FEDERAL COURT OF AUSTRALIA

Yu v Minister for Health (No 2) [2013] FCA 367

THE COURT ORDERS THAT:

1.    The decision of the first respondent made on 20 July 2012 to substitute for the third respondent’s rejection of the fourth respondents’ application for approval to supply pharmaceutical benefits at premises at 61-63 Sydney Street, Kilmore, in the State of Victoria a decision approving the fourth respondents for the purpose of supplying pharmaceutical benefits at those premises be set aside with effect from the date of this order.

2.    The fourth respondents’ request, made on 22 June 2012, for the first respondent to exercise her power under s 90A(2) of the National Health Act 1953 (Cth) in respect of the decision of the third respondent, made on 25 May 2012, to reject the fourth respondents’ application for approval to supply pharmaceutical benefits at premises at 61-63 Sydney Street, Kilmore, in the State of Victoria be referred back to the first respondent for further consideration.

3.    Before deciding whether to exercise her power under s 90A(2) of the National Health Act 1953 (Cth) in relation to the fourth respondents’ said request, the first respondent advise the applicant of that request conformably with s 90D(1)(b) of that Act, and invite him to provide comments on, or information or documents relevant to, the request within such period as the first respondent may specify.

4.    The application otherwise be dismissed.

5.    The fourth respondents pay the applicant’s costs incurred in connection with the fourth respondents’ Interlocutory Application filed on 30 January 2013.

6.    Save for the costs dealt with in the previous order, the first, second and third respondents pay the applicant’s costs.

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

REASONS FOR JUDGMENT

1    On 27 March 2013, I published my reasons for judgment in this proceeding: Yu v Minister for Health [2013] FCA 261. For reasons which I explained in para 53, I did not then make substantive orders, nor orders as to costs. I have since received the parties’ submissions with respect to the orders that should be made, and these reasons deal with that subject. They assume a familiarity with my earlier reasons, and the terminological conventions used in them.

2    The proceeding was brought under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”). With respect to the Minister’s decision of 20 July 2012, the applicant made good his case under s 5(1)(a) of the ADJR Act that a breach of the rules of natural justice had occurred in connection with the making of that decision. It is now necessary to determine the nature and timing of the order which should be made under s 16 of the ADJR Act to give effect to the applicant’s success under s 5.

3    The respondents (in the case of the fourth respondents, under their primary submission) accepted that the normal outcome in a case of the present kind would be the setting aside of the decision made in breach of the rules of natural justice, pursuant to s 16(1)(a) of the ADJR Act. However, the fourth respondents submitted that the decision should be set aside from a date which is no earlier than that of the order made by the court. The applicant, by contrast, presses for the decision to be set aside with effect from the date upon which it was made. As I understand it, he takes that position in anticipation that the court will also set aside the Authority’s recommendation of 27 July 2012, and the Secretary’s decision of 24 September 2012, in relation to his own application under s 90 of the National Health Act 1953 (Cth) (“the NH Act”) in respect of 92 Sydney Street, Kilmore. In those circumstances, the applicant anticipates that his own application would be considered by, and the subject of a recommendation by, the Authority before the Minister reconsiders, and deals with, the fourth respondents’ request under s 90B of the NH Act. Indeed, the applicant seeks orders requiring the Minister to reconsider the fourth respondents’ s 90B application after his own s 90 request has been dealt with by the Authority.

4    If it were the law that a decision made in purported reliance upon a statutory power, but made in breach of the rules of natural justice, was inevitably a nullity for all purposes, the only proper course open to the court, in my opinion, would be to set such a decision aside with effect from the date upon which it was made. By acting in this way, the court would be giving effect to the law. However, the law is not thus. Accepting that a breach of the rules of natural justice will generally involve what has been described as “jurisdictional error”, there is no “universal proposition that jurisdictional error on the part of a decision-maker will lead to the decision having no consequences whatsoever”: Jadwan v Department of Health (2003) 145 FCR 1, 16 [42]. The legal and factual consequences of such a decision “will depend upon the particular statute”: Jadwan at 16 [42]; Minister for Immigration and Citizenship v Maman [2012] FCAFC 13 at [44]. The question in the present case, therefore, is the following: given that the rules of natural justice apply to a decision under s 90A of the NH Act, what is the status of a decision made purportedly, and in good faith, but in breach of the rules of natural justice, under that section?

