FEDERAL COURT OF AUSTRALIA

Flaherty v Secretary, Department of Health and Ageing

[2010] FCAFC 67

Citation:		Flaherty v Secretary, Department of Health and Ageing [2010] FCAFC 67

Appeal from:		Flaherty v Secretary, Department of Health and Ageing [2010] FCA 63

Parties:		TIMOTHY JOHN FLAHERTY v THE SECRETARY, DEPARTMENT OF HEALTH AND AGEING, AUSTRALIAN COMMUNITY PHARMACY AUTHORITY and MARGARET HINDE

File number:		NSD 233 of 2010

Judges:		EMMETT, RARES AND NICHOLAS JJ

Date of judgment:		8 June 2010

Catchwords:		ADMINISTRATIVE LAW – procedural fairness – delegate of the first respondent exercised discretion under s 98(3) of the National Health Act 1953 (Cth) to cancel the approval of the third respondent – delegate subsequently “remade” her decision and “reinstated” the approval on the basis that the third respondent may not have been afforded procedural fairness – whether third respondent had in fact been denied procedural fairness – delegate aware that third respondent had received offer to purchase her approval –whether procedural fairness required the delegate to provide the third respondent with a further opportunity to be heard in light of this information – third respondent had been sentenced to three years’ imprisonment – whether inference should be drawn that the delegate was aware of this sentence at the time the original decision was made ADMINISTRATIVE LAW – whether the delegate had the power to “remake” the original decision under s 33(3) of the Acts Interpretation Act 1901 (Cth) – whether power to cancel an approval under s 98(3) of the National Health Act constituted a power to “make, grant or issue any instrument” for the purposes of s 33(3) of the Acts Interpretation Act – whether the provisions of the National Health Act evince a sufficient contrary intention to exclude the operation of s 33(3) Held: appeal allowed – third respondent was not denied procedural fairness by the delegate – original decision by the delegate to cancel the third respondent’s approval was valid – delegate did not have the power under s 33(3) of the Acts Interpretation Act to remake the decision and reinstate the approval

Legislation:		Acts Interpretation Act 1901 (Cth) s 33(3) Evidence Act 1995 (Cth) s 140(2) Life Insurance Act (Cth) 1945 (repealed) Medicare Australia Act 1973 (Cth) s 5(1)(d) National Health Act 1953 (Cth) ss 90, 95, 98, 105AB(8A) Pharmacy Act 1964 (NSW) (repealed)

Cases cited:		Annetts v McCann (1990) 170 CLR 596 cited Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 applied Associated Dominions Assurance Society Pty Ltd v Balmford (1950) 81 CLR 161 cited Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 cited Chittick v Ackland (1984) 1 FCR 254 cited Commissioner of Police v Tanos (1958) 98 CLR 383 cited Griffith University v Tang (2005) 221 CLR 99 applied Heslehurst v New Zealand (2002) 117 FCR 104 cited Kioa v West (1985) 159 CLR 550 cited Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 cited Minister for Immigration and Ethnic Affairs v Mayer (1985) 157 CLR 290 applied New South Wales v Corbett (2007) 230 CLR 606 cited Nicholson-Brown v Jennings (2007) 162 FCR 337 cited Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 cited R v Hamilton Knight; Ex parte Commonwealth Steamship Owners Association (1952) 86 CLR 283 cited Reg. v Australian Broadcasting Authority; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 cited Twist v Randwick Municipal Council (1976) 136 CLR 106 cited X v Australian Crime Commission (2004) 139 FCR 413 cited

Date of hearing:	11 May 2010

Date of last submissions:	11 May 2010

Place:	Sydney

Division:	GENERAL DIVISION

Category:	Catchwords

Number of paragraphs:	70

Counsel for the Appellant:	Mr H Woods

Solicitor for the Appellant:	Michael Flaherty Solicitors

Counsel for the First Appellant:	Mr T Howe QC with Mr A Dillon

Solicitor for the First Appellant:	Australian Government Solicitor

Counsel for the Third Appellant:	Mr J Gibson

Solicitor for the Third Appellant:	The People's Solicitor
	The Second Respondent submitted save as to costs

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 233 of 2010

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

TIMOTHY JOHN FLAHERTY

Appellant

AND:

THE SECRETARY, DEPARTMENT OF HEALTH AND AGEING

First Respondent

AUSTRALIAN COMMUNITY PHARMACY AUTHORITY

Second Respondent

MARGARET HINDE

Third Respondent

JUDGES:	EMMETT, RARES AND NICHOLAS JJ
DATE OF ORDER:	8 JUNE 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The orders made by the primary judge on 12 February 2010 be set aside and in lieu thereof it be ordered that:

(a) the Court declares that, pursuant to s 98(3) of the National Health Act 1953 (Cth)(the Health Act), on 20 April 2009 the first respondent cancelled the approval of the third respondent under s 90 of the Health Act numbered 12370C and that at all times thereafter that approval has had no force or effect;

(b) the purported decision of the first respondent made on 26 May 2009 to revoke or remake the decision made on 20 April 2009 referred to in order (a) above purporting to reinstate the cancelled approval of the third respondent and the purported decisions of the first respondent made on 8 July 2009 and 17 August 2009 not to cancel and to deactivate the cancelled approval of the third respondent each be set aside.

3. The first respondent pay the appellant’s costs.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 233 of 2010

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

TIMOTHY JOHN FLAHERTY

Appellant

AND:

THE SECRETARY, DEPARTMENT OF HEALTH AND AGEING

First Respondent

AUSTRALIAN COMMUNITY PHARMACY AUTHORITY

Second Respondent

MARGARET HINDE

Third Respondent

JUDGES:	EMMETT, RARES AND NICHOLAS JJ
DATE:	8 JUNE 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT:

1 This appeal concerns the validity of decisions made under s 98 of the National Health Act 1953 (Cth) (the Health Act) by a delegate of the first respondent, the Secretary of the Department of Health and Ageing (the Secretary). The decisions relate to an approval granted under the Health Act to the third respondent, Ms Margaret Hinde, to supply pharmaceutical benefits at premises situated in Segenhoe Street, Aberdeen, New South Wales (the Premises). Approval allows a pharmacist to supply and sell drugs under the Commonwealth Pharmaceutical Benefits Scheme.

