Federal Court of Australia

Darnell v Stonehealth Pty Ltd [2021] FCA 398

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory injunction application made by the fourth respondent by leave on 10 March 2021 be dismissed.

2.    In respect of the interlocutory injunction application made by the applicant and abandoned, the applicant pay the costs of and incidental to that application of the first, second and third respondents, to be fixed by a registrar if not agreed.

3.    In respect of the interlocutory injunction application made by the fourth respondent, the fourth respondent pay the costs of and incidental to that application of the first, second and third respondents, to be fixed by a registrar if not agreed.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    On 11 December 2020, the Australian Community Pharmacy Authority (the Authority), the second respondent, made a decision in the discharge of its function under s 99K(1)(b) of the National Health Act 1953 (Cth) (the National Health Act), to recommend to the Secretary to the Department of Health (Secretary), the third respondent, that an application by Stonehealth Pty Ltd (Stonehealth), the first respondent, under s 90 of that Act, to supply pharmaceutical benefits at premises located at shops 6 and 7, Flagstone Village Shopping Centre, 6-24 Gates Road, Flagstone, Queensland (Flagstone premises), the Stonehealth application, be approved.

2    A sequel to that recommendation decision in respect of the Stonehealth application was that the Secretary granted Stonehealth approval to supply pharmaceutical benefits at the Flagstone premises (the approval decision). Mr Ross Darnell (Mr Darnell), the applicant, has applied to the court under the s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (AD(JR) Act), and further, or alternatively, under s 39B(1A) of the Judiciary Act 1903 (Cth) (the Judiciary Act), for the review of the Authority’s decision and the Secretary’s approval decision in respect of the Stonehealth application.

3    Mr Darnell seeks an order that each of these decisions be set aside. In relation to the approval decision, Mr Darnell’s application has a derivative quality, in the sense that he does not allege either error in terms of s 5 of the AD(JR) Act or jurisdictional error in terms of s 39B(1A) of the Judiciary Act, other than in acting upon a recommendation which was, on the grounds set out in the originating application, flawed in law.

4    Those grounds are as follows:

GROUND 1

S5(i)(d) ADJR Act- the decision was not authorised by the enactment in pursuance of which it was made.

1.    The Decision was not authorised by the enactment in pursuance of which it was purported to be made because the Authority, in making the Decision, was required to be satisfied of the existence of a “supermarket” as on the date of the Application, a fact which did not exist, this being a requirement of the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (PB 46 of 2018) (“the Rules”). In doing so, the Authority was not authorised to not comply with the Rules.

Particulars for all grounds

(a)    Section 90 of the NH Act provides, inter alia:

(i)    for the making of applications to the Secretary for approval to supply pharmaceutical benefits at particular premises;

(ii)    that the Secretary, subject to exceptions not relevant here, must refer the application to the Authority;

(iii)    that the Secretary, may approve the application, but only if the Authority has recommended that the application be approved.

(b)    Section 99K of the NH Act provides that:

(i)    It is the function of the Authority to consider applications to supply pharmaceutical benefits from particular premises and to make recommendations to the Secretary as to whether or not the application should be approved; and

(ii)    In making a recommendation the Authority must comply with the Rules determined under s99L of the NH Act.

(c)    The Application was made pursuant to Item 130 of the Rules, which includes the requirement that the Authority is satisfied that, at all relevant times, there is, within 500 metres, in a straight line from the proposed premises, either:

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

(ii)    a supermarket that has a gross leasable area of at least 2,500 square metres.

(d)    Section 5 of the Rules defines "at all relevant times"; in relation to an application, means:

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

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

(e)    Section 5 of the Rules defines a "supermarket" to mean a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods.

(f)    The Authority provided a statement of reasons of the Decision to the Applicant. The Authority was satisfied there was a supermarket as defined at the date of the

Application, being 20 March 2020, (the Coles) when in fact the Coles, became “supermarket” as defined on 21 March 2020 when it first opened to the public

GROUND 2

S5(1)(e) and s5(2)(b) ADJR Act - the decision was an improper exercise of the power conferred- failure to take into account a relevant consideration

2.     Further, or in the alternative, the Authority failed to take into account a relevant consideration, namely the primary business of the Coles, being the day before the official opening of the Coles, was not that of a "supermarket" as defined.

