Federal Court of Australia

Stonehealth Pty Ltd v ZAA Ventures Pty Ltd as Trustee for the ZAA Investment Trust [2020] FCAFC 188

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is allowed.

2.    The orders made on 25 August 2020 are set aside.

3.    The originating application filed in matter QUD 218 of 2020 is dismissed.

4.    The first respondent pay the appellant’s costs of the appeal.

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

REASONS FOR JUDGMENT

COLLIER J:

1    I am indebted to Justice Rangiah and Justice Charlesworth for their thoughtful and thorough judgments, which I have had the great advantage of reading in draft.

2    I respectfully concur with the judgment of Justice Rangiah and the orders his Honour proposes.

Associate:    

Dated:    9 November 2020

REASONS FOR JUDGMENT

RANGIAH J:

3    On 19 March 2020, the first respondent, ZAA Ventures Pty Ltd (ZAA), made an application to the Secretary of the Department of Health (the Secretary) for approval to supply pharmaceutical benefits from certain premises.

4    On 26 June 2020, the second respondent, the Australian Community Pharmacy Authority (the Authority), made a recommendation to the Secretary that the application not be approved.

5    On 25 August 2020, a judge of this Court ordered that a writ of certiorari issue quashing the Authority’s decision, and that a writ of mandamus issue compelling the Authority to consider ZAA’s application and make a recommendation according to law: ZAA Ventures Pty Ltd as Trustee for ZAA Investment Trust v Australian Community Pharmacy Authority [2020] FCA 1227. This is an appeal against that judgment.

6    The appellant, Stonehealth Pty Ltd (Stonehealth) was joined as a second respondent at first instance. It has an interest in opposing the approval of ZAA’s application.

7    There is, under the National Health Act 1953 (Cth) (the NH Act) and the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) (the Rules), a detailed scheme for the approval of applications to supply pharmaceutical benefits. The appeal is concerned with the proper construction of the criteria for approval under Item 130 of Pt 2 of Sch 1 of the Rules.

8    There are two grounds of appeal. The first ground asserts, in effect, that the primary judge erred by failing to construe the definition of “supermarket” in s 5 of the Rules as requiring that a supermarket have commenced trading on or before the day the application was made. It is unnecessary to consider the second ground which, as Stonehealth concedes, would not be dispositive of the appeal even if upheld.

9    It will be necessary to set out the relevant elements of the legislative scheme in some detail. The facts and background of the case are not in dispute and may be described briefly.

Facts and background

10    On 19 March 2020, ZAA applied to the Secretary pursuant to s 90 of the NH Act for approval to supply pharmaceutical benefits from premises situated at Flagstone in Queensland (the Proposed Premises). The application was for “approval to establish a new pharmacy” under Item 130 of Pt 2 of Sch 1 of the Rules.

11    The material provided in support of the application demonstrated that a Coles supermarket with a gross leasable area of 3,665 m² was to open on 21 March 2020 (that is, two days after the day on which the application was made) within 500 m of the Proposed Premises. There was evidence that the shop had been fitted out and that stocking and merchandising had commenced. Photographic evidence showed trucks at the site, presumably to deliver goods, as well as marketing signs, price signs and weighing scales in the shop area. The supporting material also included social media posts showing that a store manager and 103 staff members had been employed.

12    As required by s 90(3A) of the NH Act, the Secretary referred ZAA’s application to the Authority. On 26 June 2020, the Authority determined that the application not be approved.

13    In its reasons for the decision, the Authority referred to the definitions of the phrases “at all relevant times” and “supermarket” appearing in Item 130 of Pt 2 of Sch 1 of the Rules and concluded:

The submissions claimed that as at the date of lodging the application (19 March 2020), possession of the supermarket premises had been handed over to Coles, Coles had fitted out its premises, and the confirmed opening date of 21 March 2020 was less than 4 days from the lodging of the application. Further it was claimed that on this basis, the Authority can be satisfied that the supermarket would be stocked and merchandised in readiness for commencement of trade, and that as trading of the Coles Supermarket is imminent, the Authority can be satisfied that there is a supermarket.

Based on the evidence provided, the Authority found that the Coles Supermarket was not trading on the day the application was made, and was therefore not satisfied that, at all relevant times, there is, within 500 m, in a straight line, from the proposed premises, either:

(i)    both the equivalent of at least one full-time prescribing medical practitioner and a supermarket that has a gross leasable area of at least 1,000 m2; or

 (ii)    a supermarket that has a gross leasable area of at least 2,500 m2.

