FEDERAL COURT OF AUSTRALIA

Yu v Minister for Health [2013] FCA 261

THE COURT ORDERS THAT:

1.    The proceeding be listed for further hearing at 10:15 am on 3 April 2013.

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

REASONS FOR JUDGMENT

1    This is an application under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”) with respect to decisions made in July and September 2012 by the first respondent, the Minister for Health (“the Minister”), the second respondent, the Australian Community Pharmacy Authority (“the Authority”) and the third respondent, the Secretary to the Department of Health and Ageing (“the Secretary”). In the first decision, made on 20 July 2012 by the Minister, the fourth respondents, Steven Barlow and Shane Weller, were approved for supplying pharmaceutical benefits at 61-63 Sydney Street, Kilmore, pursuant to s 90A of the National Health Act 1953 (Cth) (“the NH Act”). In the second decision, made on 27 July 2012, the Authority recommended to the Secretary that the applicant not be approved for the purpose of supplying pharmaceutical benefits at 92 Sydney Street, Kilmore, pursuant to s 90 of the NH Act. In the third decision, made on 24 September 2012, the Secretary rejected the applicant’s application for approval for the purpose of supplying pharmaceutical benefits at 92 Sydney Street, Kilmore, also pursuant to s 90 of the NH Act.

2    In his attack upon the first decision, that made by the Minister, the applicant relies upon paras (a) and (c) of s 5(1) of the ADJR Act. That is to say, he contends that a breach of the rules of natural justice occurred in connection with that decision, and that the Minister did not, in any event, have jurisdiction to make the decision. The basis of the applicant’s attack on the second and third decisions is to be found in the operation of certain provisions of the NH Act to which I shall refer, and of rules made under that Act.

3    Before turning to the facts of the case, it is convenient to identify the provisions of the NH Act under which the present controversy arose. As is well known, in some circumstances, the Commonwealth subsidises the provision by pharmacists of pharmaceutical benefits. Such subsidies are available only to approved pharmacists dispensing pharmaceutical benefits from premises in relation to which they (the pharmacists) are approved. In the normal course, the process of approval is governed by s 90 of the NH Act, the presently relevant provisions of which are the following:

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

….

(3A)    Subject to subsections (3AA) and (3AE), an application under this section must be referred to the Authority.

….

(3B)    An approval may be granted under this section in respect of an application that has been referred to the Authority under subsection (3A) or (3AF) only if the Authority has recommended the grant of the approval, but the Secretary may refuse to grant an approval even if the grant has been recommended by the Authority.

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

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

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

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

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

….

(6)    For the purposes of this section, a reference to a pharmacist is taken to include a reference to a person who owns, or is about to own, a business for the supply of pharmaceutical benefits at particular premises.

As provided in s 90(3A) of the NH Act, an application for approval must be referred to the Authority. Under subs (3B), a favourable recommendation by the Authority is necessary for the Secretary to grant approval under subs (1).

4    The next provisions to consider are ss 99K and 99L of the NH Act, which provide as follows:

99K(1)    The functions of the Authority are:

(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; and

(2)    In making a recommendation under subsection (1), the Authority must comply with the relevant rules determined by the Minister under section 99L.

(3)    All recommendations of the Authority under subsection (1) are to be made to the Secretary.

99L(1)    The Minister must, by writing, determine the rules subject to which the Authority is to make recommendations under subsection 99K(1).

(2)    A determination under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

These provisions are relevant in the present case because it is by s 99K(2) that rules made by the Minister under s 99L are made binding on the Authority when considering whether to make a recommendation for approval under s 90.

5    Also relevant are certain provisions of s 98(1) of the NH Act, which provide:

(1)    Whenever:

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

….

    the Secretary shall cancel that approval.

6    The section of the NH Act which lay at the centre of the controversy in the present case is s 90A, the relevant provisions of which are as follows:

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

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

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

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

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

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

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

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

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

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

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

(b)    by the Minister personally.

(5)    Subject to subsection 90B(5), the Minister does not have a duty to consider whether to exercise the power under subsection (2) in respect of the Secretary’s decision.

(6)    The power under subsection (2) does not authorise the Minister to approve a pharmacist for the purpose of supplying pharmaceutical benefits at particular premises at which the pharmacist is not permitted, under the law of the State or Territory in which the premises are situated, to carry on business.

7    By s 90B(1), a pharmacist to whom (by subs (1) thereof) s 90A applies may, in writing, request the Minister to exercise the power of substitution arising under s 90A(2). Subsections (4) and (5) of s 90B provide:

(4)    The Minister must, within 3 months after receiving a request under subsection (1), personally decide whether to consider the request. If the Minister has not made a decision within this period, the Minister is taken to have decided not to consider the request.

(5)    If the Minister decides to consider a request under subsection (1), the Minister must, within 3 months after making that decision, personally decide whether to exercise the power under subsection 90A(2) in respect of the Secretary’s decision. If the Minister has not made a decision within this period, the Minister is taken to have decided not to exercise the power under subsection 90A(2) in respect of the Secretary’s decision.

8    Section 90D has become of some importance in the present case. It provides:

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

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

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

(i)    advising the person of the request; and

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

(2)    If:

(a)    the Minister gives a notice to a pharmacist under paragraph (1)(a); and

(b)    the pharmacist does not provide the information specified in the notice or produce the documents specified in the notice within the period specified in the notice;

the Minister may treat the request as having been withdrawn.

