Federal Court of Australia

ZAA Ventures Pty Ltd as Trustee for ZAA Investment Trust v Australian Community Pharmacy Authority [2020] FCA 1227

ORDERS

THE COURT ORDERS THAT:

1.    The decision of the Australian Community Pharmacy Authority of 26 June 2020 recommending that ZAA’s application for approval to supply pharmaceutical benefits under s 90 of the NH Act at Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland, 4280 not be approved is quashed and a writ of certiorari be issued quashing the decision;

2.    ZAA’s application for approval to supply pharmaceutical benefits under s 90 of the NH Act at Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland, 4280 is remitted to the Australian Community Pharmacy Authority to consider the application and make a recommendation according to law and a writ of mandamus be issued compelling the Australian Community Pharmacy Authority to consider the application and make a recommendation according to law;

3.    The First Respondent pay the Applicant’s costs of and incidental to the application.

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

REASONS FOR JUDGMENT

SC DERRINGTON J:

1    The applicant (ZAA) seeks judicial review pursuant to s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act), or alternatively s 39B(1A) of the Judiciary Act 1903 (Cth)(JA), of a decision of the First Respondent, the Australian Community Pharmacy Authority (the Authority), made on 26 June 2020 (the Decision), to recommend to the Secretary to the Department of Health (the Secretary) that an application to supply pharmaceutical benefits at certain premises (the Application) not be approved.

2    The Decision concerns the correct interpretation of the word “supermarket” in s 5 of the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) (PB 46 of 2018) (the Rules). ZAA contends that the Authority erred in its conclusion that the relevant supermarket was not a “supermarket” for the purposes of Item 130 of the Rules because it was not trading on the day on which the Application was made.

3    By order dated 7 August 2020, the Second Respondent (Stonehealth Pty Ltd) was joined to the proceedings, it being an entity with existing applications before the Authority, but on the basis that it bears its own costs of the proceedings and that no other party would seek costs against it.

4    All parties provided the Court with comprehensive written submissions, which were supplemented by oral argument. The Authority indicated that “consistent with [its] role as decision-maker and the principle in R v Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13 at 35-36, the Authority will not make submissions on factual issues, but will instead to seek to assist the Court in relation to the construction of relevant provisions of the Location Rules, the Authority’s powers and procedures” (R1S [3]). There is some force in the submission of ZAA that the Authority’s written submissions raised the risk of endangering the degree of impartiality the Authority is expected to maintain should the relief sought by ZAA be granted (ARS [19]-[20]). The Authority entered the adversarial fray. It indicated that it agreed with the submissions of Stonehealth in relation to the construction of the Rules (R1S [5]) and directly contested the majority of the submissions put by ZAA. I have no reason, however, to doubt the assurance given by Counsel for the Authority that the Authority would act in accordance with the construction of Item 130(b) as determined by the Court and have considered the submissions of all parties.

5    For the reasons that follow, the Decision of the Authority is quashed and the Application is remitted to the Authority to consider the Application and make a recommendation according to law.

The statutory context

6    By s 89 of the National Health Act 1953 (Cth) (the NH Act), a person is not entitled to receive a pharmaceutical benefit (PBS benefit) unless it is supplied, amongst other things, by an approved pharmacist at or from approved premises. A PBS benefit is a form of prescribed drug. The NH Act provides a scheme by which a pharmacist may obtain approval to supply PBS benefits at particular premises.

7    The pharmacist may, in the first instance, apply to the Secretary for approval (s 90(1)). Subject to some exceptions which are not presently relevant, the Secretary is obliged by subs (3A) to refer the application to the Authority established under s 99J, and may grant the approval only if the Authority recommends the grant (subs (3B)).

8    The functions of the Authority are set out in s 99K(1):

(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)     f an approval is recommended – recommendations as to the conditions (if any) to which the approval should be subject.

9    In making its recommendation, the Authority must comply with the Rules determined by the Minister under s 99L (s 99K(2)). The Rules are a legislative instrument for the purpose of the Legislation Act 2003 (Cth). They repeal the National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (Cth) (the 2011 Rules).

