FEDERAL COURT OF AUSTRALIA

Clare v Australian Community Pharmacy Authority [2015] FCA 653

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    The appellant pay the respondent’s costs of and incidental to the appeal.

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

REASONS FOR JUDGMENT

Ms Clare seeks to relocate her pharmacy

1    This is an appeal from a decision of the Administrative Appeals Tribunal (the Tribunal). For the reasons which follow, the appeal will be dismissed. It arises in the following circumstances.

2    Ms Clare is a pharmacist and, as such, she holds an approval to dispense pharmaceuticals from premises located in Broadbeach Waters on the Gold Coast, Queensland. She obtained this approval in February 2014 following an application she made to the Secretary of the Department of Health (the Secretary) under Part VII of the National Health Act 1953 (Cth) (the National Health Act). This approval carries with it the ability to supply pharmaceutical benefits under Australia’s Pharmaceutical Benefits Scheme (PBS), which is established under that Part.

3    In May 2014, Ms Clare applied to relocate her pharmacy to other premises within approximately 700 metres of her existing premises. The proposed premises are in the adjoining suburb, namely Broadbeach, on the Gold Coast. In order to relocate her pharmacy and retain the approval to supply pharmaceutical benefits under the PBS, it was necessary for her to apply to the Secretary to cancel her existing approval and replace it with a fresh approval for the proposed premises.

4    In her application, Ms Clare relied upon a particular item (item 124) in one of the schedules to the National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (the 2011 Rules). That item applies to a “short distance relocation”. Since Ms Clare had not held her existing approval for a continuous period of at least two years, she also sought to rely upon another item (item 312(b)(ii)) in another schedule to the 2011 Rules. That item required that “the proposed premises are in the same town as the existing premises”.

5    Under the National Health Act, the Secretary was required to refer Ms Clare’s application to the Australian Community Pharmacy Authority (the Authority). In turn, the Authority was required to consider the application and, in that process, it was required to comply with the provisions of the 2011 Rules.

6    After considering Ms Clare’s application, the Authority decided that her proposed premises were not in the same town as her existing premises because “Broadbeach” and “Broadbeach Waters” were located in different suburbs of the Gold Coast. Accordingly, it recommended that her application for relocation should not be approved.

7    Ms Clare then applied to the Tribunal for a review of the Authority’s decision. She sought that review on the sole ground that the Authority had erred in its conclusion that her two sets of premises were not in the same town.

8    The Tribunal found in Ms Clare’s favour on her sole ground of review: see Clare v Australian Community Pharmacy Authority [2014] AATA 932. However, it decided to affirm the Authority’s decision on a different basis, namely that on a proper construction of the 2011 Rules, Ms Clare was not entitled to rely upon the “same town” provision in item 312(b)(ii). This issue was originally conceded by the Authority but, some days before the Tribunal hearing, it changed its position and notified Ms Clare’s solicitors that it intended to raise it at the hearing.

Ms Clare’s grounds of appeal and the Authority’s notice of contention

9    As is already mentioned above, Ms Clare has now sought to appeal the Tribunal’s decision to this Court. In her notice of appeal, she claims that the Tribunal erred in the following respects:

(a)    finding that item 312(b)(ii) of Part 1 of Schedule 3 to the 2011 Rules was not available to “assist the Applicant”;

(b)    construing item 312 by reference to extrinsic material in circumstances in which no ambiguity was reasonably capable of arising;

(c)    having regard to, and treating as determinative, extrinsic material which provided no support for the erroneous construction the Tribunal adopted;

(d)    construing item 312(b)(ii) not to apply to “all applications”, notwithstanding the clear express words of s 10(a)(iii) and Part 1 of Schedule 3 to the 2011 Rules;

(e)    determining such question despite it not having arisen on the parties’ Statements of Facts, Issues and Contentions and over the objection of Ms Clare.

10    In response, the Authority filed a notice of contention claiming that the decision of the Tribunal should be affirmed on grounds other than those relied on by the Tribunal. That ground is that, contrary to the Tribunal’s finding of fact, the approved pharmacy premises and the proposed premises are not in the “same town” for the purposes of item 312(b)(ii) of the 2011 Rules. The Authority contends that, in making its finding of fact, the Tribunal misconstrued the meaning of the expression “same town”.

11    Accordingly, two issues arise for consideration in this appeal. The first is whether Ms Clare’s existing pharmacy premises are in the “same town” as the proposed premises; and the second is whether, in any event, item 312(b)(ii) of Part 1 of Schedule 3 to the 2011 Rules applied to Ms Clare’s application.

The Tribunal’s decision

12    Before turning to consider these issues, it is convenient to summarise the Tribunal’s decision on these two issues. The kernel of it is set out hereunder.

The “same town” issue

13    The Tribunal member began by noting that item 312(b)(ii) was the key provision in this case and he recorded that Ms Clare’s position was that that item allowed for the approval of a relocation application if “the proposed premises are in the same town as the existing premises”.

14    Apart from s 5(3) of the 2011 Rules, the Tribunal member observed that the expression “town” was not otherwise defined in those Rules. Section 5(3) provides:

If proposed premises are required to be in the same town as an existing premises, the proposed premises are taken to be in the same town if they are located in the same town and postcode as the existing premises.

15    In the absence of a definition of the expression “town”, the Tribunal member decided to rely upon the following definition in the Macquarie Dictionary:

i.    a small group of houses and other buildings thought of as a place, and given a name: *the word ‘town’ is employed with generosity in Australia – WA Winter-Irving, 1977.

ii.    a distinct densely populated area of considerable size, having some degree of self-government.

iii.    (British) a group of buildings, larger than a village and administratively more independent, but smaller than a city.

