FEDERAL COURT OF AUSTRALIA
Slopen Main Pty Ltd (Trustee) v Hope [2017] FCAFC 203
ORDERS
GRIFFITHS, MORTIMER and BROMWICH jJ | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
2. The appellant pay the first respondent’s costs and the second respondent’s costs of and incidental to the appeal, as assessed or agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
THE COURT:
[4] | |
[15] | |
[19] | |
[24] | |
[32] | |
[50] | |
[51] | |
[58] | |
[63] | |
[68] |
1 This is an appeal from orders made by a judge of this Court on 23 June 2017, setting aside a decision of the first respondent, the Australian Community Pharmacy Authority, that was made on 4 November 2016. The Authority had decided to recommend to the second respondent, the Secretary of the Department of Health, that approval be granted to the appellant to supply pharmaceutical benefits from particular premises in a suburb of Hobart, Tasmania (approval recommendation). The approval, if granted, would have been given by the Secretary under s 90(1) of the National Health Act 1953 (Cth) (NH Act).
2 The principal contention of the appellant is that the primary judge erred by denying the appellant procedural fairness in the proceedings below. It is alleged that, in making adverse findings of fraud in a public law sense by a solicitor acting for the appellant during the approval recommendation process, the primary judge denied the appellant the opportunity to respond to that issue in a way that might have altered those findings.
3 The Authority and the Secretary filed the usual submitting appearances, save as to costs. The active opposing parties were the third and fourth respondents, who operated premises that were already approved under the NH Act. It is therefore convenient to refer to them in these reasons as the respondents, except where a separate reference is needed.
4 Division 2 of Part VII of the NH Act deals with the supply of “pharmaceutical benefits” by the Australian Government. Such benefits facilitate the supply of pharmaceutical products to consumers at a reduced price, subsidised under the Pharmaceutical Benefits Scheme. A pharmacist, and thus pharmacy, does not have to be approved by the Secretary in order to sell pharmaceutical products, but without such approval, no pharmaceutical benefit may be provided.
5 Section 90(1) of the NH Act provides that, subject to the balance of s 90, the Secretary may, upon application by a pharmacist for approval to supply pharmaceutical benefits at particular premises, give such approval. Section 90(3A) provides, subject to limited exceptions that have no application to this case, that such an application must be referred to the Authority. Section 90(3B) provides that approval may be granted in respect of an application referred to the Authority only if the Authority has recommended approval, but the Secretary may refuse approval even if such a recommendation has been given. Thus an approval recommendation is indispensable for obtaining approval from the Secretary.
6 The Authority is established under s 99J of the NH Act. Section 99K(1) describes the Authority’s functions as being:
(a) to consider applications under section 90; and
(b) to make, in respect of an application under section 90:
(i) a recommendation whether or not the applicant should be approved under that section in respect of particular premises; and
(ii) if an approval is recommended—recommendations as to the conditions (if any) to which the approval should be subject;
7 Section 99K(2) and (3) provide that, in making a recommendation only to the Secretary, the Authority must comply with the relevant rules determined by the Minister under s 99L. Those rules are the National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (PD 65 of 2011) (Determination). The Determination was referred to before and by the primary judge as the “Rules”, but that does not accord with how the Determination is referred to within that instrument, including by the use of section numbers instead of rule numbers.
8 Relevantly, s 10(b) of the Determination provides that, other than for applications under s 90 of the NH Act involving cancellation of an approval, the Authority must recommend approval of an application by the Secretary if:
(i) the application states that it is one of the kinds mentioned in column 2 of an item in Part 2 of Schedule 1; and
(ii) all the requirements set out in column 3 of that item are met; and
(iii) all the requirements set out in Schedule 2 are met.
9 The s 90(1) application by the appellant was made by reference to item 133 in Part 2 of Schedule 1 of the Determination, which provides:
Item | Kind of application | Requirements |
… | … | … |
133 | New pharmacy in a facility (small shopping centre) | 1. The proposed premises are in a small shopping centre. 2. The proposed premises are at least 500 m, in a straight line, from the nearest approved premises. 3. There are no approved premises in the small shopping centre. |
… | … | … |
10 The meaning of the requirement in item 133 that the “proposed premises are in a small shopping centre” is provided by the following definitions:
(1) In this Determination:
…
commercial establishment has the meaning given by section 7 [of the Determination].