(3)    If the Minister gives a notice to a person under paragraph (1)(b), the Minister:

(a)    is only required to consider comments, information or documents provided by the person during the period specified in the notice; and

(b)    if the person does not provide any comments, information or documents within that period—is not required to take any further action to obtain such comments, information or documents.

9    The provisions of s 90E should also be noted:

If the Minister decides to substitute for a decision of the Secretary to which section 90A applies a decision approving a pharmacist for the purpose of supplying pharmaceutical benefits at particular premises:

(a)    the pharmacist is to be treated for all purposes of this Act as if the pharmacist is approved under section 90 in respect of those premises; and

(b)    references in this Act to an approval granted under section 90 include references to an approval treated as having been granted under section 90 by paragraph (a) of this section; and

(c)    the conditions to which an approval granted under section 90 is subject (including any condition that is imposed by means of a determination under paragraph 92A(1)(f)) apply also to an approval that is treated as having been granted under section 90 by paragraph (a) of this section; and

(d)    the rights conferred and obligations imposed on an approved pharmacist apply to the pharmacist in his or her activities as an approved pharmacist.

10    I turn next to the rules which have been determined by the Minister (or one or more of her predecessors) under s 99L of the NH Act. Until the events which became controversial in the present case, those rules were contained in the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (“the 2006 Rules”). In s 6A of the 2006 Rules, the term “approved premises” was defined as follows:

(1)    For this Determination, approved premises are premises, other than redundant premises:

(a)    in respect of which an approval granted under section 90 of the Act is in force; or

(b)    in respect of which the Authority has recommended an applicant be approved under section 90 of the Act.

The operative provisions of the 2006 Rules were ss 9 and 10 thereof, as follows:

9    The Authority must recommend that an applicant be approved under section 90 of the Act in respect of particular premises if:

(a)    for an application that involves the cancellation of an approval (the existing approval) that is in force in respect of approved premises (the existing premises):

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

(ii)    the requirements set out in column 3 of that item are met; and

(iii)    the requirements set out in Schedule 2 and Part 1 of Schedule 3 are met; and

(iv)    for an application described in column 2 of an item of Part 2 of Schedule 3 — the requirement set out in column 3 of that item is met; and

(b)    for an application to which paragraph (a) does not apply:

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

(ii)    the requirements set out in column 3 of that item are met; and

(iii)    the requirements set out in Schedule 2 are met.

10    The Authority must recommend that an applicant not be approved under section 90 of the Act in respect of particular premises if a requirement that, under paragraph 9 (a) or (b), applies in relation to the application is not met.

As appears from the provisions of s 9, the substantive criteria by reference to which the Authority was to make a recommendation to the Secretary were contained in the schedules to the 2006 Rules.

11    With respect to s 9(a)(i) of the 2006 Rules, all that was required was that the application for approval state that it was of a kind mentioned in column 2 of an item in Pt 1 of Sch 1. That part dealt with “[a]pplications involving cancellation of existing approval”, and one of the kinds of an application of that nature, covered by item 104, was “[s]hort distance relocation (1 km)”. In such a case, s 9(a)(ii) provided that the corresponding requirements set out in column 3 of Pt 1 of Sch 1 be met. Relevantly, one of the requirements identified for a “short distance relocation” was that the “proposed premises are no more than 1 km, in a straight line, from the existing premises”. This item in the schedule contemplated the cancellation of the approval of existing premises pursuant to s 98 of the NH Act, together with the approval of proposed premises to which the pharmacy would be relocated pursuant to s 90 of that Act.

12    Part 2 of Sch 1 to the 2006 Rules was concerned with “[a]pplications not involving cancellation of existing approval”. There were only two “kinds” of application that could be made under this part, each in respect of a “new pharmacy”. Item 113 dealt with pharmacies in urban localities, while item 114 dealt with pharmacies in rural localities. Under item 114, it was necessary that the new pharmacy in a rural locality be “at least 10 km, by the shortest lawful access route, from the nearest approved premises”.

13    Returning to s 9 of the 2006 Rules, subpara (iii) of para (a) thereof was concerned with the requirements in Sch 2, and in Pt 1 of Sch 3, to those Rules. The provisions of Sch 2 are uncontroversial, and need not detain us further. The provisions of Pt 1 of Sch 3, however, are presently significant. Schedule 3 was concerned with “[r]equirements for applications involving cancellation of existing approval”. Part 1 specified the requirements that applied in the case of “all applications”. Item 301(a) provided as follows:

(a)    the pharmacist approved in respect of the existing premises has requested, in writing, that, if an approval is to be granted in respect of the proposed premises, the existing approval will be cancelled immediately before the approval is granted;

The evident purpose of this item was to require the pharmacist in question to fashion his or her request for cancellation under s 98 in such a way as would make the cancellation, if the request were granted, effective immediately before the pharmacist received approval under s 90 for the proposed premises to which the pharmacy would be relocated.

