Armstrong v Australian Community Pharmacy Authority

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FEDERAL COURT OF AUSTRALIA

Armstrong v Australian Community Pharmacy Authority

[2012] FCA 577

Citation: Armstrong v Australian Community Pharmacy Authority [2012] FCA 577
Parties: DANIEL ARMSTRONG v AUSTRALIAN COMMUNITY PHARMACY AUTHORITY, SECRETARY, DEPARTMENT OF HEALTH and GARY PAUL MCGRAW, MATTHEW JAMES NEWMAN AND CAMERON FOOTE
File number: NSD 2248 of 2011
Judge: RARES J
Date of judgment: 27 April 2012
Legislation: Federal Court of Australia Act 1976 (Cth) s 31A, 43(2), 59, Part VB
Federal Court Rules 1979 (Cth) O 22 r 2(1) and O 22 r 2(1)(d)
Federal Court Rules 2011 (Cth) rr 1.34, 26.12(2), 26.12(7)
National Health Act 1953 (Cth) s 90
Cases cited:

Primary Health Care Limited v Australian General Practice Network Ltd [2012] FCA 174 considered

Re Minister for Immigration and Ethnic Affairs;  Ex Parte Lai Qin (1997) 186 CLR 622 applied

Smith v Airservices Australia (2005) 146 FCR 37 applied
Wotton v Queensland (2009) 109 ALD 534 applied

Date of hearing: 27 April 2012
Place: Sydney
Division: GENERAL DIVISION
Category: No Catchwords
Number of paragraphs: 24
Counsel for the Applicant: Mr H Woods
Solicitor for the Applicant: Michael Flaherty Solicitor
Counsel for the First and Second Respondents: Mr T Giugni
Solicitor for the First and Second Respondents: Australian Government Solicitor
Counsel for the Third Respondent: Mr  S Stoddart
Solicitor for the Third Respondent: Stoddart Legal

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2248 of 2011
BETWEEN:

DANIEL ARMSTRONG
Applicant
AND:

AUSTRALIAN COMMUNITY PHARMACY AUTHORITY
First Respondent

SECRETARY, DEPARTMENT OF HEALTH
Second Respondent

GARY PAUL MCGRAW, MATTHEW JAMES NEWMAN AND CAMERON FOOTE
Third Respondent

JUDGE:

RARES J

DATE OF ORDER:

27 APRIL 2012

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The applicant pay the second respondent’s costs of the proceedings.

2.The applicant pay the costs of the Court appointed expert.

3.The applicant pay 40% of the third respondents’ costs.

4.The applicant pay the first respondent’s costs of 14 and 15 December 2011.

THE COURT NOTES THAT:

5.After 15 December 2011, the first respondent submitted to any order that the Court might make save as to costs.  

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


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2248 of 2011
BETWEEN:

DANIEL ARMSTRONG
Applicant
AND:

AUSTRALIAN COMMUNITY PHARMACY AUTHORITY
First Respondent

SECRETARY, DEPARTMENT OF HEALTH
Second Respondent

GARY PAUL MCGRAW, MATTHEW JAMES NEWMAN AND CAMERON FOOTE
Third Respondent

JUDGE:

RARES J

DATE:

27 APRIL 2012

PLACE:

SYDNEY

REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)

  1. These proceedings were commenced urgently on 13 December 2011. Following his filing of a notice of discontinuance on 24 April 2012, the applicant, Daniel Armstrong, seeks to be partly relieved of the obligation imposed by r 26.12(7) of the Federal Court Rules 2011 (Cth) to pay the costs of the second respondent, the Secretary of the Department of Health, and the third respondents, Gary McGraw, Matthew James Newman and Cameron Foote.