14    The Authority considered that Item 130 was not satisfied as “the Coles Supermarket was not trading on the day the application was made”. Accordingly, it recommended to the Secretary that the application not be approved.

15    ZAA commenced proceedings for judicial review of the Authority’s decision pursuant to s 5(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act). Stonehealth applied for joinder on the basis that it had made a competing application to the Secretary for approval to establish a new pharmacy and its interests could be adversely affected if the judicial review application were successful. The primary judge allowed the joinder on the basis that Stonehealth would bear its own costs of the proceedings and that no other party would seek costs against it.

16    Before the primary judge, both Stonehealth and the Authority made submissions in opposition to ZAA’s construction of Item 130 of the Rules. However, the Authority has filed a submitting appearance, and has not participated, in the appeal. The appeal is contested solely between Stonehealth, as appellant, and ZAA, as first respondent.

17    On 3 September 2020, I made orders staying the orders of the primary judge and restraining the Authority from making any further recommendations concerning relevant applications until determination of the appeal or other order. In view of these orders, the appeal was listed for hearing on an expedited basis.

The statutory scheme

18    Part VII of the NH Act establishes a scheme for the payment by the Commonwealth of benefits, or subsidies, in respect of certain drugs and medicinal preparations. Those benefits are referred to in ss 84 and 85 of the NH Act as “pharmaceutical benefits”. Under s 89 of the NH Act, a person is not entitled to receive a pharmaceutical benefit unless it is supplied by an approved pharmacist at or from approved premises.

19    A pharmacist may apply to the Secretary for approval to supply pharmaceutical benefits at particular premises: s 90(1) of the NH Act. The Secretary must then refer the application to the Authority: s 90(3A). The Secretary may grant the approval if the Authority recommends the grant: s 90(3B).

20    In Pharmacy Restructuring Authority v Chatfield (1993) 43 FCR 418 at 433–434, French J (as his Honour then was) explained that the scheme for approval of pharmacies, introduced by way of amendments to the NH Act in 1990, reflected the terms of an agreement between the Minister and the Pharmacy Guild of Australia. The agreement provided for the restructuring of the pharmacy industry by rationalising the number and distribution of pharmacies in Australia. His Honour held at 434:

It may be concluded from the Minister’s speech that the objects of the legislative scheme established by the 1990 amendments included the reduction of the number of existing pharmacies and the regulation of the approval of new pharmacies. The guidelines determined by the Minister and the terms of cl 8.3 of the agreement with the Pharmacy Guild indicate that new approvals would have to be justified by reference to community needs.

21    In Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589, the Full Court observed at 597:

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.

22    In Assarapin v Australian Community Pharmacy Authority (2016) 239 FCR 161, the Full Court, referring to the 1990 amendments, held at [41]:

Those amendments were directed to reducing the number of existing pharmacies and regulating the approval of new pharmacies so as to reduce the cost of dispensing prescriptions by increasing the average output per pharmacy with consequential savings for the Commonwealth.

(Citation omitted.)

23    Section 99K(1) of the NH Act provides that the functions of the Authority are to consider and make recommendations in respect of applications made under s 90. Section 99K(2) requires the Authority to comply with the rules determined by the Minister. Section 99L provides that the Minister must, by legislative instrument, determine the rules subject to which the Authority is to make recommendations.

24    Section 10 of the Rules is prescriptive as to the circumstances in which the Authority must recommend that the application be approved:

10    When Authority must recommend applicant be approved

…

Applications not involving the cancellation of an existing approval

(2)     For an application that does not involve the cancellation of an existing approval, the Authority must recommend that an applicant be approved under section 90 of the Act in relation to particular premises if:

(a)     the application is of a kind mentioned in column 1 of an item in Part 2 of Schedule 1; and

(b)     the following requirements are met in relation to the application:

(i)     the requirements in column 2 of that item;

(ii)     the requirements in subsection (3).