10    As was the case with respect to the 2011 Rules, the Rules themselves contain no statement of purpose. Mortimer J observed, when considering the 2011 Rules, there is nothing in the determination or the rule making power in s 99L of the NH Act which indicates any general or specific purpose to attach to the making of determinations under that provision (Walkerden v Wodonga Pharmacy Pty Ltd [2015] FCA 273; (2015) 230 FCR 243 at [50]). Nevertheless, her Honour observed, at [62]:

Clearly the objectives of the 2011 Rules, as set out in cl 1.2(d)(vi) of the fifth [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 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.

11    There is no reason to discern any alteration of those objectives in the current Rules and nothing in the Explanatory Statement, National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) (Explanatory Statement) suggests that any alteration was intended. The objectives are relevant to any consideration of the construction of the Rules.

12    The Rules require the Authority to recommend approval of an application if the circumstances specified in s 10 of the Rules are met and to recommend that an application not be approved if a prescribed matter relating to the premises in question is not satisfied (s 11).

13    Specifically, s 10(2) of the Rules reads:

For an application that does not involve the cancellation of an existing approval, the Authority must recommend that an applicant be approved under section 90 of the Act in relation to particular premises if:

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

(b)    the following requirements are met in relation to the application:

(i)    the requirements in column 2 of that item;

(ii)    the requirements in subsection (3).

14    Part 2 of Schedule 1 of the Rules provides, relevantly:

15    The definitions of the terms used in Item 130(b) are provided in s 5 of the Rules.

16    The phrase “at all relevant times” is defined to mean “(a) the day on which the application was made; and (b) the day on which the application is considered by the Authority”.

17    A “supermarket means a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods”.

Summary of background facts

18    There was no dispute amongst the parties as to the relevant facts. On 19 March 2020, ZAA applied to the Secretary pursuant to s 90 of the NH Act for approval to supply pharmaceutical benefits from premises situated at Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland (the Proposed Premises). The Application was for “approval to establish a new pharmacy” in accordance with Item 130 of the Rules and provided supporting material and submissions.

19    The supporting material included evidence that the Proposed Premises are located in close proximity to a Coles supermarket, with a gross leasable area of 3665m² (Exhibit SMS-A to the Affidavit of Steven Michael Stoddart filed 20 July 2020 [2.6]), located at 6-24 Gates Road, Flagstone, and within 500m by straight line (SMS-A [2.5]).

20    The supporting material included evidence that the Coles supermarket had been “fitted out and stocking and merchandising” had commenced (SMS-A [2.7]). Photographic evidence was provided that was said to show “trucks at the site, presumably to deliver goods, as well as marketing signs, price signs and weighing scales displayed and hanging in the supermarket area”. The photographs were also said to provide “evidence of workers arriving at the site” (SMS-A [2.7]).

21    The supporting material also provided social media posts evidencing that the Coles supermarket was to open from 7am on 21 March 2020 and that a store manager and 103 staff members had apparently been employed (SMS-A [2.8]).

22    As required by s 90(3A) of the NH Act, the Secretary referred the Application to the Authority. On 26 June 2020, the Authority determined that the Application not be approved (Exhibit SMS-C to the Affidavit) for the following reason (Exhibit SMS-D to the Affidavit):

Based upon the evidence provided, the Authority found that the Coles Supermarket was not trading on the day the application was made, and was therefore not satisfied that, at all relevant times, there is, within 500 m, in a straight line, from the proposed premises, either:

(a) both the equivalent of at least one full-time prescribing medical practitioner and a supermarket that has a gross leasable area of at least 1,000 m²; or

(b) a supermarket that has a gross leasable area of at least 2,500 m².

Under the circumstances, the Authority decided not to consider whether the application would or would not have satisfied any of the subsequent requirements in the Rules…

23    The Originating Application contains four grounds for judicial review of the Decision.

24    First, that the Decision was not authorised by the enactment in pursuance of which it was made (s 5(1)(d) ADJR Act) because the Authority was not authorised to consider and base the Decision on a matter, that was not a requirement of the Rules, namely that the “supermarket was not trading”. In doing so, the Authority was not authorised to not comply with the Rules.

