FEDERAL COURT OF AUSTRALIA

Hallgath v Australian Community Pharmacy Authority [2011] FCA 1062

Upon the applicant giving the usual undertaking as to damages.

THE COURT ORDERS THAT:

1.    The decision under review is stayed until the hearing and determination of the application or further earlier order.

2.    The applicant has leave to amend the grounds of the judicial review application.

3.    The applicant is to file any amended application by close of business on 6 September 2011.

4.    The first respondent is to serve on the applicant and the third respondent an extract of the minutes of its meeting relevant to the decision under review by close of business on 7 September 2011.

5.    The applicant is to file such further material, if any, upon which he proposes to rely by close of business on 8 September 2011.

6.    The third respondent is to file such further material, if any, upon which it proposes to rely by close of business on 12 September 2011.

7.    The matter is listed for hearing on 14 September 2011 at 10.15am.

8.    Liberty to apply.

9.    As between the applicant and the third respondent the costs of today are costs in the proceedings.

10.    Save as aforesaid, costs are reserved.

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

REASONS FOR JUDGMENT

1    Mr Hallgath is a pharmacist practising at Maclean in northern New South Wales. He has sought the judicial review of a decision by the first respondent, the Australian Community Pharmacy Authority (the Authority) under the National Health Act 1953 (Cth) (National Health Act), to recommend to the second respondent, the Secretary of the Department of Health and Ageing, that an approval be granted to the third respondent, CKK Services Pty Ltd (CKK Services) for the supply of pharmaceutical benefits on demand to members of the public pursuant to the National Health Act.

2    The existence of a favourable recommendation by the Authority is a condition precedent to, but not determinative of, the granting by the Secretary of such an approval under the National Health Act. The language of s 90 of the National Health Act is such that it is patent that the Secretary retains a residual discretion in respect of the granting to a pharmacist of approval to supply pharmaceutical benefits at particular premises. The question for today is whether or not to continue an interlocutory injunction which was granted in circumstances of some urgency last month. The urgency arose because of the then-apprehended imminence of the making of a decision by the Secretary in respect of the granting of an approval following an earlier favourable recommendation by the Authority.

3    I should indicate that the stance taken by the Authority, and for that matter the Secretary, is that of abiding the order of the Court.

4    In terms of the granting of interlocutory injunctive relief, the test which has come to be regarded as applicable in this country is that found in the joint judgment of Gummow and Hayne JJ in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65] in particular. In essence, one is driven to consider whether the applicant has shown a prima facie case and where the balance of convenience lies. The two are not mutually exclusive in the sense that a case which can be seen not just to be established prima facie but to have about it a compelling quality might tend to support the granting of interlocutory injunctive relief, even if the balance of convenience were not as compellingly in favour of an applicant. There are many permutations and combinations. The point that I seek to make is nothing more than it would be a mistake to regard the two as mutually exclusive in terms of the relevance and interplay which they have in relation to the granting of interlocutory injunctive relief.

5    In this instance there are, or at least there have come to be, two grounds of judicial review which are sought to be agitated. The first is one of either the Authority having no evidence, or at least making its decision unreasonably, in relation to the population criterion in respect of a catchment area for the proposed premises. The second concerns the separate criterion of whether, at two critical times which emerge from rules which are relevant to the making of a recommendation, the third respondent, CKK Services, had a legal right to occupy proposed premises. It is convenient to make brief further reference to each of these grounds of review and the arguments sought to be raised by Mr Hallgath.

6    Within the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (Cth) (the Determination), r 9 provides for a number of circumstances in which, if found to exist, the Authority must recommend that an applicant be approved under s 90 of the National Health Act in respect of particular premises. In contrast, r 10 in the Determination provides that a recommendation must be made that an applicant not be approved if a requirement found in r 9(a) or r 9(b) is not met. It was submitted on behalf of Mr Hallgath and not, as I apprehend, contested, that the effect of these two rules was that the Authority did not have a discretion in relation to a recommendation in the event that it found that the criteria in r 9(a) or r 9(b) were met, or as the case may be, not met.