2 By one decision, on 20 April 2009, a delegate of the Secretary purported to cancel Ms Hinde’s approval. On the same day the delegate wrote to Ms Hinde, who was then in prison, notifying her of the decision and her right to apply to the Administrative Appeals Tribunal (the Tribunal) for a review under s 105AB(8A) of the Health Act.

3 In the meantime, on 6 May 2009, the appellant, Mr Timothy Flaherty, applied to the Secretary for the grant of an approval in respect of the Premises. Mr Flaherty included with his application a copy of a lease of the Premises for a term of two years commencing on 1 June 2009. The cancellation of Ms Hinde’s approval would have permitted the grant of approval to Mr Flaherty in respect of the Premises.

4 However, on 26 May 2009, the delegate decided to review her earlier decision to cancel Ms Hinde’s approval. On that day the delegate purported to revoke the cancellation and reinstate the approval. The delegate did so because she considered that she may not have afforded Ms Hinde procedural fairness in exercising her discretion on 20 April 2009. If the revocation and reinstatement decision was effective, Mr Flaherty cannot be granted approval in respect of the Premises.

5 Mr Flaherty commenced a proceeding in the Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the Judicial Review Act) seeking orders that the revocation and reinstatement decision be quashed or set aside. On 12 February 2010, a judge of the Court held that the cancellation decision was ineffective and that the revocation and reinstatement decision was valid. His Honour therefore ordered that the proceeding be dismissed with costs. By notice of appeal filed on 9 March 2010, Mr Flaherty appeals from those orders to the Full Court.

6 The central issues in this appeal are whether the delegate had, in fact, denied Ms Hinde procedural fairness, as the primary judge found, or, as the Secretary and Ms Hinde contend, whether s 33(3) of the Acts Interpretation Act 1901 (Cth) (the Interpretation Act) authorised the delegate to revoke and remake her earlier decision. That provision authorises a person who has power to make, grant or issue an instrument to revoke it in the same manner and subject to the same conditions.

The Statutory Scheme

7 Relevantly, ss 90, 98 and 105AB of the Health Act provide:

“90 Approved pharmacists

(1) Subject to this section, the Secretary may, upon application by a pharmacist for approval to supply pharmaceutical benefits at particular premises, approve that pharmacist for the purpose of supplying pharmaceutical benefits at those premises.

...

(3D) The Secretary must not grant approval under this section to a pharmacist in respect of particular premises if the Secretary is satisfied that on or after the day the approval would otherwise be granted:

(a) the pharmacist would be unable to supply pharmaceutical benefits at the premises; or

(b) the premises would not be accessible by members of the public for the purpose of receiving pharmaceutical benefits at times that, in the opinion of the Secretary, are reasonable.

(4) Nothing in this section authorizes the Secretary to grant approval to a pharmacist in respect of premises at which that pharmacist is not permitted, under the law of the State or Territory in which the premises are situated, to carry on business.

(5) Where the Secretary makes a decision granting or rejecting an application made by a pharmacist under this section, the Secretary shall cause to be served on the pharmacist, notice in writing of that decision.

…

98 Cancellation by Secretary of approval of pharmacists etc

(1) Whenever:

(a) an approved pharmacist requests that his or her approval under section 90 in respect of all or any of the premises in respect of which he or she is approved be cancelled;

…

the Secretary shall cancel that approval.

(2) Where:

(a) an approved pharmacist gives the Secretary notice in writing that the pharmacist has ceased to carry on business as a pharmacist at premises in respect of which the pharmacist is approved; or

…

the Secretary may (at his or her discretion) cancel the approval.

(3) If the Secretary is satisfied that:

(a) an approved pharmacist is not carrying on business as a pharmacist at premises in respect of which the pharmacist is approved; or

(b) the premises are not accessible by members of the public for the purpose of receiving pharmaceutical benefits at times that, in the opinion of the Secretary, are reasonable;

then the Secretary may (at his or her discretion), by notice in writing to the pharmacist, cancel the approval of the pharmacist under section 90.

…

105ABApplication for review by Tribunal

(8A) An application may be made to the Tribunal for a review of a decision of the Secretary under subsection 98(3) or (3A) to revoke an approval.” (emphasis added)

8 The express discretion in s 98(3) to decide whether or not to cancel a pharmacist’s approval was inserted into that section to ensure that the Secretary had power to decide not to cancel an approval, despite being satisfied of the occurrence of one or both of the preconditions to cancellation. The explanatory memorandum for the Health and Ageing Legislation Amendment Bill 2003 discussed the insertion of the parenthetical phrase “(at his or her discretion)” into s 98(3) and other sections as follows:

“The proposed amendments will put beyond doubt that the decision-maker has the discretion whether or not to cancel the relevant approvals.

For example, the Secretary might decide not to cancel an approval where an approved pharmacist has ceased to trade temporarily through illness or other unanticipated circumstances. If the discretion were not available the Secretary would be obliged to cancel the approval in such circumstances and there would be a requirement for the pharmacist to reapply for a new approval, which may not be appropriate in all cases.”

9 The powers of the Secretary to grant and cancel an approval under ss 90(1) and 98(3) were conferred on the Chief Executive Officer of Medicare Australia by cl 20 of the Medicare Australia (Functions of the Chief Executive Officer) Direction 2005, made under s 5(1)(d) of the Medicare Australia Act 1973 (Cth) (the Medicare Act). The Chief Executive Officer could delegate those powers in writing to employees of Medicare Australia under s 8AC of the Medicare Act. Medicare Australia has formulated guidelines for the exercise of the discretion not to cancel an approval but, instead to deactivate it when circumstances arose, such as those contemplated in the above extract from the explanatory memorandum.