16    With reference to this definition, the Tribunal member considered that “[t]he legislative scheme … suggests the second meaning is appropriate here”, noting that “[t]he scheme regulates the distribution of pharmacies throughout the community”. With apparent reference to the first and second meanings above, the Tribunal member observed that, while the concept of “a catchment area” (used in the 2006 version of the 2011 Rules) had been abandoned (at [12]):

… pharmacies are still allocated with reference to geographical areas that are somewhat larger than “a small group of houses and other buildings”. The focus tends to be on “distinct densely populated areas of considerable size” so that the pharmacy will have access to a large enough population base to be viable.

17    Accordingly, the Tribunal member concluded that the expression the “same town” meant the same “distinct densely populated area”. On that basis, he concluded that Ms Clare’s two sets of premises fell within that meaning. He said (at [13]):

… I do not need to precisely delineate the boundaries of the town where the pharmacy is located. All I have to decide is whether the proposed premises are sufficiently close to the existing premises to justify saying they are both in the same town, even if they are not in the same suburb. As it happens, I am satisfied both premises are in the same distinct densely populated area. I accept they are in the same town, and they are also in the same postcode.

The item 312(b)(ii) issue

18    On the question of the application of item 312(b)(ii), the Tribunal member recorded the arguments put by the Authority and Ms Clare. In particular, he recorded the Authority’s submission that item 312(b)(ii) was ambiguous and therefore resort may be had to the following remarks in the Explanatory Statement for the 2011 Rules as extrinsic material (at [18]):

…subparagraph (b)(ii) requires that the existing premises are the only approved premises in a particular town and the proposed premises are situated in the same town as the existing premises …

19    The Tribunal member then concluded that, having regard to the text and context of item 123 in Part 1 of Schedule 1, item 312(b)(ii) was ambiguous and, in that event, regard may be had to the Explanatory Statement above which, he considered, indicated that the Authority’s construction was correct. The Tribunal member therefore concluded that Ms Clare could not rely on item 312(b)(ii). He said (at [23]):

… While the words of item 312(b)(ii) appear clear enough on their face, I must approach them in the knowledge that items 123 and 124 exist, and that item 123 appears to refer to the same subject matter in a way that indicates both provisions should be read together. At a minimum, the presence of item 123 – the language it uses and the role it appears to play in the legislative scheme – calls into question what interpretation I should give to the words in item 312(b)(ii). If that is so, the words of item 312(b)(ii) are ambiguous after all. That means I may have regard to the Explanatory Statement – and the extract I have already quoted from that document suggests the respondent’s interpretation is correct. It follows that item 312(b)(ii) is not available to assist the applicant.

Item 312(b)(ii) did not apply to Ms Clare’s application

20    It is convenient to deal with the second issue above first because, if Ms Clare is unsuccessful on that issue, there will be no necessity to consider the first issue. From examining the relevant provisions of the National Health Act and the 2011 Rules that establish and give effect to the PBS as a statutory scheme, I have concluded that item 312(b)(ii) did not apply to Ms Clare’s application. However, while this conclusion is the same as that reached by the Tribunal, I have reached it by a different process of reasoning. My reasons are as follows.

The general purpose of the PBS

21    As is already noted above, the PBS is established under Part VII of the National Health Act (ss 83Z to 105). The general purpose of the PBS was succinctly described by Jessup J in Yu v Minister for Health (No 2) (2013) 216 FCR 188; [2013] FCA 367 (Yu) as providing the community with safe and convenient access to qualified pharmacists who are authorised to dispense pharmaceutical benefits under the scheme. In particular, his Honour said (at [10]):

[T]he scheme of the [National Health] 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.

The statutory scheme and the role of “particular premises”

22    Part VII of the National Health Act establishes an elaborate and complex scheme to give effect to this general purpose. It is apt to begin by identifying how pharmacists enter that scheme. In order to dispense pharmaceutical benefits under the PBS, a pharmacist must first become an “approved pharmacist” as defined in s 84(1) of the National Health Act. To become an approved pharmacist, he or she must obtain an approval from the Secretary “to supply pharmaceutical benefits at particular premises”: see s 90(1) of the National Health Act. If a pharmacist wishes to supply pharmaceutical benefits at more than one set of premises, a separate approval is required for each set of the premises: see s 90(2). And if, as occurred in this case, a pharmacist wishes to supply pharmaceutical benefits at different premises to those for which approval has already been granted, he or she must apply for approval in respect of the proposed premises: see s 90(3).

23    With some limited exceptions, the Secretary is required to refer an application under s 90 to the Authority: see s 90(3A). Once the Authority receives an application, it is required to consider it and make a recommendation to the Secretary whether or not it should be approved “in respect of particular premises” and, if so, whether the approval should be subject to any conditions: see s 99K. All of these provisions serve to underscore the important role that “particular premises” play in obtaining approvals to dispense pharmaceutical benefits under the PBS.

The kinds of applications for the approval of “particular premises”

24    As is already noted above, in making a recommendation in respect of an application that is referred to it, the Authority must comply with the relevant rules – here the 2011 Rules – determined by the Minister under s 99L: see s 99K(2). Section 10 of the 2011 Rules prescribes how the Authority is to deal with an application it receives. It provides:

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

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

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

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

(iii)    all the requirements set out in Schedule 2 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 any other application:

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

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

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

(Emphasis in original)

25    These provisions essentially define two broad categories of applications for approval: one for the relocation of existing approved pharmacy premises (s 10(a)); and the other for the approval of new pharmacy premises (s 10(b)). This categorisation is apparent from Parts 1 (see [26] below) and 2 (see [27] below), respectively, of Schedule 1 to the 2011 Rules, which are activated by ss 10(a)(i) and 10(b)(i) above, respectively.