7    Rule 9 directs attention to requirements found in either Sch 1 or as the case may be, Sch 2. In this instance, so far as the question of catchment area is concerned, it is item 107 in Sch 1 which is pertinent; in particular requirement 3(a), which provides that one of the criteria is that the Authority is satisfied that:

The resident population of the catchment area for the proposed premises is, for most of the year, at least 8000.

8    It can be seen by the use of the expression “is satisfied” that the relevant jurisdictional fact is a state of administrative satisfaction as to the existence of a particular state of affairs, rather than the very existence, as a matter of objective fact, of that state of affairs. This type of drafting device is often used in circumstances where the Parliament, or as the case may be, the author of an administrative determination, seeks to limit the scope of agitation concerning factual matters upon judicial review: see definitively in this regard the judgment of Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611.

9    That does not mean that such decisions which are made by reference to such a criterion are unexaminable on judicial review. It does though mean that the grounds of review which relate to this particular aspect of the Authority’s recommendation decision will not be met if there was some evidence before the Authority which was reasonably probative of the state of satisfaction which the Authority voiced in its reasons.

10    In respect of this particular aspect of the challenge, it is apparent that there was a body of evidence before the Authority by reference to which the Authority came to make its decision. It was not possible in the circumstances of an interlocutory injunction application to explore that material in detail. Nonetheless, as a matter of initial impression, it seems to me that the applicant has a difficult task ahead in establishing relief by reference to this ground of judicial review, whether it be considered on a no-evidence basis or on an unreasonableness basis. The test, though, in relation to whether a prima facie case exists is that if the evidence remains as it is, is there a probability that the applicant will be entitled to the relief sought? It is not necessary that the applicant show that it is more probable than not that the applicant will succeed.

11    Were this the only basis of challenge and having regard to some matters touching on the balance of convenience, I am not persuaded that I would grant continued interlocutory injunctive relief.

12    That is an apt note upon which to turn to the other basis of challenge. That too emerges from one of the schedules to the determination, in this case Sch 2. Schedule 2, in item 201(a), provides inter alia that the authority must be satisfied that:

…the applicant had, on the date of the application, and has, on the date on which the Authority makes a recommendation in respect of the application a legal right to occupy the proposed premises.

13    “Proposed premises” is a defined term for the purposes of the Determination. Rule 6 provides:

Proposed premises in relation to an application means the premises at which an applicant proposes to supply pharmaceutical benefits.

14    Having regard to the terms of item 201(a) and the circumstances of this case there are two critical dates namely, 20 June 2011 and 29 July 2011 which are respectively the date of the application and the date of the recommendation decision. The Authority had in evidence before it a lease in respect of a property known as 60 River Street, Maclean. That is the address of the proposed premises. The lease was signed on 20 June 2011, but its commencing date was 1 August 2011. The question then is whether, as at the date of the Authority’s recommendation decision in particular, CKK Services had a legal right to occupy the proposed premises?

15    It is unnecessary to express a concluded view on that subject, but I am well satisfied that the applicant, Mr Hallgath, has established a prima facie case in respect of what is a short but nonetheless highly important point of statutory construction in relation to the criteria which must be met before the Authority may make a recommendation decision. The arguments are not all one way, as was apparent from the submissions made on behalf of CKK Services today, but they do at least admit of a view that it is unlikely that item 201 should be construed as referable only to actual occupation.