…
small shopping centre means:
(a) a group of shops and associated facilities that is under single management; and
(b) has a gross leasable area of at least 5 000 m2; and
(c) contains a supermarket that occupies a gross leasable area of at least 2 500 m2; and
(d) contains at least 15 other commercial establishments; and
(e) has customer parking facilities.
…
7 Meaning of commercial establishment
(1) In this Determination, subject to subsection (2):
commercial establishment means premises:
(a) in a small shopping centre or a large shopping centre; and
(b) occupied by, or likely to be occupied by:
(i) a shop where goods, food or beverages are sold retail; or
(ii) a bar, café, restaurant or takeaway; or
(iii) a business that provides services to customers.
…
11 Section 7(2) of the Determination excludes from the definition of “commercial establishment” various types of premises that might, in ordinary parlance, be thought to meet that description. Relevantly excluded under s 7(2)(j) is “a temporary selling point”.
12 Section 9 of the Determination confines consideration of whether or not to make a recommendation to information that was given at the time that the application was made or was requested by the Authority. There is no restriction on the Authority requesting information from anyone, but also no apparent power to compel any information to be provided.
13 Section 11 of the Determination provides that the Authority must not recommend approval under s 90 of the NH Act if, inter alia, a requirement under s 10(b) of the Determination is not met. Thus, meeting the requirements of item 133 in Part 2 of Schedule 1 of the Determination reproduced above is mandatory in order for the appellant’s application to be approved. Relevantly, the appellant’s proposed premises had to be “in a small shopping centre”, as defined, and be at least 500 metres in a straight line from the nearest approved premises, being those of the respondents.
14 Once approval has been given for the supply of “pharmaceutical benefits” in a “small shopping centre”, the premises to which that approval attaches may be transferred within the same shopping centre without any requirement to meet the criterion of being at least 500 metres in a straight line from the nearest approved premises.
The appellant’s plan to overcome the 500-metre restriction
15 The appellant sought:
(1) to achieve the outcome of ultimately obtaining approval for premises that were within 500 metres of two existing approved premises operated by the third and fourth respondents respectively; and
(2) to overcome the barriers to obtaining such approval posed by the 500-metre restriction in requirement 2 to item 133 in Part 2 of Schedule 1 of the Determination, by the strategy of a two-stage process of:
(a) applying for approval under s 90(1) of the NH Act for temporary premises that were beyond 500 metres from existing approved premises operated by each of the second and third respondents; and then
(b) once that approval was obtained, applying to transfer it to permanent premises that were within 500 metres of those existing approved premises, under s 90(3) of the NH Act.
16 The respondents did not identify any provision that directly or expressly rendered the appellant’s strategy illegal or in any way unlawful. Nor was any provision identified that required such a strategy to be disclosed. The relevant aspect of the case for the respondents before the primary judge, as pleaded and argued, only appeared to take issue with the appellant’s strategy insofar as it was alleged that the correct characterisation of the appellant’s application was that there was no real application for approval for the temporary premises at all, and that this had been concealed. The respondents effectively contended that the appellant’s strategy was an ineffective device of mere form rather than necessary substance.
17 This aspect of the respondents’ case in the proceedings below was an assertion that the application that was made by the appellant was, in reality and in substance, an application for approval of the permanent premises. If this characterisation was correct, the appellant’s application could not be approved because it did not meet the s 10(b)(ii) requirement of meeting all the requirements in column 3 of item 133 in Part 2 of Schedule 1 of the Determination, because the permanent premises were not “at least 500 m, in a straight line, from the nearest approved premises”, being each of the respondents’ approved premises. A number of other points of non-compliance were also relied upon.
18 The first step of the appellant’s strategy was on the way to being successfully achieved by obtaining the recommendation for approval from the Authority on 4 November 2016. However, the appellant’s plan was thwarted by the orders of the primary judge setting aside the Authority’s recommendation.