14    On 13 September 2011, the then Minister made a new determination under s 99L of the NH Act, described as the “National Health (Australian Community Pharmacy Authority Rules) Determination 2011” (“the 2011 Rules”). By s 3 of the 2011 Rules, the 2006 Rules were revoked. Then s 4 of the 2011 Rules provided as follows:

The National Health (Australian Community Pharmacy Authority Rules) Determination 2006, also known as Determination No. PB 23 of 2006, as in force immediately before 18 October 2011, continues to apply in relation to the consideration, by the Authority, of an application made before 18 October 2011.

If there were any changes in the body of the 2011 Rules, by comparison with the 2006 Rules, they are not presently material. There was some renumbering, such that, for instance, what had been s 6A became s 6 and what had been ss 9 and 10 became ss 10 and 11.

15    There were, however, significant changes to the requirements set out in Pt 2 of Sch 1 to the 2011 Rules. The new provision which became relevant in the present case was item 132 in Pt 2 of that schedule (ie amongst the provisions dealing with “[a]pplications not involving cancellation of existing approval”). The new item 132 provided as follows:

In a rural locality, such as Kilmore, under Item 114 in Pt 2 of Sch 1 to the 2006 Rules, a new pharmacy had to be at least 10 km from the nearest “approved premises”. In similar circumstances under Item 132 of Pt 2 of Sch 1 to the 2011 Rules, however, the new pharmacy had to be only at least 200 m from the nearest “approved premises”, and at least 10 km from any other approved premises.

16    The effect of these changes brought about by the Ministerial Determination of 13 September 2011 was profound. Previously, there would be one “approved premises” only within a rural town such as Kilmore, with no possibility of approval being given to a second pharmacy within a 10 km radius. However, under the 2011 Rules, there could be two pharmacies in such a town, so long as the second approved premises were not less than 200 m from the first. The 10 km rule then applied with respect to subsequent approved premises. These changes were significant because they meant that, for the first time, it would be possible for a second pharmacy to be approved under s 90 of the NH Act in Kilmore.

17    I turn next to the facts of the case, commencing with a brief observation about the administrative procedures pursuant to which the Authority handles applications which are referred to it under s 90(3A) of the NH Act. Where multiple applications relate to a circumstance which could give rise to one approval only, or, I presume, to fewer approvals than there are applications, the Authority will handle the applications in the order in which they are received. It is not clear whether this is the order in which they are received by the Secretary under s 90(1) or are received on referral under s 90(3A). However, as a general proposition, the Authority appears to deal with applications on a first-come basis, although there is no specific legislative or regulatory provision which requires recourse to such a practice.

18    That brings me to the circumstances which led to the institution of this proceeding. For many years, the applicant has conducted a pharmacy business from premises at 20 Sydney Street, Kilmore. He has been, and remains, approved under s 90 of the NH Act in relation to those premises. That approval was of considerable value to him, since it meant that he could dispense pharmaceutical benefits which were subsidised under the Commonwealth Pharmaceutical Benefits Scheme (pursuant to provisions of the NH Act which are uncontroversial and do not need to be mentioned further). Although my attention was not drawn to any legal prohibition upon the conduct of a second pharmacy in Kilmore, it seems to be uncontroversial that the ability to attract the Commonwealth subsidy in relation to pharmaceutical benefits sold from premises approved under s 90 of the NH Act is of sufficient significance to the viability of a pharmacy to have produced the result that the applicant’s pharmacy was the only one in Kilmore. For reasons to which I shall turn, that remains the case.

19    When it became clear that the 2011 Rules would be determined under s 99L of the NH Act, and that the practical effect would be to allow for the s 90 approval of a second pharmacy in Kilmore, the applicant formed the intention that he should, if possible, take steps to secure the second approval for himself. Unsurprisingly, he seems to have anticipated that he would not be alone in that intention and, as it happened, the fourth respondents also desired to secure approval to conduct the second pharmacy in Kilmore. At the time, of course, the applicant did not know of the fourth respondents’ intentions (nor even, I assume, of the fourth respondents themselves). However, the applicant naturally assumed that there would be other pharmacists wanting to set up in competition with him in Kilmore, and he and his solicitor devised a stratagem to minimise the prospect of this occurring.

20    The 2011 Rules were to commence on 18 October 2011. That was the day upon which, therefore, an application for approval under s 90(1) of the NH Act would have to be dealt with under the 2011 Rules, rather than under the 2006 Rules. The applicant was concerned that any application made by him under s 90(1) might not be considered by the Authority in priority to like applications which might be received from other interests. With his solicitor, the applicant devised a means of securing priority for himself, although, as his counsel stressed and as I shall indicate below, it was a stratagem which presented some risks.

21    On 17 October 2011, the day before the commencement of the 2011 Rules, the applicant applied under s 90 of the NH Act for approval of premises at 92 Sydney Street, Kilmore. At the same time, he requested a cancellation of his long-standing approval at 20 Sydney Street, Kilmore, pursuant to s 98 of the NH Act. It is convenient to refer to this as the applicant’s relocation application. It was open to the applicant to make this application under the 2006 Rules and, by reason of s 4 of the 2011 Rules, the 2006 Rules would continue to apply in relation to consideration of it by the Authority.

22    Because of certain submissions made by the fourth respondents, to which I shall come, it is necessary to refer to the terms of the applicant’s relocation application. That application was made on a Commonwealth Government pro-forma headed “Application for Approval – Relocation of a Pharmacy”. After setting out the applicant’s existing approval number, the form continued:

I/we request approval under section 90 of the National Health Act 1953 (the Act) to supply pharmaceutical benefits at the premises described in ‘Section 2’ of this form with effect from (anticipated opening date) [1/3/2012].