26    Part 1 of Schedule 1 is headed “Applications involving cancellation of existing approval”. Column 2 (the column specified in s 10(a)(i) above) sets out seven different kinds of applications and a corresponding item number for each. Consistent with the categorisation mentioned above, with the possible exception of item 121 (see at [40(a)] below), each of those items deals with a particular form of relocation of premises the subject of an existing approval. The seven items are:

Item 121    Expansion or contraction

Item 122    Relocation within a facility

Item 123    Relocation within the same town (10 km)

Item 124    Short distance relocation (1 km)

Item 125    Short distance relocation (more than 1 km)

Item 126    Long distance relocation

Item 127    Relocation to a population growth area.

27    Part 2 of Schedule 1 is headed “Applications not involving cancellation of existing approval”. As noted above, when considered in context, this Part relates to applications for new pharmacy premises. It sets out in column 2 seven different kinds of new pharmacy applications. The seven items are:

Item 130    New pharmacy (at least 1.5 km)

Item 131    New pharmacy (at least 10 km)

Item 132    New additional pharmacy (at least 10 km)

Item 133    New pharmacy in a facility (small shopping centre)

Item 134    New pharmacy in a facility (large shopping centre)

Item 135    New pharmacy in a facility (private hospital)

Item 136    New pharmacy in a facility (large medical centre).

The requirements each kind of application must meet

28    Having identified the two broad categories of applications that may be made, s 10 of the 2011 Rules then proceeds to prescribe requirements that must be met in respect of the seven different kinds of applications in each category. Those requirements are set out in s 10(a)(ii) to (iv) (for relocation applications) and s 10(b)(ii) and (iii) (for new pharmacy applications). The first set of requirements is set out in column 3 of whichever Part of Schedule 1 is applicable to the application, that is, Part 1 if it is a relocation application, or Part 2 if it is a new pharmacy application. The other requirements are set out in Schedule 2 (for all applications) and, in the case of relocation applications, Schedule 3. That is to say, if the application is a relocation application, there are three sets of requirements to be met – those in Schedules 1, 2 and 3 (inclusive) – whereas if the application is a new pharmacy application, there are two sets of requirements – those in Schedules 1 and 2 (inclusive).

29    At this point, it is important to record that, by using the words “the application states”, ss 10(a)(i) and 10(b)(i) make it clear that it is for the applicant to nominate which of the seven kinds of applications in column 2 of an item in either Part 1 or Part 2 of Schedule 1 he or she wishes to make. This means that the applicant effectively chooses the particular requirements his or her application will have to meet.

The requirements inherent to the particular premises in all applications

30    It is instructive to examine how the various requirements in the three Schedules to the 2011 Rules operate. It is convenient to begin with the requirements that are applied equally to both categories of applications. As is noted above, they are set out in Schedule 2 to the 2011 Rules. That Schedule contains two items (items 211 and 212) which describe certain general requirements applicable to all applications. They are prescribed in s 10(a)(iii) in relation to relocation applications and s 10(b)(iii) in relation to new pharmacy applications. Those general requirements require the Authority to be satisfied that in all applications:

    the applicant has a legal right to occupy the proposed premises;

    the premises can be used for the operation of a pharmacy under applicable local government and State or Territory government laws;

    the premises will be accessible by members of the public at large;

    the applicant will be able to begin operating a pharmacy at the premises within six months after approval is given;

    the proposed premises are not directly accessible by the public from within a supermarket; and

    the proposed premises are not premises that have already been approved.

31    All of these requirements therefore relate to factors that are inherent to the particular premises concerned.

The requirements extrinsic to the particular premises in new pharmacy applications

32    Next, it is convenient to consider the other set of requirements that have to be met in relation to new pharmacy applications. As noted above, that set of requirements is set out in Part 2 of Schedule 1 to the 2011 Rules. They essentially fall into two categories: those which require there to be a minimum distance between the proposed new pharmacy premises and any nearby approved premises (items 130, 131 and 132); and those which require the new pharmacy premises to be located in a “facility” (items 133, 134, 135 and 136). In contrast to the requirements in Schedule 2 above, all these requirements therefore relate to various factors that are extrinsic to the proposed premises.

33    Item 132 – New additional pharmacy (at least 10 km) – provides an apt example of how the first category of requirements above operates. That item provides:

1.    The proposed premises are:

(a)    located in the same town as an approved premises; and

(b)    at least 200 m, in a straight line, from the nearest approved premises; and

(c)    at least 10 km, by the shortest lawful access route, from any approved premises other than the approved premises mentioned in paragraph (b).

2.    The Authority is satisfied that, at all relevant times, located in the same town as the proposed premises are:

(a)    at least the equivalent of 4 full-time prescribing medical practitioners practising; and

(b)    one or 2 supermarkets which occupy a combined total gross leasable area of at least 2 500 m2.

3.    For this item, all relevant times means:

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

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

34    It can be seen that this item prescribes as extrinsic requirements, first, on the one hand, certain minimum distances between the new pharmacy premises and any approved premises in the same town, and between them and any approved premises other than those premises, and, on the other hand, between the new pharmacy premises and various other specific features in the same town, such as the location of a full-time prescribing medical practitioner and supermarkets of a certain size. In this respect, it is also worth noting that, under item 131 (entitled “New pharmacy (at least 10 km)”), if the new pharmacy premises “are at least 10 km, by the shortest lawful access route, from the nearest approved premises”, they are not required to meet any “same town” requirements and no other requirements are imposed. In other words, the 10 kilometre minimum distance between the new pharmacy premises and the nearest approved premises becomes the sole overriding requirement.