General requirements

(3)     For the purposes of subparagraphs (1)(b)(ii) and (2)(b)(ii), the requirements are that the Authority is satisfied that:

(a)     at all relevant times the proposed premises are not approved premises; and

(b)     the applicant has, at all relevant times, a legal right to occupy the proposed premises (whether the right is to occupy the premises on the day the application is made or after that day); and

(c)     at all relevant times the proposed premises could be used for the operation of a pharmacy under applicable local government and State or Territory laws relating to land development; and

(d)     the proposed premises would be accessible by the public; and

(e)     within 6 months after the day on which the Authority makes a recommendation in relation to the application, the applicant will be able to begin operating a pharmacy at the proposed premises; and

(f)     the proposed premises will not be directly accessible by the public from within a supermarket.

…

25    Section 11 of the Rules prescribes the circumstances in which the Authority must recommend that an application not be approved:

The Authority must recommend that an applicant not be approved under section 90 of the Act in relation to particular premises if:

(a)    a requirement under section 10 of this instrument that applies in relation to the application is not met; or

…

26    Part 2 of Sch 1 of the Rules provides, relevantly:

27    Some of the terms used in Item 130(b) are defined in s 5 of the Rules. The phrase “all relevant times” is defined to mean:

(a)    the day on which the application was made; and

(b)    the day on which the application is considered by the Authority.

28    A “supermarket” is defined to mean, “a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods”.

29    These definitions are critical to the parties’ arguments in the appeal. As Mortimer J observed in Friends of Leadbeater’s Possum Inc v VicForests (No 4) [2020] FCA 704 at [139], where a legislative instrument (such as the Rules) provides that a term “means” something, then subject to any express or implied contrary intention, the Court should construe that as being an exhaustive definition.

30    It is relevant to also describe some other provisions of the Rules referred to in argument.

31    In Sch 1, the criteria described in Items 124, 125, 133, 134, 134A and 136 require that there be either a “small shopping centre” or a “large shopping centre”. The definition of “large shopping centre” in s 5 requires a group of shops and associated facilities that contains, amongst other things, “a supermarket” and “at least 50 other commercial establishments”. The definition of “small shopping centre” requires, amongst other things, “a supermarket” and “at least 15 other commercial establishments”. The expression “commercial establishment” is defined, relevantly, in s 7(1) of the Rules as follows:

(1)    In this instrument, subject to subsection (2), commercial establishment means premises that are occupied by, or likely to be occupied by:

(a)     a shop where goods, food or beverages are sold retail; or

   (b)     a bar, café, restaurant or takeaway; or

   (c)     a business that provides services to customers.

…

32    It will be seen that the words “likely to be occupied by” in s 7(1) form part of the context relevant to the construction of Item 130(b).

The issues and the judgment of the primary judge

33    ZAA submitted before the primary judge that the Authority had misconstrued the term “supermarket”, or had improperly imposed a requirement under the Rules for a supermarket to be “trading” on the day an application is made in order for it to be considered a supermarket “at all relevant times”.

34    On the other hand, Stonehealth submitted that when Item 130(b) is read together with the definitions of “at all relevant times” and “supermarket”, the Authority must be satisfied that, on the day on which the application is made, there is within 500 m, a retail store, the primary business of which is (on that same day) the sale of a range of food, beverages, groceries and other domestic goods (emphasis added). Stonehealth contended that if no retail trade had commenced from a store, it is not possible to say that the store’s primary business “is” the sale of specified products on the relevant day.

35    The primary judge commenced by considering the grammatical meaning of the definition of “supermarket” in s 5 of the Rules, observing that Stonehealth relied on the use of the simple present tense (“is”) in the relative phrase “the primary purpose of which is the sale…” to support its construction that the supermarket must be actually selling the range of goods on the relevant dates. Her Honour observed that the present tense may be used descriptively or to signify contemporaneity, but that generally the simple present tense is used descriptively, whereas the “continuous present” (“is” followed by a present participle) is used to convey contemporaneity, referring to the judgment of Gaudron J in Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 362. Her Honour held that in the context of the definition of supermarket, the simple present tense is used descriptively, and that such use is consistent with the use of the simple present tense throughout the Rules.

36    The primary judge considered Stonehealth’s contention that regardless of whether the present tense has been used descriptively or to signify contemporaneity, if no sales have occurred from a premises then it is not possible, on the day on which the application is made, to describe the premises as one at which the primary business is the sale of certain goods. Her Honour noted that Stonehealth had submitted that, “If those sales are not taking place, the premises is not a ‘supermarket’” (emphasis added). Her Honour considered that this explanation exposed the need to resort to the use of the continuous present to make good the argument.