The date, 1 March 2012, had been inserted by the applicant. There was provision on the pro-forma for a box to be ticked indicating under which item of the schedules to the 2006 Rules the application was made. Although the applicant overlooked ticking the appropriate box, it was common ground that he intended to tick, and that the Authority took him to be relying on, Item 104. In the form, the applicant also stated as follows:

I/we request that my/our approval under section 90 of the Act to supply pharmaceutical benefits at the premises described in ‘Section 1’ of this form be cancelled under section 98 of the Act with effect immediately prior to granting of approval to the applicant/s listed in ‘Section 3’ of this form.

23    As I have said, on the following day, 18 October 2011, the 2011 Rules commenced operation. On that day, the fourth respondents applied for approval under s 90 of the NH Act with respect to premises located at 61-63 Sydney Street, Kilmore. Those premises were, and are, more than 200 m from the applicant’s premises at 20 Sydney Street, which was probably, at the time, the only consideration exercising the minds of the fourth respondents. The premises were, however, in Kilmore, and were thus much less than 10 km from the premises to which, on the previous day, the applicant had indicated an intention to relocate his pharmacy, namely, 92 Sydney Street. The relevance of that circumstance is a matter to which I shall turn presently.

24    No doubt dealing with applications in the order in which they had been received, on 24 November 2011, the Authority recommended (pursuant to s 90(3B) of the NH Act) the applicant’s relocation application for approval. In so doing, the Authority was operating with reference to Items 104 and 301 in the schedules to the 2006 Rules which, pursuant to s 4 of the 2011 Rules, continued to apply to that application. Counsel for the applicant submitted, and I accept, that, from that point forward, the Secretary might have granted the applicant’s request under s 98(1) of the NH Act to cancel his approval in respect of the premises at 20 Sydney Street, in combination with approving the new proposed premises at 92 Sydney Street. For reasons which do not appear, however, no such step was taken by the Secretary. For a number of months after 24 November 2011, the position which obtained was that the applicant’s relocation application had been recommended for approval under s 90(3B), but no approval had been granted under s 90(1) of the NH Act.

25    On 20 January 2012, the Authority recommended the approval of the fourth respondents’ application with respect to 61-63 Sydney Street Kilmore. By a proceeding commenced in the court on 20 February 2012, the applicant challenged the legality of that recommendation. His case relied upon s 6 of the 2011 Rules, the terms of which (as previously numbered s 6A) I have set out in para 10 above. Because the Authority had, on 24 November 2011, recommended the approval of the applicant to conduct a pharmacy at premises at 92 Sydney Street, those premises were “approved premises” under s 6(1)(b). However, because the approval which the applicant held in respect of the premises at 20 Sydney Street had not been cancelled under s 98 of the NH Act, those premises were also “approved premises”, this time under s 6(1)(a) of the 2011 Rules. In the circumstances, so the applicant said in the court proceeding, at the time when the Authority purported to recommend the fourth respondents’ application for approval (on 20 January 2012), there were already two “approved premises” in Kilmore, and the premises proposed by the fourth respondents would not be at least 10 km from either of them, as required by item 132 in the schedules to the 2011 Rules.

26    A view appears to have been taken – and continued to be treated as uncontroversial in the present proceeding – that the applicant’s point in the proceeding commenced on 20 February 2012 was unanswerable. In the circumstances, on 30 March 2012, the Authority, which was the only respondent in that proceeding, consented to an order that the recommendation which it made favourably for the fourth respondents on 20 January 2012 be set aside, and that the matter be remitted to it for reconsideration according to law.

27    The Authority reconsidered the subject on 27 April 2012. It recommended that the fourth respondents’ application be refused on the basis that there were already two approved premises within the 10 km radius referred to in Item 132.1(c) of the schedules to the 2011 Rules.

28    At this stage, the applicant’s relocation application remained a matter of recommendation only. Approval for premises at 92 Sydney Street had not been given by the Secretary under s 90, and the applicant’s existing approval with respect to 20 Sydney Street had not been cancelled pursuant to s 98. Then on 24 May 2012, the applicant withdrew his relocation application, and, at the same time, applied for approval for a pharmacy at 92 Sydney Street, Kilmore, in addition to, rather than by way of relocation of, his existing pharmacy business at 20 Sydney Street. This application was to be processed pursuant to the 2011 Rules.

29    On 25 May 2012, the Secretary acted conformably with the Authority’s recommendation of 27 April 2012, and rejected the fourth respondents’ application in respect of 61-63 Sydney Street, Kilmore.

30    Before the applicant’s application of 24 May 2012 had become the subject of a recommendation by the Authority, on 22 June 2012, the fourth respondents lodged a request under s 90B of the NH Act for the Minister to make a decision, pursuant to s 90A(2) of that Act, in substitution for the Secretary’s decision of 25 May 2012 rejecting their application for approval with respect to 61-63 Sydney Street. How the Minister dealt with that application lies at the centre of the applicant’s case in this proceeding, and I shall return to it. It is sufficient here to say that the Minister had the benefit of a departmental minute, and that she neither notified the applicant of, nor afforded the applicant the opportunity to respond to, the fourth respondents’ application. On 20 July 2012, the Minister approved that application, that approval being treated, by reason of s 90E of the NH Act, as an approval under s 90 for all purposes. The Minister’s decision to give that approval is the first of the decisions to be challenged by the applicant in this proceeding.