19 On 18 March 2016, the appellant made an application to the Tasmanian Pharmacy Authority (TPA) seeking approval for pharmacy premises at tenancy T19 at Cove Hill Shopping Centre in Hobart. That application was approved in principle by the TPA on 15 April 2016. On 21 June 2017, the appellant made an application to the Authority to establish a new pharmacy at tenancy T19, at what was described as the Cove Hill Shopping Centre. The premises at tenancy T19 were only ever temporary for the purposes of the appellant’s strategy.
20 On 27 September 2016, the appellant executed a lease for tenancy T4 at the Cove Hill Shopping Centre. The appellant subsequently made an application to the TPA for approval of pharmacy premises at tenancy T4 on 17 October 2016. The premises at tenancy T4 were the ultimate permanent premises for the purposes of the appellant’s strategy.
21 On 4 November 2016, the Authority recommended to the Secretary that approval be granted to supply pharmaceutical benefits from tenancy T19 at Cove Hill Shopping Centre.
22 On 14 November 2016, the TPA approved in principle the application in respect of tenancy T4, noting that the T19 pharmacy had never been completed. That approval in principle was corrected by the TPA on 1 December 2016 to recognise that the T19 pharmacy had been completed.
23 The Secretary did not act upon the Authority’s recommendation before it was set aside.
The proceedings before the primary judge
24 On 1 December 2016, the respondents filed an originating application, relevantly seeking to have the Authority’s 4 November 2016 approval recommendation set aside on various grounds. Certain interlocutory relief was also sought, but that does not require elaboration.
25 The proceedings before the primary judge proceeded on the basis of a further amended statement of claim (FASOC). The key assertions made in the operative grounds of review were as follows:
(1) the shopping centre did not have 15 other commercial establishments at the relevant times, with particulars as to why it was said that particular tenancies did not fall within the definition of “commercial establishment”;
(2) the premises for which approval was sought were not a “commercial establishment” and were not “in” the shopping centre but, rather, were outside of and separate to it;
(3) the 500-metre requirement in paragraph 2 of item 133 had to be measured in two particular ways (as provided by s 8 of the Determination), the details of which are not presently material; and
(4) the appellant’s proposed premises did not meet all of the requirements of s 10(b) of the Determination, and the Authority was therefore required under s 11 to recommend that the approval not be granted.
26 None of those pleaded allegations above were determined by the primary judge by reason of reliance on the alternative pleading that followed those summarised above. The FASOC added that further alternative basis for the relief sought as follows:
17. Further, or in the alternative, at all material times the third respondent:
(a) intended to not supply pharmaceutical benefits at the premises for anything other than a short time;
(b) intended to supply pharmaceutical benefits from different premises, which are not the premises, being tenancy T4 within the Cove Hill Shopping Centre, which is significantly less than 500m from the nearest approved premises;
(c) only had planning approval to operate a pharmacy at the premises on a temporary basis for a short period; and
(d) intended to transfer any approval granted for tenancy T19 to tenancy T4, thereby avoiding the distance restriction contained in Item 133 of the Rules.
18. In the circumstances described in paragraph 17, the application considered by the first respondent was not a bona fide application to supply pharmaceutical benefits from the premises.
27 The appellant’s defence to those additional paragraphs (as reproduced in the primary judge’s reasons at [46]) was as follows:
7. As to the allegations in paragraph 17 of the amended statement of claim, the third respondent:
(a.) denies the allegations therein;
(b.) says that the allegations are irrelevant to the grounds of review raised in this proceeding.
8. The third respondent denies the allegations in paragraph 18 in the amended statement of claim.
28 At the conclusion of the trial, the primary judge gave leave for supplementary written submissions to be provided. The submissions furnished on behalf of the respondents relevantly included the following:
3. In relation to this issue the Court should find:
…
f. The [appellant] misled the Secretary and the Authority by including, in its application, and in the provision of further information, tenancy listings which suggested that T4 was ‘open and operating’ and that the nature of the business was ‘retail goods’, when in fact the [appellant] knew that T4 was vacant, knew that it was leased to it (or the subject of an accepted offer to lease) and that it intended to occupy T4 as a pharmacy.