35    Similar minimum distance and feature specific requirements are also prescribed in relation to many items in the second category above: new pharmacy premises which are to be located in a “facility”. The expression “facility” is defined in s 5(1) of the 2011 Rules as follows:

(a)    a small shopping centre; or

(b)    a large shopping centre; or

(c)    a large medical centre; or

(d)    a private hospital.

36    With the exception of a private hospital, each of the expressions within this definition is also defined in the 2011 Rules. For example, “large shopping centre” is defined as follows (s 5(1)):

… a shopping centre that:

(a)    has a gross leasable area of at least 5 000 m2; and

(b)    contains a supermarket that occupies a gross leasable area of at least 1 000 m2; and

(c)    contains at least 50 other commercial establishments; and

(d)    has customer parking facilities.

37    Then, the pivotal expressions within the above definition are also defined: “gross leasable area” and “commercial establishment”. For example, the latter is defined in a separate section of the Rules (s 7) as follows:

(1)    In this Determination, subject to subsection (2):

commercial establishment means premises:

(a)    in a shopping centre; and

(b)    occupied by, or likely to be occupied by:

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

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

(iii)    a business that provides services to customers.

(2)    For subsection (1), commercial establishment does not include:

(a)    commercial office space; or

(b)    premises occupied by an accountant, analyst, architect, engineer, lawyer, planner, stockbroker or surveyor, unless the premises are occupied as a shopfront; or

(c)    premises occupied by a real estate agent or an insurance company, agent or broker, unless the premises are occupied as a shopfront for the real estate agent or insurance company; or

(d)    a council office or government or statutory corporation office or shopfront, other than an Australia Post shopfront, an Australian Broadcasting Corporation shop or a Medicare or Centrelink shopfront; or

(e)    a car wash or car parking facilities; or

(f)    a library; or

(g)    a kindergarten or preschool; or

(h)    a child care centre or child minding facility, unless the centre or facility is regularly available for use by customers of the shopping centre while the customers are at the shopping centre; or

(i)    a storeroom or storage area; or

(j)    a temporary selling point; or

(k)    an automatic teller machine or automatic dispensing machine.

(3)    In working out the number of commercial establishments in a shopping centre:

(a)    2 or more commercial establishments occupied by, or likely to be occupied by, one business are counted as one commercial establishment; and

(b)    the maximum number of shopfronts for accountants, analysts, architects, engineers, lawyers, planners, stockbrokers or surveyors that can be counted towards the total number of commercial establishments in a shopping centre is:

(i)    for a small shopping centre — one; or

(ii)    for a large shopping centre — 2.

(Emphasis in original)

38    The way in which the minimum distance and feature specific requirements are employed in relation to new pharmacy applications within a “facility” can be demonstrated by setting out items 133 (small shopping centre) and 134 (large shopping centre). They are:

[Item 133]

1.    The proposed premises are in a small shopping centre.

2.    The proposed premises are at least 500 m, in a straight line, from the nearest approved premises.

3.    There are no approved premises in the small shopping centre.

[Item 134]

1.    The proposed premises are in a large shopping centre.

2.    There are:

(a)    for a shopping centre that contains at least 50, but fewer than 100, commercial establishments — no approved premises in the shopping centre; or

(b)    for a shopping centre that contains at least 100, but fewer than 200, commercial establishments — no more than one approved premises in the shopping centre; or

(c)    for a shopping centre that contains at least 200 commercial establishments — no more than 2 approved premises in the shopping centre.

39    It can be seen that, as with item 132 (see [33] above), the minimum distance requirement is the sole requirement that has to be met in respect of a new pharmacy application in a small shopping centre facility. However, where the new pharmacy premises are to be located in a large shopping centre facility, the requirements are linked to the size of the shopping centre. Similarly, it is worth noting that no minimum distance requirement is applied if the new pharmacy premises are to be located in a special feature such as a private hospital (see item 135). However, there is a minimum distance requirement mixed with various feature specific requirements if the premises are to be located in a large medical centre (see item 136). In that case, “the proposed premises [must be] at least 500 m, in a straight line, from the nearest approved premises other than an approved premises in a small shopping centre, large shopping centre or private hospital”.

The requirements extrinsic to the particular premises in relocation applications

40    Since these extrinsic requirements are applied in relation to the seven kinds of new pharmacy applications, it is not surprising to find that the 2011 Rules place similar extrinsic requirements on the relocation of pharmacy premises once they have been approved. Apart from the set of requirements that applies to all applications (see at [30] above), the first of the other two sets of requirements applicable to this category of applications are set out in Part 1 of Schedule 1. The seven different kinds of applications described in that Part (see at [26] above) fall into three broad categories, as follows:

(f)    Item 121, dealing with applications for expansion or contraction of premises. By its terms, this item does not really involve a relocation as such;

(g)    Items 125 to 127 (inclusive), which contain, what might be described as, transitional provisions relating to applications for relocation made before 16 April 2012; and

(h)    Items 122 to 124 (inclusive) – the three remaining items.

41    Subject to some aspects discussed later in these reasons, the items in [40(a)] and [40(b)] above are not directly relevant in this appeal. However, the three remaining items referred to in [40(c)] above are. It is therefore appropriate to set them out verbatim. They are as follows:

42    At this point, it is worth interpolating that the expression “same town” which appears in item 123 also appears in item 132 (see [33] above) and item 312(b)(ii) (see [46] below).

43    It can be seen that under item 122, the only requirement is that the relocation occurs “in the same facility”. The other two items impose minimum distance requirements from any approved premises. In the case of item 123, that requirement is identical to that in item 131 (see [34] above). Further, as is noted immediately above, item 123 also imposes an “in the same town” requirement.