31    On 27 July 2012, the Authority dealt with the applicant’s application, made on 24 May 2012, with respect to the premises at 92 Sydney Street. It recommended that approval not be granted, on the basis that, by then, there were already two approved pharmacy premises within the relevant 10 km radius in Kilmore, namely, the applicant’s existing premises at 20 Sydney Street and the fourth respondents’ intended premises at 61-63 Sydney Street, which had been the subject of the Minister’s approval under s 90A on 20 July 2012. On 24 September 2012, the Secretary gave effect to the Authority’s recommendation by rejecting the applicant’s application in respect of 92 Sydney Street.

32    The applicant challenges the legality of the Minister’s decision of 20 July 2012 on two grounds. First, it is said that the decision was made in breach of the rules of natural justice, in that the applicant, whose interests were affected, was given neither notice of, nor the opportunity to respond to, the fourth respondents’ invocation of the Minister’s power under s 90A, or the Minister’s intention to exercise that power. Secondly, the applicant relies on s 90A(6) of the NH Act, and says that the fourth respondents were not permitted, under the law of Victoria, to carry on business as pharmacists at 61-63 Sydney Street, Kilmore. It is said that a jurisdictional fact apropos the power arising under s 90A was therefore absent, and that the Minister had no power to make her decision under the section.

33    With respect to the natural justice point, it is uncontroversial that the applicant was not notified of the proceeding under s 90A of the NH Act, and had no opportunity to make any representations to the Minister in that regard. If the rules of natural justice apply, and if the applicant is entitled to the protection of those rules, they were, therefore, breached. The respondents contend, however, that the applicant did not have an interest sufficient to require him to be notified of the s 90A proceeding, and that the rules of natural justice were in any event, as a matter of statutory intention, excluded from operation in relation to a proceeding of that kind.

34    With respect to the sufficiency of the applicant’s interest, one commences with the judgment of Mason J in Kioa v West (1985) 159 CLR 550 at 584:

The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention.

Subject to the excision of the reference to “legitimate expectations” by the judgment of Gummow, Hayne, Crennan and Bell JJ in Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 290 ALR 616, 633 [65], this remains the accepted statement of the law with respect to the interest required to give rise to an obligation to accord procedural fairness in the making of an administrative decision. On the facts of the present case, it is not difficult to see how the interests of the applicant were affected by the Minister’s decision under s 90A in favour of the fourth respondents.

35    The respondents rely, however, on the judgment of the Full Court in Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589. That case also involved a recommendation under s 90 of the NH Act with respect to pharmacy premises, and it was claimed by pharmacists who operated nearby that they should have been accorded procedural fairness before the recommendation was made. Their Honours said (53 FCR at 597):

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

Martin was treated as binding, and applied on corresponding facts, in Loveridge v Pharmacy Restructuring Authority (1995) 39 ALD 103, 106, Pharmacy Guild of Australia v Australian Community Pharmacy Authority (1996) 70 FCR 462, 474 and Wong v Australian Community Pharmacy Authority [2011] FCA 52 at [63].

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

37    It was, however, next submitted on behalf of the respondents that the NH Act, properly understood, intended that the power under s 90A might be exercised without affording procedural fairness to any person. The question which arises on this submission is whether the rules of natural justice have been excluded “by plain words of necessary intendment”: Annetts v McCann (1990) 170 CLR 596, 598. It was submitted on behalf of the Minister, the Secretary and the Authority, with the support of the fourth respondents, that the relevant terms of the NH Act were such as to justify the same approach as was taken by the High Court in Plaintiff S10. The respondents referred to the circumstances that there was no obligation to exercise, or to consider the exercise of, the power under that section, that the power was exercisable only by the Minister personally, and was not delegable, that, at least in one respect, a criterion for the exercise of the power was the public interest and that the power would come to be exercised only after the conventional processes involving the Authority and the Secretary under s 90 had been worked through, and under provisions which were, procedurally, quite different from those which regulated those processes. In this respect, the respondents submitted that, for the most part at least, the situation arising under s 90A was analogous to that arising under the special provisions for Ministerial decision-making with which Plaintiff S10 was concerned.

38    In Plaintiff S10, speaking of the provisions of the Migration Act 1958 (Cth) which are said, by the respondents, to have analogues under the NH Act, Gummow, Hayne, Crennan and Bell JJ said (290 ALR at 640 [99]):

However, those dispensing provisions also have the following significant characteristics:

(i)    The powers they confer may be exercised by the minister personally and not otherwise; that is to say, unlike many other decisions respecting the issue of visas, the power may not be delegated by the minister under s 496 of the Act. (Citing Re Patterson; Ex parte Taylor (2001) 207 CLR 391).

(ii)    By the tabling requirements the minister is rendered accountable in an immediate sense to each House of the Parliament for exercises of the dispensing powers.

(iii)    The exercise of the powers is not preconditioned by the making of any request by any other person, and, if a request be made there is no requirement to consider it.