…
15. If an application to the Secretary is misleading because it omits to include all relevant matters, the Secretary cannot properly exercise his or her discretion and, in such circumstances, it can be said that any decision of the Secretary was induced by, or affected by, fraud in the equitable sense and as how that word is used in relation to public matters. The duty of people applying for Commonwealth grants, approvals etc. to ensure that such applications do not mislead is also enshrined in the Criminal Code […] (Cth), s136.1 and more generally in relation to dealings with Commonwealth entities in s137.1.
29 The primary judge said the following of [17] and [18] of the FASOC:
10 Additionally or alternatively the [respondents’ FASOC] pleads that the application considered by the Authority was not a bona fide application to supply pharmaceutical benefits from T19 Cove Hill and that the application must be set aside on the basis that the Authority’s decision was induced or affected by misrepresentations on the part of the [appellant]. They submit the proven conduct of the [appellant] falls within the meaning of fraud on the Authority as that concept applies in the public law context. The [respondents] claim that the [appellant]’s application was not a bona fide application and was merely part of a scheme for it to obtain approval for it to operate a pharmacy from different premises in respect of which approval was prohibited. The [respondents] claim the [appellant] submitted misleading information to the Authority and in so doing disabled it from making a true assessment of the nature of the application before it.
11 As the Court has accepted the additional or alternative argument pressed by the [respondents] it is unnecessary for it to decide whether the two specific requirements under the Rules that the [respondents] pleaded were not met were jurisdictional facts. The Court need not address Mr Chesterman’s submission that Davies J decision in Kastrinakis v Australian Community Pharmacy Authority [2013] FCA 995 (2 October 2013) was plainly wrong.
30 The primary judge further observed at [47]:
While the pleadings do not expressly assert fraud within the meaning of that concept in public law, the conduct of the parties, the hearing and the submissions all proceeded on the premise that that issue was in contest and findings on that account were open to be made by the Court.
31 It follows that the primary judge found in favour of the respondents, purportedly upon the case advanced by them in support of [17] and [18] of the FASOC. The respondents contended on appeal that their pleaded case was enlarged beyond the text of the pleadings by the way in which the case was actually conducted by the parties before the primary judge. To an extent, that is correct insofar as reliance was placed on what was done by way of omission, purportedly to conceal the appellant’s strategy from the Authority. However, as will become apparent, his Honour went further than that extended understanding of the case pleaded.
The primary judge’s reasoning on fraud
32 After describing the legislative scheme created by the NH Act and the Determination, the primary judge referred to the appellant’s “undisclosed intention” to obtain approval for temporary premises which met the 500-metre restriction, and then to apply to transfer that approval to permanent premises which were, permissibly for the purposes of such a transfer, within 500 metres of the present respondents’ approved premises. After reproducing the pleadings upon which the decision was made, his Honour then considered various authorities addressing the circumstances in which conduct on behalf of an applicant for an administrative decision vitiates such a decision. It is not necessary to consider those aspects of his Honour’s reasons further, nor the application per se of the principles identified. That is because the primary complaint of the appellant is an assertion that the misconduct found and relied upon by his Honour to set aside the Authority’s approval recommendation was not a part of either the case pleaded or of the case argued against it, such that it did not have a proper opportunity to meet those particular allegations and persuade his Honour to reach a different conclusion. It is that claim that must be evaluated in this appeal.
33 The asserted principal vice in the primary judge’s decision-making process was a denial of procedural fairness. Such an allegation requires close attention to the case as pleaded and run in the Court below, the way in which the relevant issue was addressed, and the case made on appeal for the conclusion to be overturned as a matter of process, rather than the inherent soundness or otherwise of the reasoning deployed (which was also argued by the appellant in the alternative, but does not require determination). In this case, the focus is on what the appellant was alleged to have done and how that particular aspect of the case was pleaded and argued by the respondents and addressed in his Honour’s reasons, leading to the order setting aside the Authority’s approval recommendation.
34 The pleading and the relevant aspect of the argument advanced on behalf of the present respondents is reproduced above. The aspect that is complained of, being the means by which the primary judge decided to set aside the Authority’s recommendation, took place by the following process of reasoning. That process was not challenged and, in any event, does not call for any appellate adjudication. His Honour:
(1) set out what was considered to be the overarching purpose of the Determination, which should prevail over the interests of an applicant for approval;
(2) concluded that the provision of false or materially misleading information may be found to disable the Authority from fulfilling its statutory duty, considering and distinguishing Yu v Minister for Health (No 2) [2013] FCA 367; 216 FCR 188 upon the basis that Jessup J’s reasoning and conclusion in that case did not preclude a different outcome if false information was provided, rather than only the omission of information that could have been, but was not, provided; and
(3) observed that there was an obligation to provide factually accurate information in an application for approval.