16    I turn to the balance of convenience question. The evidence establishes that, perhaps optimistically, but nonetheless in fact, CKK Services has embarked on a course which has seen the fitting out of the premises concerned, and their stocking. Staff also have been engaged. CKK Services is a party to an agreement in respect of the approval with other parties. The agreement is dated 20 June 2011. It is termed a “Sale of Approval Number Agreement”. It is perhaps something of a misnomer to term the agreement a sale of an approval number, in the sense that the Secretary has the power to cancel and then to approve. Agreements of this kind are not unknown in relation to pharmacies in this country. The Secretary, though, is not a party to it, nor is there any provision in the legislation for the Secretary to be a party to it. Nonetheless, as I have said, this type of agreement is not unknown. Approvals are seen to have a value within the pharmacy profession. The terms of the agreement are such that a critical date which emerges, so far as the ability of CKK Services to hold the “vendor” of the approval to the agreement, is 28 September 2011. That is what is described as the “second completion date” for the agreement.

17    Another critical date which emerges, this time from the lease in item 25, is 31 October 2011. At item 25 in the lease one finds in clause A the following:

This lease is condition is condition upon the Lessee, prior to 31 October 2011, obtaining on terms acceptable to the Lessee:

(a)    approval from the Australian Pharmacy Council and Medicare to operate a pharmacy at the premises with an approval number to supply pharmaceutical benefits under Section 90 of the National Health Act 1953;

(b)    a positive recommendation from the Australian Community Pharmacy Authority for the operation or relocation of a pharmacy at the premises.

…

It is not necessary to set out the balance of item 25.

18    The case is not one which is presently on my docket. The earliest date upon which the docket judge could hear this case is 3 November 2011. Each side has agreed that the case would take one day to hear. That accords with my own impression of the case, having regard to the issues raised. It is possible for me to hear the case on 14 September 2011, a little over a week away. I believe it will be possible, according to the ordinary practice of the Court, for the case to be transferred to my docket for a hearing on that date in light of the urgency which attends the interests of each of the active parties, having regard to the critical dates which I have mentioned, as well as the more general question of whether, having regard to the steps thus far taken by CKK Services, there ought to be any disruption of the planned operation and carrying into effect of that plan of the pharmacy at the premises.

19    Weighing up the question of the balance of convenience by reference to a trial date of 14 September 2011 raises different considerations than would arise if weighing up the balance of convenience by reference to a trial date on 3 November 2011.

20    Other factors which are relevant, in the event that, for one reason or the other, the applicant’s case proves successful such that the recommendation decision is quashed, are the interests of the wider community in terms of disruption of attendance at particular pharmacy premises, and the uncertain effect which quashing might have on the vendor of the approval if the case were not determined by 28 September 2011.

21    Another consideration which is relevant to take into account is the effect on the third respondent of the receipt of payments from the Commonwealth in respect of the supply of pharmaceutical benefits if it transpired that the condition precedent for the Secretary’s approval, namely a favourable recommendation from the Authority was not met because it was unlawful. To extend interlocutory injunctive relief until the hearing and determination of this case, where the case can be heard on 14 September 2011, is not in my opinion an unreasonable restraint in terms of the balance of convenience. There is in that short time period much to be said in favour of a preservation of the status quo. Of course that will involve some expense being incurred by CKK Services in terms of rental of premises and in terms of other business outlays, including in respect of staff. However, there was something of an element of commercial risk taking in CKK Services embarking upon the course that it did prior to the expiry of the time within which a judicial review challenge might be instituted. That there was the possibility of such a challenge should have been apparent from the existence of an objector in respect of the approval process. That there was a view competing with that of CKK Services in relation to the catchment area question, at least, is apparent from para 22 of the reasons given by the Authority. To balance against those particular expenses that will be incurred, there is the usual undertaking as to damages which is offered on behalf of the applicant.

22    I also take into account that, if the applicant is successful, it is unlikely that he would have any cause of action, either as against CKK Services or the Commonwealth in respect of any damage that might be inflicted on his pharmacy business by the conduct of another pharmacy at Maclean.

23    For these reasons, having regard to the grounds of review, which do establish a prima facie case, the strength of those grounds and the factors which intrude on a balance of convenience, I am persuaded that there ought to be an interlocutory injunction granted until the hearing and determination of the application.

Associate:

Dated:    13 September 2011