FEDERAL COURT OF AUSTRALIA

Murray v Australian Community Pharmacy Authority [2017] FCA 705

ORDERS

THE COURT ORDERS THAT:

1.    The further amended originating application for judicial review is dismissed.

2.    The applicants must pay the costs of the first and third respondents, as agreed or assessed.

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

REASONS FOR JUDGMENT

GRIFFITHS J:

Introduction

1    This proceeding involves a judicial review challenge to the validity of two matters. The first is a decision by the Australian Community Pharmacy Authority (Authority) to recommend to the Secretary of the Department of Health and Ageing (the Secretary) that approval be given under s 90 of the National Health Act 1953 (Cth) (the Act) to an application by St Moses Black Pty Ltd (St Moses) to supply pharmaceutical benefits at premises at Unit 110, 227 Flemington Road, Franklin in the Australian Capital Territory. The second matter concerns a decision by the Secretary’s delegate made on 21 November 2016 to grant the approval.

2    The judicial review applicants own a pharmacy located at 2/141 Flemington Road, Mitchell, another suburb in Canberra. They have an existing approval to supply pharmaceutical benefits from that location, which is situated approximately 1,900 metres from Unit 110, 227 Flemington Road, Franklin. The applicants’ standing to bring these proceedings was not contested.

3    For the reasons which follow, the further amended application for judicial review will be dismissed, with costs.

Summary of relevant background facts

4    The following facts are uncontroversial. On 29 June 2016, St Moses lodged an application with the Secretary for approval to supply pharmaceutical benefits at Unit 110, 227 Flemington Road, Franklin, ACT. It will be necessary to say something more about the contents of that application shortly. The application was given an application registration number NA 2520. The Secretary referred the application to the Authority pursuant to s 90(3A) of the Act. Although there was no copy of any letter of referral in evidence, a document entitled “Referral to ACPA – check list” dated 7 July 2016 was in evidence. It contains an express reference to the application number NA 2520. There is no dispute that the Authority had before it, from at least 7 July 2016, a copy of the application lodged on 29 June 2016, together with the supporting documentation. So much is clear from the Authority’s statement of reasons dated 31 October 2016 (see further below).

5    By letter dated 20 July 2016, the judicial review applicants were informed by the Authority of St Moses’ application. They were informed that an “application for approval to supply pharmaceutical benefits at Unit 110, 227 Flemington Road, Franklin, ACT, 2013 has been referred to” the Authority for consideration under item 130 of the relevant rules. The applicants’ solicitor sent the Authority a letter dated 19 August 2016 opposing the application. The application was considered by the Authority at its meeting on 26 August 2016. A decision was made then to defer making any recommendation in respect of the application. There was then an exchange of correspondence between the Authority and St Moses’ solicitor prior to the Authority again considering the application at a meeting on 30 September 2016. The Authority determined at that time to recommend that the application be approved. This recommendation was sent to the Secretary on 4 October 2016. A copy of the recommendation was belatedly put into evidence. The recommendation described the application in the following terms:

Application Details

Application:    NA2520

Applicant:    St Moses Black Pty Ltd

Address of proposed premises:    Part of Unit 110, 227 Flemington Road, Franklin, ACT, 2913.

6    For reasons which will shortly emerge, it is significant to note that the letter of recommendation referred to the application being in respect of part of Unit 110. It is also significant to note that the letter of recommendation expressly stated that the “documentation submitted with the application is now returned” (i.e. returned to the Secretary). It may be deduced that the Secretary had supplied the Authority with a copy of St Moses’ formal application and supporting documentation, given the reference at the end of the recommendation letter to the documentation submitted with the application being returned to the Secretary.

7    The judicial review applicants’ solicitor was informed of the recommendation by a letter dated 11 October 2016 from the Authority. Following a request by the judicial review applicants’ solicitor, the Authority provided a statement of reasons for its decision to make the recommendation under cover of a letter dated 31 October 2016.

8    On 21 November 2016, a delegate of the Secretary decided to grant an approval. The delegate subsequently issued to St Moses a formal “Approval as a pharmacist” on 11 January 2017. Relevantly, that document stated that approval was given to St Moses trading as (emphasis in original):

FRANKLIN CHEMIST

for the purpose of supplying pharmaceutical benefits on demand at the premises situated at:

Unit 110, 227 Flemington Road

FRANKLIN ACT 2913

effective from twenty-first day of November in the year 2016.