37    The primary judge noted that the Authority had submitted that the word “sale”, in the phrase “the primary business of which is the sale”, is used, “as a verb in the present tense, indicating that the Rules envisage that the primary business referred to is the act of selling the relevant goods”. Her Honour considered that the Authority’s submissions also revealed the need to resort to the use of a different verb form in order to make good the argument by contending that the definition, “requires that a supermarket be selling goods at all relevant times” (emphasis added).

38    The primary judge made three further observations about these submissions. First, in the phrase “the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods”, the word “sale” is used in its noun form, not as a verb. The Explanatory Statement indicates that the phrase is intended to narrow the definition of “retail store” – it explains what is not the primary business of a supermarket. Her Honour also contrasted the phrase “are sold retail” in s 7(1) of the Rules.

39    Second, her Honour considered that resort to the dictionary definition of the word “retail” did not assist the Authority’s argument. The definition relied on by the Authority included the noun, adjectival, adverbial, and verb forms of the word “retail”. Her Honour said that the verb form preferred by the Authority must yield to the actual syntax of the definition.

40    Third, her Honour said that while the definition contemplates the existence of a retail store on the day on which an application is made, the definition does not require that, on that day, the retail store must be selling, or that sales must be taking place. It requires no more than that the “primary business” of any such store can be described as the retail sale of a range of goods. Her Honour observed that the definition could have provided that a supermarket must have commenced retail sales or must have opened to retail customers on the relevant dates, but it did not.

41    Her Honour went on to consider Stonehealth’s argument that a rule which promoted certainty better served the purpose of the Rules, whereas the construction contended for by ZAA, “suggests that the day is reached at some vague indeterminate time prior to the supermarket actually selling anything and where, if circumstances change, the supermarket might never sell those products”. The Authority contended that it was not merely a question of administrative convenience, but of clarity and predictability in the operation of the Rules for all applicants.

42    The primary judge considered that the posited uncertainty was overstated. Her Honour said that the Authority is required to be satisfied of the existence of a supermarket at two points in time—the day of the application, and the day on which the Authority makes its decision. If the circumstances changed the Authority would presumably not recommend approval of the application.

43    Her Honour observed that the objectives of the Rules seek to balance community access with commercial sustainability. The Explanatory Statement provides that, “The 1,000m² supermarket and one general practitioner; or 2,500m² supermarket requirements are proxies that reflect a location that is likely to be well frequented, with sufficient community need for a new pharmacy to operate viably” (emphasis added). Her Honour considered that this connotes a consideration of future matters, not merely presently existing circumstances. Her Honour said that the proxy is the existence of a supermarket, and whether or not the supermarket is “open to the public” or “trading” at particular points in time is irrelevant to its existence. If there were a requirement inherent in the definition of “supermarket” that it be “open to the public” or “trading” at particular points in time, no proxy would be necessary to determine whether a location is “likely to be well frequented”; that would be evident one way or the other.

44    The primary judge observed that  Items 133, 134 and 134A use additional proxies in respect of applications for new pharmacies by reference to small or large shopping centres, which are defined by reference to, inter alia, “other commercial establishments”. A “commercial establishment” is defined in s 7(1) of the Rules to mean premises that “are occupied by, or likely to be occupied by [certain types of businesses]” (emphasis added). Her Honour stated that these definitions do not require that any of the “other commercial establishments” are in fact already open to customers or that they have commenced trading at the relevant date: see Walkerden v Wodonga Pharmacy Pty Ltd (2015) 230 FCR 243 at [75]. The Authority is required to determine whether, at all relevant times, there is, or is likely to be, a sufficient number of commercial establishments to satisfy the requirements of the relevant Item. Her Honour noted that this determination does not depend on a “bright-line” finding that any establishment is operating, trading, or indeed open to retail customers.

45    The primary judge noted that s 7(2) of the Rules excludes a range of businesses from the definition of “commercial establishment”, and also excludes a “temporary selling point”. Her Honour considered it to be evident from the regime established by the Rules that there are a range of uncertainties that can attend the Authority’s consideration of an application under s 90 of the NH Act and in reaching a recommendation in compliance with the Rules. Her Honour took the view that the task of considering whether, at all relevant times, there is sufficient evidence of the indicia of a “supermarket” is not relevantly different from the task of considering the various factual matters informing, for example, how many commercial establishments exist within a shopping centre, or whether a premises is a “temporary selling point”.