25    Secondly, that the making of the Decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made (s 5(1)(e) and s 5(2)(c) ADJR Act) because the Authority was not entitled to consider as an additional requirement of the Rules that a supermarket was required to be “trading” in circumstances where the Authority must comply with the Rules and the Rules, as determined by the Minister for Health pursuant to s 99L of the NH Act, contained no such requirement.

26    Thirdly, in considering the Application the Authority took into account an irrelevant consideration (s 5(1)(e) and s 5(2)(a) ADJR Act), namely that a supermarket was required to be trading in order for the Authority to be satisfied of the existence of a supermarket as defined under the Rules.

27    Fourthly, the Decision involved an error of law (s 5(1)(f) ADJR Act), namely that the Authority improperly construed the definition of “supermarket” contained [in] the Rules, and that the Supermarket relied upon in the Application, was a “supermarket” as defined by the Rules at all relevant times.

28    Both the oral and the written submissions were directed primarily to the issue of whether the Authority had improperly construed the definition of “supermarket” in the Rules.

The construction of “supermarket”

29    ZAA submits that the Authority has misconstrued the proper construction of the term “supermarket”, and/or improperly imposed a further requirement under the Rules for a supermarket to be “trading” on the day an application is made in order for it to be considered a supermarket “at all relevant times” (AS [19]).

30    Stonehealth contends that no such gloss was placed on the definition by the Authority; rather, the use of the word “trading” was “in direct response to the use of the term” in the Application (R2S [11]). It contends that the words “not trading”, as used in the Decision, unambiguously “meant that the supermarket was not yet open and selling its range of products” (R2S [11]).

31    In Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1 at 22, McHugh J, with whom Toohey J agreed said:

…where the text of a legislative provision is grammatically capable of only one meaning, and neither the context nor any purpose of the Act throws any real doubt on that meaning, the grammatical meaning is the “ordinary meaning” to be applied. A court cannot depart from the “ordinary meaning” of a legislative provision simply because that meaning produces anomalies…[unless that] leads to a result that is “manifestly absurd” or “unreasonable”.

32    The task of courts when construing statutory words has been articulated most recently by Edelman J in Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29 at [95] and [98] (citations omitted):

The duty of courts is to give effect to the meaning of statutory words as intended by Parliament. In common with how all speech acts are understood, the meaning is that which a reasonable person would understand to have been intended by the words used in their context. One presumption, or inference based on common experience of legislative acts, is that when Parliament uses words with a common or ordinary meaning then the words are intended to bear that ordinary meaning. That presumption also reflects the expressed goal of parliamentary drating for clarity and familiarity in order to ensure the transparency and intelligibility of statute law.

…

The ultimate question in every case is the meaning of the words, in all their context, as they were intended by Parliament. Of course, the prolific references by courts to parliamentary intention are not to a subjective intention of any or all of the members of Parliament. Rather, they are shorthand to describe the same general approach that people take to the understanding of language. Words of a statute are not a secret code for lawyers. They are enacted to be read and understood by reasonable, informed people using their everyday tools of language. This involves considering what was intended by the speaker, here the construct of Parliament. Consideration of a speaker’s intention requires the speaker’s purpose and the context of the spoken words to be considered at the same time as their “ordinary meaning”.

33    Stonehealth submits that the definition of “supermarket” in the Rules, being in the “current tense” requires the store “to be selling the relevant range of goods at the date that the application is made” (R2S [2]). It contends that if no trade, in the narrow sense of retail trade, has commenced from a store, then it is not possible to say that its primary business “is” the sale of specified products on the relevant day. It submits that the “most that can be said in such circumstances is that it is proposed to sell certain goods from the premises or that it is intended or proposed that the primary business of the store will be the sale of certain goods” (R2S [22]-[23]). Stonehealth contends that such a construction follows when Item 130(b) is read together with the definitions of “at all relevant times” and “supermarket”. It says that, from this, four requirements (relevant to this Application) emerge:

(1)    that the Authority be satisfied

(2)    as at the day on which the application is made

(3)    that there is within 500m a retail store

(4)    the primary business of that store is (on that same day) the sale of a range of a range of food, beverages, groceries and other domestic goods.