The circumstances leading to the decision to cancel

10 Ms Hinde’s right to practise as a pharmacist under the Pharmacy Act 1964 (NSW) (since repealed) had been suspended by the Pharmacy Board of New South Wales on 20 September 2007 because of her alcohol dependency. However, she was still allowed to manage the pharmacy and employ locum pharmacists to dispense prescriptions.

11 On 15 October 2007, Ms Hinde suffered significant injuries in a motor vehicle accident and was admitted to hospital in a serious condition. The car she was driving collided with another vehicle, killing one person and severely injuring another. The next day, the pharmacy at the Premises was badly damaged by a fire that appeared to have been caused by an arson attack. All the stock was destroyed.

12 As a consequence of both her injuries and the fire, Ms Hinde would not have been able to carry on business as a pharmacist at the Premises even if her suspension from practice were lifted. On 3 January 2008, she applied to the Secretary for a temporary deactivation of her approval.

13 On 8 January 2008 a delegate decided not to cancel Ms Hinde’s approval but to deactivate it for the period between 16 October 2007 and 31 March 2008. Subsequently, delegates made similar decisions at Ms Hinde’s request maintaining her approval, although deactivated, until 16 October 2008.

14 In October 2008 a delegate experienced difficulty in contacting Ms Hinde to ascertain what her position was. The Pharmacy Board had informed the delegate that Ms Hinde remained suspended by it until 11 December 2008. By late November 2008 the delegate was aware that:

· other persons were seeking approval to supply pharmaceutical benefits at other premises in Aberdeen;

· Ms Hinde had been reported in the press as having pleaded guilty to serious offences relating to the motor vehicle accident and that there would be a hearing concerning penalty in the District Court of New South Wales at Newcastle on 18 December 2008;

· Ms Hinde had solicitors acting for her and that the solicitors had been made aware by the delegate of the risk of her approval being cancelled if her pharmacy was not operating; and

· the Upper Hunter Shire Council had sent a letter to the Australian Community Pharmacy Authority expressing concern that the community of Aberdeen had been without a pharmacy for over 12 months.

15 By 1 December 2008, the delegate was aware from online newspaper reports that Ms Hinde was being held on remand in prison awaiting sentencing on 18 December 2008. She had pleaded guilty to a charge of dangerous driving occasioning death and the judge had said that a full time custodial sentence was inevitable when remanding her.

16 On 3 December 2008 a delegate wrote to Ms Hinde at her prison address. The letter noted that Ms Hinde had not given Medicare Australia any information concerning the continued operation of her pharmacy since a letter from her dated 3 August 2008, which had requested deactivation of her approval until 16 October 2008. The delegate referred Ms Hinde to an enclosed copy of the guidelines for deactivation of approvals. The delegate noted that the guidelines provided that an extension of a deactivation for more than six months would only be considered in exceptional circumstances and that Ms Hinde’s approval had been deactivated for over 12 months. The delegate informed Ms Hinde that:

· she was not presently prepared to allow further deactivation of her approval; and

· she had formed the preliminary views that the closure of her pharmacy was not temporary and she would not be ensuring the efficient distribution of drugs under the pharmaceutical benefits scheme if her pharmacy were allowed to remain closed and unable to supply such drugs.

17 The delegate referred to the power of cancellation under s 98(3) of the Health Act. She wrote that, if Ms Hinde were not carrying on business as a pharmacist at the Premises, she would be minded to cancel her approval. The delegate invited Ms Hinde to make a written submission on that issue by 30 January 2009. She noted that she had allowed that lengthy time for response because Ms Hinde’s then present circumstances might not have permitted her to respond within the usual 28 day period. The letter concluded with a warning that, if no response was received by 30 January 2009, the delegate would make a decision on 13 February 2009.

18 Ms Hinde’s solicitors responded to the delegate’s letter on 28 January 2009. They wrote only:

“We act for Margaret Hinde. We are instructed to inform you that Ms Hinde is planning to reopen a new pharmaceutical [sic] business in due course. And [sic] intends to keep your office informed.”

That response was uninformative. Nor did it reveal, and the delegate did not otherwise become aware, that Ms Hinde had been released on bail on 18 December 2008 and her sentencing hearing had been adjourned until 26 March 2009.

19 On 13 March 2009, another delegate wrote to Ms Hinde’s solicitors suggesting that their client had not provided sufficient information regarding her intention to supply pharmaceutical benefit drugs at the pharmacy. The letter suggested that, in order to assist the delegate in making a decision as to cancellation of her approval Ms Hinde might wish to provide:

· the date on which she expected to reopen the pharmacy and supply pharmaceutical benefit scheme drugs;

· a copy of a fully executed lease or other documentation demonstrating that Ms Hinde had a legal right to occupy the Premises;

· evidence of the Premises having been repaired after the fire;

· evidence that Ms Hinde had approval from the Pharmacy Board to carry on business at the Premises;

· evidence of how she intended to supply pharmaceutical benefit scheme drugs from the Premises; and

· any other information she considered relevant.

The letter required a response by 10 April 2009. It advised that, if Ms Hinde did not provide relevant information by then, the delegate might make a decision whether to cancel her approval on the basis of the available information.

20 On 31 March 2009, The Pharmacy Guild Sales and Valuations (NSW) Pty Ltd (the Pharmacy Guild) wrote, as broker, to Ms Hinde at Silverwater Correctional Centre conveying an offer by Ms Caroline Sevil to purchase her approval and the pharmacy for $320,000. The Pharmacy Guild sent another letter on the next day to Medicare Australia enclosing a copy of the earlier letter. That letter referred to the fact that Ms Hinde was to be sentenced later in April. The letter referred to the desire of the town of Aberdeen and the Council for the pharmacy to be reopened. The Pharmacy Guild said that Ms Sevil was proposing to hand deliver the offer to Ms Hinde’s solicitor. It attached a transfer form under s 90 of the Health Act. The delegate replied to the Pharmacy Guild on 2 April 2009, informing it both that Medicare Australia could only act on Ms Hinde’s request and could not release any information about the matter.