5    In my earlier reasons, I set out the terms of s 90A of the NH Act. Because of the importance of the section, and of other provisions with which it is associated, for the matter presently before the court, I set out below the terms of ss 90A, 90B, 90D and 90E:

90A    Minister may substitute decision approving pharmacist

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

(8)    For the purposes of this section (other than subsection (7)):

(a)    a reference to a decision of the Secretary includes a reference to a decision of the Secretary that has been affirmed by a decision of the Administrative Appeals Tribunal or an order of a federal court; and

(b)    a reference to a decision of the Administrative Appeals Tribunal includes a reference to a decision of the Administrative Appeals Tribunal that has been affirmed by an order of a federal court.

90B    Request to Minister to approve pharmacist

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

(2)    The Minister may determine the form in which a request under subsection (1) must be made and, if the Minister does so, such a request must be made in that form.

(3)    A request under subsection (1) must be made:

(a)    within 30 days after the pharmacist is notified of the Secretary’s decision; or

(b)    if the pharmacist has applied to the Administrative Appeals Tribunal for review of the Secretary’s decision—within 30 days after:

(i)    the pharmacist is given a copy of the Administrative Appeals Tribunal’s decision affirming the Secretary’s decision; or

(ii)    the application has been discontinued, withdrawn or dismissed; or

(c)    if the pharmacist has sought an order from a federal court in respect of the Secretary’s decision or a decision of the Administrative Appeals Tribunal affirming the Secretary’s decision—within 30 days after:

(i)    the court has made an order affirming the Secretary’s decision or the Administrative Appeals Tribunal’s decision, as the case requires; or

(ii)    the court proceeding has been discontinued, withdrawn or dismissed.

(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.

(6)    The Secretary must, by notice in writing, advise the pharmacist of:

(a)    the decision made, or taken to have been made, by the Minister under subsection (4); and

(b)    if applicable, the decision made, or taken to have been made, by the Minister under subsection (5).

90D    Provision of further information

(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.

90E    Effect of decision by Minister to approve pharmacist

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.

6    With respect to the provisions set out above, certain things should be noted. First, s 90A applies only in relation to a decision of the Secretary under s 90 of the NH Act rejecting an application for approval on the basis that the application did not comply with the requirements of rules determined under s 99L of that Act. That is to say, the s 90A power cannot be exercised in the broad, but is available only after a s 90 rejection. Secondly, the s 90A power may be exercised only on a s 90B request made by the pharmacist whose s 90 application was rejected. Thirdly, and absent any Administrative Appeals Tribunal or court proceedings in respect of the s 90 rejection, a request under s 90B must be made within 30 days after the pharmacist is notified of that rejection. Fourthly, the process in which the Minister must engage for the purpose of s 90A is a bifurcated one: she must first decide whether to consider the s 90B request and, if she decides to do so, she must then decide whether to exercise the power of substitution for which s 90A(2) provides. Fifthly, at each of those levels, the Minister has three months within which to act. If she has not made a decision whether to consider the request within three months after the request has been received, she is taken to have decided not to consider the request. If she decides to consider the request, but has not, within a further three months, made a substantive decision on the request, she is taken to have decided not to exercise the power arising under s 90A(2). Sixthly, a positive decision under s 90A to approve a pharmacist for the purposes of supplying pharmaceutical benefits at a particular premises is to be treated for all purposes of the NH Act as an approval under s 90 in respect of those premises.

7    In my earlier reasons, I referred briefly to the important consequences of a pharmacist being approved, in relation to particular premises, under s 90 of the NH Act. It is now necessary to consider those consequences in more detail. Part VII of the NH Act, which is relevant for present purposes, contains many detailed provisions which address particular situations, and many provisos and exceptions. It will be sufficient, however, to note the main organising principles by reference to which benefits are provided under the Commonwealth Pharmaceutical Benefit Scheme. By s 85 of the NH Act, benefits are to be so provided “in respect of pharmaceutical benefits”. The “pharmaceutical benefits” so referred to are not the monetary benefits provided by the Commonwealth, but are the “drugs and medicinal preparations”, or classes of them, declared by the Minister under subs (2). By s 89 of the NH Act –

[a] person is not entitled to receive a pharmaceutical benefit unless it is supplied:

(a)    by an approved pharmacist, at or from premises in respect of which the pharmacist is for the time being approved, on presentation of a prescription written by a PBS prescriber in accordance with this Act and the regulations, or, in such circumstances as are prescribed, on communication to that pharmacist, in the prescribed manner, of a prescription of a PBS prescriber; ….

That is to say, supply by an “approved pharmacist” at or from premises in respect of which he or she is approved is the only lawful way that a person may obtain pharmaceutical benefits as defined.

