Cenrin Pty Ltd & Anor v Lamb & Ors (constituting The Pharmacy Restructuring Authority)

[1993] FCA 250

CENRIN PTY LIMITED and GARY IAN SMOKER v. A. LAMB; N. GARRITTY; K. CARNELL; R.
JAMES; K. PHELPS; M. FORD; I. FLETCHER (constituting; THE PHARMACY
RESTRUCTURING AUTHORITY); THE HONOURABLE PETER STAPLES (MINISTER OF STATE FOR
AGED, FAMILY AND HEALTH SERVICES); THE COMMONWEALTH OF AUSTRALIA; ROBIN ALLAN;
THE PHARMACY GUILD OF AUSTRALIA and THE SECRETARY OF THE DEPARTMENT OF HEALTH,
HOUSING AND COMMUNITY SERVICES
No. NG211 of 1991
FED No. 250
Number of pages - 17
Administrative Law
(1993) 42 FCR 167
(1993) 29 ALD 714

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Spender J(1)

CATCHWORDS

Administrative Law - judicial review - decision of Pharmacy Restructuring Authority not to recommend that approval be given to supply pharmaceutical benefits from particular premises - Minister's determination concerning applications for approval to supply pharmaceutical benefits - whether guidelines valid - ordinary meaning of 'cancel' not retrospective - meaning of 'change of ownership arrangements of the premises'.

National Health Act 1953 ss. 89, 90, 98, 99L

HEARING

SYDNEY, 2 and 3 November 1992

#DATE 23:4:1993, BRISBANE

Counsel for the applicants: Mr J. W. Shaw QC

with Mr A. Hughes

Instructed by: Elizabeth Johnstone

Counsel for the first,
second, third, and
sixth respondents: Miss M. J. Beazley QC with Miss

R. M. Henderson

Instructed by: Australian Government Solicitor

Counsel for the fifth
respondent: Mr G. C. Lindsay

Instructed by: Michell Sillar McPhee Meyer

ORDER

THE COURT ORDERS THAT: 1. The decision of the first respondent of 29 April 1992 not to recommend that an approval be given to the second applicant, Gary Ian Smoker, to supply pharmaceutical benefits from the premises at 85 Burwood Road, Burwood, New South Wales, be set aside.

2. The matter be remitted to the Pharmacy Restructuring Authority for further consideration, with or without further evidence, according to law.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

SPENDER J This is an application for an order of review pursuant to the Administrative Decisions (Judicial Review) Act 1977 ('the ADJR Act') of a decision of the Pharmacy Restructuring Authority ('PRA') not to recommend that an approval be given to Mr Gary Ian Smoker under the provisions of the National Health Act 1953 ('the Act') to supply pharmaceutical benefits with respect to premises at 85 Burwood Road, Burwood N.S.W.

1. Associated with that application is a claim by the applicants seeking to have a decision by the delegate of the Secretary of the Department of Health, Housing and Community Services made on 18 April 1991 to cancel the approval of Ms Robin Allan, the fourth respondent, with respect to the premises at 85 Burwood Road, Burwood N.S.W. quashed.

2. The attack on these two primary decisions, as argued, had four elements.

3. First, the applicants seek a declaration that determinations made by the Honourable Peter Staples, the Minister of State for Aged, Family and Health Services, purporting to promulgate 'guidelines' which the PRA was obliged to follow in considering whether to recommend approval of a registered pharmacist in respect of particular premises, and which determinations purported to be made pursuant to s. 99L of the Act on 9 January 1991 and 16 May 1991 are void ab initio.

4. Secondly, and alternatively, if the guidelines embodied in the determinations are valid exercises of the power conferred on the Minister, it was submitted that Mr Smoker was within the guideline 3(f) and as a consequence approval should have been given to him to supply pharmaceutical benefits from the premises at 85 Burwood Road, Burwood.

5. Thirdly, the applicants submitted that the decision of the delegate of the Secretary on 18 April 1991 purporting to cancel the approval of Robin Allan for and on behalf of L. C. Allan, as from 31 March 1991 was of no effect, there being no power pursuant to s. 98 of the Act to cancel an approval with retrospective effect.