46    For these reasons, her Honour was unpersuaded by submissions that the Rules “are largely (if not entirely) based on objectively measureable factors”, and that adoption of the construction contended for by ZAA “would create significant difficulty for the Authority (and for applicants, in determining how the Location Rules apply to them)”.

47    The primary judge held that the definition does not impose any requirement that a supermarket be open and selling goods in order that it be a “supermarket” for the purposes of the Rules. Her Honour said that it is a matter for the decision-maker to consider any fact or matter put before it that would establish to its satisfaction that, on the relevant day, there is a retail store by reference to the facts or matters which evidence the existence of that store’s primary business.

48    The primary judge considered that the Authority had been focused on the definition of “supermarket” and construed it to require that the supermarket be open (in the sense of being generally open for retail trade) on the day on which the application was made. Her Honour said that there was nothing in the legislative framework that required such a construction. Her Honour considered that such a construction runs counter to the grammatical meaning of the definition and to the interpretation that a reasonable person would understand to have been intended by the meaning of the word “supermarket”, used in the context of a proxy for a location that is “likely to be well frequented”, and which has sufficient community need for a new pharmacy to operate viably. Her Honour found that the Authority had improperly construed the definition of “supermarket”, and formed its state of non-satisfaction as to the existence of a supermarket on an erroneous basis. Her Honour held that the Authority’s decision was not authorised by the enactment in pursuance of which it was purported to be made, within the meaning of s 5(1)(d) of the ADJR Act.

Consideration

49    It is unnecessary to rehearse the submissions made by the parties in the appeal. That is because ZAA essentially relied upon the reasons of the primary judge, which we have described in detail, while Stonehealth largely repeated the submissions it made at first instance that were rejected by the primary judge.

50    It is necessary to commence by understanding the Authority’s pivotal finding that, “the Coles supermarket was not trading on the day the application was made, and [the Authority] was therefore not satisfied that, at all relevant times, there is, within 500 m, in a straight line, from the proposed premises…a supermarket that has a gross leasable area of at least 2,500 m2”. That finding was expressed somewhat loosely, but must be understood by reference to the reasons as a whole. The Authority’s finding must be construed as meaning that, firstly, the requirement of Item 130(b) of the Rules that there be “at all relevant times…a supermarket”, means that a retail store must have commenced trading on or before the day on which the application was made; and, secondly, as the Coles supermarket had not commenced trading on or before that day, that requirement was not met.

51    The issue is whether the primary judge erred in holding that the Authority’s construction of Item 130(b) was wrong.

52    In Vincentia MC Pharmacy Pty Ltd v Australian Community Pharmacy Authority [2020] FCAFC 163, Perry and Stewart JJ observed at [43]–[48] that the Rules are legislative instruments and, pursuant to s 13(1) of the Legislation Act 2003 (Cth), the Acts Interpretation Act 1901 (Cth) applies to their construction and, further, they must be read and construed subject to the NH Act. Their Honours also observed that s 15AA of the Acts Interpretation Act requires that the interpretation which best gives effect to the legislative purpose must be preferred to any other interpretation.

53    In SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362, Kiefel CJ, Nettle and Gordon JJ held at [14]:

The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.

(Citations omitted.)

54    In Walkerden, Mortimer J observed at [62], in relation to the objectives of the version of the Rules then in force:

Those objectives have twin themes: a sustainable and viable community pharmacy network (which focuses at least as much on the interests of pharmacy owners as on the community) and access to pharmaceutical benefits (with a focus only on the community’s interests). In that sense, the location rules are an attempt to balance community access with commercial sustainability.

Those observations remain pertinent to the present version of the Rules. However, it may be observed that the Rules in their current form bear little resemblance to those first promulgated in 1990. As a result of numerous iterations and alterations of the Rules, caution must be exercised in attempting to identify the particular rationale for particular Items in Pt 2 of Sch 1 and understanding whether and how some Items cohere with others. Beyond the objectives of a sustainable and viable community pharmacy network and access to pharmaceutical benefits, it becomes difficult to identify common economic or policy considerations connecting all of the Items and criteria in Pt 2 of Sch 1.

55    It is appropriate to commence with the language of Item 130 of the Rules. The provision can be more readily understood if the definitions of “all relevant times” and “supermarket” are incorporated. Item 130(b) then, relevantly, reads:

The Authority is satisfied that, at all relevant times (ie at the day on which the application was made and the day on which the application is considered by the Authority), there is, within 500 m, in a straight line, from the proposed premises, a supermarket (ie a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods) that has a gross leasable area of at least 2,500 m2.