    BACKGROUND

  2. Mr Armstrong and the third…

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Details
Case
[2012] FCA 577
Decision Date

CaseChat Overview and Summary

The case of Armstrong v Australian Community Pharmacy Authority involves Daniel Armstrong, who applied for relief from the costs obligation imposed by rule 26.12(7) of the Federal Court Rules 2011. Armstrong's application for approval under section 90 of the National Health Act 1953 for the supply of pharmaceutical benefits was processed after new rules came into force. Armstrong's application was registered third in time by Medicare, leading to his legal challenge against the Australian Community Pharmacy Authority and others. Armstrong sought an injunction and preliminary discovery to determine the order of receipt of applications. The proceedings were eventually discontinued by Armstrong, leading to the issue of costs.

The central legal issues in this case revolved around the interpretation and application of rule 26.12(7) of the Federal Court Rules 2011, which governs the payment of costs upon discontinuance of proceedings. The court had to determine whether the default position under the rule should be displaced and, if so, under what circumstances. The case also examined whether the applicant's reasons for discontinuing the proceedings justified relief from the costs obligation.

The court found that rule 26.12(7) establishes a default position that the discontinuing party is liable for the costs of the other parties unless a consent or court order provides otherwise. The court held that the applicant's decision to discontinue proceedings under leave did not automatically trigger an unfettered discretion to order costs differently. The applicant would need to demonstrate that the circumstances justified displacing the default position. The court concluded that Armstrong had not met the necessary burden to show that the ordinary practice and procedure should be departed from, thereby upholding the default rule.

The court ordered that Armstrong pay the costs of the second respondent, the costs of the court-appointed expert, 40% of the third respondents' costs, and the first respondent's costs up until 15 December 2011. The first respondent submitted to any further orders save as to costs. The decision underscores the importance of adhering to procedural rules and the limited circumstances under which a party can be relieved from the financial burden of discontinuing proceedings.

Orders

Orders of the court

1. The applicant pay the second respondent’s costs of the proceedings.

2. The applicant pay the costs of the Court appointed expert.

3. The applicant pay 40% of the third respondents’ costs.

4. The applicant pay the first respondent’s costs of 14 and 15 December 2011.

THE COURT NOTES THAT:

5. After 15 December 2011, the first respondent submitted to any order that the Court might make save as to costs.

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

Background

Background to the litigation

These proceedings were commenced urgently on 13 December 2011. Following his filing of a notice of discontinuance on 24 April 2012, the applicant, Daniel Armstrong, seeks to be partly relieved of the obligation imposed by r 26.12(7) of the Federal Court Rules 2011 (Cth) to pay the costs of the second respondent, the Secretary of the Department of Health, and the third respondents, Gary McGraw, Matthew James Newman and Cameron Foote. BACKGROUND Mr Armstrong and the third respondents each applied for approval under s 90 of the National Health Act 1953 (Cth) for the purpose of supplying pharmaceutical benefits in premises at Scone. New rules had been introduced for the purposes of dealing with such applications and came into force at midnight on 17-18 October 2011. Mr Armstrong submitted applications by email to Medicare Australia that his solicitors recorded as having been transmitted at 12 midnight. A number of other persons, including the third respondents, also submitted applications by email that had a similar time of transmission recorded. The applications were received and processed by officers of Medicare on the morning of 18 October 2011. The usual procedure was that after those officers had processed applications for approval under s 90(1) of the Act, the Secretary provided the applications in the order in which they had been received by Medicare to the first respondent, the Australian Community Pharmacy Authority. The Authority then granted approval to the first application. The originating application, when filed on 13 December 2011, sought relief restraining the Authority from determining to make, or making, any recommendation in relation to an application for the grant of an approval under s 90 for approval of a pharmacist at Scone until further order or 28 days after the Authority or the Secretary gave a statement of reasons that had been requested on 8 and 12 December 2012 by Mr Armstrong’s solicitor as to why his application was registered third in time by Medicare. When the first matter came before me in the duty list on 14 December 2011 I directed that the persons who had been identified as having submitted their application for approval first be joined. That was because they had an interest in the proceedings, which sought to enjoin the Authority from making a recommendation on 16 December 2011 to the Secretary for approval of a pharmacist at Scone. That resulted in the joinder of the third respondents. They appeared by their solicitor’s Sydney agent and have continued to do so throughout these proceedings. Mr Armstrong chose not to seek injunctive relief. Instead he, in effect, conducted an application for preliminary discovery against the Secretary by examining the records of Medicare for the purposes of determining whether or not his application, arguably, was received before the third respondents’ was. That involved an initial exchange of information between the parties and led to substantive affidavits being filed by the relevant officers of Medicare who had processed the applications on the morning of 18 October 2011 when they attended work at around 8.00 a.m. Subsequently, Mr Armstrong applied for an expert, Nigel Carson, nominated originally by him to inspect the computers at Medicare for the purposes of ascertaining whether any data or metadata existed to throw light on the order of receipt of applications for approval of a pharmacist at Scone at midnight on 17-18 October 2011. After some debate on an interlocutory application, on 13 March 2012, I appointed Mr Carson as a Court expert to report and made orders in relation to maintaining confidentiality of material on the Medicare computer system which he might be able to access.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Her Honour referred to the variety of reasons that might impel a party to seek leave to discontinue, and to her decision in Smith 146 FCR at 47-51 [36]-[49]. There her Honour had expressed the view that there was no settled rule as to the allocation of costs in those circumstances. Her Honour then observed ([2012] FCA 174 at [7]):“Considerations relevant to the exercise of the Court’s discretion generally, and in this case, are: whether the proceedings were reasonably commenced; whether, in all the circumstances, the parties’ conduct in maintaining and defending the proceedings was reasonable; and the nature of the applicants’ reasons for seeking to discontinue the proceedings.”CONSIDERATION I do not accept Mr Armstrong’s argument that Stone J’s approach to the construction of r 26.12(7) entailed that, in general, the Court’s discretion as to costs is unfettered in every case of a discontinuance with leave under r 26.12(2)(c). In Primary Health Care [2012] FCA 174 her Honour was considering whether an applicant should be granted leave to discontinue and on what terms. The discretion exercised by Stone J was unfettered because, there, the Court need not have granted leave to discontinue at all, and if it decided that leave be granted it could impose conditions including as to costs. Here, Mr Armstrong decided to exercise a grant of leave to discontinue rather than deal with an application that his proceedings be dismissed summarily under s 31A of the Federal Court Act and, as a result, potentially different considerations arise. I am of opinion that the Rules now reflect that the ordinary practice and procedure of the Court in any instance where a party discontinues under r 26.12(2), whether with leave of the Court or otherwise, is that the party is liable pursuant to r 26.12(7) to pay the costs of the other party or parties in relation to the claim or part of the claim that is discontinued “unless the terms of a consent or an order of the Court provide otherwise”. The rule-making power under s 59 of the Federal Court Act enables the Court to make provision for the practice and procedure to be followed in the Court. This includes the very broad discretion in r 1.34 to dispense with compliance with any of the Rules. A party seeking an order that the Court “provide otherwise” under r 26.12(7) must persuade the Court that the circumstances justify the displacement of the operation of the default position provided for in the Rule. Depending on the circumstances that onus may be displaced more or less easily so as to enliven, once it is displaced, the unfettered discretion to award costs in a way that departs from that ordinary rule or default position in r 26.12(7). The considerations referred to by Stone J in Primary Health Care [2012] FCA 174 at [7] are relevant to the question whether the Court should order otherwise. But, the operation of r 26.12(7) must be taken to have been intended to enable the parties to avoid making an application in respect of costs where a discontinuance was effected by leave of the Court, thus saving expense and having regard to the overarching purpose of the civil practice and procedure provisions provided for in Part VB of the Federal Court Act. Where a party applies for leave of the Court and an order displacing the ordinary operation of r 26.12(7), the Court has a discretion to consider how costs should be borne but that discretion fails to be exercised having regard to the default provision now applicable under r 26.12(7).