34    No party submitted that the definition of “supermarket” in s 5 of the Rules is manifestly absurd or unreasonable. It therefore falls to determine its grammatical meaning. Stonehealth relies on the use of the simple present tense (“is”) in the relative phrase (“the primary purpose of which is the sale…”) to support its construction that the supermarket must be actually selling the range of goods on the relevant dates. ZAA contends that, in this case, the present tense is being used descriptively (AS [21]). In Re Dingjan; Ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 at 362, Gaudron J said:

The present tense may be used descriptively or it may be used to signify contemporaneity. Although there is no fixed rule, the use in a statute of the present tense, simpliciter, generally indicates that it is being used descriptively (the “simple present”) whereas “is” followed by a present participle (the “continuous” or “progressive” present) usually indicates contemporaneity.

35    The descriptive character of the simple present has more recently been explained by the New South Wales Court of Appeal in Hochbaum v RSM Building Services Pty Ltd [2020] NSWCA 113, drawing a distinction between the contemporaneity conveyed by the use of the continuous present in the phrase “a woman who is living with a man” (in s 43(1) of the Social Security Act 1947 (Cth): Freeman v Secretary, Department of Social Security [1988] FCA 294; (1988) 19 FCR 342) and the descriptive simple present “is a fit and proper person” (in s 39(2) of the Migration Act 1987 (Cth): Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286).

36    The characterisation of the use of the simple present as descriptive in the context of the definition of “supermarket” is consistent with the use of the simple present throughout the Rules as descriptive of the relevant requirement – the proposed premises are at least 1.5 km (Item 130(a)); are in the same town (Item 132(a)(i)); are in a large medical centre (Item 136(a)).

37    Stonehealth contends, however, that it does not matter in this case whether the present tense has been used descriptively or to signify contemporaneity because if no sales have occurred from a premises then it is not possible, on the day on which the application is made, to describe the premises as one at which the primary business is the sale of certain goods (R2S [23]). In order to make good this submission, however, Stonehealth resorts to the explanation that “a ‘supermarket’ as defined under the Location Rules … is a retail store from which the retail sale of a range of goods takes place. If those sales are not taking place, the premises is not a ‘supermarket’” (R2S [24]) (emphasis added). This explanation exposes the need to resort to the use of the continuous present to make good the argument.

38    The Authority agrees with Stonehealth’s contention in this respect but submits further that the word “sale”, in the phrase “the primary business of which is the sale”, is used “as a verb in the present tense, indicating that the Location Rules envisage that the primary business referred to is the act of selling the relevant goods” (R1S [9]). The Authority seems to draw support for this interpretation by reference to the Macquarie Dictionary Online 2020 definition of the word “retail”, from which the Authority submits that the ordinary meaning of the word “entails the making of sales”. The Authority’s submissions also reveal the need to resort to the use of a different verb form in order to make the good the argument by contending that the ordinary meaning of the words of the definition “requires that a supermarket be selling goods at all relevant times” (R1S [9]) (emphasis added).

39    Three observations might be made. First, in the phrase “the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods”, the word “sale” is used in its noun form, not as a verb. It (the sale of a range of … goods) is the object of the phrase which describes the “primary business”. That description is in contra-distinction to the narrower range of products that “are sold retail” in commercial establishments (Rules, s 7(1)). The Explanatory Statement indicates that the phrase is intended to narrow the definition of “retail store” – it explains what is not the primary business of a supermarket:

“supermarket” is intended to mean a retail store, usually self-service, the primary business of which is the retail sale of a range of food, beverages, groceries and other domestic goods which can be purchased in a single transaction.

… Reference to the primary business means that the definition would not extend to a convenience store, department or variety store that has a deli or café section, nor does it include a petrol station or market (retail/wholesale) selling a range of produce.

…

40    Secondly, resort to the dictionary definition of the word “retail” does not assist the with the construction of the definition. The definition relied on by on the Authority in its submissions (R1S [8]) includes the noun, adjectival, adverbial, and verb forms of the word “retail”, albeit without identifying them as such in the submissions. The verb form preferred by the Authority must yield to the actual syntax of the definition.