Additional requirements applicable to relocation applications

44    The third set of requirements applicable to relocation applications are set out in Schedule 3 to the 2011 Rules. Schedule 3 is divided into two Parts: Part 1, applicable to “All applications”; and Part 2, applicable to “Particular applications”. Only Part 1 is pertinent in this appeal. That Part contains two items (items 311 and 312).

45    Item 311 sets out certain procedural requirements for relocation applications that are reflected in s 6(2) of the 2011 Rules. It does not arise for consideration in this appeal.

46    However, item 312 is obviously central to this appeal. It is therefore appropriate to set it out verbatim. It provides:

The Authority is satisfied that:

(a)    on the day the application is made, one or more approvals in relation to the existing premises have been in force, immediately prior to the day the application was made, for a continuous period of at least 2 years; or

(b)    if paragraph (a) does not apply:

(i)    the proposed premises are in the same facility as the existing premises; or

(ii)    the proposed premises are in the same town as the existing premises; or

(iii)    the purpose of the application is to allow the pharmacy operated by the applicant at the existing premises to move to the proposed premises while the existing premises are renovated or refurbished; or

(iv)    the proposed premises are renovated or refurbished premises that are the same, or substantially the same, premises previously occupied by the pharmacy operated by the applicant or by the previous owner of the pharmacy; or

(v)    there are exceptional circumstances; or

(vi)    both:

(A)    the application involves the cancellation of an existing approval that was granted following an application of the kind mentioned in subsection 90 (3AE) of the Act; and

(B)    the existing approval, and the approval the cancellation of which was involved in the application for the existing approval, have been in force for a total of at least 2 years; or

(vii)    the application:

(A)    is of the kind mentioned in subsection 90 (3AE) of the Act; and

(B)    has been referred to the Authority under subsection 90 (3AF) of the Act.

47    It can be seen that this item distinguishes between applications where the existing approval for the premises has been in force for a continuous period of at least two years prior to the date of the application (in item 312(a)) and those where that is not the case (in item 312(b)).

48    The rationale for this distinction was to ensure a balance was struck between flexibility and stability “in the network of approved pharmacies”. That rationale was illuminated in the following part of the Explanatory Statement for the 2011 Rules:

Item 312 relates to the period of time the existing approval has been in force. It provides that an existing approval can not be relocated more often than once every two years, except in specified circumstances such as, temporary relocations resulting from refurbishment of premises, for relocations within the same facility, or if there are exceptional circumstances (such as, if the existing premises have been damaged by flood or fire). It aims to ensure a degree of stability in the network of approved pharmacies while still allowing some flexibility for relocations that have no impact on other pharmacies.

(Emphasis in original)

49    At this juncture, it is worth noting the following features of item 312. First, subject to the limitations that are set by s 10(a)(ii) of the 2011 Rules and Part 1 of Schedule 1, item 312(a) effectively provides that approved pharmacy premises can be located within the same facility, or within the same town, or within a short distance of its approved location, every two years. Secondly, and relatedly, since no additional requirements are imposed by item 312(a), it follows that, so far as there are any, the requirements prescribed in the second part of s 10(a)(iii) (those in Part 1 of Schedule 3) must be contained within item 312(b). In saying this, I am not ignoring the procedural requirements in item 311 that apply to all relocation applications. Thirdly, the seven sub-clauses of item 312(b) can be divided into two broad categories. In the first place, sub-clauses (i), (ii) and (vii) repeat in identical terms items 122, 123 and 121, respectively, of Part 1 of Schedule 1. While sub-clause (vi) is not in identical terms to an item in Part 1 of Schedule 1, it deals with the same subject matter and the same legislative provision as item 121 and, therefore, clause (vii). For these reasons, I consider it can be placed in the same category as the latter clause. That leaves clauses (iii) to (v) in the second category. They form a separate category because they do not replicate any items in Part 1 of Schedule 1 and, more importantly, by their terms, they variously describe the purpose of, or reason for, a relocation of premises. I will return to the features of these sub-clauses of item 312(b) later in these reasons.

Summing up on the structure of the statutory scheme underpinning the PBS

50    From this review of the relevant parts of the National Health Act and the 2011 Rules, the following are the salient features of the structure of the statutory scheme underpinning the PBS. In the first place, whether the application is for new pharmacy premises, or for the relocation of approved pharmacy premises, the “particular premises” from which it is proposed to dispense the pharmaceutical benefits under the PBS is an important component of the scheme. Next, with both types of application, it is for the applicant to nominate the kind of application listed in Schedule 1 that he or she wishes to pursue. That, in turn, determines the particular requirements the application must meet to gain approval.

51    Then, three sets of requirements are prescribed in the three Schedules to the 2011 Rules, two of which apply to new pharmacy applications and all three of which apply to relocation applications. They are: first, requirements that are inherent to the particular proposed premises (Schedule 2); secondly, requirements that are extrinsic to the particular proposed premises (Part 1 or Part 2 of Schedule 1); and, thirdly, an additional set of requirements that apply only to relocation applications (relevantly for present purposes Part 1 of Schedule 3).

52    Further, insofar as new pharmacy applications are concerned, the combination of the “particular premises” component mentioned above, together with the extrinsic requirements mentioned above, serve to create a broad network of PBS dispensing pharmacies which are located so as to provide easy access by the various communities that they are intended to serve.

53    As an aside, it was these features of the scheme that I think led Mortimer J to describe the PBS as “location-based”: see Walkerden v Wodonga Pharmacy Pty Ltd [2015] FCA 273 at [12]. Moreover, her Honour added the following observations about the community focus entailed in the PBS (at [13]):

Thus, in accordance with the content of the scheme as filled out by the 2011 Rules, it is the appropriateness of a new pharmacy in the particular location which is the focus of the decision-making process. As part of that focus, consideration is given to the location of other pharmacies. But the principal focus, in my opinion, is on the community’s need for adequate and sustainable access to pharmaceutical benefits and a new application is to be assessed according to criteria designed to advance that objective.