56    The Authority must be satisfied that the relevant criteria were and are met at “all relevant times”, which are defined to mean, “(a) the day on which the application was made; and (b) the day on which the application is considered by the Authority”. I respectfully agree with the primary judge that Item 130 contemplates the existence of a “supermarket” on the day the application is made, as well as on the day the application is considered.

57    That conclusion is reinforced by the use of the simple present tense (“is”), immediately after the phrase “at all relevant times”. In light of the definition of “all relevant times” as referring to both a time in the past and the present, it would have been grammatically correct to say “was and is” rather than “is”. However, what is significant is that, in the context that it immediately follows “at all relevant times”, “is” denotes a temporal requirement. It means “exists”. It emphasises that the Authority must be satisfied that, relevantly, a “supermarket” existed at the day the application was made, and exists on the day the application is being considered.

58    Accordingly, the Authority must be satisfied that there was at the day the application was made, and is at the day it considers the application, a “supermarket”; which had and has a gross leasable area of at least 2500 m2; and which was and is within 500 m in a straight line from the proposed premises.

59    The expression “supermarket” is defined as, “a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods”. The definition has three requirements, each of which is substantive in its operation: cf Vincentia at [51]. First, there must be a retail store. Second, the retail store must have business. Third, the primary business must be the sale of a range of food, beverages, groceries and other domestic goods. Each of these elements must be satisfied at the day the application was made and at the day the application is being considered by the Authority.

60    Item 130(b) makes use of the simple present tense (“is”) four times. The primary judge focused on the fourth use, in the definition of “supermarket”, concluding that that use is descriptive. In that definition, the simple present tense describes the nature of the primary business that is required – the primary business must be the sale of a range of food, beverages, groceries and other domestic goods. The primary judge’s conclusion that in the definition of “supermarket”, the simple present tense is used descriptively, rather than to signify contemporaneity, should be accepted.

61    As has been mentioned, the first element of the definition is that there be a “retail store”. A “store” refers, in the context, to a physical shop. I agree with the primary judge that “retail” is used as an adjective, describing a store where products are available for sale directly to retail consumers. The word “retail” narrows the type of store that may be a “supermarket” by excluding, for example, a “wholesale store”. The use of the word “retail” is not as a verb to denote the activity of selling. Therefore, I consider that the phrase “retail store” does not of itself indicate that the store must be trading on the day when the application is made.

62    However, that is not the end of the analysis. The second element of the definition is that the retail store must have “business”. This is indicated by the use of the possessive relative clause, “the primary business of which is”. The definition requires that the retail store—not the owner of the retail store—have business. The definition does not require that the retail store be “a business”. While the Macquarie Dictionary Online offers no definition of “business” which precisely fits the present context, “business” must mean simply “commercial activity”. The retail store must have commercial activity. This is consistent with the view expressed by Mortimer J in Walkerden at [108] that the definition of “supermarket”, “clearly connotes business activities carried out by the store concerned”.

63    Therefore, the phrase “a retail store, the primary business of which…” in the definition of “supermarket” requires that there be a physical retail store that has commercial activity of a particular kind. As has been emphasised, that definition must be satisfied at the day the application is made and at the day the application is considered.

64    The first element may be capable of being satisfied even if the retail store has not commenced trading at the day the application is made, but the second is not. The retail store must have “business” at the day the application is made, and at the day the application is considered, and that requires the existence of business, which must consist primarily of the sale of a range of food, beverages, groceries and other domestic goods. A retail store cannot have business (let alone primary business) until it has commenced trading.

65    Once trading is commenced, a “supermarket” may be open or closed at various times according to its hours. It does not lose its character as a “supermarket” during the hours when it is closed. That character derives from the fact that it has commenced trading.

66    The primary judge’s construction such that a retail store need not have commenced trading at the day the application is made must mean, logically, that there is also no requirement for it to have commenced trading at the day the application is considered by the Authority. A consequence of such a construction would be that the Authority may be obliged to recommend approval of an application so long as a “supermarket” will probably trade in the future. However, Item 130(b) does not use the language of likelihood. This may be contrasted with Items 133, 134, 134A and 136 which rely upon there being a certain number of “commercial establishments” under s 7(1) of the Rules, which, in turn, depends upon whether premises are “occupied by, or likely to be occupied by” certain types of businesses. That is the type of language that would have been used in Item 130 if it were intended that approval be granted on the basis that a “supermarket” will probably trade in the future. The construction favoured by the primary judge is not supported by the language of Item 130.