GROUND 3

S5(1)(e) and s5(2)(g) ADJR Act- the decision was an improper exercise of the power conferred-an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power

3.    Further, or in the alternative, in considering the Application the Authority reached its satisfaction of the existence of the Coles “On balance”, without any proper foundation and or evaluation. The manner the Authority reached its satisfaction of the existence of a “supermarket” as defined was so unreasonable, no reasonable decision maker would have so reached.

GROUND 4

S5(1)(f) ADJR Act - the decision involved an error of law GROUND 4

4.    Further, or in the alternative, the Decision involved an error of law, namely that:

(a)    The Authority improperly construed the definition of "supermarket" contained in the Rules, in finding discrete sales by the Coles, not being in the ordinary course of business, prior to its official opening, was sufficient for the Coles to be considered a "supermarket" at all relevant times, as defined under the Rules;

(b)    The Coles relied upon in the Application, was not a "supermarket" as defined by the Rules at all relevant times as at the date of the application the Coles had not opened to the public at large and commenced trading in the ordinary course of business.

GROUND 5

S5(1)(h)- that there was no evidence or other material to justify the making of the decision

5.    Further, or in the alternative, the Authority based the Decision on the fact the Coles, was opened to the public on 20 March 2020 and this fact did not exist.

[emphasis in original]

5    Mr Darnell was originally disposed to apply for, and did apply for, an interlocutory injunction, in the following terms:

1.    An order, pursuant to section 23 Federal Court Act 1976, that the Second Respondent be restrained from determining or making any recommendation in relation to any application with respect to the granting of approval under section 90 of the National Health Act 1953 with respect to premises located within a radial distance of 1.5 kilometres of Tenancy 6, 8-12 Wild Mint Drive, Flagstone, Queensland until further order of this Court.

6    The application for interlocutory injunctive relief had a quality of urgency about it, in that it appears that the Authority will, in the ordinary course of public administration, consider and decide upon, at a meeting to be held on Friday, 12 March 2021, the fate of another application for approval to supply pharmaceutical benefits at Tenancy 6, 8-12 Wild Mint Drive, Flagstone, Queensland (second Flagstone premises). That application is by ZAA Ventures Pty Ltd as Trustee for ZAA Investment Trust (ZAA).

7    The Authority is not due to consider, at the meeting on Friday, Mr Darnell’s own separate application for approval to supply pharmaceutical benefits at the second Flagstone premises. The Authority, for reasons of good public administration, has adopted for many years the practice of considering and determining applications for a recommendation decision in the order of their receipt by the Authority. It was not submitted by any party to the present proceeding that there was anything unlawful in this practice. As will be seen, though, the practice is not without commercial and, related to that, legal significance.

8    The decisions under judicial review, in respect of the Stonehealth application, concerned an application which Stonehealth made on 20 March 2020. In turn, those decisions were a sequel to the disposal to finality in the Full Court of this Court of an earlier application for approval to supply pharmaceutical benefits at the second Flagstone premises. That application was one made by ZAA on 19 March 2020. As it transpired, the Authority declined to make a recommendation in favour of ZAA in respect of that application. ZAA enjoyed some initial forensic success in a challenge to the Authority’s decision (see ZAA Ventures Pty Ltd as Trustee for ZAA Investment Trust v Australian Community Pharmacy Authority [2020] FCA 1227), but that result was overturned on appeal on 9 November 2020 by the Full Court (see Stonehealth Pty Ltd v ZAA Ventures Pty Ltd as Trustee for the ZAA Investment Trust [2020] FCAFC 188) (ZAA Ventures). Thus, while one application by ZAA has failed, another application, made on 20 March 2020, remains to be decided. Mr Darnell’s application was made on 21 March 2020.

9    In making its recommendations, the Authority is obliged by s 99K(2) of the National Health Act to comply with rules made by the Minister pursuant to s 99L of the National Health Act. The general scheme of the National Health Act is described by Rangiah J at [18] of ZAA Ventures:

18    Part VII of the NH Act establishes a scheme for the payment by the Commonwealth of benefits, or subsidies, in respect of certain drugs and medicinal preparations. Those benefits are referred to in ss 84 and 85 of the NH Act as “pharmaceutical benefits”. Under s 89 of the NH Act, a person is not entitled to receive a pharmaceutical benefit unless it is supplied by an approved pharmacist at or from approved premises.