41    Thirdly, the use of the simple present tense of the verb “to be” does not lead to the construction for which the Respondents contend. The definition contemplates the existence of a retail store on the day on which an application is made. That definition does not require that, on that day, the retail store must be selling, or that sales must be taking place. It requires no more than that the “primary business” of any such store can be described as the retail sale of a range of goods. The definition nevertheless contemplates that a supermarket will engage in other business activities as a necessary incident of the primary business. Were that not the case, there would be no need for the word “primary”. The definition could have provided that a supermarket must have commenced retail sales or must have opened to retail customers on the relevant dates, but it did not.

42    In my view, the definition does not impose any requirement that a supermarket be open and selling goods in order that it be a supermarket for the purposes of the Rules. It is a matter for the decision-maker to consider any fact or matter put before it that would establish to its satisfaction that, on the relevant day, there is a retail store by reference to the facts or matters which evidence the existence of that store’s primary business, being the sale of a range of food, beverages, groceries and other domestic goods.

Certainty

43    Stonehealth argues that “a rule which promotes certainty better serves the purpose of the Location Rules” (R2S [19]). It argues that the construction contended for by ZAA “suggests that the day is reached at some vague indeterminate time prior to the supermarket actually selling anything and where, if circumstances change, the supermarket might never sell those products” (R2S [17]). It submits that the “obvious difficulty with the applicant’s construction is that … [the definition] could be met at any stage from an idea being floated to construct a supermarket, to obtaining planning permission, to turning the first sod, to erection of the walls and roof, to the fit out or the stocking of the shelves” (R2S [19]).

44    Stonehealth submits that such an approach leads to undesirable uncertainty (R2S [19]). The Authority agrees and contends further that it is not merely a question of administrative convenience, “but of clarity and predictability in the operation of the Location Rules for all applicants” (R1S [15]).

45    The uncertainty posited is, with respect, overstated.

46    First, Stonehealth’s submission seems to ignore the requirement that the Authority be satisfied of the existence of a supermarket at two points in time – the date of the application, and the date on which the Authority makes it decision. If circumstances have indeed changed by the date on which the Authority makes it decision, it will presumably not recommend approval of the application.

47    Secondly, Item 130 sits within the scheme established by the Rules against which most applications made by pharmacists under s 90 of the NH Act are assessed. The objectives of the Rules, to which reference has already been made, seek to balance community access with commercial sustainability. These objectives are relevant to issues of construction that arise from time to time. In relation to Item 130, the Explanatory Statement provides:

New pharmacy (at least 1.5km)

Item 130 applies to applications for a new approval where there is a community need for the supply of pharmaceutical benefits. The objective test used to determine the likely need for a pharmacy is that, within 500 m, by straight line, from the proposed premises, there is at least the equivalent of one full-time prescribing medical practitioner and a supermarket with a gross leasable area of at least 1,000m². Alternatively, within 500m, in a straight line, from the proposed premises, there is a supermarket with a gross leasable area of at least 2,500m².

The 1,000m² supermarket and one general practitioner; or 2,500m² supermarket requirement are proxies that reflect a location that is likely to be well frequented, with sufficient community need for a new pharmacy to operate viably. (emphasis added)

48    Some temporal indication of relevance to the Authority’s satisfaction that, at all relevant times, there “is” a supermarket can be discerned from the Explanatory Statement. It refers to the “2,500m² supermarket requirement” as a proxy that reflects a location that “is likely to be well frequented, with sufficient community need for a new pharmacy to operate viably”. This connotes a consideration of future matters, not merely presently existing circumstances.

49    The Rules provide for this proxy in all circumstances relevant to an application for a new pharmacy. A proxy may not always be necessary – presumably it would be unnecessary in the context of an application for a new pharmacy within a well-established shopping precinct where a supermarket has existed for some period of time. Nevertheless, within an entirely new shopping precinct, it is unsurprising that there would need to be a proxy to determine whether the location was likely to be well frequented.

50    That proxy is the existence of a supermarket. Whether or not the supermarket is “open to the public” or “trading” at particular points in time is irrelevant to its existence. If there were a requirement inherent in the definition of “supermarket” that it be “open to the public” or “trading” at particular points in time, no proxy would be necessary to determine whether a location is “likely to be well frequented”; that would be evident one way or the other.

