FEDERAL COURT OF AUSTRALIA

Kong v Minister for Health [2014] FCAFC 149

THE COURT ORDERS THAT:

1.    The appeal be dismissed with costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Jacobson J

1    The appellants, Steven Kong, Bradley Coleman and Pannet Pok (KC&P) appeal against an order made by the primary judge (Buchanan J) dismissing an application for review of a decision made by the Minister for Health granting approval to the second and third respondents (the Mahonys) to supply pharmaceutical benefits at premises located at Shop 2, 215 Balo Street, Moree.

2    The Minister’s decision was made in the exercise of a personal discretion conferred upon her under s 90A(2) of the National Health Act 1953 (Cth) (the Act). Section 90A applied only where there had been an earlier decision of the Secretary of the Department of Health under s 90 of the Act rejecting an application by a pharmacist for approval to supply pharmaceutical benefits at particular premises: see the Act, s 90A(1).

3    Section 90A was enlivened in the present case because in August 2011 the Secretary rejected an application made by the Mahonys under s 90. The Mahonys then requested, in early September 2011, that the Minister personally exercise her discretion under s 90A(1) to substitute a favourable decision in place of the Secretary’s decision to reject the application.

4    The Minister’s power to substitute a favourable decision under s 90A(2) was conditioned upon the Minister being satisfied that:

    the Secretary’s decision would result in a community being left without reasonable access to pharmaceutical benefits; and

    it was in the public interest to grant approval.

5    On 1 November 2011, prior to the Minister deciding whether to exercise her discretion under s 90A of the Act, KC&P purchased two pharmacies in Moree from Mr Jeremy Francis. One of those pharmacies was located at 64 Balo Street Moree, about 440 metres from the Mahoney’s pharmacy at 215 Balo Street. Both of the pharmacies owned by Mr Francis and purchased by KC&P were the subject of approvals for the supply of pharmaceutical benefits under s 90.

6    On 29 November 2011 the then Minister for Health (Ms Nicola Roxon) decided to consider the request made by the Mahonys in September 2011 that she substitute a favourable decision in place of the Secretary’s earlier rejection. On 27 February 2012 the then Minister (Ms Tanya Plibersek) decided to approve the Mahonys’ application.

7    KC&P (and Mr Francis) were not notified of the Mahonys’ request to the Minister for the exercise of the discretion under s 90A or the decision by Minister Roxon to consider the request. KC&P claimed that the failure to notify them constituted a denial of procedural fairness. They also claimed that the Minister had made two errors of law in her decision. The first was said to be that the Minister had wrongly examined whether the Moree community would be left without reasonable access to pharmaceutical benefits. The second was that the Minister had misinterpreted the “public interest” requirement stated in s 90A(2)(b).

8    The primary judge held that the exercise by the Minister of the power conferred by s 90A(2) of the Act was not conditioned upon an obligation to afford KC&P an opportunity to be heard in relation to the Mahonys’ request for the exercise of the Minister’s discretion, or of her decision to consider the request.

9    In coming to that view, the primary judge considered that he was bound to follow a decision of a Full Court in Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589 (“Martin”). His Honour considered that the approach adopted by the Court in Martin was applicable notwithstanding that their Honours in that case were concerned with an earlier statutory regime which did not include a provision in the terms of s 90A of the Act.

10    The effect of the decision in Martin was that there was no obligation upon the decision-maker to notify other pharmacists who were not parties to the application for approval because they had no more than an economic interest in the outcome.

11    However, Mr N Williams SC, who appeared for KP&C in the appeal, submitted that under the present statutory regime, KP&C had a statutory interest which carried with it an obligation of procedural fairness upon the Minister to give notice to KP&C (or Mr Francis) of the request made by the Mahonys under s 90A and/or of the decision to consider the request.

12    The first issue in the appeal is therefore whether the primary judge erred in holding that the Minister was not obliged to afford KP&C procedural fairness in relation to the request made by the Mahonys under s 90A of the Act.

13    The second issue in the appeal is whether the Minister misinterpreted and misapplied the expression “a community being left without reasonable access to pharmaceutical benefits” and “in the public interest” in s 90A(2)(a) and s 90A(2)(b) of the Act.

The Statutory Scheme

14    Part VII of the Act establishes a scheme for the payment by the Commonwealth of benefits or subsidies in respect of certain drugs and medicinal preparations referred to in s 85. The benefits which are provided by the Commonwealth are referred to as “pharmaceutical benefits”: see the definition in s 84 and see s 85(1).

15    Pharmaceutical benefits consist of the payment by the patient to the pharmacist of a limited fee for a prescribed drug to which s 85 refers. The balance of the fee for the drug or medicinal preparation is paid by the Commonwealth to the pharmacist.

16    The central provision in the present case, s 90A of the Act, was introduced into Part VII by the Health Legislation (Pharmacy Location Arrangements Act) 2006 (Cth) (the 2006 Amendments). The 2006 Amendments varied the scheme which was the subject of certain amendments to Part VII that were made in 1990 by the Community Services and Health Legislation Amendment Act 1990 (Cth) (the 1990 Amendments).

17    The 1990 Amendments and their background are fully explained in the judgment of French J in Pharmacy Restructuring Authority v Chatfield (1993) 43 FCR 418 at 429, 433-434 and by Hill J in Smoker at 292-295.

18    The 1990 Amendments implemented certain aspects of an agreement made between the then relevant Minister and the Pharmacy Guild of Australia. The agreement provided for the restructuring of the retail pharmacy industry by rationalising the number of pharmacies. This was intended to have benefits for taxpayers and patients: Chatfield at 433-434; Smoker at 293-294.

19    The 1990 Amendments established an authority originally called the Pharmacy Restructuring Authority, now known as the Australian Community Pharmacy Authority (“the Authority”). The Authority was established by s 99J of the Act and its functions were stated in s 99K. Those functions included considering applications by pharmacists under s 90(1) to supply pharmaceutical benefits and to make recommendations as to whether or not an applicant should be approved.

20    The power to approve an application to supply pharmaceutical benefits was conferred on the Secretary of the Department by s 90 of the Act which was introduced by the 1990 Amendments. Section 90(1) is as follows:

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.

21    The Authority plays an important role in the approval process. Subject to certain exceptions, all applications for approval must be referred to it: s 90(3A). An approval may only be granted by the Secretary if the Authority has recommended that it be granted, but the Secretary may refuse approval even if the grant has been recommended by the Authority: s 90(3B).

22    When making recommendations the Authority must comply with the rules determined by the Minister: see 99K(2) and 99L. The rules were originally called guidelines: Chatfield at 429-430; Smoker at 293. The rules in force at the time of the present application were contained in the National Health (Australian Community Pharmacy Authority) Rules Determination 2006 (the 2006 Rules). I will refer to the relevant rules later.

23    The relevant parts of s 90A, as introduced by the 2006 Amendments are as follows:

(1)    This section applies in relation to a decision of the Secretary under section 90 rejecting an application by a pharmacist for approval to supply pharmaceutical benefits at particular premises, if:

(a)    the application was made on or after 1 July 2006; and

(b)    the decision was made on the basis that the application did not comply with the requirements of the relevant rules determined by the Minister under section 99L.

(2)    The Minister may substitute for the Secretary’s decision a decision approving the pharmacist for the purpose of supplying pharmaceutical benefits at the particular premises if the Minister is satisfied that:

(a)    the Secretary’s decision will result in a community being left without reasonable access to pharmaceutical benefits supplied by an approved pharmacist; and

(b)    it is in the public interest to approve the pharmacist.

(3)    For the purposes of subsection (2):

community means a group of people that, in the opinion of the Minister, constitutes a community.

reasonable access, in relation to pharmaceutical benefits supplied by an approved pharmacist, means access that, in the opinion of the Minister, is reasonable.

(4)    The power under subsection (2) may only be exercised:

(a)    on request by the pharmacist made under section 90B; and

(b)    by the Minister personally.

…

…

(7)    A decision by the Minister not to exercise the power under subsection (2) in respect of the Secretary’s decision does not prevent the pharmacist from making an application to the Administrative Appeals Tribunal under subsection 105AB(7) for review of the Secretary’s decision.

24    The 2006 Amendments also introduced a number of provisions related to the exercise of the power conferred on the Minister under s 90A. The relevant provisions for present purposes are s 90B which deals with requests to the Minister to exercise the power, and s 90D which deals with the provision of further information to the Minister.

25    Section 90B(1) is as follows:

If section 90A applies to a decision of the Secretary under section 90 rejecting an application by a pharmacist, the pharmacist may, in writing, request the Minister to exercise the Minister’s power under subsection 90A(2) in respect of the Secretary’s decision.

26    If the Minister receives a request under s 90B(1), he or she must personally decide within three months whether to consider the request: s 90B(4). If the Minister decides to consider it, the Minister must then decide within a further three months whether to exercise the discretion to substitute a decision approving the pharmacist in place of the Secretary’s decision to reject the application: s 90B(5).

27    Section 90D(1) is as follows:

(1)    For the purpose of deciding whether to consider a request made by a pharmacist under subsection 90B(1) or whether to exercise the power under subsection 90A(2) in relation to such a request:

(a)    the Minister may, by notice in writing given to the pharmacist, require the pharmacist to provide such further information, or produce such further documents, to the Minister as the Minister specifies, within the period specified in the notice; and

(b)    the Minister may give a notice in writing to any other person:

(i)    advising the person of the request; and

(ii)    inviting the person to provide comments on, or information or documents relevant to, the request within the period specified in the notice.

The 2006 Rules

28    Rule 9 of the 2006 Rules states that the authority must recommend that an applicant be approved under s 90 of the Act in respect of particular premises if certain requirements are met.

29    Rule 10 of the 2006 Rules states that the Authority must recommend that an applicant not be approved under s 90 if a requirement that applies under para (a) or (b) of rule 9 is not met.

30    The requirements referred to in rule 9 are specified in a large number of items contained in schedules. The Mahonys’ application was for a relocation of an existing pharmacy to Moree. There are different requirements in Schedule 1 depending upon the nature of the relocation.

31    Since the relocation was to a rural locality, the relevant requirement was contained in item 107. Paragraph 3 of item 107 required the Authority to be satisfied that:

(a)    the resident population of the catchment area for the proposed premises is, for most of the year, at least 8,000; and

(b)    there is the equivalent of at least 4 full-time prescribing medical practitioners practising in the catchment area for the proposed premises; and

(c)    the catchment area for the proposed premises contains 1 approved premises; and

(d)    the pharmacy operating from the approved premises mentioned in paragraph (c) has not, in the 3 years before the date the application is made, been involved in an amalgamation with a pharmacy that had operated from other approved premises in the same rural locality other than an amalgamation that occurred on or after 1 July 2006.