21 On 14 April 2009, an officer of Medicare Australia sent the delegate an email reporting that the Pharmacy Guild had telephoned. The Pharmacy Guild told the officer that a change of ownership form had been sent to Ms Hinde’s solicitor, who had returned it the previous week explaining that he no longer represented Ms Hinde, who had appeared for herself in court the previous week. The email also referred to receipt of another application for approval for a pharmacist in Aberdeen. Another officer informed the delegate on 15 April 2009 that Ms Hinde had been deregistered by the Pharmacy Board and that she was thus not a registered pharmacist for the purposes of the Health Act. In an email sent at 09:06 on 16 April 2009, the delegate gave instructions that a draft letter be prepared to cancel Ms Hinde’s approval under s 98(3).

22 A draft letter cancelling Ms Hinde’s approval was emailed to the delegate on Friday 17 April 2009. The letter stated that it was dated for the delegate’s return on Monday. No communication had been received from Ms Hinde or her solicitor since the delegate’s letter of 13 March 2009 had been sent.

The newspaper articles faxed on 16 April 2009

23 Medicare Australia received a fax of printouts of two internet newspaper articles. The fax was sent on 16 April 2009 at 13:05. One article was dated 7 April 2009, the other 13 April 2009. Each referred to the sentencing of Ms Hinde to six years imprisonment with a minimum term of three years and four months on 3 April 2009. There was no evidence that either article had been seen by, or brought to the notice of, the delegate before she made her decision and signed the letter of cancellation on 20 April 2009.

The cancellation Decision

24 On 20 April 2009, the delegate wrote a letter to Ms Hinde at Silverwater Correctional Centre. She referred to the earlier correspondence and set out the terms of s 98(3)(a). The letter continued:

“I hereby cancel the approval … granted to you to supply pharmaceutical benefits [drugs] at … Aberdeen.”

25 The delegate stated that the reasons for her decision were that she was satisfied that Ms Hinde was not carrying on business as a pharmacist and was not supplying pharmaceutical benefit scheme drugs at the pharmacy for which she was approved. The letter referred to Ms Hinde’s right to apply to the Tribunal for review of the decision under s 105AB(8A) of the Health Act.

26 In a statement of reasons dated 27 August 2007, which was filed pursuant to a direction of the Court given on 30 July 2009 (the Statement of Reasons), the Secretary’s solicitor stated that the reasons for the decision to cancel Ms Hinde’s approval were as follows:

45. There was no evidence before the delegate to demonstrate that a locum would be installed or that the pharmacy would otherwise resume business.

46. In the circumstances, and having in its [sic] view afforded procedural fairness, the delegate decided to exercise their [sic] discretion under section 98(3) of the [Health Act] to cancel Ms Hinde’s approval.

27 The Statement of Reasons said that the following findings on material facts had been made in relation to the decision to cancel:

· Ms Hinde was currently approved to supply pharmaceuticals at the Premises.

· Ms Hinde was seriously injured in a motor vehicle accident on 15 October 2007.

· The Premises were damaged by fire on 16 October 2007.

· From 16 October 2007 Ms Hinde was not carrying on business as a pharmacist at the Premises and therefore the community did not have access to pharmaceutical benefits supplied to those Premises.

· Ms Hinde had not been able to make any arrangements to ensure the continued supply of pharmaceuticals at the Premises.

· Elements of the community of Aberdeen were concerned by the lack of a pharmacy in Aberdeen.

· Ms Hinde was the subject of court proceedings and may have been taken into custody.

· The Pharmacy Board of NSW had suspended Ms Hinde’s registration as a pharmacist.

Events following 20 April 2009

28 On 29 April 2009, Ms Hinde’s solicitor telephoned an officer of Medicare Australia and told her that he had not been able to provide a copy of the delegate’s letter of 13 March 2009 to his client. He said that he had a power of attorney from her. He also said that the letter of 20 April 2009 was not received. Later that day, he faxed a letter to Medicare Australia and an application for approval of a change of ownership of the pharmacy from Ms Hinde to Ms Sevil. The letter noted that agreement had been reached on the terms of sale. The application form was executed under powers of attorney by him, on Ms Hinde’s behalf. Importantly, the application form was appropriate for a change of ownership of a pharmacy that did not involve a relocation. The form left uncompleted the section that declared that the applicants had “… attached evidence of legal right to occupy the new premises”.

29 In a second letter of 29 April 2009 to the delegate, Ms Hinde’s solicitor acknowledged that he had received the letter of 13 March 2009 addressed to him, but said that he had not been able to get instructions from Ms Hinde and that she had never received it. He asserted that she had not been able to determine the future intentions of her business until 3 April 2009, when she received a custodial sentence of over three years. The solicitor also acknowledged receipt of the Pharmacy Guild’s letter, but stated that he had only been able to get Ms Hinde’s instructions on the previous day. He said that he had submitted the application for approval of the transfer to Ms Sevil and that a deed of sale had been exchanged. The solicitor sent a third letter to Medicare Australia on 29 April 2009, again acknowledging his receipt of the letter of 13 March 2009, but asserting that he had not been able to deliver it to Ms Hinde.

30 Then, on 30 April 2009, the solicitor wrote again to the delegate asserting that, unless Ms Hinde was given an opportunity to present an appropriate case, she would not have been afforded procedural fairness. On 7 May 2009, the solicitor wrote to the delegate informing her that Ms Hinde had received the letter of cancellation on 5 May 2009 and that the Department would have been aware from 1 April 2009 of the offer by Ms Sevil. He requested restoration of Ms Hinde’s approval.