54    While these observations were directed to applications for new pharmacies, I consider they are apt to describe the importance of this location element in the structure of the PBS and its focus on servicing the needs of the broader community more generally. And, it may also be noted, the latter focus on the community’s “adequate and sustainable” access to pharmaceutical benefits and the pharmacies dispensing those benefits under the PBS can be equated with the convenience of access mentioned by Jessup J in Yu: see [21] above.

55    Having created this broad network of pharmacies providing convenient community access to those dispensing pharmacies operating under the PBS, it was obviously important for the integrity of the scheme to ensure that the distribution and stability of that network would not be adversely affected by the relocation of pharmacy premises once they became approved premises under the scheme. It is therefore unsurprising to find limitations placed upon the circumstances in which any approved pharmacy premises may be relocated from their originally approved locations. That is what the requirements in Part 1 of Schedule 1 and the additional requirements in Part 1 of Schedule 3 of the 2011 Rules are directed to.

56    Insofar as Part 1 of Schedule 1 is concerned, the limits placed upon the relocation of an approved pharmacy are relevantly prescribed in item 122 (within the same facility), item 123 (within the same town) and item 124 (within a short distance). With item 123, there is also an additional requirement that “[t]he proposed premises are at least 10 km, by the shortest lawful access route, from the nearest approved premises other than the exiting premises” (see [41] and [43] above). The two sets of limitations in items 122 and 123 are plainly directed to retaining an approved pharmacy at a location which is sufficiently close to, and therefore readily accessible by, the particular community that it was originally approved to serve (the town community, or the community surrounding the facility). Apart from these two sets of limitations, relocations of approved pharmacies are relevantly confined to one other set of circumstances, namely short distance relocations under item 124. In using the expression “relevantly”, I am excluding, for present purposes, items 121 and 125 to 127 (inclusive) for the reasons stated in [40(a)] and [40(b)] above. Depending upon whether the existing premises are located within a facility, the limitations placed on such relocation applications are set out in Part 1 of Schedule 1 (see [41] above). Both are distance requirements.

57    There is, therefore, an important difference between these three sets of requirements. Items 122 and 123 are directed to the interests of the community that the pharmacy premises were approved to serve, whereas item 124 does not have any express or implied community focus. Put differently, while the former are directed to retaining the pharmacy premises within proximity of the community it is intended to serve, the latter is directed to providing approved pharmacists with some additional flexibility outside of those two situations to relocate their approved premises a short distance (no more than one kilometre) while at the same time maintaining the stability of the overall network of dispensing pharmacies operating under the PBS. Since item 124 is, in this sense, atypical, one might therefore expect to find it treated differently in the statutory scheme underpinning the PBS. This brings me to the key provision in this appeal: item 312(b) and particularly sub-clause (ii) thereof.

Ms Clare’s application and contentions

58    Before examining that provision closely, it is convenient to recap briefly. First, it will be recalled that Ms Clare’s application to relocate her pharmacy premises was made within two years of those premises having been approved. As a consequence, the Authority was required to deal with her application in accordance with s 10(a) of the 2011 Rules. Consistent with the terms of s 10(a)(i) of those Rules (see [24] above), Ms Clare stated that her application was of the kind mentioned in item 124 of Part 1 of Schedule 1. Ms Clare therefore effectively elected to meet the requirements of that particular item in preference to, for example, item 122 (relating to a relocation within the same facility) or item 123 (relating to a relocation within the same town) and the requirements attaching to those items. Putting aside the requirements set out in column 3 of Part 1 of Schedule 1 (s 10(a)(ii)) and in Schedule 2 (s 10(a)(iii)), which are not in issue in this appeal, Ms Clare’s application therefore had to comply with the additional requirements in Part 1 of Schedule 3. That is prescribed by s 10(a)(iii). As noted above, item 311 does not arise for consideration in this appeal, so that leaves the requirements of item 312.

59    Ms Clare contends that, notwithstanding her nomination of item 124 in her relocation application, item 312 should be construed so that her application is treated as falling within the terms of item 312(b)(ii) with the consequence that her application effectively becomes a short distance relocation within the same town. Ms Clare claims that this construction is supported by the heading to Part 1 of Schedule 3, which states “All applications” and to the terms of s 10(a)(iii), which states that “all the requirements” in Part 1 of Schedule 3 must be met. Ms Clare also contends that there is nothing in the 2011 Rules or the National Health Act which would give a more limited operation to item 312 and she also points out that the terminology used in item 312(b)(ii), “proposed premises” and “existing premises”, is precisely the same as the terminology used in item 124.

Principles on statutory construction

60    The same principles apply to the construction of the 2011 Rules as apply to the National Health Act and other legislative instruments. Those principles have been restated many times by the High Court in recent decisions. The following will suffice from the decision in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55, where the Court said (at [39]):

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.

The construction of item 312(b)

61    With these principles in mind, I now turn to item 312. I have already observed above (at [47]) that item 312 creates a distinction between applications involving the relocation of pharmacy premises where the existing premises have been approved for a continuous period of at least two years, and those that have not. Item 312(a) deals with the former and item 312(b) deals with the latter. As I have also observed at [49] above, the effect of item 312(a) is that no additional requirements are placed upon relocation applications made after this two year period, beyond those set out in Part 1 of Schedule 1 to the 2011 Rules. However, where the relocation application is made within this two year period, item 312(b) is intended to place additional requirements on the application. The rationale for this distinction is already explained above (at [48]).