51    Items 133, 134 and 134A of Sch 1 Part 2 of the Rules use additional proxies in respect of applications for new pharmacies by reference to small or large shopping centres. A “small shopping centre” means a group of shops and associated facilities that contains, inter alia, “a supermarket that has a gross leasable area of at least 2,500m²” and “contains at least 15 other commercial establishments”. The definition of a “large shopping centre” expands the latter requirement to “at least 50 other commercial establishments” (Rules, s 5). A “commercial establishment” is defined in s 7(1) of the Rules to mean

premises that are occupied by, or likely to be occupied by:

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

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

(c)    a business that provides services to customers.

52    These definitions do not require that any of the “other commercial establishments” are in fact already open to customers or that they have commenced trading at the relevant date. Premises may be counted towards the relevant number of “commercial establishments” even though they are not operating at the time (Walkerden at [75]). It is for the Authority as the decision-maker to determine whether, at all relevant times, there is, or is likely to be, a sufficient number of commercial establishments to satisfy the requirements of the relevant Item in Sch 1 Part 2 of the Rules. That determination does not depend on a “bright-line” finding that any establishment is operating, trading, or indeed open to retail customers.

53    Section 7(2) excludes a range of businesses from the definition of “commercial establishment”, presumably on the basis that the types of businesses listed are less likely to attract customers to the shopping centre (eg: premises occupied by professional service providers, council office or government or statutory corporation office, storeroom or storage area). The list also excludes from the definition, a library, a carwash or car parking facilities, a kindergarten or preschool, childcare centre or child minding facility (unless exclusively for the use of shoppers), and an automatic teller or dispensing machine. As Mortimer J observed, the rationale behind the list is not entirely clear (Walkerden at [72]). Also excluded from the definition of “commercial establishment” is a “temporary selling point” (s 7(2)(j)). Where relevant, the Authority is required to determine as a matter of fact, on the basis of all the material and evidence, whether a premises has sufficient continuity and whether the retail activity or activities carried out there are not “temporary” but will contribute in an ongoing way to the level of retail activity at the shopping centre (Walkerden at [78]).

54    It is evident from the regime that has been established by the Rules promulgated under the NH Act that there is a range of uncertainties that can attend the Authority’s consideration of an application under s 90 of the NH Act and in reaching a recommendation in compliance with the Rules. Consideration of whether, at all relevant times, there is sufficient evidence of the indicia of a supermarket is no different from the various factual matters the Authority is required to consider in determining, for example, how many commercial establishments exist within a shopping centre, or whether a premises is merely a “temporary selling point” (albeit that the latter requirements do not engage the temporal factor of “at all relevant times”).

55    The submissions that the Rules “are largely (if not entirely) based on objectively measureable factors” (R2S [20]) and that adoption of the construction contended for by ZAA “would create significant difficulty for the Authority (and for applicants, in determining how the Location Rules apply to them)” (R1S [15]) are not persuasive.

The Decision

56    It is apparent from the Decision (SMS-D to the Affidavit) that the Authority did not dispute the physical existence of what it described as “the Coles Supermarket”. The Authority indicated that it had considered the supporting materials and submissions which included:

    a plan of the Coles Supermarket development in Flagstone, showing a gross leasable area of the supermarket of 3,665 m² not including the loading dock, carparks or stage 3 expansion of the supermarket;

    photographs of the Coles Supermarket demonstrating that it had been fitted out and was being stocked; and advertisements of the opening of the planned opening [sic] of the Coles Supermarket on 21 March 2020.

57    The Authority also referred to the claims made in the submissions that, as at the date of lodging the application (19 March 2020):

    possession of the supermarket premises had been handed over to Coles;

    Coles had fitted out its premises;

    the confirmed opening date of 21 March 2020 was less than 4 days from the lodging of the application;

    the Authority can be satisfied that the supermarket would be stocked and merchandised in readiness for commencement of trade, and that as trading of the Coles Supermarket is imminent, the Authority can be satisfied that there is a supermarket.

58    The Authority made no specific findings in relations to any of ZAA’s submissions.

59    The Authority’s sole finding was that “based on the evidence provided … the Coles Supermarket was not trading on the day the application was made”. It was “therefore not satisfied that, at all relevant times, there is, within 500m, in a straight line, from the proposed premises” a supermarket.