9    In their judicial review application, which is brought under both the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) and s 39B of the Judiciary Act 1903 (Cth) (Judiciary Act), the applicants seek judicial review of both the Authority’s recommendation and the delegate’s approval decision.

10    During the course of the hearing, after a copy of the Authority’s recommendation to the Secretary was tendered in evidence for the first time, it became apparent that the applicants’ primary challenge was directed to the validity of the delegate’s approval decision and, in particular, to the fact that the premises to which the approval relates are formally described as being situated at Unit 110, 227 Flemington Road, Franklin, whereas the recommendation made by the Authority described the address of the proposed premises as “Part of Unit 110, 227 Flemington Road, Franklin, ACT, 2913”. The applicants contended that the delegate’s approval was invalid because, by virtue of s 90(3B) of the Act, the Secretary was empowered to grant approval under s 90 only in respect of an application that has been referred to the Authority under s 90(3A). The argument turned on the proposition that, while the recommendation was expressed to be in terms of “Part of Unit 110”, the delegate’s decision was expressed in terms of “premises situated at Unit 110”.

11    The judicial review applicants did not abandon their grounds of challenge to the validity of the Authority’s recommendation.

12    It is desirable to now summarise some relevant legislative provisions in the Act, the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth) (the Regulations) and the National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (the Rules) made by the Minister under the Act.

The Act

13    Section 90 of the Act is an important relevant provision. It deals with approved pharmacists. To become an approved pharmacist, a pharmacist must apply to the Secretary "for approval to supply pharmaceutical benefits at particular premises". The Secretary may “approve the pharmacist for the purpose of supplying pharmaceutical benefits at those premises” (s 90 (1)).

14    With some limited exceptions, the Secretary is required to refer an application under s 90 to the Authority (s 90(3A)).

15    All recommendations of the Authority are to be made to the Secretary (s 99K(3)) who, in turn, cannot grant an approval under s 90 unless the Authority has recommended the grant of approval (s 90(3B)). However, where the Authority has recommended a grant, the Secretary has a discretion to refuse to grant approval (s 90(3B)).

16    It is desirable to set out in full the relevant provisions of s 90:

90    Approved pharmacists

(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.

…

(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.

…

17    It is to be noted that while the Secretary is obliged by s 90(5) to serve a written notice on an applicant pharmacist of a decision to grant or reject an application under s 90, there is no statutory obligation to publish such a notice more widely, nor provide a copy to a rival pharmacist who, like the judicial review applicants here, oppose the approval.

18    The Authority’s functions are set out in s 99K of the Act. They include the consideration of applications made under s 90 and making a recommendation in respect of such an application as to whether or not it should be approved. It is desirable to set out the full terms of that provision:

99K    Functions

(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.

19    It is important to note that, in making a recommendation under s 99K(1)(b), the Authority is obliged to comply with relevant rules determined by the Minister under s 99L.

20    Before turning to the relevant rules, it is desirable to note that the relevance of some parts of the Regulations, which were in force at the time of both the Authority’s recommendation and the delegate’s approval decision (the Regulations were subsequently repealed effective 1 April 2017).

21    Part 2 of the Regulations deals with approvals under Pt VII of the Act. The Court drew the parties’ attention to the potential relevance of reg 8(a), which is relevantly in the following terms:

8    Application for approval to be in approved form

The Minister, in the case of a hospital authority, and the Secretary, in the case of a pharmacist or medical practitioner, may refuse to entertain an application for approval under Part VII of the Act unless the application:

(a)    in the case of an application for approval of a pharmacist – is in accordance with a form approved in writing by the Secretary;

…

22    There are two other statutory provisions of relevance. The first is s 4 of the Act, which defines “premises” as “includes a part of premises” (emphasis added). The second is s 13 of the Legislative Instruments Act 2003 (Cth), which provides that, if enabling legislation confers on a rule-maker the power to make a legislative instrument, then, in the absence of a contrary intention, expressions used in any legislative instruments so made have the same meaning as in the enabling legislation (s 13(1)(b)). Accordingly, unless a contrary intention appears, the definition of “premises” in s 4 of the Act (which includes a part of premises) also applies to the Rules. No party suggested that there was a contrary intention which displaced the operation of s 13(1)(b). In my view, the definition of “premises” in s 4 of the Act applies equally to the term “premises” in the Rules as determined by the Minister under s 99L of the Act. Accordingly, for the purposes of the Rules, premises, including in the phrases “proposed premises” or “particular premises”, includes a part of premises.