35 The last observation was supported by the fact that the process before the Authority was heavily reliant on the integrity of the information that an applicant provided, with very limited scope to test the accuracy of such information, although it seemed that the Authority did routinely seek additional information. That was a process with inherent shortcomings, however, including that the appellant, the Authority and the respondents would each have different views as to the legal and factual issues at play, noting that the application is not made to the Authority, but rather to the Secretary, who refers it to the Authority to make a recommendation.
36 The primary judge’s reasoning above may be accepted, at least for present purposes. However, the primary judge then took the inquiry in a sharply different direction. With that framework in place, his Honour turned to the evidence before him. By the process of reasoning detailed below, his Honour ultimately found that the information provided to the Authority on behalf of the appellant included material that was false, and deliberately or recklessly so, meeting the test for fraud on the Authority in the public law sense. That was not the respondents’ case as pleaded or argued. It was a conclusion reached without apparent warning.
37 The primary judge first considered the propositions that Mr Darnell, the sole director, shareholder and “controlling mind” of Slopen Main, assented to during cross-examination, including that the appellant:
(1) had intended to not supply pharmaceutical benefits at the T19 premises for anything other a short time;
(2) rather, had intended to supply pharmaceutical benefits from tenancy T4, despite that being less than 500 metres from the nearest approved premises;
(3) only had planning approval to operate a pharmacy at tenancy T19 for a temporary period; and
(4) intended to transfer any approval granted for tenancy T19 to tenancy T4.
38 Despite Mr Darnell’s objection to the proposition that the appellant therefore intended to avoid the distance restriction contained in item 133 of the Rules, the primary judge was satisfied that such a finding should be made.
39 The primary judge noted that the appellant held approvals for T19 and T4 concurrently, with the Pharmacy Board of Tasmania having granted both due to a misunderstanding. His Honour rejected Mr Darnell’s evidence that, had a relocation application not been granted in respect of T4, the appellant would have continued to operate from T19. His Honour found that the temporary nature of the T19 permit rendered that objective unachievable. As such, his Honour found that the only logical conclusion was that Mr Darnell’s true intention was to transfer any approval granted for tenancy T19 to tenancy T4, thereby avoiding the item 133 500-metre distance restriction.
40 The primary judge considered the application made by Mr Darnell to the Secretary for approval for the supply of pharmaceutical benefits at T19, and noted that that application made no reference at all to the appellant’s intention to relocate after a short period of time to tenancy T4, despite that relocation plan already being in place. Turning back to Yu, his Honour made the assumption, without judgment at that point, that Mr Darnell’s actions in so doing fell within “what Jessup J would have accepted as permissible sharp practice by a pharmacist seeking to advance his own interests”. With that in mind, his Honour noted that notwithstanding that assumption, the appellant’s actions transgressed beyond that permissible limit.
41 In support of the finding that the appellant had transgressed beyond the permissible limit set by Yu, the primary judge turned to the conduct of Mr Hannan, the solicitor authorised to act on behalf of the appellant at the given time. His Honour primarily considered the statutory declaration that Mr Hannan sent to Ms Bowkett of Kalis Properties for her signature, and which he then provided to the Authority when it was executed. That statutory declaration described tenancy T4 as “open and operating” and the tenant usage of T4 as “retail goods”. That information was not correct. The primary judge found those statements to be false.
42 The primary judge considered that, as Mr Hannan had not given evidence in the proceedings, it would be “inappropriate for this Court to make adverse findings having any consequence beyond these proceedings”. However, his Honour considered that he nonetheless had to determine the issues before him. His Honour found that, of several possibilities as to how and why Mr Hannan provided a false statutory declaration to the Authority, the evidence in the proceedings pointed to Ms Bowkett’s statutory declaration being the product of his own drafting. This was particularly reinforced by Mr Darnell’s evidence that suggested that the terms of Ms Bowkett’s statutory declaration had been the “subject of discussion and design” prior to it being signed by Ms Bowkett and sent by Mr Hannan to the Authority. Even if this was not the product of design, his Honour found that Mr Hannan sending Ms Bowkett’s statutory declaration to the Authority was “reckless as to the truth of its representations”.