Mr Flaherty applies for approval

31 On 8 May 2009, Medicare Australia received an application by Mr Flaherty for approval under s 90 of the Health Act to supply pharmaceutical benefit scheme drugs from the Premises. He enclosed, among other documents, an executed lease of the Premises with a two year term commencing on 1 June 2009. Medicare Australia informed him that his application had been forwarded to the Australian Community Pharmacy Authority, the second respondent, for its consideration.

The Decision to revoke and reinstate

32 On 26 May 2009, the delegate considered legal advice she had received in consequence of Ms Hinde’s solicitor’s assertion that his client had not been afforded procedural fairness. The advice suggested that that contention was arguable because the delegate had not enquired of Ms Hinde what her attitude was to Ms Sevil’s offer and the delegate had not received a response to her letter of 13 March 2009. The advice also informed the delegate that, in any event, she had power to remake the decision to cancel the approval, even if it had been made validly, under s 33 of the Interpretation Act.

33 The Statement of Reasons asserted that the following were the reasons for the decision of 26 May 2009 to reinstate the approval:

“The delegate considered that Ms Hinde was entitled to procedural fairness and that Ms Hinde may not have been properly afforded procedural fairness in the period leading up to the decision of 20 April 2009. The delegate considered that the decision of 20 April 2009 was subject to jurisdictional error and was invalid. On that basis the delegate considered that the approval should be reinstated and further deactivated.” (emphasis added)

34 The Statement of Reasons said that the findings on material facts in relation to the decision of 26 May 2009 to reinstate the approval were as follows:

· Ms Hinde was currently approved to supply pharmaceuticals at the Premises.

· Ms Hinde was seriously injured in a motor vehicle accident on 15 October 2007.

· The Premises were damaged by fire on 16 October 2007.

· From 18 October 2007 Ms Hinde was not carrying on business as a pharmacist at the Premises and therefore the community did not have access to the pharmaceutical benefits supplied at those premises.

· Ms Hinde was taking steps, with the help of her solicitor, to transfer her approval to another pharmacist.

· Elements of the community of Aberdeen were concerned by the lack of a pharmacy in Aberdeen.

· Ms Hinde no longer had control of the Premises – Mr Flaherty had secured a lease over the Premises.

· Ms Hinde was serving a custodial sentence of three years.

· Ms Hinde had not been able to respond to the show cause letter of 13 March 2009 and had not seen that letter.

· Ms Hinde’s solicitor had not been able to obtain instructions in relation to the letter of 13 March 2009.

· Neither Ms Hinde nor Ms Hinde’s solicitor had received notice of the delegate’s decision to cancel the approval.

35 On 2 June 2009 the delegate wrote to Ms Hinde’s solicitor advising him of the new decision she had made. In that letter she said:

“… I reviewed my decision of 20 April 2009 and chose to remake that decision.”

She informed the solicitor that the approval had been reinstated and that she had decided to deactivate it until 10 July 2009.

Subsequent events

36 On 3 July 2009 the delegate rejected the application by Ms Sevil. That was because the delegate considered that Ms Sevil was unable to conduct a pharmacy supplying pharmaceutical benefit drugs at the Premises. Ms Hinde’s solicitor had informed the delegate on 25 June 2009 that the Premises had been made the subject of a “standby” lease to another pharmacist who had applied for an approval. That appeared to acknowledge that Mr Flaherty had secured some form of tenancy arrangement with the landlord of the Premises.

37 Ms Hinde’s solicitor wrote to the delegate again on 7 July 2009. He asked for a further period of deactivation while Ms Sevil obtained alternate premises so as to complete an application for relocation of pharmacy form signed by Ms Hinde on 2 July 2009.

38 On 8 July 2009 another delegate granted a further deactivation until 17 August 2009 to allow Ms Sevil time to lodge a complete relocation application. His letter noted that the decision to reinstate the approval on 26 May 2009 had been made “[o]n the basis that Ms Hinde may not have been afforded procedural fairness at the time of the cancellation”. The letter warned that if Ms Hinde was not carrying on business as a pharmacist at the Premises on 17 August 2009 and Ms Sevil had not lodged a complete relocation application by then, he would cancel the approval without further notice. Ms Sevil lodged a completed relocation application on 17 August 2009 and Ms Hinde’s approval was deactivated for a further period on about 18 August 2009.

Reasons of the primary judge

39 The primary judge considered that the decision of 20 April 2009 to cancel Ms Hinde’s approval had been made in breach of the rules of procedural fairness. He held that that failure was a jurisdictional error rendering the decision to be of no legal effect, so that no cancellation had occurred. He held that there was what he described as a “procedural vice”. That vice was that the delegate had failed to invite Ms Hinde or her solicitor to advise what Ms Hinde’s position was, in light of Ms Sevil’s offer that had been made known to the delegate on about 1 April 2009, in circumstances where the delegate knew that Ms Hinde was in custody.

40 His Honour found that the delegate’s letter of 13 March 2009 sought a response on the assumption that Ms Hinde would carry on business at the pharmacy. However, his Honour considered that, by 20 April 2009, when the delegate made her decision, she would have appreciated that that assumption was likely to be wrong. He based that conclusion on the two newspaper reports of Ms Hinde’s sentencing referred to at [23] above, which he found were in the possession of Medicare Australia by 16 April 2009. His Honour inferred that it was more probable than not that the delegate knew on 20 April 2009 that Ms Hinde would remain in a correctional centre for the following three years.

41 Secondly, the primary judge indicated that he would have rejected the argument of the Secretary and Ms Hinde that the delegate had power to remake the decision of 20 April 2009 under s 33(3) of the Interpretation Act. His Honour considered that the Health Act evinced a contrary intention to that assumed in s 33(3). He considered that, once the power to cancel an approval had been exercised under s 98(3), it was final. Furthermore, his Honour doubted that the power conferred under s 98(3) was one that fell within the description in s 33(3) of a power to “make, grant or issue any instrument”,even though notice of a cancellation had to be given in writing. The primary judge said that the decision was simply one that had to be evidenced in writing.