The Rules

23    As noted above, the Minister is empowered to make rules under s 99L, which are then binding on the Authority in making a recommendation under s 99K(1). The relevant rules are the Rules. Those Rules were made against the background of an agreement having been reached between the Australian Government and the Pharmacy Guild of Australia on 3 May 2010. That agreement (known as the Fifth Community Pharmacy Agreement) contains provisions which deal inter alia with the manner in which the Commonwealth price is to be ascertained for the purpose of payments to approved pharmacists in respect of the supply by them of pharmaceutical benefits under the Commonwealth’s Pharmaceutical Benefits Scheme. There is a reference is cl 23 of that Agreement to Location Rules made by Ministerial determination and to the Commonwealth putting in place a process for the Authority to refer anomalies in, and substantial problems arising from, the Location Rules. Location Rules are defined to mean rules determined by the Minister under s 99L. The Fifth Community Pharmacy Agreement expired in May 2015 and was replaced by the Sixth Community Pharmacy Agreement dated 24 May 2015.

24    In Walkerden v Wodonga Pharmacy Pty Ltd [2015] FCA 273; 230 FCR 243 at [62], Mortimer J described the objectives of the Rules in the following terms:

Clearly the objectives of the 2011 Rules, as set out in cl 1.2(d)(vi) of the [F]ifth [Community Pharmacy] Agreement, are of principal relevance to the construction issues on this application. Those objectives have twin themes: a sustainable and viable community pharmacy network (which focuses at least as much on the interests of pharmacy owners as on the community) and access to pharmaceutical benefits (with a focus only on the community's interests). In that sense the location rules are an attempt to balance community access with commercial sustainability.

25    Section 10 in Pt 2 of the Rules relevantly provides (emphasis added):

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

(a)    …

(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.

26    Section 11(a) in Pt 2 of the Rules relevantly provides (emphasis added):

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

(a)     a requirement, under paragraph 10 (a) or (b), that applies in relation to the     application is not met; or

(b)    …

27    The following definitions in s 5 of the Rules should also be noted:

application means an application under section 190 of the Act referred to the Authority.

…

approved premises has the meaning given by subsection 6(1) [of the Rules].

…

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

It is to be noted that while the Act refers to “particular premises”, the Rules refer both to “proposed premises” and “particular premises”. For example, the phrase “particular premises” is used in both ss 10 and 11 of the Rules, while the phrase “proposed premises” is used in ss 5(2) and (3) and 6(2)(b) and (c).

28    As noted above, St Moses’ application was expressly made in relation to item 130 in Pt 2 of the Rules. This is the kind of application which is required to be made by a new pharmacy. In column three of item 130, the specific requirements for such an application are specified. In summary, those requirements relate to the location of the proposed premises in relation to the nearest approved premises, a full-time prescribing medical practitioner and supermarkets.

29    Schedule 2 of the Rules also specified general requirements which were relevant to St Moses’ application. In summary, items 211 and 212 required the Authority to be satisfied of various matters, including that the proposed premises were not approved premises; that the applicant had a legal right to occupy the proposed premises and that the proposed premises could be used for the operation of a pharmacy under applicable local government and State or Territory laws relating to land development. The Authority also needed to be satisfied that within six months of making a recommendation the applicant would be able to begin operating a pharmacy at the proposed premises, and that the proposed premises were not directly accessible by the public from within a supermarket.

Consideration and determination

30    It is convenient to deal seriatim with the grounds of review set out in the further amended originating application for judicial review, noting that most are directed to the actions of the Authority, however, a challenge is also brought to the validity of the delegate’s approval.

31    The first ground claims that the Authority acted contrary to the Rules by effectively deferring consideration of St Moses’ application on 26 August 2016, when it was first considered by the Authority, rather than determining at that time that the Authority recommend that the application not be approved. The judicial review applicants relied upon a record produced by the Authority of its meeting held on 26 August 2016. The record appears to have been prepared by someone in the Authority’s secretariat. Handwritten annotations on the record which appear alongside the entry “Premises: Unit 110, 227 Flemington Road, Franklin, Act, 2913” record that the premises are “part of as per hatched plan”. There are other handwritten annotations alongside the relevant items, particularly items 211, 212 and 130. Under a heading “Reasons for deferral (if applicable)”, there are various handwritten annotations which indicate that the view was apparently taken that further information was required in relation to various relevant items. They include, for example, the reference alongside item 211(c) to “clarification that Council breach has been rectified & that pharmacy and Dr able to operate”.