6. Finally, it was submitted on behalf of the applicants that the applicants were denied natural justice.

7. The first applicant, Cenrin Pty Limited ('Cenrin') is a company which operates a 24 hour medical centre at 85 Burwood Road, Burwood and at other places in New South Wales and Queensland. The second applicant, Mr Smoker, is a pharmacist who at all material times was registered in New South Wales. The PRA is an administrative body set up pursuant to Division 4B of the Act and its functions include the making of recommendations whether or not registered pharmacists should be approved in respect of particular premises for the purpose of supplying pharmaceutical benefits at or from those premises.

8. Ms Allan, the fourth respondent, is a pharmacist registered in New South Wales who was the pharmacist approved up until 18 April 1991, holding approval No. 2181T, in respect of the premises at 85 Burwood Road. A 24 hour medical centre was provided at those premises, having provision for general practitioners, specialists, radiographers and so on and included a pharmaceutical dispensary. The Pharmacy Guild of Australia ('P.G.A.) is an organisation of employers registered pursuant to the provisions of the Industrial Relations Act 1988.

9. In 1990 there were discussions between officers of the Commonwealth and the P.G.A., and a number of agreements were reached, one of the purposes of the agreements being to rationalise the number of pharmacies. On 30 October 1991 assent was given to s. 98BAA of the Act, requiring the Pharmaceutical Benefits Remuneration Tribunal to give effect to an agreement reached between the Minister and the P.G.A.

10. After events not presently relevant, on 6 December 1990, an agreement relating to remuneration for approved pharmacists and an agreement relating to a restructuring of the community pharmacy industry until 1995 were reached between the Minister and the P.G.A. On 18 December 1990, assent was given to Division 4B of the Act, establishing the PRA and introducing provisions into the Act which are of direct relevance to the present proceedings.

11. Under the Act, "pharmacist" is defined in s. 4 to mean:-
    

"a person registered as a pharmacist or pharmaceutical chemist under a law of a State or Territory providing for the registration of pharmacists or pharmaceutical chemists, and includes:

(a) a friendly society or other body of persons (whether corporate or unincorporate) carrying on business as a pharmacist; and

(b) the legal personal representative of a deceased pharmacist carrying on the business of that deceased pharmacist; "

1. By s. 4, "Secretary", where the expression is used in a provision that is administered solely by the Minister for Health, means the Secretary to the Department of Health.

2. Section 6(5) provides:
   

"The Secretary (to the Department of Health) may, either generally or as otherwise provided by the instrument of delegation, by writing signed by the Secretary, delegate to a person all or any of the Secretary's powers under this Act... ...other than:

(a) this power of delegation; or

(b) the Secretary's powers under section 95."

1. Section 6(6) provides:
   

"A power so delegated under subsection (5), when exercised by the delegate, shall, for the purposes of this Act or the regulations, be deemed to have been exercised by the Secretary. "

1. Part VII of the Act deals with "Pharmaceutical Benefits". By s. 84, a pharmaceutical benefit means a drug or medicinal preparation in relation to which, by virtue of s. 85, Part VII applies. Section 85 specifies the drugs and medicinal preparations in relation to which Part VII applies.

2. Section 89 relevantly provides:
   

"A person is not entitled to receive a pharmaceutical benefit unless it is supplied:

(a) by an approved pharmacist, at or from premises in respect of which the pharmacist is for the time being approved, on presentation of a prescription written by a medical practitioner or a participating dental practitioner in accordance with this Act and the regulations, or, in such circumstances as are prescribed, on communication to that pharmacist, in the prescribed manner, of a prescription of a medical practitioner or a participating dental practitioner;... "

1. Section 90 is central to the present proceedings. It provides:
   

"(1) Subject to this section, the Secretary may, upon application by a pharmacist who is willing to supply pharmaceutical benefits on demand at particular premises, approve that pharmacist for the purpose of supplying pharmaceutical benefits at or from those premises.

(2) Where a pharmacist desires to supply pharmaceutical benefits at or from several premises (being premises at which he or she carries on, or is about to carry on, business as a pharmacist) a separate application shall be made in respect of each of the premises and, where approval is granted in respect of 2 or more premises, a separate approval shall be granted in respect of each of the premises.

(3) Subject to this section, where an approved pharmacist desires to supply pharmaceutical benefits at or from premises (being premises at which the pharmacist carries on, or is about to carry on, business as a pharmacist) other than premises in respect of which approval has been granted, the Secretary may on application by the approved pharmacist, grant approval in respect of those other premises.

(3A) An application under this section must be referred to the Authority.

(3B) An approval may be granted under this section only if the Authority has recommended the grant of the approval, but the Secretary may refuse to grant an approval even if the grant has been recommended by the Authority.