32    Other requirements were set out in items 108 to 112 specific to proposed relocations to an urban locality (item 108), a small shopping centre (item 109), a private hospital (item 111), a large medical centre (item 112).

33    Whilst those requirements were not applicable to the Mahonys’ application, they are relevant to the process of construction which informs the issue of whether the power under s 90A of the Act is conditioned upon an obligation of procedural fairness.

Background

34    From at least 2010 Mr Francis conducted the business of dispensing pharmaceutical benefits under approvals given to him in accordance with s 90 of the Act for premises at 64 Balo Street Moree and Shop 2, 100 Amaroo Drive Moree.

35    During 2010 the Mahonys made a number of unsuccessful applications to relocate an approval which they held to dispense pharmaceutical benefits in Calala, a suburb of Tamworth, to premises at Moree. The trading name of the Calala pharmacy was the Calala Discount Drug Store.

36    On or about 16 May 2011 the Mahonys opened the Moree Discount Drug Store at Shop 2, 215 Balo Street Moree. They did so about a week before making application under s 90 for approval to dispense pharmaceutical benefits.

37    On 23 May 2011 the Mahonys made application under s 90 for approval to relocate their authority to dispense pharmaceutical benefits from the Calala Discount Drug Store to the Moree Discount Drug Store which they had opened the previous week.

38    In accordance with s 90(3A) of the Act, the Mahonys’ application was referred to the Authority. On 3 August 2011 the Authority decided to recommend under s 99K(1) of the Act that the application not be approved. The Authority made that decision because it was not satisfied that the application met the requirements of item 107 of the 2006 Rules.

39    In particular, the Authority was not satisfied as to the “one approved premises” requirement of para 3(c) of item 107. It went on to say that:

“.. the Authority found that there are two pharmacies currently located in Moree. The Authority did not accept that the residents in Moree South would not travel to the central business district on a regular basis and therefore did not accept that this was not part of the catchment area.”

40    On 9 September 2011 the Department received a request from the Mahonys that the then Minister exercise her discretion to approve the premises at 215 Balo Street. The request was made under s 90B for a favourable exercise of the power under s 90A(2) of the Act.

41    On 29 November 2011, within the three month period permitted by s 90B(4), Minister Roxon decided to consider the request to substitute a favourable decision for that of the Secretary.

42    However, as I said above, nearly a month earlier, on 1 November 2011 KP&C purchased the two Moree pharmacies from Mr Francis. It appears that on or about that date KP&C obtained approvals under s 90 to supply pharmaceutical benefits from both of those pharmacies.

43    On 9 December 2011 the Department wrote to the Mahonys to advise them of the Minister’s decision to consider their request. As stated above, notice of that decision was not given to either KP&C or Mr Francis.

44    In February 2012, Mr Anthony James Wynd, an employee of the Pharmacy Access Branch of the Pharmaceutical Benefits Division of the Department of Health, settled a Minute to the Minister to assist her to decide whether to exercise her discretion under s 90A. The Minute was signed by the Deputy Secretary of the Department. It referred to the statutory conditions which needed to be met under s 90A(2) and to the non-satisfaction of rule 107.

45    On 27 February 2012, within the three month period prescribed by s 90B(5), Minister Plibersek decided to exercise her discretion under s 90A(2) to grant approval to the Mahonys to supply pharmaceutical benefits at Shop 2, 215 Balo Street Moree in substitution for the earlier decision of the Secretary rejecting the application by the Mahonys under s 90.

46    On 1 March 2012 a representative of KP&C wrote to the Department seeking confirmation as to whether the Minister had exercised her discretion and, if so, seeking a statement of reasons. Further correspondence ensued and, following upon the commencement of proceedings in the Federal Court by KP&C, the Minister agreed to provide a statement of reasons.

47    The Minister’s statement of reasons was supplied on 13 July 2012.

The Departmental Minute

48    The Minute did not make a recommendation as to whether the Minister should exercise her discretion to substitute a more favourable decision. Instead, the Minute set out key factors supporting the Mahonys’ request and stated that those factors needed to be balanced against certain counter-arguments.

49    The key factors identified in the Minute as supporting the request, and the counter-arguments are reproduced in full in the primary judgment at [67]. It is unnecessary to set out those parts of the Minute in this judgment.

The Minister’s Statement of Reasons

50    The Minister’s Statement of Reasons was divided into findings on material questions of fact which were set out at paras 9 to 16 of the document, and a statement of the reasons for the decision which appeared at paras 18 to 25.

51    Those parts of the Statement of Reasons are reproduced in [72] of the primary judgment and it is unnecessary to repeat them.

The Primary Judge’s Reasons on the Procedural Fairness Issue

52    The primary judge’s reasons for his conclusion that the Minister was not obliged to afford KP&C an opportunity to be heard contain four elements.

53    The first is that the existence of a power, expressed in s 90D(1)(b) in terms that appear to be discretionary, to give notice to other persons and invite comments on, or information or documents relevant to the request, suggests that no obligation to provide an opportunity to be heard exists (for other pharmacists): see primary judgment [22].

54    The second element of the reasoning process is that there is an established line of authority in the Court to the contrary of the proposition that there is a duty to afford procedural fairness. His Honour set out at [24] the relevant passage from the decision of the Full Court in Martin at 597. The effect of it is that the principles of procedural fairness do not extend to persons, such as other pharmacists, whose economic interests may be damaged by an approval and that the scope and purpose of the power in question are not concerned with minimising competition in the industry but with reducing the Commonwealth’s financial burden while maintaining an acceptable level of community service.

55    The third element is that recent decisions including the decision of Jessup J in Yu v Minister for Health (2013) 216 FCR 168, [2013] FCA 261 (“Yu”), in which his Honour found that a pharmacist had a statutory interest, and not merely an economic interest and Hanna v Minister of Health [2013] FCA 303 (Jagot J) were distinguishable: see primary judgment at [29]-[37].

56    The fourth element is that his Honour considered that the present case is not distinguishable from Martin and that he was bound to follow that decision: see primary judgment at [38].

What constitutes a sufficient interest

57    Unsurprisingly, the debate between the parties proceeded upon an acceptance of the well-known statements of principle in relation to natural justice, in particular of Brennan J in Kioa v West (1985) 159 CLR 550, which have been reiterated on numerous occasions, including in two recent decisions of the High Court: Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at [11]; Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at [66].

58    Thus, it was common ground between the parties that, absent a clear statement of legislative intention to the contrary, the exercise of a power which is apt to affect adversely interests, falling short of legal rights, is conditioned upon observance of the principles of procedural fairness: Saeed at [11]; Plaintiff S10/2011 at [66].

59    In Plaintiff S10/2011 at [66] the plurality described the issue in that case as whether the exercise of the power was apt to affect adversely a “sufficient interest” of a party seeking the exercise of the power.

60    Their Honours went on to refer at [68] to the observation of Brennan J in Kioa v West at 621 that the interest which tends to attract the protection of the principles of natural justice may be equated with the interest which gives standing at common law or equity to seek a public law remedy.

61    It is not necessary to explore the boundaries of the relationship between the interest which gives rise to an obligation of procedural fairness and the interest which is sufficient to give standing. This is because all of the authorities, including the decision in Plaintiff M61/2010 v The Commonwealth (2010) 243 CLR 319 (the “Offshore Processing Case”) to which the plurality in Plaintiff S10/2011 referred to [68], make it clear that the question is one of construction of the statutory framework in order to determine whether the affected party has a sufficiently direct, or “real” interest: Plaintiff S10/2011 at [66], [68]; Offshore Processing Case at [76].

62    Whilst this is a principle of general application, each case turns upon the particular statutory framework and the nature of the power in question. In order to attract an obligation of procedural fairness it must be a decision which directly affects the interests of the person: Kioa v West at 584 (Mason J); Offshore Processing Case at [76]; see also Saraceni v Australian Securities and Investments Commission (2013) 211 FCR 298 at [12], [79], [81].

63    In Bateman’s Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at [48], the plurality (Gaudron, Gummow and Kirby JJ) considered the nature of an interest sufficient to give standing to competitors or third parties. Their Honours suggested that:

“… the circumstance that the plaintiff conducts commercial activities in competition with those which it seeks to restrain is not necessarily insufficient to provide it with a sufficient interest …”. (emphasis added)

64    However, I do not consider that this statement provides an answer to the question which arises in the present case. Their Honours recognised, at [48], and in expressing their conclusion at [49]-[52], that the question is always one of determining whether there is a sufficient interest to give standing (and therefore an entitlement to procedural fairness) upon the true construction of the subject matter, scope and purpose of the particular statute.

65    That was why the plurality in Bateman’s Bay at [84] and McHugh J at [102] distinguished the decision of a Full Court in Alphapharm Pty Ltd v SmithKline Beecham (Aust) Pty Ltd (1994) 49 FCR 250. In that case the Full Court held that the interests of a patentee were not “affected” by a decision made under therapeutic goods legislation to register a generic brand of the product.

66    In my opinion, the decision of the Full Court in Martin is consistent with the authorities to which I have referred. I do not consider that the observation of the plurality in Bateman’s Bay that a competitor is “not necessarily” insufficient is inconsistent with the approach adopted in Martin.

The decision of the Full Court in Martin

67    Martin addressed the question of whether a pharmacist was entitled to procedural fairness from the Authority in deciding to recommend approval of an application under s 90 of the Act by a potentially competing pharmacist to relocate a pharmacy to a location in close proximity to the applicant.

68    The Full Court said in Martin at 597 that:

“ … we do not know of any general principle to the effect that a statutory authority charged with the duty of considering an application is obliged by the principles of procedural fairness to notify and hear everybody whose economic interests may be damaged by an approval.”

69    Their Honours went on (at 597) to draw attention to the difficulties for the Authority in determining the class of persons to whom procedural fairness would need to be afforded. Their Honours said that such an obligation would impose upon statutory decision-makers a “potentially massive task of indeterminate reference”.

70    The Court then observed (at 597) that there was nothing in the subject matter, scope or purpose of the Act which supported the implication of an obligation of procedural fairness. They said:

“The relevant provisions are not concerned with minimising competition in the pharmaceutical industry but with reducing the Commonwealth’s financial burden in providing pharmaceutical benefits while maintaining an acceptable level of community service. In the absence of authority, we are not prepared to hold that, if it had a discretion about its decision, the Authority had any obligation to notify or hear pharmacists, non-parties to the application for approval, merely because an approval might commercially damage them.”