32    The minutes of the Authority’s meeting held on 26 August 2016 (the Minutes) contain information relating to St Moses’ application. The Minutes record the Authority having considered “information provided by an interested third party”. That information is described in the Minutes as including advice which indicated that a controlled activity was being conducted at the proposed premises and that directions had been issued by the Council to the lessee of the proposed premises requiring it to take steps to rectify the breach. The Minutes then record that the Authority was unable to determine whether this breach impacted on the ability of a pharmacy to operate at the proposed premises. The Minutes state that the Authority was unable to determine, based on information provided by the third party, whether the Council’s directions required that the activity being conducted at the proposed premises, namely the operation of the medical practice, should cease until the breach was rectified. Finally, the Minutes record that the Authority requested St Moses to provide various relevant information relating to its application.

33    The judicial review applicants did not draw the Court’s attention to any provision in the legislative scheme which obliged the Authority to consider and determine an application under s 90 without seeking any relevant additional information from anybody, including the applicants for approval.

34    It is notable that the Authority was not obliged by the Act, Regulations or Rules to notify any other approved pharmacy of an application for approval under s 90 of the Act. Nevertheless, it was open to the Authority to proceed as it did in this case when, in July 2016, it wrote to three different approved pharmacies, including the judicial review applicants, advising them of St Moses’ application and inviting comments or submissions. The judicial review applicants availed themselves of this opportunity and had their solicitor provide a detailed submission objecting to St Moses’ application under cover of a letter dated 19 August 2016. It may be assumed that this response was included in the third party material which is described in the Minutes of the Authority’s meeting held on 26 August 2016 (i.e. shortly after the submission by the judicial review applicants’ solicitor was made).

35    In my view, the Authority acted lawfully in deferring a final determination of St Moses’ application until St Moses was afforded an opportunity to comment on the third party material. Considerations of procedural fairness required no less. There is nothing in the legislative scheme to indicate that basic procedural fairness requirements did not apply.

36    In his oral submissions, Mr Woods (who appeared for the judicial review applicants) seemed to contend that this ground of challenge was also predicated on the judicial review applicants’ assertion that the deferral related to the difficulties presented by St Moses’ application being in respect of the whole of Unit 110. It emerged during discussions with the Court that this assertion was based upon the information contained in responses to questions 13 to 15 of the prescribed form (it should be noted that the judicial review applicants did not contest that the form used by St Moses was the prescribed form). In particular, heavy reliance was placed by the judicial review applicants upon the fact that alongside question 14 (which, as noted at [38] below, required the applicant to give the address of the proposed pharmacy premises), St Moses had written “UNIT 110/227 FLEMINGTON RD”.

37    The judicial review applicants’ submissions on this matter are unpersuasive and are rejected. They effectively invite the Court to focus only on the answers to questions 13 to 15 in identifying the premises which were the proposed premises. This approach is artificial and unsupported by the legislative scheme. Indeed, it is inconsistent with the legislative scheme in the sense that, as noted above, the applicants for approval were in substance obliged by reg 8 to submit an application which was in accordance with the approved form. There was no dispute that they did so. The information contained in the prescribed form, when viewed as a whole, included material which left no doubt that St Moses’ application related to only part of Unit 110. This is reflected in Appendix 4 to the application and is also highlighted in the covering letter dated 29 July 2016 to which the formal application was attached. The Authority plainly understood at its meeting on 26 August 2016 that the application related to only part of Unit 110, as is reflected in the handwritten annotations on the record which it appears was prepared by the Authority’s secretariat at that meeting. The Authority’s statement of reasons, which was tendered by the judicial review applicants, also unambiguously confirms that the Authority was aware that the proposed premises were located at part of Unit 110. This is confirmed, for example, in paragraph 20 of that document and, as noted above, the Authority’s letter of recommendation to the Secretary expressly stated that the address the subject of the application was part of Unit 110.