62    In identifying what additional requirements are imposed by item 312(b), Ms Clare is correct in her contention that one should begin with a consideration of s 10 of the 2011 Rules because that section dictates when the Authority must approve an application for relocation of pharmacy premises. She is also correct in focusing on s 10(a)(iii) because, for present purposes, that is the critical provision in s 10. It provides that the Authority must recommend an application for relocation of pharmacy premises if “all the requirements set out in Schedule 2 and Part 1 of Schedule 3 are met”. The word “requirements” is not defined in the 2011 Rules so it must take its ordinary meaning, which is: “that which is required; a thing demanded or obligatory”: see Macquarie Dictionary online, sense 1. It necessarily follows that Schedule 2 and Part 1 of Schedule 3 contain certain requirements or obligations an applicant for relocation must meet. The requirements or obligations described in Schedule 2 are quite clear (see at [30] above). It can be seen from the terms of those requirements that they have universal application to all of the seven kinds of relocation applications described in Part 1 of Schedule 1 (set out at [26] above). Similarly, the requirements or obligations prescribed by items 311 and 312(a) of Part 1 of Schedule 3 are relatively clear (see at [64] below).

63    The question then is: what are the additional requirements in item 312(b) that must be met? On this question, as I understand it, Ms Clare contends that, since s 10(a)(iii) requires a relocation application to meet “all” the requirements in Part 1 of Schedule 3; and since the heading to Part 1 of Schedule 3 states that it applies to “All applications”; and, finally, since there is nothing in the language of item 312 to justify it being read down, she is able to rely upon item 312(b)(ii) to support her application for relocation under item 124.

64    In considering these contentions I will begin with the heading to Part 1 of Schedule 3. I do not consider that heading affects the construction of the items within Part 1 of Schedule 3 in the way advanced by Ms Clare. Instead, I consider that heading signifies that all applications have to meet the requirements in that Part insofar as the items in that Part can be properly characterised as requirements. In this respect, there is no difficulty with item 311 because, by its terms, it prescribes certain procedural requirements that apply to all kinds of relocation applications. Similarly, item 312(a), by its terms, requires an approval for the existing premises to have been in force for a continuous period of at least two years by the time an application for relocation is made. However, some difficulties do arise with the sub-clauses of item 312(b) because, by their terms, they could only apply to a particular kind of relocation application, for example, item 312(b)(i) specifically refers to relocations in the same facility. Furthermore, each sub-clause of item 312(b) is separated by the word “or” indicating it must be considered separately and not conjunctively. Before turning to consider what requirements are prescribed in item 312(b), I will address Ms Clare’s first contention above.

65    In that respect, I consider Ms Clare’s approach to the construction of s 10(a)(iii) and item 312(b) effectively treats those provisions as expanding the circumstances in which an approved pharmacist can relocate his or her premises within the first two years of the last approval, rather than placing additional requirements or limitations on such pharmacy relocations. This approach would run contrary to the statutory scheme I have outlined above, which operates to limit pharmacy relocations generally beyond the period of two years after the last approval and places additional limitations on relocations within that period. These limitations are, as explained above, directed to ensuring the integrity of the network of dispensing pharmacies operating under the PBS. This construction would therefore result in the absurd outcome that there would be more opportunities to relocate a pharmacy within the first two years after approval than there would be after that period. For these reasons, I do not consider this construction can be accepted.

66    To address Ms Clare’s third contention above and to identify what, if any, requirements are prescribed in item 312(b), it is necessary to examine the text and structure of that item. First, as I have already observed above at [49], sub-clauses (i), (ii), (vi) and (vii) of item 312(b) all restate in identical terms (or, in the case of sub-clause (vi), very similar terms) items 122, 123 and 121, respectively, from Part 1 of Schedule 1. This terminology does two things: it serves to identify those three kinds of relocation application in the terms described in Part 1 of Schedule 1; and it serves to distinguish those three kinds of relocation applications from the remainder of the provisions in item 312(b). More significantly, none of those sub-clauses includes additional words or provisions that attach any identifiable requirements or obligations for those three kinds of relocation applications. In my view, these aspects of the text of those sub-clauses therefore serve to indicate that no additional requirements are to be attached to those three kinds of relocation applications. In relation to relocation applications of the kinds described in items 122 and 123, this conclusion is further supported by the fact that all the requirements necessary to achieve the statutory purpose of maintaining convenient community access to such relocated approved pharmacies are already set out in Part 1 of Schedule 1 (see at [56] above). It should also be noted that no concerns about community access arise in connection with relocation applications of the kind described in item 121 because, as is already noted above, that item applies to relocation applications involving the expansion or contraction of approved pharmacy premises and does not involve a relocation as such. I should add that there is an alternative construction which I have identified below (at [68]) which counters some of these propositions, but not the ultimate outcome.

67    If items 121 to 123 (inclusive )of Part 1 of Schedule 1 are identified, distinguished and placed in a separate category by the language used in sub-clauses (i), (ii), (vi) and (vii) of item 312(b), then there is only one other item in Part 1 of Schedule 1 remaining: item 124. It would therefore seem to follow that the requirements in Part 1 of Schedule 3 to which s 10(a)(iii) refers are directed to item 124. Of course, they may also be directed to the transitional items in 125 to 127 (inclusive), but this does not detract from the conclusion that they are directed to item 124 and not to items 121 to 123 (inclusive). Singling out item 124 in this way is consistent with its atypical character, as discussed above (at [57]), and why one may expect to find that item treated differently in the statutory scheme underpinning the PBS. It is also consistent with the fact that the terms of item 124 have not been replicated in any of the sub-clauses of item 312(b) in the same way that the terms of items 121 to 123 (inclusive) have. Furthermore, it is significant that the language of sub-clauses (iii) to (v) of item 312(b) bespeaks of the notion of requirement expressed in s 10(a)(iii). That is to say, to identify some reason or purpose for the relocation of pharmacy premises within the first two years after they become approved pharmacy premises. Finally, the circumstances described in sub-clauses (iii) to (v) of item 312(b) are of the kind that one might expect could cause a pharmacist to seek to relocate his or her premises a short distance within that two year period. That is, to attend to renovations or refurbishment, or because of some exceptional circumstances.