42 Thirdly, the primary judge rejected the argument of Mr Flaherty that the decisions of 26 May 2009 and following, to reinstate and then extend the periods of deactivation of Ms Hinde’s approval, were invalid. He found that it was open to the delegate to permit the further deactivations so as to facilitate a sale of Ms Hinde’s approval. His Honour found that the discretion in s 98(3) was unconstrained but had to be exercised in a way that accorded with the scope, objects and purposes of the Health Act. His Honour made a declaration that the decision of 20 April 2009 was a nullity.

Was there a denial of procedural fairness?

43 The procedural vice identified by the primary judge was faintly supported by the Secretary and Ms Hinde in the appeal. On examination, it does not sustain a conclusion that the decision to cancel Ms Hinde’s approval of 20 April 2009 was affected by a jurisdictional error. First, on the material before the delegate as at 20 April 2009, Ms Hinde’s solicitor would have received both the delegate’s letter of 13 March 2009 and the Pharmacy Guild’s offer on behalf of Ms Sevil of 31 March 2009.

44 Secondly, Ms Hinde and her solicitor did not reply to the letter of 13 March 2009 prior to 20 April 2009, let alone within the time stipulated of 10 April 2009. The delegate was entitled to assume that, had Ms Hinde been in a position to offer any reason why her approval ought not be cancelled, including the existence of any negotiations for the sale of her approval, she would have brought that to the delegate’s attention. The absence of any communication from Ms Hinde or her solicitor in answer to the delegate’s letter of 13 March 2009 did not require the delegate to offer another opportunity to Ms Hinde to reply. The delegate’s obligation to afford procedural fairness to Ms Hinde to put her case against cancellation of her approval based on whatever she might have to say, including recent developments such as the offer from Ms Sevil, had been satisfied by the time allowed in the letter of 13 March 2009.

45 The principles of procedural fairness require that a decision-maker be, and be seen to be, impartial and that the person whose interests may be adversely affected by the decision be given a procedure that affords him or her a fair opportunity to put his or her case to the decision-maker for consideration in accordance with law. That is, an adequate opportunity of being heard: Commissioner of Police v Tanos (1958) 98 CLR 383 at 395-396; Annetts v McCann (1990) 170 CLR 596 at 598-599.

46 The information that Ms Sevil had made an offer through the Pharmacy Guild to purchase Ms Hinde’s approval came to the delegate in circumstances where she had been told that the offer was to be delivered to Ms Hinde’s solicitor. That information was not adverse to the interests of Ms Hinde as a person who would be affected if the delegate were to exercise the discretion to cancel her approval under s 98(3). Rather, the offer was a potentially advantageous development that, were Ms Hinde to pursue the opportunity it presented, could be argued by her as a reason against cancellation of her approval. The mere fact that the delegate was aware of information that an offer had been made to Ms Hinde did not enliven an obligation of procedural fairness in the delegate to take any further step to afford Ms Hinde an opportunity to let the delegate know if she wanted to pursue that offer. Such an obligation arises when a decision-maker has information available that is adverse to the interests of a person who will be affected by the decision and that he or she has not previously disclosed to the person affected: Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at 95-96 [15]-[17].

47 That obligation requires the decision-maker to determine, before reaching his or her final decision, whether the new or previously undisclosed adverse information is credible, relevant and significant to the decision to be made. In other words, the information cannot be dismissed from further consideration by the decision-maker before making the decision: Applicant VEAL 225 CLR at 96 [17]. A decision affected by a jurisdictional error, such as a denial of procedural fairness, is no decision at all: Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 506 [76].

48 Ms Hinde did not avail herself of the opportunity to put her case by reference to matters that might have assisted her, including the possible sale of her approval, before the decision-maker within the time afforded to her to do so, before the decision was made.

49 Of course, all the procedures used in arriving at the decision, including the time and opportunity allowed, in all the circumstances, must comply with the law that is the source of the power being exercised and be appropriate and adapted to give the person whose interests are affected a fair opportunity to put his or her case to the decision-maker: Annetts 170 CLR at 598; Twist v Randwick Municipal Council (1976) 136 CLR 106 at 110, 114-115; cf Kioa v West (1985) 159 CLR 550 at 633.

50 The primary judge erred in finding that the cancellation decision of 20 April 2009 had the procedural vice on which he relied. The delegate had given Ms Hinde and her solicitor ample opportunity to put her case by 10 April 2009. There was no need for the delegate to enquire further about what Ms Hinde may or may not have wished to say about Ms Sevil’s offer. It was in the interest of Ms Hinde alone to decide whether she wished to raise that issue as one favouring a decision not to cancel her approval. The delegate was entitled to decide to cancel Ms Hinde’s approval under s 98(3) on 20 April 2009, in circumstances where she had not made any response to the delegate’s letter of 13 March 2009 or referred to her position in respect of the offer from Ms Sevil.

New contention that procedural fairness WAS not given

51 During the argument of the appeal, the Secretary was granted leave to file a further ground in an amended notice of contention to support the primary judge’s reasoning that the decision of 20 April 2009 had been made in breach of the requirements of procedural fairness. The new contention was based on his Honour’s inference that the delegate knew by 20 April 2009 that Ms Hinde would remain in a correctional centre for the following three years. That inference was based on the evidence of the two newspaper articles faxed to Medicare Australia on 16 April 2009. The Secretary referred to the information in the two articles concerning the minimum term of the sentence of 3 years and 4 months passed on Ms Hinde on 3 April 2009. He contended that that was new information adverse to her interests. That was because the sentence suggested that Ms Hinde would be in no position to carry on business as a pharmacist at the Premises while incarcerated. The Secretary contended that the delegate was obliged to draw that information to Ms Hinde’s attention and invite her response because it was credible, relevant and significant to the decision to be made: Applicant VEAL 225 CLR at 96 [17].