(iv)    The exercise of the powers is preconditioned by (a) the minister having decided to consider whether to exercise the power in question, and (b) the minister thinking that: “It is in the public interest” to exercise it; but the minister is not obliged to take either step. (Citing Plaintiff M61/2010E v Commonwealth (Offshore Processing case) (2010) 243 CLR 319 at [70]).

(v)    The expression “in the public interest” can have no fixed and precise content and involves a value judgment often to be made by reference to undefined matters. (Citing Osland v Secretary to Department of Justice (No 2) (2010) 241 CLR 320). Here the legislative supposition upon which the dispensing powers are conferred is that there will be cases in which the requirements which otherwise control the administration of the Act are not to dictate a particular outcome.

(vi)    Further, as to (iv), while the personal circumstances of an individual may be taken into account, they are not a mandatory relevant consideration.

(vii)    Rather, as the Commonwealth Solicitor-General submitted, individual interests and rights are dealt with by provisions of the Act regulating applications and providing for review of decisions concerning visas.

(viii)    The premise for the operation of s 48B is that there has been the refusal of a protection visa (with attendant RRT engagement) which will be final unless the minister lifts the bar upon further applications which is lowered by s 48A; the premise for the engagement of either s 351 or s 417 is that on a merits review the relevant tribunal has determined that there is no right to the visa sought; leaving aside the categories of offshore entry persons to whom subss (3) and (4) of s 189 apply, the premise for the engagement of s 195A in present cases was that the person concerned either had unsuccessfully applied for a visa or, at least, while in detention, could have done so.

(ix)    Against that background, it is not surprising that the focus of the four dispensation sections is upon the minister’s view of the public interest rather than upon the satisfaction of conditions for the issue of visas.

39    Immediately following in their judgment, their Honours said (290 ALR at 641 [100]):

The cumulative significance of the matters referred to above in (i)–(ix) is to disclose a situation akin to that identified by Brennan J in [South Australia v O’Shea (1987) 163 CLR 378 at 410] namely where a senior official standing at the peak of the administration of the statute is not required to give an opportunity for a hearing in every case affecting an individual who has had an opportunity of a merits review in the course of the administrative process. Upon their proper construction and in their application to the present cases, the dispensing provisions are not conditioned on observance of the principles of procedural fairness. In particular, there was no requirement to provide to the plaintiffs the opportunities to be heard which they assert in their submissions. The use in the provisions of the Act in question here of language emphatic both of the distinctive nature of the powers conferred upon the minister (as personal, non-compellable, “public interest” powers), and of the availability of access to the exercise of those powers only to persons who have sought or could have sought, but have not established their right to, a visa is of determinative significance. It reveals the “necessary intendment” referred to in the Offshore Processing case that the provisions are not attended by a requirement for the observance of procedural fairness.

40    It was, clearly, a significant aspect of their Honours’ reasons in Plaintiff S10 that they were dealing with “a situation … where a senior official standing at the peak of the administration of the statute is not required to give an opportunity for a hearing in every case affecting an individual who has had an opportunity of a merits review in the course of the administrative process”. That is not the present case. It might be in the case of a disappointed applicant under s 90, for whose circumstances the provisions of s 90A are intended to provide a potential avenue of amelioration. But it could not be regarded as the situation where another person’s interests would be adversely affected by a positive outcome under s 90A, but where that person had had no involvement in the previous proceedings under s 90 which had presumptively taken place.

41    On the facts of the present case, the applicant had succeeded in having the Authority’s recommendation of 24 November 2011 set aside, and, understanding the law as he did, was entitled to assume that the fourth respondents’ application would be unsuccessful under the 2011 Rules. That is what occurred. The applicant had no knowledge of the fourth respondents’ invocation of the s 90A procedure. The first he knew about it was when he later discovered that his own application, lodged on 24 May 2012, had been rejected because of the approval given to the fourth respondents’ application. The situation is, in my view, very different from that which was before the High Court in Plaintiff S10.

42    The respondents relied also on s 90D of the NH Act in their resistance to the applicant’s natural justice case. They submitted that that section demonstrated that the legislature had given special attention to the matter of an interested person’s right to be heard in relation to a proceeding under s 90A and made, in effect, exclusive provision on that subject. Section 90D(1)(b) provided that the Minister “may” give a notice of the kind referred to, and her decision not to do so could not be challenged under the generally-applicable rules of natural justice. I do no accept that submission. To exclude the rules of natural justice, there must be “plain words of necessary intendment”. Such words are not, in my view, to be found in s 90D. Rather, I consider that the section recognises that a person with a relevant interest might indeed be entitled to be notified and heard, and introduced a degree of definition into how the process of notification and hearing would work in a particular case. For example, someone who had received an invitation under s 90D(1)(b)(ii), but who had failed to respond within the specified period, could not then complain of having been denied natural justice. The section does give the Minister a discretion whether to notify a particular person of the s 90A proceeding, but if she fails to do so in the case of a person who, in point of fact, has an interest sufficient to attract the operation of the natural justice rules, she cannot use the existence of the discretion as justification for that failure.