10    Item 130 of Pt 2 of Sch 1 of the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) (the Rules) of the Rules made by the Minister pursuant to s 99L, provides:

Other definitions relevant to the present are to be found in the judgment of Rangiah J in ZAA Ventures.

11    The grounds of review raise questions as to the legality of the view formed by the Authority, for reasons which it set out in writing, that it was satisfied that there was a “supermarket” within the requisite distance required by the rules, on 20 March 2020. The Authority, in its reasons, chose to act “on balance” on material from Coles which suggested that the supermarket was open on that date, as well as retail receipts which also suggested that. There was other material which referred to an official opening of the supermarket on 21 March 2020.

12    The adequacy of the Authority’s reasons is also an issue which will fall for determination at trial. So, too, will the meaning and effect of item 130 and the meaning, insofar as it has not already been elucidated by the Full Court’s judgment, of supermarket.

13    An issue which will arise at trial, and which I raised in the course of submissions in respect of the interlocutory injunction, was the presence in the text of item 130 of the qualification “is satisfied”. The presence of that type of qualification in legislation or subordinate legislation was the subject of a notable discussion by Gummow J, in Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 (Eshetu), at [117] – [141].

14    Suffice it to say, the effect of authorities in relation to other provisions where “is satisfied” has been used is that the jurisdictional fact becomes the state of administrative satisfaction, with the role of the court not being to determine whether it would have held the satisfaction or, in some cases, formed the opinion in question, but whether the repository of the power could have reached that satisfaction or formed that opinion reasonably, or whether in so doing relevant considerations were not taken into account, irrelevant considerations were or that the decision to be satisfied or form an opinion was otherwise contrary to law.

15    It is neither necessary nor emphatically desirable to reach any concluded view as to whether these authorities, referred to by Gummow J in Eshetu, do, indeed, have particular ramifications in relation to the judicial review challenge which Mr Darnell has instituted. Those ramifications may also include the extent to which, if at all, the material before the Authority at the time when it made its decision on 20 March 2020 can be supplemented, relevantly, on the substantive hearing.

16    ZAA was not originally a party to the present proceeding. The more submissions progressed in respect of Mr Darnell’s interlocutory injunction application, the more that particular omission gave pause for thought to the parties and, in particular, Mr Darnell’s side of the record. Accordingly, in the course of submissions yesterday, ZAA, by its counsel, who also appeared for Mr Darnell, made an application to be joined as a party and was joined.

17    Also on the hearing of the application, the Authority and the Secretary, respectively second and third respondents, by their solicitor, undertook not to determine Mr Darnell’s application until the hearing and determination of the present proceeding or further earlier order.

18    Upon resuming the hearing of the then interlocutory application after the luncheon adjournment, Mr Darnell, by his counsel, informed the court that, having regard to the undertaking proffered by the Authority and the Secretary, and upon reflection, he no longer wished to pursue his application for interlocutory injunctive relief. Instead, and by that same counsel, ZAA, now a party, made an oral application itself for interlocutory injunctive relief in the following terms, later, confirmed in writing:

1.    An order, pursuant to section 23 Federal Court Act 1976, that the Second Respondent be restrained from determining or making any recommendation in relation to any application with respect to the granting of approval under section 90 of the National Health Act 1953 with respect to premises located within a radial distance of 1.5 kilometres of Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland until further order of this Court.

2.    Such further or other order that the Court sees fit pursuant to section 23 of the Federal Court Act or otherwise.

19    It was convenient to each of the parties for the hearing of that application to be conducted instanter. The application was opposed by Stonehealth, particularly on the basis of it carrying what might be described as an element of approbation and reprobation and, in any event, extending beyond that permissible in the exercise of power conferred on the court by s 23 of the Federal Court of Australia Act 1976 (Cth) (Federal Court of Australia Act). For their part, the Authority and the Secretary voiced reservations of the same kind, but it is fair to say that the act of opposition was more that of Stonehealth.