The decisions in Yu and Hanna

71    The factual background in Yu is critical to an understanding of the result of the case. Those facts included, in particular “the unusual circumstances” that came about as a result of a determination made by the Minister to introduce new rules under the National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (the 2011 Rules) which replaced the earlier 2006 Rules: Yu at [14], [36].

72    The effect of the changes brought about by the introduction of the new rules was, as Jessup J said at [16], profound. Previously there could be only one approved premises in a rural town such as Kilmore, which was the town in question, and there was no possibility of approval under the 2006 Rules for a pharmacy within a 10 km radius. However, under the 2011 Rules there could be two pharmacies, so long as the second approved premises were not less than 200 metres from the first.

73    The applicant in Yu conducted a pharmacy in Kilmore from certain premises (the first premises) for which he had approval under s 90 of the Act. Jessup J considered that this approval was of considerable value because the Commonwealth subsidy was of significant value to the viability of the first pharmacy which was the only one in Kilmore: Yu at [18].

74    When it became clear that the 2011 Rules would be introduced the applicant put in place a strategy to secure the second approval for himself. The strategy which the applicant put in place involved an application for the approval for relocation of the first premises to another location in Kilmore (the second premises) and a request for cancellation of his approval for the first premises. These steps were taken on the day before the 2011 Rules commenced operation: Yu at [19]-[21].

75    The next day, that is to say on the date when the 2011 Rules became effective, the fourth respondents (Barlow & Weller (“B&W”)) applied for approval under s 90 of the Act for other premises at Kilmore (the third premises): Yu at [23].

76    The steps which then occurred are described by Jessup J at [25]-[31]. The Authority recommended approval under s 90 for the third premises but that recommendation was set aside by a consent order. However, B&W then made a request to the Minister for an exercise of discretion under s 90A and the Minister dealt with the request favourably to B&W. The Minister did so without notice to the applicant.

77    However, prior to the request to the Minister by B&W, the applicant withdrew his relocation application for the first premises and applied for approval for the second premises in addition to, rather than by way of relocation to the first premises: Yu at [28].

78    The question which then arose in the proceeding before Jessup J was whether the applicant had a sufficient interest to require him to be notified of B&W’s request under s 90A. B&W relied on the decision in Martin but Jessup J distinguished that decision. His Honour said at [36]:

“In my opinion, the judgment of the Full Court in Martin is distinguishable, and does not govern the disposition of the present case, because here the applicant had an interest greater than the economic one of a competing pharmacist to which their Honours referred in the passage extracted from that case above. In the unusual circumstances brought about by the commencement of the 2011 Rules, there was to be one, and one only, additional pharmacy approved for the town of Kilmore. As someone who had applied to be that approved pharmacist, the applicant had an interest which was defeated upon the Minister giving approval to the fourth respondents’ application under s 90A of the NH Act. That interest had a statutory, and not merely an economic, source.”

79    His Honour then addressed an argument that the power under s 90A might be exercised without affording procedural fairness to any person. It was said in support of this argument that the exercise of the discretion under s 90A was analogous to the special provisions for ministerial decision-making which were considered in Plaintiff S10/2011. However, his Honour considered that the provisions of s 90A were different from those which applied in Plaintiff S10/2011.

80    Jessup J went on the say at [40] that a “disappointed applicant” under s 90 might not be entitled to procedural fairness under s 90A which is intended to be “a potential avenue of amelioration”:

“But it could not be regarded as the situation where another person’s interests would be adversely affected by a positive outcome under s 90A, but where that person had had no involvement in the previous proceedings under s 90 which had presumptively taken place.”

81    However, I do not consider that his Honour was intending to state a principle of general application. This is because he continued by saying at [41] that:

“(o)n the facts of the present case, the applicant had succeeded in having the Authority’s recommendation … set aside, and, understanding the law as he did, was entitled to assume that [B&W’s] application would be unsuccessful under the 2011 Rules.”

82    His Honour next considered whether s 90D of the Act evinced an intention to exclude the rules of natural justice. He was of the view that it did not and stated at [42]:

“I consider that the section recognises that a person with a relevant interest might indeed be entitled to be notified …” (emphasis added)

83    His Honour’s observations at [43] about the criteria for the necessary state of satisfaction in s 90A were also expressed upon the basis that they were considerations of a kind:

“… in relation to which a person having a proper interest, such as the applicant, might have a legitimate concern, worthy of consideration by the minister.” (emphasis added)

84    In Hanna at [49] Jagot J was of the view that Yu is authority for the proposition that the power conferred on the Minister is conditioned on the observance of the principles of procedural fairness. However, for the reasons stated above, in my opinion, the decision in Yu is limited to the facts of the case and is not authority for the proposition expressed in the wide terms stated by Jagot J.

No requirement to afford procedural fairness

85    Mr Williams submitted that the interest held by KP&C was not a mere economic interest but was to be characterised as a form of statutory monopoly which was to be found in the application of s 90 when read with the “one approved premises” rule in item 107 sub-item 3(c) of the 2006 Rules.

86    Initially Mr Williams sought to characterise the interest as a pre-emptive right but in the course of argument he accepted that it was not a right but was, in his submission, an interest which arose from s 90 and the 2006 Rules.

87    The effect of these provisions was said to be that, so long as KP&C held an approval under s 90 of the Act, no other pharmacist could obtain an approval for premises within the relevant catchment area. Thus, when KP&C purchased their pharmacies from Mr Francis, they were said to have obtained a statutory interest which could be characterised by the shorthand expression of “pole position”.

88    Mr Williams also pointed out that a request under s 90A raises fresh issues to be considered for the first time by the Minister. Those issues are, first, whether the Secretary’s decision will result in a community being left without reasonable access to pharmaceutical benefits, and, second, whether it is in the public interest to approve the proposed pharmacy: see s 90A(2). Those issues do not fall for consideration by the Secretary, or the Authority, when an application is made under s 90. That application is to be considered only by reference to the somewhat rigid formulae which were, at the relevant time, contained in the 2006 Rules.

89    In my opinion there are a number of reasons why Mr Williams submission that KP&C had a sufficient statutory interest must be rejected.

90    First, in considering the statutory scheme it must be borne in mind that the interest which is said to give rise to an obligation of procedural fairness is not that of an applicant for an approval. Rather it is an interest of a stranger or third party to the application.

91    In Plaintiff S10/2011 the Court dealt with the question of whether a request to the Minister for Immigration and Citizenship to exercise statutory dispensing powers in favour of unsuccessful applicants attracted an obligation of procedural fairness. The conclusion reached by the plurality as explained by them at [100] depended upon the role of the Minister at the peak of the statutory scheme exercising a personal, non-compellable, public interest discretionary power.

92    The conclusion in Plaintiff S10/2011 that the power did not attract an obligation of procedural fairness to the party requesting dispensation may well apply to a party who seeks the exercise of a discretion under s 90A. But the position of a third party must be analysed differently.

93    Nor is Mr Williams’ argument assisted by the fact that different issues arise in an application under s 90 and a request under s 90A, cf SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152. In that case the High Court held that an applicant for review by the Refugee Review Tribunal was entitled to assume that the issues considered dispositive in the decision of the delegate which was under review were the issues which arose in the review. Thus, the failure to notify the applicant of a new issue constituted a denial of procedural fairness.

94    SZBEL was therefore concerned with the question of whether an applicant was entitled to procedural fairness when different issues arose at different stages of the applicant’s own application for administrative action.

95    At the risk of repetition, that approach does not assist a third party. It must point to a sufficient statutory interest to engage an obligation of procedural fairness.

96    Second, the interest which Mr Williams seeks to glean from the statutory scheme is merely an economic or commercial interest. So much is plain from the attempt to characterise it as an interest in the nature of a statutory monopoly or a statutory pole position.

97    The background to the 1990 Amendments as explained in Chatfield and Smoker, and the observations of the Full Court in Martin at 597, set out at [70] above, make it plain that the 1990 Amendments were not concerned with the protection of commercial interests of existing pharmacies but, rather, with balancing the Commonwealth’s financial burden against the need for an acceptable level of community service.

98    An interest which is said to be the protection of a form of statutory monopoly is therefore not one which is consistent with the subject matter, scope or purpose of the statutory scheme.

99    It is true that the 1990 Amendments implemented the first agreement made between the Minister and the Pharmacy Guild whereas the 2006 Rules implemented a later agreement. But I do not see why the introduction of s 90A or the introduction of the 2006 Rules alters the nature of the subject matter, scope or purpose of the Act which has, at its heart, public funding of the provision of pharmaceutical benefits.

100    Third, serious practical difficulties would arise in the administration of the statutory scheme if the decision-maker were required to give notice to all persons whose commercial interests might be adversely affected by an exercise of the discretion.

101    It is true that, at least in relation to the application of item 107 of the 2006 Rules the task is not one of indeterminate reference because sub-item 3(c) would confine the object of the task to the pharmacist who had approval under s 90 for the sole approved premises: cf Martin at 597.

102    But item 107 is applicable only to relocations to a rural locality. Other rules apply to relocation to other localities including urban localities and shopping centres: see items 108-112.

103    If an obligation of procedural fairness were to be owed to the pharmacist who holds a s 90 approval for the catchment area referred to in item 107, the same process of reasoning would apply in relation to relocations to the other localities. The criteria applicable to those localities are not easily amenable to a determination of the identity of the persons to whom notice would have to be given. For example, in urban localities there are likely to be large numbers of approved pharmacies within close proximity to each other. It would then be necessary to determine which ones fell within the catchment area affected by the proposed location.

104    Fourth, as the primary judge said at [22], the existence of a discretion given to the Minister in s 90D of the Act to give notice to “any other person” of the request, and to invite comments or provide information, suggests that no obligation to accord procedural fairness exists.

105    This is not an example of a power which is expressed in apparently discretionary terms which must be treated as giving rise to an obligation to exercise it, cf Julius v Bishop of Oxford (1880) 5 App Cas 214 at 222-223; Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 at 134-135. To read “may” as “must” in s 90D would lead to an unworkable administrative burden.

106    Fifth, it is not a question in the present case of finding plain words of necessary intendment to exclude the application of procedural fairness, or clear words to exclude its application: Annetts v McCann (1990) 170 CLR 596 at 598; Plaintiff S10/2011 at [44].