43    I also take the view that the criteria by reference to which the Minister was required to work under s 90A were the very kind of discretionary ones in relation to which a person having a proper interest, such as the applicant, might have a legitimate concern, worthy of consideration by the Minister. As someone whose own application was in the pipeline, as it were, it seems self-evident that the applicant would have a direct interest in, and a concern with, the answer to the question whether the rejection of the fourth respondents’ application under s 90 would result in the community of Kilmore “being left without reasonable access to pharmaceutical benefits supplied by an approved pharmacist”. Perhaps unlike the more tightly structured format of the 2011 Rules themselves – pursuant to which, on one view at least, the Authority’s recommendation in any particular case is preordained by the hard facts of the case – the Minister’s judgment under s 90A is a more conventional discretionary one in which one might expect both factual and evaluative considerations, with respect to the interests of the local community concerned and to the broader public interest, to be placed upon the decision-making scales.

44    For those reasons, I would uphold the applicant’s case under s 5(1)(a) of the ADJR Act.

45    The applicant’s case under subs (6) of s 90A of the NH Act is based upon the circumstance, which is uncontroversial, that, at the time of the Minister’s decision, the fourth respondents’ premises at 61-63 Sydney Street, Kilmore, were not registered, and the fourth respondents themselves were not licensed to carry on business at those premises, as required by s 21(1) of the Pharmacy Regulation Act 2010 (Vic). That subsection provides as follows:

(1)    A person must not establish or carry on a pharmacy business unless—

(a)    the requirements of section 5(1) and (2) are satisfied; and

(b)    the Authority has registered the premises of the pharmacy business; and

(c)    the Authority has granted a licence to the person to carry on a pharmacy business at the registered premises.

In the circumstances, at the relevant time, the fourth respondents were not permitted, under the law of Victoria, to carry on business at those premises.

46    On the face of it, this has the appearance of taking the applicant the distance required for his case under s 90A(6) of the NH Act. However, in Terry White Chemists Australia Fair v Secretary, Department of Health and Ageing (2009) 178 FCR 161, the Full Court construed s 90(4), which is relevantly indistinguishable from s 90A(6), in a way which would leave no scope for the applicant’s submission to succeed. Their Honours said (178 FCR at 169 [20]):

The preferable construction is to regard s 90(4) of the National Health Act as not so much a limitation on the power of the Secretary to grant an approval pursuant to s 90(1), as a limitation on the extent of the approval that the Secretary grants. Viewed in this way, s 90(4) makes it clear that an approval granted by the Secretary pursuant to s 90(1) is not to be regarded as extending beyond the purposes of the scheme set up by Pt VII of the National Health Act, the Pharmaceutical Benefits Scheme. The approval is not to be regarded as overriding any provision of State or Territory laws under which the carrying on of the business of a pharmacy at the relevant premises by the particular pharmacist would not be permitted. On this construction, the Secretary would not be concerned with the operation of any laws of any State or Territory, but only with the granting or refusal of approval to a particular pharmacist to supply pharmaceutical benefits at particular premises, for the purposes of the Pharmaceutical Benefits Scheme. A pharmacist to whom such approval is granted would still need to be permitted by the laws of the relevant State or Territory to carry on the business of a pharmacist at the premises in respect of which the approval has been granted. The Secretary cannot grant the pharmacist an approval that would oust the effect of those State and Territory laws, but only an approval for the purposes of the Pharmaceutical Benefits Scheme. It would be for the authorities of the relevant State or Territory to apply and enforce the laws of that State or Territory. Accordingly, s 90(4) of the National Health Act is a declaratory provision that seeks to put beyond doubt that, although a pharmacist might be approved under s 90(1) for the purpose of supplying pharmaceutical benefits at or from particular premises, he or she being willing to do so on demand at particular premises, such an approval does not cover the field of all permits, licences or approvals a pharmacist may be required to obtain in order to comply with a law of a State or Territory in which the premises are situated, in order to carry on the business of a pharmacist. In that sense, s 90(4) of the National Health Act is not a limitation on the power of the Secretary, but explanatory of the content of the power.

The judgment in Terry White is binding on me, and cannot be distinguished. The applicant’s jurisdictional fact point under s 5(1)(c) of the ADJR Act must, therefore, be rejected.

47    Albeit that the applicant has succeeded upon one of his grounds under s 5 of the ADJR Act, the fourth respondents submitted that I should withhold the grant of relief under s 16 of that Act upon the ground that the applicant acted in bad faith in his relocation application lodged on 17 October 2011. In this respect, the fourth respondents relied upon the example of a situation in which the prerogative writ of mandamus might be withheld, given by the High Court in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389 at 400:

For example the writ may not be granted if a more convenient and satisfactory remedy exists, if no useful result could ensue, if the party has been guilty of unwarrantable delay or if there has been bad faith on the part of the applicant, either in the transaction out of which the duty to be enforced arises or towards the court to which the application is made. The court's discretion is judicial and if the refusal of a definite public duty is established, the writ issues unless circumstances appear making it just that the remedy should be withheld.

It was submitted on behalf of the fourth respondents that there had been bad faith on the part of the applicant in the transaction out of which the Minister’s powers came to be exercised under s 90A of the NH Act.