52 This argument should be rejected. Although the primary judge drew an inference that the delegate was aware of the sentencing information, there is no evidence to show that she was aware. Importantly, on 16 April 2009, the delegate had decided to put in train the preparation of the letter of 20 April 2009, over 4 hours before the faxed articles were received by Medicare Australia. The facsimile number for Medicare Australia was the same as that of the delegate. The documentary evidence suggested that that was the facsimile number for the whole Parramatta office shared by the delegate with others in the staff of the Secretary’s department or Medicare Australia. The delegate appeared to have been away on Friday 17 April 2009.

53 Moreover, there was no direct evidence that the faxed articles or the information in them had come to the delegate’s attention before 20 April 2009. The Statement of Reasons does not refer to Ms Hinde’s sentence or the articles. Rather, it stated that the delegate had found, as part of the process of making the cancellation decision, that “Ms Hinde was the subject of court proceedings and may have been taken into custody”. That finding was consistent with the only information that the delegate appears to have had about Ms Hinde’s whereabouts, namely, based on the 3 December 2008 letter to her at a jail and the earlier newspaper article of 30 October 2008. The latter indicated that Ms Hinde had been on bail as at 29 October 2008 but that on that date the judge, having commented that a full time custodial sentence was inevitable, remanded her in custody. There is nothing to suggest that Ms Hinde informed the delegate of her subsequent release on bail or any other change in her custodial status before 20 April 2009.

54 The new contention involves the drawing of an inference that the delegate was aware that Ms Hinde had been granted bail at some time after 3 December 2008 and that, in those circumstances, it ought to have been apparent to the delegate that there was a reasonable prospect that Ms Hinde would not be given a custodial sentence. The Secretary argued that that was the assumption upon which the letter of 13 March 2009 had been written, whereas by the time the cancellation decision was made, on 20 April 2009, it was clear to the delegate that there was no longer any prospect of a non-custodial sentence, and that, therefore, there was no longer a possibility of Ms Hinde resurrecting the pharmacy business herself.

55 The Secretary argued that the inference should be drawn in circumstances where no evidence was adduced by the Secretary from the delegate. This is in circumstances where, as is accepted, the delegate was in possession of the earlier newspaper article of 30 October 2008 which reported that the sentencing judge had indicated that a custodial sentence was inevitable. It would have been open to the Secretary to call the delegate to give evidence as to her state of knowledge and the assumptions she made, in order to support the contention that her decision to cancel involved assumptions or was based on adverse material on which Ms Hinde was not afforded the opportunity to comment. The Secretary chose not to call evidence in that regard. This is not a case where it is for the moving party to establish what was before a decision maker in order to demonstrate jurisdictional error. The decision maker was itself asserting jurisdictional error in relation to the cancellation decision.

56 The delegate was in the best position to give evidence that a jurisdictional error was made by reason of what was known to her or the assumptions she made. No favourable inference about particular matters should be drawn in circumstances where the delegate was not called to give evidence and those very matters were within her knowledge. There is no reason to draw an inference that is contrary to the Secretary’s solicitor’s statement of reasons. The Secretary sought to impugn those reasons, relying only on inexact proofs and indirect inferences. He did not take the readily available expedient of calling direct evidence from the delegate or other witnesses with knowledge of the facts on the question: see s 140(2) of the Evidence Act 1995 (Cth); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 at 479-482 [29]-[38]. In the absence of evidence from the delegate it would not be appropriate in this case to draw the inference that the delegate was aware, at the time when the decision to cancel was made, that Ms Hinde had been sentenced to more than three years’ imprisonment and that this information involved a significant change in her circumstances in so far as there had previously been a possibility that she would not be given a custodial sentence.

57 The new ground in the notice of contention fails. The decision to cancel Ms Hinde’s approval on 20 April 2009 was validly made.

Could the delegate revoke the decision of 20 April 2009?

58 The Secretary also relied on a ground in his notice of contention that the delegate had power on 26 May 2009 to “remake” her earlier decision to cancel Ms Hinde’s approval by force of s 33(3) of the Interpretation Act. That provides:

“33 Exercise of powers and duties

(3) Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.”

59 The Secretary argued that s 98(3) of the Health Act required that a decision to cancel an approval had to be given in an instrument, namely a notice in writing to the pharmacist. He pointed to the absence of any requirement for writing to give effect to a cancellation of an approval under s 98(1) or s 98(2) in support of the argument and to the different language of s 90(5). The latter provision required the Secretary, where he had made a decision, to serve notice in writing of a grant or rejection. He argued that s 33(3) should be given a purposive construction and be applied to the power in s 98(3) in the interest of good public administration. The power in s 33(3) was exercisable, he argued, independently of the validity of the earlier decision of 20 April 2009. The Secretary also argued that a cancellation under s 98(3) was “executed by notice in writing” so that the notice was an “instrument”.

60 This argument fails. The power in s 98(3) is expressed as a power to cancel an approval in the exercise of a discretion. It is not in terms a discretion to make, grant or issue an instrument, being the notice. A notice of the cancellation in writing is required to be given to the pharmacist by s 98(3). The notice is made necessary, doubtless, so that the pharmacist will be informed of the fact that his or her approval has been cancelled. It is the mode prescribed by s 98(3) of communicating the making of the decision to exercise the discretion to cancel. Importantly, s 105AB(8A) of the Health Act gives a pharmacist a right to apply to the Tribunal for a review of a decision of the Secretary under s 98(3) to revoke an approval. That suggests that the relevant exercise of power under s 98(3) is one of cancellation not a power to make an instrument or issue a notice: Nicholson-Brown v Jennings (2007) 162 FCR 337 at 349 [27].