43 The primary judge found that the effect of the false and misleading information in Ms Bowkett’s statutory declaration was that the Authority was not aware that tenancy T4 was not leased and open and operating to supply retail goods, and, rather, that only tenancy T19 was effectively leased. His Honour reasoned that, had the Authority been aware of that fact, it would have had to consider whether tenancy T19 should count as one of the required 15 commercial establishments in Cove Hill Shopping Centre. While his Honour noted that the decision that might have been made in the absence of that false information was unknown, it was “far from inconceivable that, had the Authority been aware of the true facts, it might have concluded that T19 was a ‘temporary selling point’.”
44 The primary judge highlighted several other “curiosities” regarding the information supplied by Mr Hannan to the Authority on behalf of the appellant. For example, the lease of T19 and T4 by the same business was not explicitly disclosed to the Authority in Annexure B to Ms Bowkett’s statutory declaration, notwithstanding that s7(3) of the Determination requires two or more commercial establishments occupied by a single business to be counted as only one commercial establishment for the purposes of item 133. His Honour found that circumstance seemed to have been taken into account by the drafter of Ms Bowkett’s statutory declaration.
45 Similarly, the trading names of the shops at 6a and 7 in Annexure B to Ms Bowkett’s statutory declaration were listed as “Gift Shop” and “Cove Hill Newsagency” respectively, despite, in reality, trading under the very similar names of “Cove Hill News Gift Shop” and “Cove Hill News”. The primary judge found that that listing was also false, and was likely designed to obscure from the Authority that the two shops were owned by the same business. His Honour reasoned that, had the Authority been aware that both premises were owned by the same business, this would have been relevant to the determination of whether there were the necessary 15 commercial establishments at Cove Hill Shopping Centre.
46 If any one of the listed 15 premises were not eligible to be included under the Determination, by reason of the truth behind the two categories of information provided by Ms Bowkett’s statutory declaration that the primary judge found to be false, his Honour found that “there would have been no possibility that [the appellant]’s application could be approved”. His Honour therefore inferred that significant conclusions of the Authority relied upon materially false and misleading representations provided by Mr Hannan in sending Ms Bowkett’s statutory declaration to the Authority.
47 The primary judge considered that it was not credible that the appellant could have been unaware of the significance of the Authority’s request for further information, and thus the significance of its response in the form of Ms Bowkett’s statutory declaration. His Honour found that the appellant knew that this information would go to the Authority’s decision-making process. While his Honour accepted that, as per Yu, the appellant was entitled to pursue a “stratagem”, it was “not entitled to provide false and misleading information to the Authority in respect of matters requiring the decision of the Authority to aid it in the execution of that stratagem”.
48 The primary judge concluded that the appellant provided false and misleading information to the Authority to avoid it being discovered that, at the same time as its application for approval to supply pharmaceutical benefits at tenancy T19 was being processed, it had finalised arrangements for a ten-year renewable lease in respect of tenancy T4 and had also secured licensing approval to use T4 as a pharmacy. His Honour found that the appellant did this to avoid the risk that the Authority, if it knew the true facts, might reject the application in respect of tenancy T19.
49 As a result of the foregoing, the primary judge was satisfied that the “proven conduct” of the appellant was “within the meaning of ‘fraud’ as that concept applies in this specific public law context”. His Honour therefore found that the appellant “by its authorised representative submitted misleading information to the Authority and in so doing disabled the Authority from making a true assessment of the application” before it. As a consequence, his Honour decided that the Authority’s decision to recommend to the Secretary that the appellant’s application for approval be granted had to be quashed and remitted for reconsideration.
50 By a Notice of Appeal filed on 14 July 2017, the appellant pleaded six grounds of appeal. Grounds 1 to 3 concern findings of fraud in public law, while grounds 4 to 6 allege a denial of procedural fairness. This appeal is able to be determined upon a narrow version of the appeal grounds of denial of procedural fairness, without any need to determine the substantive issues between the parties raised by the remaining appeal grounds.
