Bray and Australian Community Pharmacy Authority

[2007] AATA 1918

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1918

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  2007/1509

GENERAL ADMINISTRATIVE DIVISION		)
Re		Lawrence Bray

Applicant

And Australian Community Pharmacy Authority

Respondent

DECISION

Tribunal Senior Member B J McCabe

Date2 November 2007

PlaceBrisbane (heard in Toowoomba)

Decision The Tribunal sets aside the decision under review. The Tribunal decides in substitution to recommend to the Secretary that the application be approved.

..............................................

SENIOR MEMBER

CATCHWORDS

HEALTH – Pharmacies – refusal of recommendation for approval of pharmacy application – premises less than 500 m from existing pharmacy – exception if a genuine barrier to access – Tribunal satisfied of genuine barrier to access – decision under review set aside and substituted that recommendation for approval be given

STATUTORY INTERPRETATION – Rules and Rule-Making – Meaning of “genuine barrier to access” – plain meaning preferred as it gives effect to the intention of parliament – genuine barrier more than token or notional barrier – extrinsic material does not make a difference to this interpretation   

National Health (Australian Community Pharmacy Authority Rules) Determination 2006 cl 109

Acts Interpretation Act 1901 s 15AB

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Thompson v Judge Byrne (1999) 196 CLR 141 citing Sussex Peerage Case (1844) 11 Cl & F 85 (8 ER 1034)

Secretary, Department of Family and Community Services v Brown [2006] FCA 532

Sayegh v Australian Community Pharmacy Authority [2006] FCA 1289

REASONS FOR DECISION

2 November 2007 Senior Member B J McCabe         

1.      How close is too close? That is the central question in this dispute between the Australian Community Pharmacy Authority (the Regulator) and the applicant, Mr Lawrence Bray. Mr Bray wants to open a pharmacy business in a shopping centre in Toowoomba. The site of the proposed pharmacy is less than 500 metres from an existing pharmacy in another shopping centre. That is a problem, because the rules which govern these things suggest pharmacies should be at least 500 metres apart. But one cannot walk in a straight line between the two sites under consideration here. If one takes the more circuitous route required to avoid climbing over boundary fences or trespassing on private property situated between the sites, one travels in excess of 500 metres. Should the Regulator allow Mr Bray to locate a pharmacy at his preferred site in those circumstances?

2.      The decision turns on the correct interpretation of clause 109 of the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (“the rules”). The rules say pharmacies must be at least 500 metres apart but make provision in clause 109(2) for a situation where the pharmacies are closer but separated by a ‘genuine barrier to access’ which forces a person travelling between the two sites to take a more circuitous route. After setting out the facts (which are agreed) and the law, I will explain why I have decided to recommend that Mr Bray’s application be approved.

the facts

3. Mr Bray seeks approval under s 90 of the National Health Act 1953 (the Act) to supply pharmaceutical benefits from tenancy 2 of The Ridge Shopping Centre (the Ridge) at 445-455 Hume Street, Toowoomba. The application for approval was passed to the Regulator for consideration. Under the terms of the Act, the Regulator was required to recommend whether the approval should be given. After considering the application, the Regulator decided against recommending that it be approved. The Secretary of the Department of Health and Ageing cannot approve an application if the Regulator recommends against doing so: s 90(3B). The Regulator’s decision is the reviewable decision for the purposes of these proceedings: s 99K(1).

4.      The Ridge is a typical shopping complex in a large regional centre. It includes a supermarket and a number of speciality retailers grouped around an enclosed central court. Most of the shops are accessed from inside the centre. There is a large car-park underneath with additional parking around the centre’s perimeter.

5.      The centre fronts onto Hume Street. There is an Aldi supermarket next door on the corner of Hume and Stenner streets. Shoppers in the Ridge can access the Aldi supermarket and its car park during business hours through a gate in the perimeter fence. The gate is locked after hours.

6.      Australia Post’s Toowoomba mail centre is located along the rear boundary of the Aldi site and the Ridge. It is not a wide block, but it is deep. It fronts onto Stenner Street. There is a wire mesh fence along the boundary separating the two shopping complexes from the mail centre. The fence extends around the mail centre on three sides. It is topped in places with barbed wire. There are signs on at least one of the gates in the fence announcing that trespassing on the mail centre property is prohibited. The mail centre has been located on this site for a number of years. I was not given any reason to believe it is to be relocated or changed in any relevant way in the foreseeable future.