20    ZAA has not, itself, instituted any judicial review challenge to the decisions of the Authority and the Secretary made in respect of the Stonehealth application in December 2020. Neither did it signify that it proposed to join with Mr Darnell in submitting that the Authority and Secretary’s decisions, under judicial review, were unlawful or otherwise affected by jurisdictional error such that they should be set aside. The role of ZAA in the present proceeding is yet, finally, to be resolved but it is, in my view, significant, given the application that it made for interlocutory injunctive relief, that it did not signify, an active participatory role. Thus ZAA, though it will be bound by the result, and though it did not definitively state it would seek to vindicate a legal right, namely that the decisions were unlawful, nonetheless seeks interlocutory injunctive relief in respect of the making by the Authority of a decision tomorrow in respect of its application.

21    More particularly, ZAA, as for that matter with Mr Darnell, did not seek that the operation of the decisions made in December by the Authority and the Secretary be stayed pending the hearing and determination of the present proceedings or further earlier order.

22    It emerges from the affidavit material filed, and it was common ground, that Stonehealth has commenced to operate a pharmacy at the Flagstone premises.

23    ZAA submitted that it was not seeking to disturb the status quo. Part of the status quo, however, is an extant decision of the Authority and in turn, then, of the Secretary, which have particular ramifications in respect of the fate of ZAA’s application if those decisions are, indeed, lawful. That is because, if Stonehealth’s approval is lawful in respect of the Flagstone premises, the Authority will be bound to reject, if only for that reason alone, ZAA’s application. The Authority and the Secretary might also be so obliged in relation to Mr Darnell’s application that they have voluntarily undertaken to refrain from making any such decision in respect of Mr Darnell’s application. No such undertaking was offered in respect of ZAA’s application.

24    Before turning, otherwise, to the particular merits of ZAA’s application for interlocutory injunctive relief, some reference should be made to the nature of the power invoked, or sought to be invoked, by ZAA as found in s 23 of the Federal Court of Australia Act. Section 23 is, for all its apparent breadth of conferral, a conferral of power, not jurisdiction. In other words, it provides the fullest source of power to the court to make orders necessary for the vindication of a particular jurisdiction, but it does not allow the Court to make orders beyond the jurisdiction conferred.

25    A helpful discussion of the authorities concerning s 23, which have considered the ramifications of reservations concerning that section notably voiced in the High Court in Jackson v Sterling Industries Ltd (1987) 162 CLR 612, is to be found in the judgment of Weinberg J in Betkhoshabeh v Minister for Immigration and Multicultural Affairs (1999) 92 FCR 504, at [56], and following. Notable in those authorities is an observation by Beaumont J in Minister for Immigration, Local Government and Ethnic Affairs v Msilanga (1992) 34 FCR 169, as to s 23, that a stream cannot rise higher than its source.

26    Also relevant in relation to the power to grant interlocutory injunctive relief is an implied power which the Court has to grant an injunction in an appropriate case in aid of a statutory right. This power, and the qualifications which attend it, was the subject of another helpful discussion of authority offered by Pagone J in Simon Yu v Australian Community Pharmacy Authority [2013] FCA 713, at [10] – [11].

27    ZAA sought to meet the qualification which necessarily attends the power conferred by s 23 by referring to the breadth of final orders which might be made by the Court pursuant to s 16(1)(d) of the AD(JR) Act. Those orders would, if sought by Mr Darnell, extend to the restraining of deciding applications made after that of Stonehealth. But Mr Darnell, for his part, no longer seeks any orders restraining, on an interlocutory basis, any decisions in respect of any application subsequent to that of Stonehealth. Neither does Mr Darnell seek to stay the operation of the decisions in respect of Stonehealth which have been made. Neither does ZAA seek to stay the operation of that decision. Indeed, as of yesterday, ZAA sought nothing more in the substantive proceeding than to be a party and be bound by the result.

28    It appears to me that Stonehealth is, at present, subject to what one might describe as a forensic pincer movement by ZAA. ZAA wishes to have the benefit of interlocutory injunctive relief without pressing for the vindication of a substantive right based on it alleging that the decisions in respect of the Stonehealth application are unlawful. ZAA may well have good reason for this. Its own application was made on 20 March 2020. One might have thought that whatever vices in law attended the Authority’s recommendation decision and the Secretary’s consequential approval decision in respect of the Stonehealth application also would attend any decision in respect of ZAA on the merits.