67    It must be considered whether the grammatical meaning of Item 130—that a retail store must have actually commenced trading at the day of the application to be a “supermarket”—is affected by other contextual factors.

68    The potential consequences of the competing constructions must be considered. In Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297, Mason and Wilson JJ said at 321:

If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.

69    The primary judge’s construction would leave open the possibility that an approval may be granted even though the “supermarket” never ultimately trades, or trades with a gross leasable area less than the prescribed area. As will be discussed, the requirement that there be a “supermarket” appears designed to ensure that there is adequate demand for the supply of pharmaceutical benefits in a particular location. The granting of approval in circumstances where a “supermarket” may never open, or open with a smaller area than anticipated, would be inconsistent with the objects of a sustainable and viable network of community pharmacies and access of consumers to pharmaceutical benefits. Such consequences are unlikely to have been intended.

70    A construction that requires that a retail store have actually commenced trading on or before the day of the application promotes greater certainty for applicants. The primary judge’s view—that it is a matter for the Authority to consider any fact or matter put before it that would establish to its satisfaction that, at the relevant days, the retail store was a “supermarket”—promotes uncertainty. It would mean that at some uncertain point in time, a “retail store” would transform into a “supermarket”. It would require competing applicants to make a judgment, or guess, as to the point in time when that occurs. It would encourage multiple applications to be made by an applicant or competing applicants before a retail store commences trading to guard against the prospect that the Authority may regard the “supermarket” as having come into existence at some later time. The success of any application would depend upon the Authority’s evaluative judgment as to when it is that the “supermarket” comes into existence.

71    The primary judge reasoned that there are other evaluative judgments that the Authority is required to make under the Rules, such that uncertainty about whether the definition of “supermarket” is met at a particular point in time cannot be regarded as unintended. The Authority must make an evaluative judgment in respect of Items 133, 134, 134A and 136, where the Authority must consider the likelihood of occupation of premises, as well as the nature of the businesses likely to occupy the premises, including whether premises are likely to be a “temporary selling point”. It is true that there are matters of “fact and degree” involved in these assessments: see Walkerden at [108]–[111], [115]. However, in the context that there may be competing applications vying to be the first in line, the evaluative judgment required by the primary judge’s construction in deciding at what point in time a “supermarket” comes into existence is likely to be productive of considerable uncertainty and inconvenience. That makes such a construction less likely than a construction that the requirement that “at all relevant times there is…a supermarket” cannot be satisfied unless trading has commenced on or before the day the application is made.

72    It is submitted on behalf of ZAA that Stonehealth’s construction would lead to the “absurd result” that in a newly constructed “large shopping centre”, only a supermarket would need to be trading, while the remaining minimum of 50 “commercial establishments” would not need to be trading. However, that result is a product of the express language of the definition of “commercial establishment” in s 7(1) which requires only that premises are “likely to be occupied” by businesses of certain kinds. In contrast, in that definition, the words “likely to be occupied” are not applied to a “supermarket”. That tells against a retail store that has not yet commenced trading being a “supermarket”, no matter how likely it is to commence trading.

73    Further, there is no absurdity of the kind posited. In Assarapin, the Full Court referred at [41]–[45] to the “centrality of proximity and/or location in a facility” in achieving the objects of the legislative scheme. An examination of the Items in Pt 2 of Sch 1 of the Rules reveals that the criteria for approval of new premises rely upon there being adequate existing or likely demand for drugs or medicinal preparations attracting pharmaceutical benefits, combined with the absence of nearby existing approved premises. This is consistent with the dual purposes identified in Walkerden at [62]. The Rules appear to generally gauge the existence of adequate demand or likely adequate demand by reference to proximity of the proposed premises to supermarkets or medical practices, or location within large or small shopping centres, large private hospitals or large medical centres.