7.      The Kmart Plaza shopping centre (the Plaza) is on the corner of Stenner and Ruthven streets. The centre’s car park backs onto the mail centre. The land slopes down from the Ridge towards the Plaza. The site of the Plaza is lower than the car park adjacent to the mail centre. The excavation work has left a significant drop which can be negotiated by stairs at one point between the upper car park and the rear of the Plaza. There is also a 4 metre high vertical block wall and 5 metre block wall topped with a fence.

8.      A person who set out on foot to walk from the proposed location of Mr Bray’s pharmacy to the Plaza pharmacy cannot walk in a straight line between the two addresses without traversing the mail centre property. The mail centre does not present an insuperable obstacle to a determined pedestrian: she might scale the perimeter fences and the block walls, taking care to avoid the barbed wire; perhaps she could dart unseen through an unlocked gate. But she would be a trespasser. The shortest lawful route between the two locations would require a pedestrian to exit the Ridge, cross the Aldi car park, walk down Stenner St past the mail centre before traversing the Plaza car park to enter the Plaza through the rear doors. A pedestrian taking that route would travel around 527 metres. If she did not take the short-cut through the Aldi car park, she would travel further.

the rules

9.      Clause 109 of the rules governs applications to relocate a pharmacy to a small shopping centre. (Different rules apply to locations of different kinds.) Clause 109(2)(a) contemplates that the proposed premises must be at least 500 metres in a straight line from the nearest approved premises. Clause 109(2)(b) says relocation is available if:

The proposed premises are within 500 m, in a straight line, from the nearest approved premises, and:

(i) the Authority is satisfied that there is a genuine barrier to access between the approved premises and each approved premises that is within 500 m, in a straight line, of the approved premises; and

(ii) the proposed premises are at least 500 m, by the shortest lawful access route, from each approved premises that is within 500 m, in a straight line, of the proposed premises.

10.     Mr Bray says there is a genuine barrier to access in this case which forces someone wishing to travel between the two locations to travel more than 500 metres. That is the end of the matter, in his view, because his proposed pharmacy is at least 500 metres away from its nearest rival if one walks around the mail centre – as one is required to do if one is to avoid the fences, the threat of barbed wire and the prospect of an action for trespass.

11.     The respondent takes a different view. Its statement of facts and contentions suggests the obstacles referred to above are not genuine barriers to access in the sense intended by the rules. The Regulator says “the ordinary features of built-up areas such as fencing, walls and private property” do not qualify. It says one would expect “some unique physical feature of the landscape or geography of the area, which wholly prevents access between the two premises”. The respondent went on to explain in its statement of reasons there were

“no natural obstructions such as a ravine or a body of water nor any other obstructions such as a major highway without direct pedestrian access or a restricted military base separating the two premises…”

that made it harder for members of the community to obtain pharmaceutical benefits.

12.     I was referred to a number of the leading authorities that describe the correct approach to the interpretation of the rules, including Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. Those authorities point out the decision-maker’s job is to give effect to the intention of the parliament: see, for example, Project Blue Sky at 384 per McHugh, Gummow, Kirby and Hayne JJ. The first and best guide to the parliament’s intentions are the words of the statute itself: see Sussex Peerage Case (1844) 11 Cl & F 85 (8 ER 1034 at 1057), cited by Gaudron J in Thompson v Judge Byrne (1999) 196 CLR 141 at 159. But those words cannot be read in isolation. As Bennett J explained in Secretary, Department of Family and Community Services v Brown [2006] FCA 532, a statutory provision must be “construed in its context, so that it is consistent with the language and purpose of all the provisions of the statute”. Her Honour added that “context or purpose can thus justify a court in giving a ‘strained construction’ to cure the mischief the provision was intended to cure or to achieve its clear legislative purpose”: at [24].

13. Bennett J went on to say that while a ‘strained construction’ might be justified, there were limits. Her Honour warned that purpose or context should not be used to justify a construction that is ‘unreasonable or unnatural’ in light of the language that was used: at [25]. The words in the statute must be reasonably open to the construction contended for, even if that construction is not the most obvious construction available if one had regard only to the literal meaning of the words: at [21].

14.     What is the context or purpose of the words in the rule in this case? The rules are found in a schedule to the determination which is enacted pursuant to s 99L of the Act. The rules govern the process for considering applications for approvals to distribute pharmaceutical benefits. The power of the respondent to consider applications and make recommendations is contained in s 99K of the Act. Clause 109 of the rules deals with proposals to relocate an existing approval to a small shopping centre. The clause is clearly intended to ensure that new pharmacies are not established too close to existing pharmacies. The Act itself does not offer clear guidance as to the policy behind the allocation process. To understand that policy, one must have regard to the extrinsic material.