51 The pleadings in [17] and [18] of the FASOC reproduced at [26] above describe the means sought to be used by the appellant to circumvent the 500-metre restriction on new approvals. The case as developed at trial complained that this strategy was not disclosed to the Authority, being a circumstance that was said to make good the allegation of lack of bona fides in applying for approval of the temporary premises. The appellant’s defence denied both the allegation as pleaded and the relevance of any such allegation in any event. The appellant’s case before the primary judge was that the legislative scheme did not preclude its two-stage strategy, irrespective of whether that strategy was disclosed or not.
52 The respondents’ pleaded case was therefore, at most, one of the appellant misleading the Authority by omitting reference to its strategy, including by omitting disclosure of facts that would or might have revealed that strategy. It is not necessary on this appeal to decide whether, on the face of all the material, there was such an omission, nor whether any such omission would have vitiated the Authority’s approval recommendation. That is because the primary judge did not base his decision upon such an omission, but rather upon his Honour finding that the appellant deliberately or recklessly provided false or misleading information. As that was not the pleaded case, it was only open to the primary judge to decide the judicial review application upon that basis if this was otherwise clearly part of the case that the appellant was called upon to meet, and the appellant was given sufficient opportunity to do so.
53 Senior counsel for the respondents quite properly conceded that their case before the primary judge had never extended to any allegation that the appellant had actively misled the Authority by the provision of false or misleading information, as opposed to, at worst, a case of passive omission which concealed the appellant’s true strategy. The case for the respondents did not, in substance, go beyond circumstances of the kind considered by Jessup J in Yu.
54 A case of misleading the Authority by commission was never part of the respondents’ case. Accordingly, it was not a case that the appellant was ever called upon to meet, or had any other meaningful opportunity to meet. As the acts attributed to the appellant in actively misleading the Authority were the acts of its solicitor, Mr Hannan, a denial of procedural fairness to him was necessarily a denial of procedural fairness to the appellant. That link obviates any need to consider his position separately as a non-party to the proceedings. The appellant was not given any opportunity to adduce evidence or make submissions on proposed adverse findings concerning Mr Hannan’s conduct, or state of mind, as attributed to the appellant, in relation to the information in Ms Bowkett’s statutory declaration found by the primary judge to be not just false, but deliberately or recklessly so.
55 On any view, these were grave findings to make against anyone who had not given evidence and had such a proposition put to them, or had not otherwise been put on notice that such a finding was under consideration. It was not an obvious conclusion on the pleadings or the conduct of the hearing before the primary judge: Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591-2.
56 None of the adverse findings made against Mr Hannan, and through him the appellant, were safe to make in the absence of him being given a chance to be heard and to defend himself: see Ashby v Slipper [2014] FCAFC 15; 219 FCR 322 at [141]-[150]. That is especially so given that the adverse findings were based on inferences, rather than direct evidence, in circumstances in which an innocent explanation may not have been inherently implausible as to the drafting and content of Ms Bowkett’s statutory declaration and the information upon which it was based. The question of whether the denial of procedural fairness could possibly have made a difference is therefore easily met: Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147.
57 In all the circumstances, the appellant was denied procedural fairness and was entitled, subject to the exercise of discretion to refuse relief, to have the primary judge’s order setting aside the Authority’s approval recommendation overturned. However, for the reasons that follow and primarily by reason of futility, that discretion must be exercised against the grant of that relief.
58 Upon remittal in accordance with the primary judge’s orders, the Authority reconsidered the appellant’s application, no stay having been sought pending the outcome of this appeal. On 27 October 2017, 10 days before the hearing of this appeal, the Authority decided to recommend to the Secretary that approval not be granted to the appellant. Upon this Court becoming aware of the second recommendation decision for the first time at the hearing of the appeal, the parties were given leave to make any submissions once reasons were provided by the Authority, directed only to the issue of discretion and relief. Further submissions were duly provided in accordance with that leave.