74    Under some Items in Pt 2 of Sch 1, it is clear that there must be existing demand, while under other Items, the demand need only be prospective. In the case of large or small shopping centres, there must be a “supermarket”. As Stonehealth submits, it may be inferred that the importance of “supermarkets” is that they are usually “anchor tenants”. The Rules appear to proceed upon the assumption that a “supermarket” will attract consumers to the shopping centre. However, in order to attract consumers, it is necessary for a supermarket to actually be trading. Once a supermarket is trading, there will be demand for the supply of pharmaceutical benefits from a pharmacy located in the shopping centre, even though maximal demand will not be achieved until the centre is fully tenanted. This appears to explain why the definitions of “commercial establishment”, “large shopping centre” and “small shopping centre” allow for more gradual tenanting of premises (“likely to be occupied”) by other types of businesses, provided that a supermarket is already trading and generating customers and demand for pharmaceutical benefits.

75    It was submitted on behalf of ZAA that an objective of the Rules is to provide timely access to pharmaceutical benefits and that this objective is promoted by the primary judge’s construction, since a supermarket need not have commenced trading in order to be approved. ZAA submits that, on the other hand, a requirement that a supermarket have actually commenced trading would delay approval and thereby delay the provision of pharmaceutical benefits. However, s 10(3)(e) of the Rules requires the Authority to be satisfied that, “within 6 months after the day on which the Authority makes a recommendation in relation to the application, the applicant will be able to begin operating a pharmacy at the proposed premises”. Accordingly, the Rules contemplate that there may be delay in the provision of pharmaceutical benefits even after a recommendation is made. In this context, the delay between the making of an application and the making of a recommendation by the Authority cannot be seen as significantly impairing timely access to pharmaceutical benefits.

76    It should be recognised that even under the construction of Item 130 that there must be a “supermarket” which has commenced trading on or before the day of the application and before the day on which the application is considered by the Authority, there may be difficulties for applicants and for the Authority. Under Item 130, there can only be approval of one pharmacy, and the Authority uses a queue-based system, so there is a powerful incentive for a prospective applicant to file the first application. This construction would mean that the competition to file the first application would simply be transferred to the day on which a supermarket commences trading. Even so, there would be greater uncertainties under the interpretation favoured by the primary judge. The difficulties under either interpretation are a consequence of the legislative scheme which permits only one approved premises in a certain area or within certain premises.

77    Item 130 of Pt 2 of Sch 1 of the Rules requires that a “supermarket” must have commenced trading on or before the day the application was made and before the day the application is considered by the Authority.

78    It follows that the Authority was correct to conclude that as the Coles Supermarket had not commenced trading on or before the day on which the application was made, Item 130(b) of the Rules was not met because there was not “at all relevant times…a supermarket”.

79    The appeal must be allowed and the application for judicial review must be dismissed. ZAA should pay Stonehealth’s costs of the appeal.

Associate:    

Dated:    9 November 2020

REASONS FOR JUDGMENT

CHARLESWORTH J:

80    I have had the benefit of reading the reasons of Rangiah J in draft. I agree that the appeal should be allowed, but arrive at that result by an alternate course of reasoning.

81    The primary judge was correct to describe the word “retail” as adjectival. It qualifies the word “store”. In its ordinary meaning, the phrase “retail store” denotes a premises from which a particular kind of business activity (that of retail sales) occurs in fact. In my view, the phrase does not encompass a premises from which such a business is expected to commence in the future. Once the business of a retail store has commenced, the store may have opening and closing hours. However, provided that the business has commenced to operate, the store retains its character as a retail store outside of its business hours.

82    The phrase “the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods” reinforces the temporal requirement already implicit in the phrase “retail store”. It contemplates that there be a business presently in existence. The phrase also delineates between those stores that are supermarkets and those that are not, by reference to the type of goods sold at and from the retail store.

83    The phrase “at relevant times” identifies the day or days upon which the requisite business must be operating.

84    In my view, that is sufficient to answer the temporal question arising on this appeal: a retail store is not a retail store until the day upon which the business of retail sales commences at the premises. Whether or not the retail store is a supermarket depends on the goods then being sold. It is not sufficient to show that there is likely to be a retail store of the requisite kind at the relevant place at the relevant time.

85    If there be alternate grammatical uses for the word “is”, those uses cannot overcome the ordinary meaning of the nouns and adjectives incorporated in the definition, nor the ordinary meaning of the definition, read as a whole.

86    On the facts, there was no “retail store” (properly construed) in existence at the relevant time. The Authority was correct to so decide. I respectfully differ from the conclusion reached by the primary judge, and so join in orders allowing the appeal.

Associate:

Dated:    9 November 2020