107    This is because it is first necessary to identify a sufficient interest to give rise to an obligation of procedural fairness before considering whether such an obligation is excluded by the terms of the statute.

108    Here, for reasons stated above, I do not consider that the interest which is relied upon as amounting to a sufficient statutory interest is one which is within the purview of interests that engage an obligation to accord procedural fairness.

109    Sixth, the decision in Yu is distinguishable from the present case.

110    The interest which was affected in Yu was not a mere economic interest but was statutory in nature because the effect of the exercise of the discretion under s 90A was to defeat an extant application for a second pharmacy in the special circumstances that came about as a result of the introduction of the 2011 Rules.

111    The Authority, and presumably the Minister, were aware of Mr Yu’s application. Indeed, the Authority had consented to an order, in proceedings brought by Mr Yu, setting aside the Authority’s recommendation in favour of the proposed pharmacy which was the subject of the s 90 application: see Yu at [25]-[27].

112    It follows, for the reasons set out above, that in my opinion the Minister did not owe KP&C an obligation of procedural fairness in considering the Mahonys’ request for a favourable exercise of discretion under s 90A of the Act.

No error of law in the application of s 90A(2)(a)

113    Under s 90A(2)(a) the Minister was required to be satisfied that the Secretary’s decision would result in “a community” being left without “reasonable access” to pharmaceutical benefits.

114    Mr Williams submitted that the Minister’s reasons for decision revealed an error of law because the Minister did not apply the statutory test. He pointed in particular to [22] of the reasons in which the Minister said:

“I was not satisfied that the decision of the Secretary’s delegate would not leave residents of Moree and the surrounding community with reasonable access …”.

115    The primary judge considered this statement to be merely an error of expression. He said at [73] that the Minister intended to say that she was satisfied that if a third pharmacy was not approved in Moree, the majority of readers would be left with reasonable access because they would have the effective services of only one, not two pharmacies.

116    Mr Williams submitted that the Minister’s statement was more than an unfortunate expression. Rather, it was said to be a complete inversion of the test stated in s 92A(2)(a).

117    In my opinion, upon a fair reading of the whole of the reasons, the relevant paragraph is to be read in the manner stated by the primary judge.

118    The Minister’s findings of fact addressed five subjects. The first was the likelihood that the “majority of residents of Moree” would “gravitate” to one or other of the pharmacies conducted by KP&C at Balo Street and Amaroo Drive: see [9]-[12] of reasons reproduced by the primary judge at [72].

119    The second was the close proximity of the Mahonys’ premises to three medical centres containing nine full time prescribing general practitioners: see [13] of the reasons.

120    The third subject was the location of the “next nearest approved pharmacy” outside of Moree. The Minister found the distance to be approximately 80 km: [14] of reasons.

121    The fourth was the population to pharmacy ratio. The Minister was informed by her Department that the population to sustain a pharmacy or a rural location was 4,000:1. The Minister was also informed by the Department that the population of Moree “and the surrounding district” was at least 11,339: see [15] of the reasons.

122    The fifth subject was a petition sent to the previous Minister which “highlighted the strong public interest” in the approval of an additional pharmacy in Moree: see [16] of reasons.

123    The Minister addressed each of these subjects in her reasons at [18]-[24]. Importantly, she was of the view, at [18], that the majority of the residents of Moree and the surrounding community would be likely to gravitate to the central commercial and shopping precinct, therefore giving them access to the only approved pharmacy located in that precinct, that is to say KP&C’s pharmacy at 64 Balo Street.

124    It seems to me that when [18] of the reasons, and the other matters addressed in [19]-[21] are read together, the Minister’s statement in [22] of her reasons is to be read as a statement that she was positively satisfied that the Moree community would be left without reasonable access to pharmaceutical benefits if the Mahonys’ pharmacy at Balo Street was not approved.

125    I am therefore of the view that the Minister applied the correct test and that she reached the necessary state of satisfaction required by s 90A(2)(a).

126    The wide meanings of “community” and “reasonable access” in s 90A(3) gave considerable latitude to the Minister. There was nothing to suggest that the opinions she formed were unreasonable.

No error of law in the application of s 90A(2)(b)

127    Section 90A(2)(b) required the Minister to be satisfied that, in addition to the reasonable access requirement stated in s 90A(2)(a), it was in the public interest to approve the application.

128    Mr Williams submitted that in her statement of reasons the Minister elided the expression “in the public interest” with “the public is interested” because the sole basis which she identified was the existence of the petition. Thus, he submitted that there was no independent consideration of the public interest, although he accepted that the petition was not an irrelevant consideration.

129    The primary judge accepted, correctly, that there is a distinction between what is in the public interest and what is of interest to the public: Johansen v City Mutual Life Assurance Society Ltd (1904) 2 CLR 186 at 188; Lion Laboratories Ltd v Evans [1985] 1 QB 526 at 553; Secretary, Department of Justice v Osland [2007] VCSA 96 at [90] – [91] per Maxwell P.

130    But it is apparent from his Honour’s reasons at [80]-[83] that he did not consider that the Minister had made an error of the type which is now suggested.

131    His Honour pointed out at [80] that there is an overlap between the tests of absence of reasonable access and the public interest stated in s 90A(2)(a) and s 90A(2)(b). Thus, as he went on to observe, the matters addressed at [9]-[16] and at [18]-[22], which dealt with the reasonable access question, are not to be quarantined from the assessment of the public interest arising from the petition.

132    The authorities to which the primary judge referred, including O’Sullivan v Farrer (1989) 168 CLR 210 at 216 and Osland v Secretary, Department of Justice (2008) 234 CLR 275 at [57], make it clear that the expression, “in the public interest” is of wide import. It is a discretionary judgment to be made by reference to undefined factual matters confined only to the extent that the subject matter, scope and purpose of the enactment may require.

133    The Minister did not take into account any extraneous considerations. She noted at [23] of her reasons that the petition had been sent to the previous Minister. That was a matter which the Minister was entitled to take into account in her consideration of the public interest.

134    The statement at [24] of the reasons is not to be read as an indication that she failed to take into account any matter other than the petition in coming to the view that approval of the Mahonys’ application satisfied the public interest test. The other matters were concerned with the question of reasonable access and all of them were relevant to both limbs of s 90A(2).

135    It follows in my opinion that the Minister did not make an error of law in her application of the public interest test under s 90A(2) (b) of the Act.

Conclusion

136    I agree with Pagone J that the appeal must be dismissed with costs.

Associate:

Dated:    20 November 2014

REASONS FOR JUDGMENT

LOGAN j:

137    I have had the particular benefit of reading in draft the reasons for judgment of Jacobson J and those of Pagone J.

138    Like the reasons of any officer of the Executive Government, those given by a Minister of State (Minister) for an administrative decision are not to be read narrowly and with an eye for error: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 282. Approaching the reasons given by the then Minister for Health (the Hon Tanya Plibersek) for her decision in this way, I agree with Jacobson J and Pagone J, for the reasons each gives, and thus also the learned primary judge, that the reasons exhibit no error of law in the construction and, subject to what follows, application, of the reasonable access and public interest criteria in s 90A(2)(a) and s 90A(2)(b) respectively of the National Health Act 1953 (Cth) (the Act).

139    Where I respectfully differ from Jacobson and Pagone JJ, and thus also the learned primary judge, is in respect of the issue as to whether, having regard to the text, subject matter, scope and purpose of s 90A and the context in which that section is found in the Act, the Minister was obliged, in the circumstances of this case, to offer the appellants an opportunity to be heard, prior to making her decision. In my view, she was obliged to extend to them such an opportunity. This she did not do. Accordingly, her decision was affected by jurisdictional error.

140    The background facts and pertinent statutory provisions are summarised by Jacobson J and Pagone J in their respective judgments. I gratefully adopt those summaries. So doing allows me to move at once to setting out the basis for why I have come to a different view on the issue of whether the Minister was obliged to afford the appellants procedural fairness.

141    It follows from s 90A(1)(b) of the Act that, where the Minister has decided to consider a request for the exercise of the personal discretion vested in her by s 90A(2), the pharmacist(s) concerned (here, the second and third respondents) will already have made and had rejected by the Secretary to the Minister’s Department an application for approval to supply pharmaceutical benefits at particular premises. That rejection will, necessarily, have been made on the basis that the application by those pharmacists in respect of those particular premises did not comply with the requirements of the relevant rules determined by the Minister under s 99L of the Act.

142    The scheme found in Div 2 of Pt VII of the Act for the approval of pharmacists to supply pharmaceutical benefits at (and, having regard to s 90(5AA), “from”) particular premises is summarised by Jacobson and Pagone JJ. How the scheme came to assume its contemporary form is, as their Honours record, notably described by French J (as his Honour then was) in French J in Pharmacy Restructuring Authority v Chatfield (1993) 43 FCR 418 at 429, 433-434 and by Hill J in Smoker v Pharmacy Restructuring Authority (1994) 53 FCR 287 at 292-295.

143    For the purposes of the scheme, a “pharmaceutical benefit” is a drug which is the subject of a declaration or determination made under s 85 of the Act: s 84 definition. Those entitled to receive such a benefit are persons who are, or are to be treated as, an eligible person within the meaning of the Health Insurance Act 1973 (Cth) (Health Insurance Act) and are receiving medical treatment by a medical practitioner (or treatment by certain other allied professions) as detailed in s 86 of the Act. An Australian residency requirement is introduced via the “eligible person” eligibility criterion found in the Health Insurance Act. Exceptions to this residency requirement are to be found in s 86 of the Act but it is not necessary to detail these.

144    The entitlement to receive a pharmaceutical benefit under Part VII of the Act is an entitlement to receive that benefit, ie the drug, “without the payment or furnishing of money or other consideration other than a charge made in accordance with section 87”: s 86(1) of the Act. In s 87 of the Act is to be found provision for the demanding by the supplier of the pharmaceutical benefit of no more than a designated co-payment by the person otherwise entitled to receive that benefit. Under the scheme, apart from the receipt of this co-payment, the pharmacist (or other designated person) who supplies a person with a pharmaceutical benefit looks to the Commonwealth for the receipt of a payment in respect of the supply of that benefit: s 99 of the Act. In order to receive such a payment from the Commonwealth, the pharmacist concerned must be an “approved pharmacist” (with like approval necessary for other professionals who supply a benefit): s 99(2) of the Act.