61 The notice in writing referred to in s 98(3) may be accepted to be an “instrument” for the purposes of s 33(3) of the Interpretation Act. The word “instrument”in that section is not limited to documents or things of a legislative character. The words of expansion in the first parentheses in s 33(3) would be otiose or surplusage if a narrow construction were given to “instrument” in s 33(3): Heslehurst v New Zealand (2002) 117 FCR 104 at 111 [25] and X v Australian Crime Commission (2004) 139 FCR 413 at 421 [30]-[31]. A notice issued under s 55 of the Life Insurance Act 1945 (Cth) requiring a life insurance company to show cause why its affairs should not be investigated has been held to be an “instrument” within what was then s 46(a) of the Interpretation Act: Associated Dominions Assurance Society Pty Ltd v Balmford (1950) 81 CLR 161 at 181, 186. The expression “make, grant or issue” in s 33(3) itself are words more typically associated with instruments in the broader sense, such as agreements and licences: Chittick v Ackland (1984) 1 FCR 254 at 262-263, New South Wales v Corbett (2007) 230 CLR 606 at 615 [33]. Thus, s 33(3) may well authorise the Secretary or his delegate to “repeal, rescind, revoke, amend or vary” a notice in writing under s 98(3) because the latter is an “instrument”.

62 However, the issue here is whether the discretionary power conferred on the Secretary by s 98(3) was to make, grant or issue an instrument, being a notice in writing, or to cancel Ms Hinde’s approval. Sometimes a statutory power will be construed as a power to make or issue a notice in writing: as in Associated Dominions. In contrast, in other instances, the relevant provision will be construed as creating a power for the decision-maker to make a particular determination, while at the same time requiring him or her to give notice of it to a person affected: Minister for Immigration and Ethnic Affairs v Mayer (1985) 157 CLR 290 at 302-303; and Griffith University v Tang (2005) 221 CLR 99 at 126 [74], 128 [78]-[80], 130-131 [85]-[89].

63 The delegate was exercising a power to cancel an approval under s 98(3). The decision she made was, as expressed in terms in her letter of 20 April 2009, to “… hereby cancel the approval …”. Critically, s 98(3) contained a grant of a discretionary power to cancel an approval, and a mechanism, namely, notice in writing, to convey to the person affected that the power had been exercised. The decision to exercise the power to cancel controlled the creation of a notice in writing reflecting the decision: Griffith University221 CLR at 130 [87]; Mayer 157 CLR at 302-303. Such a conclusion is consistent with the nature of a similar power under ss 98(1) and (2) and the characterisation of the pharmacist’s right of review in s 105AB(8A) of “… a decision of the Secretary under [s 98(3)] … to revoke an approval”. The latter right was not given to review a decision to make an instrument, or issue a notice in writing under s 98(3). Rather, s 105AB(8A) gave a right to seek review of the decision to cancel.

64 In any event, s 33(3) only operates if no contrary intention appears. The scheme of the Health Act demonstrates a contrary intention.

65 Even if the Secretary is satisfied that an approved pharmacist is not carrying on business as a pharmacist, or that the relevant premises are not accessible by members of the public for the purpose of receiving pharmaceutical benefits, the Secretary has a discretion not to cancel the approval, notwithstanding that, under s 90(3D), the Secretary must not grant approval if satisfied as to those matters. Thus, the Health Act contemplates the possibility of an approval of a pharmacist in respect of particular premises continuing even though the criteria for the grant of approval to the pharmacist for those premises are not satisfied.

66 Nevertheless, the contrast between s 98 and s 95 is instructive as to the application of s 33(3) of the Interpretation Act. Section 95(1) confers on the Minister a power, first, to suspend or revoke the approval of a pharmacist under s 90 and, secondly, at any time to remove the suspension or restore the approval. Unlike s 98, s 95 expressly confers on the Minister the power to remove a suspension or restore an approval. It would be curious if the drafter of the Health Act thought it was necessary, notwithstanding the presence of s 33(3) of the Interpretation Act, to confer an express power on the Minister but to leave a similar power on the part of the Secretary to be inferred by s 33(3). A sufficient contrary intention appears from those provisions to exclude the operation of s 33(3).

67 It follows that there was no power, in the present circumstances, for the delegate to remake or make any decision on or after 26 May 2009 that restored Ms Hinde’s approval. Her approval remained cancelled by force of the valid decision made on 20 April 2009.

Other bases for challenging the decisions subsequent to 20 April 2009

68 The discretion in s 98(3) was a broad one. It was unconfined except to the extent that the subject matter, scope and purpose of the Health Act placed any implied limitation on the factors that the Secretary could take into account in its exercise: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40; Reg. v Australian Broadcasting Authority; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49-50.

69 Mr Flaherty argued that on, 26 May 2009, it was obvious that the application to change the ownership of the pharmacy made by Ms Hinde and Ms Sevil could not be granted. That was because he had a lease of the Premises commencing on 1 June 2009. Neither Ms Hinde nor Ms Sevil had any right to occupy the Premises. They had given the delegate no evidence that either of them could obtain such a right. Mr Flaherty relied on the subsequent rejection of Ms Sevil’s application as demonstrating that. It is not necessary to decide this issue. However, there is force in the primary judge’s observation that the immediate purpose of the decisions on 26 May 2009 and subsequently, to deactivate the approval, was to facilitate the transfer of Ms Hinde’s approval, which was a valuable right, to Ms Sevil. Such a consideration is not necessarily outside the permissible factors that the delegate could have taken into account had the 20 April 2009 cancellation been ineffective.

Conclusion

70 The appeal should be allowed. The orders of the primary judge on 12 February 2009 should be set aside. A declaration should be made that the approval number 12370C to Ms Hinde under s 90 of the Health Act was validly cancelled on 20 April 2009 and has had no force or effect since that time. There should be an order quashing the delegate’s decision of 26 May 2009 to reinstate the approval. The subsequent decisions to deactivate the approval should also be set aside. The Secretary should pay Mr Flaherty’s costs of the proceeding below and of the appeal.

I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Emmett, Rares and Nicholas.

Associate:

Dated: 8 June 2010

Top