8    By s 86(1) of the NH Act –

… a person who:

(a)    is, or is to be treated as, an eligible person within the meaning of the Health Insurance Act 1973; and

(b)    is receiving:

(i)    medical treatment by a medical practitioner; or

(ii)    dental treatment by a participating dental practitioner; or

(iii)    optometrical treatment by an authorised optometrist; or

(iv)    midwifery treatment by an authorised midwife; or

(v)    nurse practitioner treatment by an authorised nurse practitioner;

is entitled to receive pharmaceutical benefits under this Part without the payment or furnishing of money or other consideration other than a charge made in accordance with section 87.

I will not burden these reasons with a setting-out of the permissible charges for which s 87 provides. It is sufficient to note that, at least in the general run, it may be taken that those charges are less than would otherwise be incurred by a patient purchasing the drugs or medicinal preparations to which they relate on the open market, as it were. The difference between the charge that may be made under s 87 and what the NH Act describes as the “Commonwealth price” for the pharmaceutical benefit is the payment to which the pharmacist is entitled as against the Commonwealth under s 99 of the NH Act.

9    Thus the consequences of a pharmacist being approved under the NH Act with respect to particular premises are, or at least may be, far-reaching, both in the sense of extending to numerous transactions in which ordinary patients are involved and in the sense of involving statutory authorisation for the expenditure of Commonwealth moneys. My attention was drawn to no provision – in the NH Act or elsewhere – which would provide either for the recovery of such moneys or for the regularisation of the expenditure involved should it later be discovered that a ministerial act by which the pharmacist in question had been approved was invalid. As a broad matter of statutory purpose and convenience, I find it hard to imagine that the legislature might have contemplated that an approval given under s 90A of the NH Act in breach of the rules of natural justice was a nullity without any legal consequences whatsoever.

10    Also relevant to the present question is the circumstance that approvals under s 90 or s 90A are not given as benefits or emoluments to particular pharmacists. Rather, the scheme of the NH Act, relevantly, is to ensure that the community is provided with convenient access to pharmacies, conducted by appropriately qualified professionals, for the purpose of obtaining drugs and medicinal preparations which are beneficial in the treatment of sickness or disease but which may, at the same time, be harmful if not properly prescribed and dispensed. That does not come through in terms in s 90, but it may be seen in s 90A(2)(a) itself, which is sufficient for present purposes. An approval is, in this respect, different from the granting of a qualification or a visa, for example, which are specific benefits to which the individual becomes entitled. I have held that the applicant was entitled to be heard on the fourth respondents’ request under s 90B, but it is difficult to see how his own individual circumstances might have been relevant to the substance of the Minister’s decision under s 90A. The fact that the s 90A approval was not concerned with the applicant’s own position, or with his rights as a pharmacist, is another reason to consider it likely that the legislature did not intend that the Minister’s failure to accord natural justice to someone in the position of the applicant would produce the result that the approval ostensibly resulting therefrom would be a legal nullity.

11    The automatic rejection provisions of subs (4) and (5) of s 90B also speak against the conclusion that a decision ostensibly made under s 90A, but in breach of the rules of natural justice, should be treated as a nullity. Were it otherwise, such a breach would produce the result, under subs (4), that the Minister was taken to have decided not to consider the request or, under subs (5), that the Minister was taken to have decided not to exercise the power of substitution arising under s 90A. That is to say, the s 90A process would then be a closed event, and the court could not, consistently with the statutory scheme, require what had been done in fact but irregularly to be done again. A procedural oversight would have produced a substantive permanent outcome. It would be no answer to say that the pharmacist could make another request under s 90B, since the 30-day time limit for which subs (3) provides may, and usually would, by then have expired. I cannot think that the legislature would have intended a breach of the rules of natural justice to leave the pharmacist in this kind of procedural cul-de-sac.

12    By reason of the considerations discussed above, which are essentially ones of statutory intent, I take the view that the Minister’s failure to accord natural justice to the applicant did not produce the result that the approval she gave to the fourth respondents on 20 July 2012 was a nullity. That approval, albeit infected with legal error, was nonetheless an approval in fact for the purposes of s 90E of the NH Act.