29    Notably, ZAA did not point to any material presently in its own application of any different quality or character in terms of the engendering, one way or the other, of a state of administrative satisfaction different to that upon which the Authority acted in respect of the Stonehealth application. ZAA submitted that to grant the interlocutory injunctive relief it sought would be to preserve the status quo, but on reflection, I am not convinced that is so, at least, not in the absence of an undertaking by ZAA that it would not in any way seek to supplement the administrative record before the Authority as to the position on 20 March 2020 in relation to the existence, then, of a supermarket. To stay the Authority’s decision in respect of ZAA would leave it possible for ZAA to seek to supplement the administrative record so as to provide a different factual foundation to that which presently exists.

30    It seems to me that ZAA is seeking interlocutory injunctive relief quite detached from a substantive right which it seeks to vindicate. I am not at all persuaded that the balance of convenience, therefore, favours the granting of interlocutory injunctive relief, even assuming that there is, given the absence of any asserted substantive right sought to be vindicated, any power to grant interlocutory injunctive relief. I do have reservations as to the strength of Mr Darnell’s case, but that is, as I have indicated, not a subject for any form at all of final adjudication today and, in any event, ZAA does not itself seek to embrace the merits of that case, only to have something of a forensic approbation and reprobation. In other words, it seeks to be joined but not to seek actively to vindicate its own particular right, substantively, only to enjoy the benefit of an interlocutory injunction.

31    For these reasons, the application by ZAA will be dismissed.

32    Application has been made by Stonehealth, the Authority and the Secretary for an order that, in respect of each of Mr Darnell’s interlocutory injunction application and also that of ZAA, costs should follow the event. That is resisted on behalf of Mr Darnell and ZAA. As to Mr Darnell, it is submitted that, in relation to the Authority and the Secretary, the undertaking in respect of the decision concerning Mr Darnell’s application was given, but late.

33    It was further submitted that there was no particular interest of Stonehealth which would be affected by the granting of any of the interlocutory injunctive relief which was sought, presumably on the basis that there was no stay on the operation of the decision in respect of its application which was sought. It was put, even, that the lateness of the Authority’s and the Secretary’s giving of the undertaking was such that an order for costs should be made against those parties. Alternatively, it was put on behalf of Mr Darnell and ZAA that costs should be reserved.

34    In my view, costs should not be reserved in relation to the interlocutory injunction applications. In this instance, I consider that they are better determined by the judge who determined the fate of those applications, or at least saw the fate, in terms of abandonment, of Mr Darnell’s application. Looking at the circumstances as related in each of the affidavits of Mr Stoddart, I am not at all persuaded that there has been any unreasonable delay on the part of either the Authority or the Secretary in coming to the position voiced by their solicitor of proffering an undertaking in relation to Mr Darnell’s application.

35    As I indicated in the substantive judgment, I have the strong view that Stonehealth is in the position of being subjected to a forensic pincer movement. That, of course, is, in a sense, the product of the way the National Health Act is cast. And there was no submission, and nor do I find, that the making of two applications by the one applicant was an abuse in relation to the latter of an administrative process. It just appears, on the face of things, to be permitted. It does, though, have the consequence that Stonehealth was, quite literally, betwixt and between. I did not consider that it was absent any interest in resisting the applications. Stonehealth has an interest, in my view, in the disposal to finality of all other applications for approval in respect of Flagstone premises, including, in that regard, the disposal of any interlocutory injunction applications in respect of later made applications for approval in respect of Flagstone premises. That interest, as it transpired, was vindicated for the reasons already given.

36    I do accept that there may be some difficulty, as Mr Gunson SC fairly highlighted, in a registrar determining costs as between interlocutory injunction applications and case management hearing, particularly as far as appearance is concerned, but there were differences and they certainly extended to the length of the hearing yesterday, as well as the carry over to today in respect of delivery of judgment. In my view, the case is merely one where the ordinary position in terms of discretion should follow. In other words, costs should follow the event in relation to ZAA’s application for interlocutory injunctive relief. Further, the pressing of the application in the face of the undertakings and then its abandonment should also, in my view, result in an order for costs against Mr Darnell. In each instance, those costs will be ordered in favour both of Stonehealth and of the Authority and the Secretary.

Associate:    

Dated:    29 April 2021

SCHEDULE OF PARTIES