15.     Mr Gallagher, QC, for the applicant, said it is inappropriate to undertake that investigation because the plain meaning of the words in the legislation supplied all the information that was required to give effect to the intention of the parliament. In those circumstances, it was unnecessary – and therefore impermissible - to have regard to extrinsic material: 15AB of the Acts Interpretation Act 1901.

16.     I think Mr Gallagher is right, but I do not think it makes any difference to the outcome if I do have regard to the extrinsic material. I am satisfied the fences and the private property between the two locations do constitute a genuine barrier to access according to the ordinary meaning of those words. The fences in particular close off access. They are genuine barriers because they are not easily negotiated. They are more than a token or notional barrier, and they have a degree of permanence about them. The ordinary settled meaning of the word genuine does not suggest a requirement that the barrier be natural or unique in some respect. Even in the absence of a fence, I am satisfied that private property in the possession of a vigilant occupier who could reasonably be expected to enforce his property rights might also constitute a genuine barrier to access according to the ordinary meaning of those words.

17.     I would not reach a different view if I had regard to the extrinsic material, including the second reading speech accompanying the Community Services and Health Legislation Amendment Act 1990 (which amended the National Health Act 1953) and the Fourth Community Pharmacy Agreement between the Pharmacy Guild and the Commonwealth. That material suggests the rules are “directed…to maintaining the desired pharmacy network”: Sayegh v Australian Community Pharmacy Authority [2006] FCA 1289 at [30]. Clause 25 of the Fourth Agreement sets out specific objectives of the location rules. These include ensuring:

…

(b) a commercially viable and sustainable network of community pharmacies dispensing PBS medicines;

(c) improved efficiency through increased competition between pharmacies;

…

(f) continued development of an effective, efficient and well-distributed community pharmacy network in Australia.

18.     The interpretation contended for by the applicant is consistent with the objectives identified in the extrinsic material. There is no reason to assume the legislation intended that urban terrain (including private property, boundary fences and other features) should not be regarded as a barrier to access if those features have the effect of making a nearby pharmacy less accessible than it would otherwise be. The commercial viability of the network, the level of competition and the efficiency of the network is unaffected by this approach: at a minimum, it is not affected any more than it would be if the pharmacies were separated by a stretch of river or a major highway or a military base – the examples cited in the extrinsic material.

19.     Mr Rangiah developed a more nuanced argument on behalf of the respondent at the hearing and in written submissions. He argued that the reference to a genuine barrier to access in rule 109(2)(b)(i) was not a reference to a barrier that prevented someone from walking in a straight line. He said the reference in the clause to a straight line was merely a reference to the way in which distance should be measured. On this approach, he explained, one asked whether there was a genuine barrier to access that prevented someone from accessing another pharmacy that was located less than 500 metres away. The fact one travelled more than 500 metres in the course of negotiating the sort of obstacles one typically encounters in an urban environment in order to access the other pharmacy did not mean the obstacles counted as genuine barriers to access. In this case, Mr Rangiah explained, a person travelling between the two sites could readily walk (admittedly in excess of 500 metres) between the two sites along a more circuitous route without even having to cross a road. He said that there was no genuine barrier to access in those circumstances.

20.     I accept the words of the provision are capable of bearing the interpretation for which Mr Rangiah contends, but I think that interpretation is less obvious than that suggested by the applicant. I prefer the applicant’s view, even if I consult the extrinsic material urged on me by Mr Rangiah. That material – most obviously the objectives I have already identified in the Fourth Pharmacy Agreement – does not suggest the respondent’s interpretation does a better job of promoting the intention of the parliament. I accept the respondent’s approach might promote the commercial interests of existing pharmacies; territorial restrictions often have that effect, but they do so at the expense of competition. The more competition-friendly interpretation of the applicant, in contrast, does not appear to threaten commercial viability. The applicant would be unlikely to open a pharmacy in the area if he thought it would not be viable given the proximity of a rival. Guessing at the commercial viability of pharmacists is a problematic exercise in any event. The best guide to commercial viability is likely to be the behaviour of participants in the marketplace.

conclusion

21.     The decision under review is set aside. The Tribunal decides in substitution to recommend to the Secretary that the application be approved.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

Signed:         .....................................................................................
  Stephen A O’Grady, Associate

Date of Hearing  31 August 2007
Date of Decision  2 November 2007
Counsel for the applicant          Mr Gallagher, QC and Mr Horton, of counsel
Solicitors for the applicant        Wendy Hart Solicitor
Counsel for the respondent     Mr Rangiah, of counsel
Solicitors for the respondent     Australian Government Solicitor