2 offer was "a preliminary no".
However, the NSW Health letter said "no details were provided about what the proposed acquisition would involve".
NSW Health said it had "engaged with the Security Trustee" of the Novacare entities "to open a line of communication".
In the Mater PPP document from 2005, this trustee is listed as a company called "Permanent Custodians Limited".
The PPP document said Westpac were the "debt financiers, bond underwriter and equity investor" for the project.
However, a Westpac spokesperson said "we haven't had any interest in Novacare bonds since 2018".
"Westpac was involved in the original financing of the PPP for the development of the hospital (2004/2005). We ceased to be a lender in October 2014. We have no role in the hospital's operations or in any PPP."
Novacare stated to the inquiry that it was a consortium of Honeywell, Medirest and Abigroup, "formed by Westpac Banking Group, which also underwrote the financing solution".
"The contractual framework has not changed since it was agreed with the state and implemented in 2005," it stated.