13    That brings me to s 16 of the ADJR Act, under which any order in the present case would be made. Subsection (1) thereof provides as follows:

(1)    On an application for an order of review in respect of a decision, the Federal Court or the Federal Magistrates Court may, in its discretion, make all or any of the following orders:

(a)    an order quashing or setting aside the decision, or a part of the decision, with effect from the date of the order or from such earlier or later date as the court specifies;

(b)    an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the court thinks fit;

(c)    an order declaring the rights of the parties in respect of any matter to which the decision relates;

(d)    an order directing any of the parties to do, or to refrain from doing, any act or thing the doing, or the refraining from the doing, of which the court considers necessary to do justice between the parties.

14    I am, with respect, much attracted by the approach to the exercise of power under s 16 articulated by Kenny J in Jadwan. In essence, as I understand it, her Honour’s point was that the ADJR Act was intended to do more than merely give statutory expression to traditional public law remedies. It was a measure in the way of law reform. Whether the satisfaction of a substantive ground under s 5 of the ADJR Act should lead to the setting aside, or quashing, of the administrative decision in question was a subject left to the discretion of the court, the exercise of which might be informed by a broader range of considerations than the purely “valid or not valid” ones that might be taken into account under the common law.

15    In the present case, the fourth respondents have not commenced operating their pharmacy at 61-63 Sydney Street pursuant to the approval ostensibly given by the Minister under s 90A of the NH Act. That is a factor to be taken into account in the exercise of my discretion under s 16 of the ADJR Act. It means that complications of the kind which would arise under ss 85, 86, 87, 89 and 99 of the NH Act are not of present practical concern, but those which relate to the operation of s 90B(5) are. It must also, in my view, be assumed that the Authority may well have dealt with other applications for approval under s 90 on the basis that the fourth respondents were already approved with respect to 61-63 Sydney Street. The court knows that the applicant’s application of 24 May 2012 was one such, but it cannot be assumed that there were not others.

16    I take the view that justice would be done in the present case were I to set the Minister’s s 90A decision aside with effect from today. That decision, of course, was the one to which subs (5) of s 90B refers. No challenge was made to the Minister’s decision under subs (4) of that section, and it will, therefore, stand. On the approach which I propose to take, the Minister will have complied with her obligation under subs (5), but done so in a way that justifies the prospective setting aside of the decision concerned. To clarify what I would then consider to be the Minister’s obligation, I propose to make an order under s 16(1)(b) of the ADJR Act referring the fourth respondents’ s 90B request back to the Minister for further consideration, subject to a direction that the applicant be notified under s 90D(1)(b) of the NH Act of the request, and invited to provide comments, information or documents on or relevant to the request within such period as the Minister may specify under that paragraph.

17    That leaves the other aspects of the applicant’s originating application, namely, those which relate to the Authority’s adverse recommendation of 27 July 2012 and the Secretary’s rejection of 24 September 2012. The only grounds upon which the former was challenged was that it “involved an error of law” (ADJR Act, s 5(1)(f)) and that it was “contrary to law” (ADJR Act, s 5(1)(j)) “in that it relied upon the [Minister’s] decision” which, in turn, had been “made in error”. Since I have not set the Minister’s decision aside with effect from the date upon which it was made, those grounds cannot be sustained. That decision produced an approval in fact which the Authority was bound to recognise under the National Health (Australian Community Pharmacy Authority Rules) Determination 2011. The Authority’s recommendation did not produce any new state of affairs which should now be the subject of a corrective order: the applicant was not, before the making of that recommendation, approved with respect to 92 Sydney Street, and that remains the case. In the circumstances, I cannot perceive either a legal basis or a practical reason to make an order in relation to the recommendation.

18    Having disposed of the applicant’s challenge to the Authority’s recommendation as I have, given the terms of subs (3B) of s 90 of the NH Act, there is clearly no basis for interfering with the Secretary’s decision under s 90(1) made on 24 September 2012.

19    For the above reasons, the only substantive relief which I propose to grant favourably to the applicant is to set aside the Minister’s decision of 20 July 2012 with effect from today, and to make the consequential orders for a reconsideration to which I have referred.

20    With respect to the matter of costs, there was no real controversy. Subject only to the discrete aspect dealt with in the next paragraph, the Minister, the Authority and the Secretary accepted that the applicant had been substantially successful, and should have his costs.

21    On 30 January 2013 the fourth respondents filed an interlocutory application for discovery, which was heard by the court on 6 February 2013. The justification for the discovery was linked to the fourth respondents’ bad faith point, which I determined adversely to them in paras 47-52 of my reasons of 27 March 2013. The costs of the interlocutory application were reserved. In the circumstances, the applicant sought, and those respondents accepted, that they should be responsible for his costs to the extent that they were incurred in connection with the interlocutory application.

Associate:

Dated:    24 April 2013