38    That is sufficient to dispose of the judicial review applicants’ primary contention. There are, however, other reasons why that contention should be rejected. As noted above, the contention relied heavily on the information contained in responses to questions 13, 14 and 15 under the heading “Proposed premises”. Question 14 required an applicant to provide an address of the proposed pharmacy premises. St Moses completed that question by giving the address of the proposed premises as Unit 110/227 Flemington Road, Franklin. That information is correct. That is in fact the address of the proposed premises. There is nothing inaccurate or misleading about that answer. Reading the application as a whole, St Moses made it clear that, while that was the address of the proposed premises, the proposed premises were only part of the premises at that address. As noted above, St Moses was obliged by reg 8(a) to ensure that its application for approval of a pharmacist was in accordance with the prescribed form. In my respectful view, St Moses fulfilled that obligation.

39    The central flaw in this aspect of the judicial review applicants’ case is that it is based on an inappropriate and unduly narrow approach to reading St Moses’ application, which requires the answers to questions 13, 14 and 15 in the prescribed form to be read in isolation from the rest of the application. I see no warrant for that approach and I reject it.

40    The second ground raised in the further amended originating application for judicial review is to the effect that the Authority misconstrued the Rules by considering whether only a part of the proposed premises met the relevant requirements specified in the Rules. This challenge is predicated on the proposition that the proposed premises involved the whole of Unit 110 and not simply a part thereof. For reasons given above in respect of ground 1, this contention is rejected.

41    The third ground was said to be in the alternative to grounds 1 and 2. It is to the effect that, if the Authority did consider the Rules as against the whole of Unit 110, it failed to take into account mandatory relevant considerations, namely that the medical practice was also located there and there was no material before the Authority to suggest that the medical practice had ceased or was intending to cease to occupy Unit 110, when considering the requirements of items 211(b) and 212(a) of the Rules. This ground is predicated on a false assumption, namely that St Moses sought approval in respect of the whole of Unit 110. For reasons given above, that is not the case. The application was in respect of part of Unit 110, at which the proposed pharmacy would operate. The judicial review applicants were unable to point to any relevant legal constraint upon the co-location of the medical practice and the proposed pharmacy. Nor was there any evidence which contradicted the fact that St Moses was the sub-tenant of the whole of Unit 110 and had the legal right to occupy all of it.

42    In the alternative to the first three grounds of judicial review, all of which have been rejected, the judicial review applicants claim that the Authority misconstrued the Rules and improperly exercised its power in concluding that cl 10(b)(i) in Pt 2 of the Rules (which relates to item 130) was satisfied. They argued that the requirement that there be one full-time medical practitioner practising within 500m in a straight line from the proposed premises, required that the proposed premises be separate or distinct from the relevant medical practice. As St Moses pointed out, the submission assumes that s 8 of the Rules, which sets out a methodology for measuring the distance between two “premises”, has some relevance to this requirement. That assumption is flawed. Section 8 has no application because the relevant requirement is expressed by reference to there being the “equivalent of one full-time prescribing medical practitioner” and not by reference to the expression “premises”.

43    The next ground raised by the judicial review applicants is predicated on the claim that the Authority misconstrued the Rules and improperly exercised its power if it considered whether part of the proposed premises met the relevant requirements but then recommended that the application be approved in respect of the whole of Unit 110. As Mr Woods frankly acknowledged in oral address, this contention is unsustainable when regard is had to the terms of the Authority’s recommendation, which expressly state that the application related to only part of Unit 110.

44    Finally, the judicial review applicants challenged the validity of the delegate’s approval on the basis that the Authority’s recommendation, upon which the approval was based, was invalid for any one of the reasons given above. In circumstances where all the grounds challenging the validity of the Authority’s recommendation have been rejected, this ground of challenge necessarily fails.

45    As noted above, the delegate’s formal approval is not expressed in terms of “part” of Unit 110. Rather, it refers to “at the premises situated at Unit 110 etc”. But nothing of significance turns on that. The formal approval is issued to St Moses and plainly relates to its application having regard to the relevant legislative scheme. St Moses would fully understand that the approval relates only to part of the premises as described in its application. Different considerations might arise if there was a legal obligation to publish the formal approval more widely. It is unnecessary to consider that hypothetical.

Conclusion

46    For these reasons, the further amended originating application for judicial review must be dismissed. No persuasive reason was given as to why costs should not follow the event. Accordingly, I will order the judicial review applicants to pay the costs of both the first and third respondents, as agreed or assessed.

Associate:

Dated:    22 June 2017