59 The further submissions for the appellant annexed (as required by this Court) a copy of the Authority’s reasons for its decision made on 27 October 2017 to recommend against the grant of approval by the Secretary. That decision was made on a reconsideration of the appellant’s application, following remittal by the primary judge. Those reasons reveal that the recommendation that approval not be granted was based upon the Authority not being satisfied either that the proposed premises were in a small shopping centre, or that they were at least 500 metres in a straight line from the nearest approved premises. The Authority’s reasons do not engage with those findings of the primary judge that we have found to be erroneous, instead proceeding on a basis confined to the criteria in the Determination.
60 The appellant therefore conceded that there was no utility in ordering a new trial of the respondents’ application for review, a position that the respondents embrace. While not expressly stated, the appellant’s concession necessarily entailed also conceding that the primary judge’s order setting aside the first decision by the Authority should not be set aside. The appellant did not suggest otherwise.
61 The submissions for the appellant and the respondents were in conflict as to whether this Court should determine the issues raised in this appeal in circumstances where, ultimately, neither side sought to have the orders of the primary judge set aside. However, it is not necessary to resolve that dispute beyond the issue of denial of procedural fairness, in light of the course that has been independently taken in these reasons of determining the substance of the key point raised by the appeal favourably to the appellant, and regarding the second decision of the Authority as being relevant only to the exercise of the discretion in granting relief.
62 Both sides effectively agree that the Court should exercise its discretion not to set aside the orders of the primary judge, which in turn set aside the Authority’s first decision. The agreed basis for that course was futility in light of the Authority’s second decision. That basis for exercising the discretion to withhold relief should be accepted.
63 In its further submissions, the appellant contends that because the respondents sought to uphold the judgment at first instance, they should be ordered to pay 50% of the appellant’s costs of the appeal. It was further suggested that if the respondents applied for a costs certificate under s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), the Court might consider it appropriate for such a certificate to issue. As to the latter, it is not appropriate to adjudicate upon a hypothetical course of action.
64 In their further submissions, the respondents point out that the appellant knew that the Authority was reconsidering whether it should recommend granting the application for approval, because the Authority’s second reasons reveal that, by letters dated 25 August 2017 and 29 September 2017, the Authority sought additional information that was subsequently provided on behalf of the appellant. The respondents therefore characterised the appellant as having had a choice between continuing the appeal and seeking a stay of the Authority’s second recommendation decision, or accepting the process of reconsideration by the Authority and any review rights that might flow from an adverse decision.
65 The respondents characterised the appellant’s conduct as taking the second option. However, it is more accurate to characterise the appellant as having a bet each way, by allowing both processes to remain on foot, and doing nothing to halt or delay either. The further submissions for the appellant are silent as to why it did not seek either a stay of the Authority’s second recommendation process, or an adjournment of the hearing of the appeal.
66 The further submissions for the respondents assert that the appellant should pay their costs of the appeal because:
(1) the appellant was aware that the Authority was undertaking a reconsideration process and took no steps to preserve the subject matter of the appeal by seeking a stay or otherwise a delay of the second decision;
(2) the appellant elected to continue the appeal (and, it may be added, did not seek to have the hearing of the appeal adjourned upon being advised of the adverse decision at least a week before the appeal was to be heard);
(3) the appeal had been rendered nugatory because of the Authority’s second decision;
(4) the appellant’s solicitor knew of the Authority’s second recommendation decision by at least 30 October 2017 (being a full week before the scheduled hearing of the appeal on 6 November 2017) but did not inform the appellant’s counsel until the evening before the appeal hearing;
(5) had the appellant’s solicitor informed the respondent’s solicitors promptly of the appellant’s decision to proceed with the Authority’s reconsideration of its application, and of the Authority’s second recommendation decision, considerable time and expense in preparing and conducting the appeal could have been avoided, and consideration could have been given to applying to adjourn the hearing of the appeal.
67 The respondents’ submissions as to costs should be accepted. For the reasons advanced as summarised in the preceding paragraph, the appellant should not, in all the circumstances, be entitled to avoid an order that costs follow the outcome of the appeal, even when the appeal is dismissed on discretionary grounds.
68 The appeal must be dismissed. The appellant must pay the first and second respondents’ costs of and incidental to the appeal.
I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Griffiths, Mortimer and Bromwich. |