145    The approval of a pharmacist is, by s 90 of the Act, linked to an approval of that pharmacist to supply pharmaceutical benefits at (including “from”) particular premises. The appellants held such approvals at the time when the Minister came to make her decision. The Minister’s decision under s 90A had the effect of substituting for the Secretary’s rejection of their approval application an approval of the second and third respondents in respect of particular premises.

146    In order to be approved, the pharmacist concerned must, by definition (s 84) be registered to practise pharmacy under the law of the State concerned and, further, by s 90(4), the premises concerned must be premises at which the carrying on of a pharmacy business is permitted under State law.

147    This then is the contemporary scheme of which s 90A forms part. In terms of context, it is helpful also to recall how that scheme has evolved from its original conception.

The scheme found in Part VII of the Act is the latest manifestation of an exercise of the legislative power conferred on the Parliament by s 51 (xxiiiA) of The Constitution. That head of Commonwealth legislative power was inserted into the Constitution by amendment in 1946, following a successful referendum which was, in turn, a sequel to the failure, for want of valid legislative competence, of an earlier Commonwealth pharmaceutical benefits scheme, found in the Pharmaceutical Benefits Act 1944 (Cth): Attorney-General (Victoria); ex rel Dale v Commonwealth (1946) 71 CLR 237.

148    After the amendment of the Constitution, a further attempt to establish a scheme for the provision of Commonwealth pharmaceutical benefits was made by Parliament by the enactment of the Pharmaceutical Benefits Act 1947 (Cth) (Pharmaceutical Benefits Act 1947). This scheme, as further amended in 1949, was also the subject of challenge as to its validity but, save in respect of a severable provision, inserted by amendment in 1949, which required that medical practitioners use a Commonwealth supplied form when writing out a prescription, that challenge to the scheme failed: British Medical Association v Commonwealth (1949) 79 CLR 201.

149    Essential features of that further and largely successful attempt were provision for the supply to persons, on demand and following medical prescription in the course of treatment, by pharmacists who chose to be registered in respect of particular premises under the legislation of a range of drugs (termed pharmaceutical benefits) as set out in a “Commonwealth Pharmaceutical Formulary” made under that legislation. In return for supplying that drug without charge (save for such prescribed charge, if any) to that person, the registered pharmacist became entitled to receive a payment from the Commonwealth under the legislation. The amount of that payment was fixed in a “Pharmaceutical Tariff” made under that legislation. Even though it was well recognised by the High Court that the legislation created “a situation of economic, business or practical pressure which constrains a man to act in a way desired by the legislature” (per Dixon J at 268), that did not tell against the validity of the scheme for participation in it by, presently materially, a pharmacist remained voluntary.

150    The Pharmaceutical Benefits Act 1947 was repealed upon the enactment of the Act but that Act retained, in the scheme for which it provided, the essential features of the scheme found in that earlier legislation.

151     Since its original enactment of the Act, that scheme has evolved such that there is an actuality (as opposed to a hitherto potentiality) of a co-payment and, more latterly, by elaborate provision for the regulation of the locational and numeric distribution of premises from which pharmaceutical benefits may permissibly be supplied. That elaborate provision is found in the rules determined by the Minister under s 99L of the Act.

152    Notably for present purposes, it has been from its inception and remains an essential feature of the scheme for the provision of pharmaceutical benefits that approval of a pharmacist under the Act and its predecessor has been linked to particular premises.

153    Participation in the scheme by a pharmacist remains voluntary but the situation of “economic, business or practical pressure” conducive to volunteering also remains. It is, in theory, lawfully possible for a pharmacist with the requisite State registrations to carry on a pharmacy business from premises of choice but, absent approval of that pharmacist and those premises under and for the purposes of the Act, that pharmacist will not be able to supply to a customer at or from those premises drugs constituting pharmaceutical benefits (as defined) for a price which is no more than the statutory co-payment and receive a supplementary payment from the Commonwealth in respect of that supply. Unless an unapproved pharmacist is able in any event to supply that drug at no more than a price equal to the co-payment and to conduct a viable business by so doing, absence of approval under the Act will, inevitably, put the pharmacy business concerned at a major competitive disadvantage, relative to one conducted by an approved pharmacist from approved premises. That disadvantage will extend not just to the supply of drugs but also to the related opportunity to profit from the sale of, to those attending for the supply of the drug, the myriad of “front of house” goods which common experience instructs is a feature of the contemporary conduct of a pharmacy business. Such is the nature of the “economic, business or practical pressure” to participate in the scheme.

154    Self-evidently, both the actuality of co-payment and the provision in respect of the number and distribution of approved premises are responses by the Parliament to a concern as to the cost to the consolidated revenue of a scheme for the provision of pharmaceutical benefits.

155    A necessary consequence of the “economic, business or practical pressure” which has always been a feature of the scheme in conjunction with the present close regulation of the number and location of approved premises is that the approval of a pharmacist (or pharmacists) to supply pharmaceutical benefits from particular premises confers upon that pharmacist a valuable right, exercisable to the exclusion of others, at or from a particular location. The extent of the exclusion is as designated in the ministerially determined rules.

156    The worth of the right to supply pharmaceutical benefits from particular premises is buttressed by the exemption, found in s 90(3AA) of the Act, from the obligation of the Secretary, otherwise created by s 90(3A), to refer applications for approval of pharmacists in respect of particular premises to the Australian Community Pharmacy Authority (ACPA) (and thus to assessment of the application by the ACPA for compliance with the rules determined by the Minister under s 99L). The exemption found in s 90(3AA) is engaged where the application for an approval arises out of a change in the ownership of a pharmacy situated at particular premises if the change results or resulted from:

(a)    the sale of the pharmacy; or

(b)    the acquisition, following the death of a person who was the owner or one of the owners of the pharmacy, of that person's interest in the business of the pharmacy; or

(c)    a change in the constitution of a partnership that owned the pharmacy.

157    The effect of the exemption is that, in the circumstances set out in s 90(3AA) of the Act, parties to a transaction in respect of the pharmacy business may proceed on the basis that, even though an incoming pharmacist will have to seek approval to supply pharmaceutical benefits from particular premises, it is a given that the locational component of the approval (the particular premises) is already settled and will not be subjected afresh to assessment by the ACPA.

158    The consequence, in my view, is that an approval of a pharmacist to supply pharmaceutical benefits from particular premises is more than a mere personal right but, instead, has a proprietary character: 2Day FM Australia Pty Ltd v Commissioner of Stamp Duties (NSW) (1989) 20 ATR 1131 at 1135-1136.

159    Particular reliance was placed by the respondents upon Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589 (Martin), a case which the learned primary judge considered to be indistinguishable and binding upon him. This reliance is, with respect, misplaced. Martin concerned the making of a decision by the ACPA’s predecessor as a precursor to the making of a recommendation in respect of a decision to be made by the Secretary as to whether to approve under s 90 a pharmacist in respect of particular premises.

160    It is not necessary in this case to determine whether Martin was correctly decided and the appellants did not in any event seek to challenge its correctness. When a pharmacist chooses to volunteer to participate in the scheme by applying for approval that pharmacist necessarily accepts that his or her application and those of others will each be measured by reference to the ministerially determined rules and result in a number and distribution of approvals in accordance with those rules. That pharmacist will know that the extent of the rights conferred by his or her approval can be no less but also no more than what the application of those rules yields. Viewed against that background, that Martin holds that the holder of an existing approval has no right to be heard in respect of an application by another for approval is, with respect, unremarkable.

161    This case is quite different. In this case, there has already been an application of the elaborate, ministerially determined rules which has resulted in an approval of the premises from which the pharmacy business which the appellants came to acquire is conducted. That approval of those premises, or at least the assurance (in light of the operation of s 90(3AA)) that there was no need for the approval application to be referred to the ACPA for assessment against the rules was one of the bundle of assets they acquired which permitted the conduct of the pharmacy business. The exclusion entailed in the application of the ministerially determined rules gave value to that pharmacy business for both vendor and purchaser at the time of its sale.

162    What occurred in this case was not the approval of another pharmacist at particular premises by the ordinary application of those ministerially determined rules. Rather, notwithstanding an application for approval in respect of particular premises which had failed by virtue of that ordinary application of those rules, the Minister chose to exercise the separate and extraordinary personal discretion so as nonetheless to grant an approval to the second and third respondents in respect of those premises. That exceptional ministerial approval intruded upon the exclusivity which the appellants had hitherto enjoyed as a consequence of the application of the rules.

163    The Minister’s decision could only be made if, materially, the Minister were satisfied that the Secretary’s decision in respect of the second and third respondent’s application for approval “will result in a community being left without reasonable access to pharmaceutical benefits supplied by an approved pharmacist” namely, the appellants. This feature, the appellants submitted, distinguished the present case from Martin. I agree.

164    The respective respondents conceded, correctly, that the existing access by the community to pharmaceutical benefits supplied by the appellants at or from their approved premises was a relevant consideration for the Minister in respect of the exercise of her discretion under s 90A. So much follows by necessary implication from the language of s 90A.

165    Accepting this and that an approval is and always has been linked a particular pharmacist with particular premises, there is something quite disconcerting about a construction of s 90A of the Act which yields an outcome whereby a professional person possessed of a valuable right may be subject to a conclusion by a Minister of State that he or she is not providing reasonable access to a community to pharmaceutical benefits, without there being any obligation on the part of the Minister to afford that person an opportunity to be heard before such a conclusion is reached. That conclusion does not just diminish the worth of a proprietary right. It also entails a finding about how that right is being adapted and employed by its holder to meet the demand of that community for the supply of pharmaceutical benefits. It is to be remembered that the right confers the ability to supply pharmaceutical benefits both “at” as well as “from” particular premises. There is, in my view, a reputational element entailed in a Ministerial conclusion under s 90A.

166    Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 (Ainsworth) is a case in point. That case confirmed, at 576, what Annetts v McCann (1990) 170 CLR 596 at 598 had made evident namely, “that a duty of procedural fairness arises, if at all, because the power involved is one which may ‘destroy, defeat or prejudice a person’s rights, interests or legitimate expectations’”. The respondents accepted this principle but denied that it had application in the present case, because only the economic interests of the appellants were affected. I disagree.