48    For his part, the applicant accepted that a discretionary consideration of this kind was proper to be taken into account under s 16 of the ADJR Act, in an appropriate case. However, it was submitted on behalf of the applicant that this was not an appropriate case to withhold relief. It was said that the applicant had not been guilty of bad faith, and that his application of 17 October 2011 was not to be regarded as an aspect of “the transaction” which led to the exercise of the Minister’s power under s 90A. As to the latter aspect, the fourth respondents said that their recourse to s 90A was made necessary by the rejection, on 27 April 2012, of the application which they had lodged on 18 October 2011. That rejection was the inevitable result of the applicant’s relocation application, an application which, the fourth respondents contended, and I would find, was never intended to be carried through by the applicant.

49    The applicant was cross-examined about his intentions with respect to the relocation application of 17 October 2011, and he frankly said that it was his attempt, devised with the assistance of his solicitor, to navigate his way through the regulatory issues associated with the introduction of the 2011 Rules. The point to which he was navigating, of course, was the achievement of a second pharmacy approval for himself in Kilmore, and the exclusion, to the extent possible, of other pharmacists from securing that approval. The effect of his evidence was that the 2006 Rules and the 2011 Rules, and the transitional provisions associated with the commencement of the latter, gave him the legal right to act as he did, and he proceeded in what he perceived to be his own best interests. In submissions made on his behalf, his counsel accepted that there was a sense in which the course followed by the applicant might be regarded as a sharp practice, but it would be going too far, he submitted, to describe it as involving bad faith.

50    The statutory provisions under which the applicant made what I have described as his relocation application did not refer to “relocation” in terms. Rather, it was s 90(1) under which the applicant applied for approval for premises at 92 Sydney Street and s 98(1) under which he requested cancellation of his approval at 20 Sydney Street. Because his application under s 90 “involve[d] the cancellation of an approval”, it had to be recommended by the Authority if certain conditions were met: s 9 of the 2006 Rules. One of those conditions was that the application “state[d] that it [was] of a kind mentioned in column 2 of an item of Part 1 of Schedule 1” to those rules. The applicant’s application of 17 October 2011 stated that it was being made under item 104: “(Short distance relocation ≤ 1 km)”. The 2006 Rules did not require the applicant to state, and he did not state, that it was his intention to relocate his pharmacy business. No doubt such an intention was to be inferred from the applications which the applicant did make, but, strictly, it could not be said that the applicant provided misleading information or made a false statement in connection with his application. As I have said, there is no explanation as to why the Secretary did not act on the Authority’s recommendation of 24 November 2011, but, as counsel for the applicant pointed out, once his relocation application had been submitted, he was at risk that the Secretary might have accepted that recommendation, approved the premises at 92 Sydney Street and cancelled the approval for 20 Sydney Street.

51    Central to the fourth respondents’ bad faith point was the proposition that the applicant never intended to cease carrying on business as a pharmacist at 20 Sydney Street, and that his request for cancellation of the approval with respect to those premises was, therefore, a sham. In the light of the evidence given by the applicant himself, the first part of this proposition must be accepted, but the application for cancellation of the approval at 20 Sydney Street was a valid act done under the 2006 Rules, and in that sense, could not be described as a sham. It was a stratagem and, perhaps, a clever tactic. But it is not at all clear how the notion of “bad faith” imposed upon the applicant an obligation, unstated in the NH Act and the 2006 Rules, to refrain from making such applications as were in his own best interests. It must be remembered that it was not he who was exercising a statutory power or making a decision under an enactment. Neither is it suggested that he had any direct dealings with the fourth respondents in the context of which good faith might have been required. In the circumstances, and although I have considerable sympathy for the position occupied by the fourth respondents, I do not think that the notion of bad faith is apposite to circumstances in which a pharmacist requests a cancellation under s 98 of the NH Act with the unrevealed intention of withdrawing that request at a later, convenient, date.

52    With respect to the second of the applicant’s responses to the fourth respondents’ reliance on Ozone Theatres, their Honours’ reference in that case to “the transaction out of which the duty to be enforced arises” was not, of course, a prescriptive rule in the manner of legislation. It articulated a principle by reference to which a discretion might be exercised in a particular way in an appropriate case. Nonetheless, their Honours clearly had in mind the quality of the connection between the nature of the duty and an applicant’s conduct in the facts out of which the duty arises. It is true, in the present case, that the fourth respondents invoked s 90A because they had been blocked by the applicant’s relocation application, but in doing so they embarked on a process which was discrete in itself and under which there was a prospect that the applicant’s interests would be adversely affected. Whatever view one might take about the applicant’s conduct, nonetheless the result of it was that he had certain interests at law and he should at least have been heard in protection of them. It may be that, had the Minister heard the applicant, she might have been entitled to view his interest, arising as it did from the consequences of his relocation application, as insufficient to alter the course that she might otherwise have been minded to follow. But I would not accept that that application, and the views which I have expressed above about it, are sufficiently connected with the important duty which the Minister had to perform to justify effectively excusing her failure to perform it by declining to grant the applicant the conventional remedy which he seeks.

53    The applicant has established his entitlement to have the Minister’s decision under s 90A of the NH Act quashed or set aside under s 16 of the ADJR Act, but I do not propose to make an order to that effect until I have heard further from the parties as to the full range of orders which would appropriately reflect my reasons above, including receiving such submissions as the parties may wish to make with respect to the second and third decisions challenged by the applicant. I shall list the proceeding again for those purposes.

Associate:

Dated:    27 March 2013