60    The Authority contends that the Authority made this finding by construing the definition of “supermarket” in the manner now contended for by the Authority; namely that it requires that a supermarket be selling goods at all relevant times (R1S [9]). Stonehealth contends that the Decision was unambiguously based on a construction that requires that a supermarket have opened and be selling its range of products (R2S [11]).

61    The reasons for the Decision commence by setting out the definition of “all relevant times” and “supermarket” before summarising the supporting material and the submissions in the manner already described above. It is accepted that the Authority was focussed on the definition of “supermarket” and construed it to require that the supermarket be open (in the sense of being generally open for retail trade) on 19 March 2020, being the date on which the Application was made, in order to be satisfied that there is a supermarket. In the face of the evidence of the commercial activities that the Coles Supermarket was clearly already undertaking, it would have been surprising for the Authority to have found, in an unqualified sense, that the Coles Supermarket “was not trading”.

62    For the reasons I have given, there is nothing in the legislative framework that requires such a construction. It runs counter to the grammatical meaning of the definition and to the interpretation that a reasonable person would understand to have been intended by the meaning of the word “supermarket”, used at is in the context of a proxy for a location that is “likely to be well frequented” and so which has sufficient community need for a new pharmacy to operate viably.

Character of the error

63    Item 130(b) Sch 1, Part 2 of the Rules requires that the Authority “is satisfied” of the existence of a supermarket at all relevant times. If the Authority is so satisfied (and the objective criteria specified in Item 130(a) exists), it must recommend to the Secretary that an application be approved under s 90 of the NH Act (Rules, s 10(2)). A decision under s 10(2) requires the Authority to exercise power in a particular way if satisfied of certain facts. As ZAA has identified, Item 130(b) contains a “subjective jurisdictional fact” (ARS [8]): EHF17 v Minister for Immigration and Border Protection [2019] FCA 1681; (2019) 272 FCR 409 at [55]; BFH16 v Minister for Immigration and Border Protection [2020] FCAFC 54 at [29].

64    The Authority was required to be satisfied as to the existence of a supermarket before it could exercise its power under s 90 of the NH Act. In my opinion, the Authority has improperly construed the definition of “supermarket”. It therefore formed its state of non-satisfaction as to the existence of a supermarket on an erroneous basis. This error infected its purported exercise of power – the jurisdictional fact on which the power was conditioned did not exist and so vitiated the state of mind (non-satisfaction) of the Authority on which the power was conditioned. As was said by Dixon J in Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26; (1949) 78 CLR 353 at 360, in relation to the range of errors which might vitiate a claimed state of mind:

If he does not address himself to the question which the [statute] formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review. Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law.

65    For these reasons, the Decision was not authorised by the enactment in pursuance of which it was purported to be made within the meaning of s 5(1)(d) of the ADJR Act. Accordingly, ZAA has made good this ground of judicial review, albeit not precisely on the basis of the particulars to the grounds of application contained in the Originating Application.

66    ZAA adopted a broader view of the characterisation of the error, or errors, in the Decision and sought judicial view on the basis of an error of law in the exercise of the power, within the meaning of s 5(1)(f) of the ADJR Act. On the broader view, and for the reason already given, the Authority erred in misconstruing the definition of supermarket, and ZAA would have succeeded on this ground. It is unnecessary to consider the other two alternative grounds for judicial review of the Decision.

Conclusion

67    For the reasons given above, I make the following orders:

1.    The decision of the Australian Community Pharmacy Authority of 26 June 2020 recommending that ZAA’s application for approval to supply pharmaceutical benefits under s 90 of the NH Act at Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland, 4280 not be approved is quashed and a writ of certiorari be issued quashing the decision;

2.    ZAA’s application for approval to supply pharmaceutical benefits under s 90 of the NH Act at Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland, 4280 is remitted to the Australian Community Pharmacy Authority to consider the application and make a recommendation according to law and a writ of mandamus be issued compelling the Australian Community Pharmacy Authority to consider the application and make a recommendation according to law;

3.    The First Respondent pay the Applicant’s costs of and incidental to the application.

Associate:

Dated:    25 August 2020