167    The nature of the power exercised by the Minister under s 90A of the Act was not merely one which conferred a right on the second and third respondents. That power could only be exercised and that right conferred if, materially, a conclusion were reached about the existing supply of pharmaceutical benefits to a community by the appellants. There is a reputational element in the Minister’s conclusion under s 90A(2)(a). And, as Mason CJ, Dawson, Toohey and Gaudron JJ observed in Ainsworth at 577, “the law proceeds on the basis that reputation itself is to be protected”. Reputation extends to business or commercial reputation: Ainsworth at 578. Here, because of the link under the Act between the approval of a pharmacist with the approval of particular premises, there is a necessary intermingling of effect on both personal as well as business or commercial reputation in the Minister’s conclusion.

168    Even if, contrary to my view, the exercise of the Minister’s power under s 90A does not, necessarily, have a reputational impact on the holder of an existing approval, it does not follow that such a person is not entitled to be heard prior to the exercise by the Minister of that power. In Kioa v West (1985) 159 CLR 550 (Kioa v West), in the course of explaining why he had come to the view that his earlier expressed “proprietary” or “financial” qualification on when an obligation to afford procedural fairness in the exercise of a statutory power was to be presumed was erroneous, Brennan J (as his Honour then was) observed (at 619):

The presumption that the principles of natural justice condition the exercise of a statutory power may apply to any statutory power which is apt to affect any interest possessed by an individual whether or not the interest amounts to a legal right or is a proprietary or financial interest or relates to reputation. It is not the kind of individual interest but the manner in which it is apt to be affected that is important in determining whether the presumption is attracted.

If a power is apt to affect the interests of an individual in a way that is substantially different from the way in which it is apt to affect the interests of the public at large, the repository of the power will ordinarily be bound or entitled to have regard to the interests of the individual before he exercises the power. No doubt the matters to which the repository is bound or is entitled to have regard depend on the terms of the particular statute and, if there be no positive indications in its text, the subject-matter, scope and purpose of the statute must be looked at to determine whether the repository is bound or is entitled to have regard to individual interests: Water Conservation and Irrigation Commission (N.S.W.) v. Browning. When the repository is bound or is entitled to have regard to the interests of an individual, it may be presumed that observance of the principles of natural justice conditions the exercise of the power, for the legislature can be presumed to intend that an individual whose interests are to be regarded should be heard before the power is exercised. Therefore the presumption applies to any statutory power the exercise of which is apt to affect the interests of an individual alone or apt to affect his interests in a manner which is substantially different from the manner in which its exercise is apt to affect the interests of the public. Of course, the presumption may be displaced by the text of the statute, the nature of the power and the administrative framework created by the statute within which the power is to be exercised.

[Footnote reference omitted]

This passage encapsulates the modern position in relation to when an obligation to afford procedural fairness (or natural justice, to use the older term) in the exercise of a statutory power arises. His Honour’s statement as to the presumption that the principles of natural justice apply has recently been expressly approved by a majority of the High Court: Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at [66].

169    The appellants’ interest in relation to the exercise of the statutory power under s 90A is greater than that of an ordinary member of the public. The criterion found in s 90A(2)(a) satisfaction of which is a condition precedent for the exercise of that power underscores that the appellants’ interest is greater. That, in the exercise of that power, the Minister is entitled, by s 90D(1)(b) of the Act, to gather information from other persons prior to the making of a decision under s 90A does not carry with it an implication that the Minister is not obliged, having regard to s 90A(2)(a), to offer the holder of the existing approval an opportunity to be heard.

170    A touchstone which commended itself to Brennan J in Kioa v West at 621 as to what would ordinarily be sufficient to attract a procedural fairness obligation in the exercise of a statutory power was whether the interest, even if not a legal right, would be sufficient to confer standing to seek the review of a decision made in the exercise of that power in the event that it was exercised without adopting the procedure of extending an opportunity to be heard to the holder of that interest. Once again, by this measure, it seems to me that persons who are the subject of a ministerial conclusion that they are not at or from particular premises providing reasonable access to pharmaceutical benefits would have standing to seek the review of the decision that entailed that conclusion. Such persons are admittedly competitors of a beneficiary of a favourable exercise of the Minister’s discretion under s 90A but their interest is, having regard to the text of s 90(2)(a) in particular, even greater than the competitors found to have standing in Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247, esp at [48] or the unsuccessful tenderer regarded in Hawker Pacific Pty Ltd v Freeland (1983) 79 FLR 183 at 187 as a “person aggrieved”.

171    It was put that acceptance of the proposition that the Minister was obliged to afford the appellants procedural fairness would occasion difficulties in the administration of s 90A given that, in the application of the rules in other circumstances, for example in an intensely settled, large urban environment, rather than in Moree, which is a service centre for a rural community, there may be many approved pharmacists to whom the Minister would be obliged to afford an opportunity to be heard. This was said to tell against the implication of any obligation to afford an opportunity to existing approval holders.

172    Yet the class of persons to whom the Minister would be obliged to afford procedural fairness must necessarily be finite and defined by those holding approvals within the metes and bounds of the location which the Minister chooses on the basis of the information to hand to define as a “community”. In order favourably to exercise the discretion under s 90A, the Minister must, materially, reach a conclusion that the rejection of an approval application by the Secretary will result in that community being left without reasonable access to pharmaceutical benefits by the approved pharmacist(s) already supplying those benefits to that community. The number of those existing pharmacists will be dependent upon the numeric and locational distribution within that community of existing approved pharmacists according to the ordinary application of the rules made by the Minister under s 99L. In some cases, that may mean that there is but one pharmacist at one location; in others, depending on the particular application of those rules, there may be multiple pharmacists at multiple locations. But all of the members of that class will necessarily be affected by a conclusion that the criterion in s 90(2)(a) of the Act has been satisfied and the membership of that class will always be readily identifiable from the records of the Minister’s own department, once the metes and bounds of the community concerned are determined. The extent of the class to whom the Minister is obliged to afford procedural fairness will necessarily be related to the circumstances of a particular case. That is no reason to imply an intention to displace the presumption as to the affording of procedural fairness.

173    It is for these reasons that I would allow the appeal, quash the Minister’s decision and remit the matter to her successor for further consideration according to law.

Associate:

Dated:    20 November 2014

REASONS FOR JUDGMENT

PAGONE J

174    This appeal is from a decision by the first respondent (“the Minister”) that she was not obliged to afford the appellants with a hearing before deciding a request by the second and third respondents (“the Mahonys”) under s 90A of the National Health Act 1953 (Cth) (“the Act”). The appellants contend that they were entitled to be heard before the first respondent (“the Minister”) decided the request the Mahonys had made under s 90A. The appellants also contend that the Minister erred in the interpretation of the expressions “a community being left without reasonable access to pharmaceutical benefits” and “in the public interest” in ss 90A(2)(a) and (b) of the Act when deciding the Mahonys’ application in their favour.

175    The Mahonys are pharmacists who had approval under the Act to supply pharmaceutical benefits from premises at Calala. In 2010 and 2011 they made six unsuccessful applications under s 90 of the Act to “relocate their approval from Calala to premises in Moree”. The scheme administered under the Act contemplates relocation, as does, specifically, Item 107 of Schedule 1 of the National Health (Australian Community Pharmacy Authority Rules) Determination 2006, but the formal mechanism for relocation is effected by (a) requesting the secretary to cancel an existing approval under s 98(1) and (b) seeking a new approval under s 90 or s90A. On 16 May 2011 the Mahonys had opened a pharmacy business at 2/215 Balo Street Moree and sought to have those premises approved from which to supply pharmaceutical benefits. Those applications fell to be determined by reference to Item 107 of the 2006 Rules which, amongst other conditions, required that the catchment area for the proposed premises contain only one approved premises. The catchment area, however, was found to contain two existing approved pharmacies in Moree which had both been owned by a Mr Francis. One was located at 64 Balo Street Moree, about 440 metres from the business of the Mahonys, and the other was located about two kilometres away at 100 Amaroo Drive Moree. The Mahonys had unsuccessfully argued that the single ownership of the two existing pharmacies should be treated as being only one pharmacy within the relevant catchment area for the purposes of Item 107 with the consequence (had the argument succeeded) that the Mahonys’ application would not have been prevented by Item 107. The Mahonys’ failure of their application next led the Mahonys to seek a favourable exercise by the Minister of the discretion under s 90A(2) by request made on 9 September 2011. On 1 November 2011 Mr Francis sold his two pharmacy businesses to the appellants. On 29 November 2011 the Minister decided to consider the request which the Mahonys had made under s 90A to substitute a different decision, and on 27 February 2012 the Minister decided the request in favour of the Mahonys under s 90A. A statement of reasons was provided by her on 13 July 2012 during the course of these proceedings at first instance. The appellants complained that neither they, nor Mr Francis, had been given an opportunity to be heard on the request under s 90A by the Mahonys to the Minister.

176    Part VII of the Act establishes a scheme for the subsidy by the Commonwealth for the provision of pharmaceutical benefits. Section 90(1) empowers the Secretary to approve the supply of pharmaceutical benefits at particular premises subject to the other provisions of s 90. The Secretary, since 1990, has been required to refer applications under that section to the authority now known as the Australian Community Pharmacy Authority: see Pharmacy Restructuring Authority v Chatfield (1993) 43 FCR 418, 429, 433-4; Smoker v Pharmacy Restructuring Authority (1994) 53 FCR 287, 293-4. Section 99K provides that the function of the Authority is to consider applications under s 90 and to recommend whether or not an applicant should be approved by the Secretary under that section in respect of particular premises or whether any conditions should be attached to approval. The authority is required, by s 99K(2), in making recommendations, to comply with the relevant rules determined by the Minister under s 99L. The National Health (Australian Community Pharmacy Authority Rules) Determination 2006, which contained Item 107, had been made by the then Minister under s 99L(1) and were, therefore, required to be taken into account by the Authority.

177    That scheme was modified in 2006 to give effect to a provision in the fourth community pharmacy agreement made between the Commonwealth and the Pharmacy Guild of Australia. The agreement contemplated that the Minister could substitute a decision of the Secretary where that decision resulted in an unmet community need for pharmacy services. Section 90K gives effect to that agreement and applies where the Secretary has rejected an application made under s 90 after 1 July 2006 on the basis that the application did not comply with the requirements of the relevant rules determined by the Minister under s 99L. The criteria for the Minister to substitute a decision for that of the Secretary is found in s 90A(2) and (3) which provide:

(2)    The Minister may substitute for the Secretary's decision a decision approving the pharmacist for the purpose of supplying pharmaceutical benefits at the particular premises if the Minister is satisfied that:

(a)    the Secretary's decision will result in a community being left without reasonable access to pharmaceutical benefits supplied by an approved pharmacist; and

(b)    it is in the public interest to approve the pharmacist.