68    All these aspects of the language and structure of item 312(b) therefore support the construction that the requirements in sub-clauses (iii) to (v) are the requirements in that item of Part 1 of Schedule 3 that s 10(a)(iii) prescribes have to be met. They also support the conclusion that those requirements only apply to a relocation application of the item 124 kind and not to those in items 121 to 123 (inclusive). Alternatively, even if sub-clauses (iii) to (v) (inclusive) of item 312(b) could be construed so as to set additional requirements for relocation applications of the kinds described in items 121 to 123, neither construction permits a construction that item 312(b)(ii) is a “requirement” that an applicant relying on item 124 can depend on to avoid having to meet one of the requirements in those sub-clauses.

69    For these reasons, taking into account the text and structure of s 10(a)(iii) and item 312(b) of Part 1 of Schedule 3, together with the statutory scheme and purpose of the PBS outlined above, I consider Ms Clare’s application under item 124 had to meet one of the requirements of sub-clauses (iii) to (v) in item 312(b) and, conversely, she could not rely upon sub-clause (ii) of that item. I have therefore reached the same conclusion as the Tribunal member, but by a different course.

70    Before I leave this issue, I need to briefly deal with some other matters that Ms Clare raised. The first is whether the Tribunal could have determined the item 312(b)(ii) issue when the Authority had earlier conceded it in its pleading. The second is related; it is whether the Authority was bound by its Statement of Facts, Issues and Contentions in the same way as a party is bound by pleadings such that it could not raise this issue before the Tribunal.

71    As to the first matter, the Tribunal is an administrative decision-maker and, subject to ensuring it affords the parties before it procedural fairness, it is not bound to determine the substantive issues raised for determination according to the way in which they are “pleaded” by the parties: see Grant v Repatriation Commission (1999) 57 ALD 1, [1999] FCA 1629 (Grant) at [17]–[18] per Merkel, Goldberg and Weinberg JJ. Ultimately, the Tribunal is required to make the decision it considers is appropriate in all the circumstances; its function is to arrive at the correct or preferable decision: see Bushell v Repatriation Commission (1992) 175 CLR 408 at 424–5 per Brennan J. And specifically addressing the situation that arose before the Tribunal here, the Court said in Grant (at [20]):

The fact that an error of law was not raised previously does not preclude the appellant from raising it on appeal provided the respondent has been afforded an opportunity to be heard on the issue: ...

(Case citations omitted)

72    Ms Clare’s second matter is not sustainable for at least two reasons. First, pleadings deal with issues of fact and the issue in question here was an issue of law, namely the correct construction of s 10 and item 312(b) of the 2011 Rules. In those circumstances, it was therefore open to the Authority to change its mind about the construction of those statutory provisions and to advance any reasonably sustainable construction at the hearing before the Tribunal. The fact its revised construction of item 312(b)(ii) was ultimately adopted by the Tribunal attests to the fact it was reasonably sustainable. Secondly, if Ms Clare suffered any prejudice by the Authority’s withdrawal of its concession on this issue, her remedy lay in applying for an adjournment of the hearing. She did not adopt that course and she did not claim before me that she had suffered any unfairness by the Tribunal’s decision to proceed with the hearing.

73    Finally, Ms Clare devoted much of her written submissions to the question of ambiguity and the use the Tribunal made of extrinsic materials. Because of the way in which I have approached the construction of item 312(b)(ii), I do not consider it is necessary to address those submissions.

Whether the two sets of premises are in the “same town”

74    Having reached the conclusion that item 312(b)(ii) did not apply to Ms Clare’s relocation application under item 124, it is strictly unnecessary for me to consider the first issue above, namely whether the two sets of premises are in the “same town”. However, out of deference to the detailed submissions made by both parties, I will briefly state my reasons for respectfully disagreeing with the conclusion reached by the Tribunal member on this issue.

75    First, I agree with the Tribunal member that s 5 of the 2011 Rules does not provide any assistance in determining what the expression “same town” means. That is so because that provision uses the expression “town” itself to state when the existing premises are taken to be in the same town as the proposed premises. Secondly, I agree with the Tribunal member in his observations that, in the absence of a definition of the expression “town” in the 2011 Rules, one must resort to the ordinary meaning of that expression and the usual source of that meaning is a dictionary such as the Macquarie Dictionary.

76    However, I respectfully disagree with the use the Tribunal member made of the dictionary meaning of the expression “town” and, in particular, his focus on the pharmacy having access “to a large enough population base to be viable” (see at [16] above). In this respect, I do not consider the viability of a pharmacy is a relevant consideration. Instead, I consider the expression “town” must be construed with a focus on the general purpose of the PBS described earlier in these reasons: of providing the community with safe and convenient access to qualified pharmacists who are authorised to dispense pharmaceutical benefits under the scheme (see at [21] above). Thus the focus should have been on ensuring the community in question has convenient access to a pharmacy or pharmacies approved under the PBS. Hence, I consider the expression “town” in item 312(b)(ii) is directed to the particular town community that the approved pharmacy premises were originally approved to serve. It is that community of people to which the expression refers. Thereafter, the identification of that community of people is a question of fact and therefore a matter for the Authority to determine.

Conclusion

77    For the above reasons, Ms Clare’s appeal must be dismissed.

Associate:

Dated:    30 June 2015