(3)    For the purposes of subsection (2):

community means a group of people that, in the opinion of the Minister, constitutes a community.

reasonable access, in relation to pharmaceutical benefits supplied by an approved pharmacist, means access that, in the opinion of the Minister, is reasonable.

Section 90A(4) provides that the power given to the Minister under s 90A(2) may only be exercised by the Minister personally and only on the request by a pharmacist under s 90B. The latter provision gives a pharmacist a right to request the Minister to exercise the power under s 90A(2) if s 90A applied to a decision made by the Secretary under s 90 rejecting the application by a pharmacist.

178    The principal claim by the appellants is that they were entitled to be heard in the Minister’s consideration of the application which had been made by the Mahonys under s 90A. The primary judge held that the appellants were not entitled to be heard in the application under s 90A made by the Mahonys and gave four reasons for that conclusion. The first was that the existence of a discretion in s 90D for the Minister to give notice and invite comments, information or documents relevant to a request made by a pharmacist under s 90A indicated that the legislature intended to exclude a right for a stranger to an application to be heard in applications under s 90A. The second was the existence of an established line of authority to the contrary of the appellants’ contention. The third was that recent decisions suggesting the existence of a duty to be heard provided no foundation for distinguishing earlier binding authority. Finally, that the decision of the Full Court in Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589 was indistinguishable and binding upon him.

179    The appellants accepted the correctness of the decision in Martin’s case but contended that it was distinguishable and that it did not apply to the Minister’s consideration of the request made under s 90A by the Mahonys. The Full Court in Martin had decided that the Pharmacy Restructuring Authority was not obliged by the principles of procedural fairness to notify and hear a pharmacist in considering the application by another pharmacist for relocation under s 90(1). The Court said at 597:

There are cases where a statutory authority, charged with the duty of considering an application to use premises for a particular purpose, is expressly obliged to publicise the receipt of the application and to consider objections. Liquor legislation is a well known example. There are cases where such an obligation is implied by the scope and purpose of the legislation. But we do not know of any general principle to the effect that a statutory authority charged with the duty of considering an application is obliged by the principles of procedural fairness to notify and hear everybody whose economic interests may be damaged by an approval. To promulgate a general rule imposing such an obligation would be to visit upon statutory decision-makers a potentially massive task of indeterminate reference. In the present case, nothing is to be implied from the scope and purpose of the Act. The relevant provisions are not concerned with minimising competition in the pharmaceutical industry but with reducing the Commonwealth's financial burden in providing pharmaceutical benefits while maintaining an acceptable level of community service. In the absence of authority, we are not prepared to hold that, if it had a discretion about its decision, the Authority had any obligation to notify or hear pharmacists, non-parties to the application for approval, merely because an approval might commercially damage them.

The appellants do not contend that the decision in Martin should not be followed, or that the passage quoted above is an incorrect statement of the relevant principle, but, rather, that what was decided and said in the context of s 90 did not apply in relation to s 90A by the Mahonys.

180    In Martin the pharmacist who was seeking to be heard was held not to have a right to be heard in the application which had been made by another pharmacist because the former had only an economic interest in the outcome of the other pharmacist’s application. In that context the Court refused to hold that the authority had an obligation to notify or hear a non-party to an application for approval. That reasoning applies with equal force to an application under s 90A and is consistent with the view adopted in Alphapharm Pty Ltd v Smithkline Beecham (Australia) Pty Ltd (1994) 49 FCR 250 which was concerned with the sufficiency of an interest to give standing to sue.

181    The appellants contended, however, that their interest was greater than a merely economic interest because, they contended, they had statutory entitlements to conduct pharmacies that prevented the Mahonys from obtaining approval under s 90. The appellants’ position in that regard was initially referred to in argument as a “pre-emptive right”, but it was correctly conceded by counsel for the appellants that they did not have an entitlement to pre-empt or prevent the Mahonys from obtaining the approval they sought by a favourable exercise of discretion under s 90A. The position of the appellants was, rather, that their entitlement to supply pharmaceutical benefits from their premises in Moree carried with it a consequence for others by operation of Item 107, but that the consequence was not part of the bundle of rights exercisable by the appellants as against any applicant for approval under the Act.

182    The circumstances in which a stranger to the application of another has the right to be heard in that application depends upon a careful consideration of the interest of the stranger. The right to afford procedural fairness is not limited to a person who can show that a legal right may be adversely affected by a decision in favour of another, but may extend to other interests, not amounting to legal rights, which may be affected by the decision. The majority in Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 said at 658-9:

In Kioa v West Brennan J observed and, with respect, we agree:

“The presumption that the principles of natural justice condition the exercise of a statutory power may apply to any statutory power which is apt to affect any interest possessed by an individual whether or not the interest amounts to a legal right or is a proprietary or financial interest or relates to reputation.”

Earlier in those reasons, Brennan J had said:

“There are interests beyond legal rights that the legislature is presumed to intend to protect by the principles of natural justice. It is hardly to be thought that a modern legislature when it creates regimes for the regulation of social interests – licensing and permit systems, means of securing opportunities for acquiring legal rights, schemes for the provision of privileges and benefits at the discretion of Ministers or public officials – intends that the interests of individuals which do not amount to legal rights but which are affected by the myriad and complex powers conferred on the bureaucracy should be accorded less protection than legal rights.”

Brennan J also made the specific point that the interests which the exercise of a power of deportation are apt to affect are such as tend to attract the protection of the principles of natural justice.

The Act in its present form reflects a legislative awareness of what was decided in Kioa v West. This is apparent from provisions (eg, ss 51A, 357A, 422B) which specify what is said to be an exhaustive statement of the requirements of natural justice, and those (eg, ss 500A(11), 501(5), 501A(4)) which specify that the rules of natural justice do not apply to certain decisions.

In Kioa Brennan J also stated his agreement with the proposition that the interest which tends to attract the protection of the principles of natural justice may be equated with the interest which, if affected, gives “standing” at common law (and, one might add, in equity), to seek a public law remedy. This relationship is illustrated by the point made in the Offshore Processing Case that each plaintiff had a real interest in raising the questions to which the declaratory relief went. It may be added that the term “standing” is but “a metaphor to describe the interest required, apart from a cause of action as understood at common law, to obtain various common law, equitable and constitutional remedies”. Further, in federal jurisdiction, questions of standing are subsumed within the constitutional requirement of a “matter”. The present cases, of course, engage the exercise of federal jurisdiction.

(Footnotes omitted).

These passages draw attention to the importance of the identification of the interest relied upon in a claim by a stranger to be heard on an application by another, and that there is not an exact correlation between an interest which will be sufficient to give a person standing to sue to enforce a public duty and an interest which will be sufficient to give rise to an entitlement to be heard. In Bateman’s Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 a majority of the court expressed the view at 266 [48] that “the circumstance that [a] plaintiff conducts commercial activities in competition with those which it seeks to restrain is not necessarily insufficient to provide it with a sufficient interest in the subject matter of the action” which it had commenced. In that case the court held that the Aboriginal Community Benefit Fund had an interest to ensure that the activities of Bateman’s Bay Local Aboriginal Land Council observe statutory limitations. In that case the potential of severe detriment to the business of the fund was the special interest they had in ensuring that the Land Council observed the statutory limitations which had been imposed. However, it does not follow that a potential adverse impact of a decision in favour of a person upon the business of another person carries with it a right of the latter to be heard in an application by a potential competitor in the competitor’s application for a licence.

183    The interest of the appellant in this case is the authorisation to supply pharmaceutical benefits from two premises in Moree. That interest is unaffected by the grant of approval to the Mahonys, or to any other person, except to the extent that the supply of pharmaceutical benefits by others might have an economic impact upon the profits which may flow to the appellants directly from the supply of pharmaceutical benefits or indirectly from the supply of other products from their premises. The protection of their commercial interests is not within the scope and purpose of the Act or of the Scheme established by Part VII of the Act. The Full Court in Martin observed that the relevant provisions were not concerned with minimising competition in the pharmaceutical industry but with reducing the Commonwealth’s financial burden in providing pharmaceutical benefits while maintaining an acceptable level of community service. The introduction of s 90A has not altered the correctness of that view, nor is s 90A itself directed to promoting, limiting or in any way concerned with, the competitive supply of pharmaceutical benefits as between competitors. The purpose of s 90A can be seen from the matters the Minister is to be satisfied about before making a decision under s 90A(2), namely, whether the adverse decision by the Secretary under s 90 resulted in a community being left without reasonable access to pharmaceutical benefits supplied by an approved pharmacist and that it is in the public interest to approve a pharmacist seeking approval. The power conferred by s 90A(2) is designed to further the objects of the scheme in the Act by ensuring reasonable access to pharmaceutical benefits in the public interest and operates where the scheme is found to be inadequate by reference to the only two criteria stated in the provision: neither is concerned with the economic or commercial interest of an existing approved pharmacist whose economic interest might be affected by approval of another pharmacist within the same catchment area.

184    The rights conferred upon an approved pharmacist, such as the appellants, do not include a right to exclude any other pharmacist seeking approval under s 90A. The rights given to the appellants were no more than the rights to supply pharmaceutical benefits from specified premises and did not include any right that anyone else be excluded from approval to supply pharmaceutical benefits from any other premises. The Act is concerned not with the regulation of economic interests but with the orderly supply of pharmaceutical benefits attracting the subsidy paid by the Commonwealth. His Honour was, therefore, correct to apply the decision of the Full Court in Martin and not to apply the reasoning of Jessup J in Yu v Minister for Health (2013) 216 FCR 168 or of Jagot J in Hanna v Minister for Health [2013] FCA 303 to the extent that they might be thought to have departed from the decision in Martin.

185    The facts and issues in Yu were, however, quite different from those in Martin, and from those in this appeal, because of the unusual circumstances considered in Yu which had been brought about by the commencement of the 2011 Rules. In that case the pharmacist seeking to be heard in the application of another was a pharmacist whose statutory right would have been wholly extinguished if the other application by the other pharmacist was successful. His Honour explained at [36]:

In my opinion, the judgment of the Full Court in Martin is distinguishable, and does not govern the disposition of the present case, because here the applicant had an interest greater than the economic one of a competing pharmacist to which their Honours referred in the passage extracted from that case above. In the unusual circumstances brought about by the commencement of the 2011 Rules, there was to be one, and one only, additional pharmacy approved for the town of Kilmore. As someone who had applied to be that approved pharmacist, the applicant had an interest which was defeated upon the Minister giving approval to the fourth respondents’ application under s 90A of the NH Act. That interest had a statutory, and not merely an economic, source. It was an interest which existed whether or not the Minister was aware of the applicant’s application at the time of making her decision, but, as it happened, she was so aware, as she had been notified of that application in the departmental minute to which I have referred. In my view, the applicant had a direct interest in the disposition of the matter which came before the Minister under s 90A and had, therefore, a prima facie right to be accorded procedural fairness in relation to that decision.

The interest in question of the applicant in Yu was, therefore, the statutory right to supply pharmaceutical benefits which would wholly disappear if the application of the other pharmacist succeeded. That interest was a statutory right which would be lost if the application of the other pharmacist succeeded. That is not the same as the position of the appellants in this case whose statutory right to supply pharmaceutical benefits at their premises would not be affected in any way (other than from the potential economic impact on a competitor) by an approval given by the Minister to the Mahonys. The interest of the appellants, unlike that in Yu, had only an economic source.

186    The primary judge was also correct not to apply the broader propositions said to have been enunciated by Jagot J in Hanna to the extent that her Honour considered at [49] that the decision in Yu had been more broadly “conditioned on the observance of procedural fairness”. Yu is not authority for the proposition that s 90A(2) is so conditioned but, more narrowly, that in the circumstances arising in Yu the Minister was obliged to hear a pharmacist whose statutory approval would necessarily be lost if the Minister approved an application of another pharmacist. It was the particular circumstances in that case that gave the applicant in Yu and interest that required the Minister to hear the pharmacist as a stranger in another’s application and not because there was to be implied into s 90A(2) a general requirement that any pharmacist whose economic interest might be affected by the approval of another pharmacist be heard in the latter’s application under s 90A(2).

187    It is, therefore, unnecessary to consider the errors of law which the appellants alleged were revealed by the Minister’s decision. The primary judge, however, considered it desirable to say something about those submissions and it may be desirable to take the same course in these reasons.

188    The appellants submitted that the reasons given by the Minister for her decision disclosed error in respect of each of the two matters she was required to take into account in the exercise of the power under s 90A. The Minister’s reasons for her decision, and the material facts found by her, were set out as follows:

Findings on material questions of fact

9.    Based on the evidence set out in the ‘Minute to the Minister’ of 23 February 2012, from David Learmonth, Deputy Secretary, Departmental Executive, I found that there were two existing pharmacies in Moree. These pharmacies are located at 64 Balo Street, Moree and Shop 2, 100 Amaroo Drive, Moree, located 440 metres and 1.9 km by straight line from the proposed premises respectively.

10.    I found, based on a map of the town of Moree which identified the location of the two existing approved pharmacies and the proposed premises, colour photographs of the area surrounding the existing approved pharmacy at Shop 2, 100 Amaroo Drive, Moree, and fact sheets on the services and facilities in the area that:

a)    there is a convenience store, a news agency and a tavern trading nearby,

b)    the Moree Secondary College and a childcare centre are also located nearby, and

c)    the Moree Airport is located 2.8 km from this pharmacy.

11.    Based on the limited community facilities and commercial attractions near the existing approved pharmacy at Shop 2, 100 Amaroo Drive, Moree, I found that the majority of the residents of Moree and the surrounding community would be unlikely to be drawn, and therefore would not gravitate, to this area.

12.    I found that the majority of residents in Moree and the surrounding districts would be likely to gravitate to the central commercial and shopping precinct of Moree. The other existing approved pharmacy at 64 Balo Street, Moree, is located in this central commercial and shopping precinct and therefore the residents of Moree and the surrounding community would be likely to gravitate to this pharmacy.

13.    I found that the proposed premises is within close proximity to three medical centres, containing a combined total of approximately nine full time equivalent prescribing general practitioners.

14.    I also found that the next nearest approved pharmacy outside Moree is approximately 80 km away.

15.    I further found that approving a third pharmacy for Moree would result in a population to pharmacy ratio for the Moree region of approximately 3780:1. The population of the catchment area was a component for some of the Pharmacy Location Rules. Whilst there are no population criteria for the exercising of my power to approve a pharmacy, I am informed by my Department that the development of the criteria for the Pharmacy Location Rules was based on the view that the population to pharmacy ratio to sustain a pharmacy is 3,000:1 in an urban area and 4,000:1 in a rural area. I am further informed by my Department that the population of Moree and the surrounding district would be at least 11,339.

16.    I found that a petition of 4,157 signatories was sent to the previous Minister, which highlighted the strong public interest in the approval of an additional pharmacy in Moree. The petition requested that:

“the Minister reconsider the application for ‘Ministerial Discretion’ in the approval of an addition [sic] pharmacy at Shop 2, 215 Balo Street, Moree NSW for the following reasons:

1.    Location rule 107’s policy intent to create a ‘level of competition’ is voided as the existing pharmacies are under single ownership.

2.    The Moree Plains shire has almost 15,000 persons and two pharmacies, and no rule exists for such a situation and is therefore an “unintended consequence” of the Location Rules.

3.    Moree Plains Shire has less access to a pharmacy during opening hours than comparable sized communities in Australia.

4.    The (previous) Minister in 2010 set a precedent in Colac on the same principle where Colac has fewer residents and is considerably less isolated.”

Decision

17.    In accordance with subsection 90A(2) of the Act, I decided to exercise my discretion to approve the pharmacists to supply pharmaceutical benefits at Shop 2, 215 Balo Street, Moree, NSW.

Reasons for decision

18.    The fact that there are limited community facilities and commercial attractions where the existing approved pharmacy at Shop 2, 100 Amaroo Drive, Moree is located, suggests that it is unlikely that the majority of residents of Moree and the surrounding community would gravitate to this Pharmacy. The majority of the residents of Moree and surrounding community would be likely, therefore, to gravitate to the central commercial and shopping precinct of Moree giving access to the only approved pharmacy located in the central commercial and shopping precinct.

19.    The community of Moree and the surrounding district has a population of at least 11,339 people. Approving a third pharmacy for Moree would result in a population to pharmacy ratio for the Moree region of approximately 3780:1. The majority of the population would be unlikely to gravitate to the pharmacy at Shop 2, 100 Amaroo Drive, Moree. If I exercised my discretionary power to approve a third pharmacy in Moree, the population to pharmacy ratio for two pharmacies in Balo Street, in the central commercial and shopping district of Moree, would be significantly higher than 3780:1.

20.    There are no approved pharmacies located in the towns in the surrounding district of Moree, within a geographical radius of approximately 80 km.

21.    The proposed premises is within close proximity to three medical centres, containing a combined total of approximately nine full time equivalent prescribing general practitioners.

22.    On the basis of my findings regarding the location of the two existing approved pharmacies in Moree, I was not satisfied that the decision of the Secretary’s delegate would not leave residents of Moree and the surrounding community with reasonable access to pharmaceutical benefits.

23.    I noted that a petition of 4,157 signatories was sent to the previous Minister, which highlighted the strong public interest in the approval of an additional pharmacy in Moree. This number of signatories equates to approximately 33% of the population of Moree and the surrounding district.

24.    Accordingly, I was satisfied that the section 90B request had met the criteria for me to exercise my discretion to approve the request. I note that, in making my decision to approve the two pharmacists I can only do so if I was satisfied that both the ‘reasonable access’ and ‘public interest’ criteria of the Act were met.

25.    Therefore, I decided to exercise my discretion and approve the request.

(Emphasis in original).

The appellants contended that these reasons disclosed (a) that the Minister had erred in concluding that the failure to approve the application by the Mahonys would result in a community being left without reasonable access to pharmaceutical benefits, and (b) that the Minister had erroneously equated “public interest” with the extent to which the public had become interested in the outcome of the application by the Mahonys.

189    The first of these errors was said to be revealed from the failure by the Minister to have identified how the community she referred to would be left without reasonable access to pharmaceutical benefits by reason of the Secretary’s decision not to approve the application by the Mahonys. The appellants contended that the state of satisfaction required by s 90A(2)(a) could not have been reached by the Minister on the facts found because the only community she identified had also found by her to be able to access pharmaceutical benefits from the existing pharmacies conducted by the appellants. Those facts, however, were not the only facts found by the Minister in reaching the decision that the rejection of the application by the Mahonys under s 90 would leave the community without reasonable access to pharmaceutical benefits. The Minister, on a fair reading of her reasons, took into account the existing access to pharmaceutical benefits from the existing pharmacies conducted by the appellants as a matter which properly bore upon whether there was reasonable access to pharmaceutical benefits by the community in Moree. Whether the existing access was reasonable was, however, a matter for the Minister. She took into account additional factors, all of which bore upon reasonability of access for the community which was described in paragraph 19 of her reasons as “[t]he community of Moree and the surrounding district” which had a population of at least 11,339 people. The Minister took into account the fact that the majority of the population in that community would be unlikely to gravitate to the pharmacy at shop 2, 100 Amaroo Drive, Moree and that a favourable exercise of discretion under s 90A(2) would have the effect of improving the ratio of population to pharmacy for what would then become two pharmacies in Balo Street. In her judgment the reasonability of access depended upon the fact that a population of the size of Moree and surrounding districts would otherwise have access to, in effect, only the one pharmacy in the central commercial and shopping district. There is no reason to conclude that those were matters irrelevant to a proper consideration of whether the community would be deprived of reasonable access in light of the size of population.

190    The submission that the Minister incorrectly equated “public interest” in s 90A(2)(b) with the extent to which the public had become interested in the issue placed emphasis on the words in [23] of the Minister’s reasons. It is clear, however, that the Minister’s reasons did not focus upon the extent to which the public had expressed an interest in the issue as a sufficient fact to determine the public interest criteria in s 90A(2)(b). What was considered relevant by the Minister was, rather, such matters as were conveyed in that expression of interest, such as the absence of any effective choice between suppliers of pharmaceutical benefits within the community. In any event, the extent to which the public had become interested in the application is not excluded from the criterion of public interest in s 90A(2)(b). The phrase “the public interest” has, as his Honour the trial judge correctly observed at [81], no fixed or precise content: see Osland v Secretary, Department of Justice (2008) 234 CLR 275, [57]; O’Sullivan v Farrer (1989) 168 CLR 210, 216. The extent to which the public had become interested in the issue was a relevant factor which the Minister could take into account but it cannot be said on a fair reading of the reasons to be the only criteria taken into account by her.

191    Accordingly, I would dismiss the appeal with costs.

Associate:

Dated:    20 November 2014