(3C) Unless sooner repealed, subsections (3A) and (3B) cease to have effect at the end of 31 March 1995. ... "

1. Cancellation of the approval provided for by s. 90 is dealt with by s. 98, which relevantly provides:
   

"(1) Whenever:

(a) an approved pharmacist requests that his or her approval under section 90 in respect of all or any of the premises in respect of which he or she is approved be cancelled;

(aa) a participating dental practitioner requests that his or her approval as a participating dental practitioner under section 84A be cancelled; or

(b) an approved medical practitioner requests that his or her approval in respect of an area under section 92 be cancelled;

the Secretary shall cancel that approval.

(2) Where:

(a) an approved pharmacist gives the Secretary notice in writing that the pharmacist has ceased to carry on business as a pharmacist at premises in respect of which the pharmacist is approved; or

(b) an approved medical practitioner gives the Secretary notice in writing that the medical practitioner has ceased to practise in the area in respect of which the medical practitioner is approved; the Secretary may cancel the approval.

(3) Where the Secretary is satisfied that an approved pharmacist has, for a period of not less than 6 months, ceased to carry on business as a pharmacist at premises in respect of which the pharmacist is approved, the Secretary may, by notice in writing to the pharmacist, cancel the approval of the pharmacist under section 92. ... "

1. In Division IVB, the Pharmacy Restructuring Authority is established by s. 99J, and by s. 99K(1) the functions of the Authority are, inter alia:
   

"(a) to consider applications made by pharmacists under section 90...; and

(b) to make, in the case of an application under section 90, a recommendation whether or not the applicant should be approved under that section in respect of particular premises;

... "

1. Sub-sections 99K(2) and (3) provide:
   

"(2) In making a recommendation under subsection (1), the Authority must comply with the relevant guidelines determined by the Minister under section 99L.

(3) All recommendations of the Authority under subsection

(1) are to be made to the Secretary. "

1. Section 99L, also crucial to these proceedings, provides:
   

"(1) The Minister must determine in writing the guidelines subject to which the Authority is to make recommendations under subsection 99K(1).

(2) A determination under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. "

1. By s. 99N, the PRA is to consist of a chairperson, two persons who are to be chosen from four persons nominated by the Pharmacy Guild of Australia, one person (other than the two persons chosen from those nominated by the P.G.A.) having experience in matters relating to the pharmacy industry, and three other persons. All members are to be appointed by the Minister on a part-time basis.

2. On or about 15 January 1988, Cenrin entered into an agreement with Mr Colin Bova to lease the pharmaceutical dispensary within the Cenrin Burwood Medical Centre at 85 Burwood Road, Burwood. It appears from a letter dated 15 January 1988 to Mr. Bova that Cenrin was the lessee of the premises pursuant to a five year lease which commenced on 22 May 1985 with a five year option, and that Mr. Bova, in essence, was a sub-lessee on terms contained in that letter.

3. The evidence concerning the tenure of the fourth respondent, Ms Allan, is less than complete but Mr. Allan Pitman, the Managing Director of Cenrin, says that on about 29 May 1989, Ms Allan acquired Mr Bova's interest in the pharmaceutical dispensary and Cenrin agreed to the change. On 25 October 1989 the Department of Community Services and Health received an application dated 25 October 1989 for approval as a pharmacist by Robin Elizabeth Allan "for and on behalf of Lindsay Charles Allan" for approval as a pharmacist in respect of the premises situated at 85 Burwood Road.

4. On or about 22 November 1989 approval was granted to Robin Elizabeth Allan "for and on behalf of L. C. Allan" for the purpose of supplying pharmaceutical benefits on demand at and from the premises at 85 Burwood Road, Burwood. No party to these proceedings took any point as to what an approval "for and on behalf" of another person might mean.

5. On 25 January 1991 Ms Allan wrote to Mr Pitman concerning the Health 24 Medical Centre dispensary, Burwood, indicating that she had been notified by the Pharmacy Board of New South Wales of new regulations relating to the minimum size of a dispensary within any pharmacy and pointing to the inadequacy in the size of the present dispensary. In the course of that letter Ms Allan said:
   

"In considering possible solutions please remember that with the recent implementation of a 10% margin on NHS prescriptions, the dispensary area would need to be supplemented with a substantial retail area to make the pharmacy commercially viable. Should this dispensary close, the Pharmacy Board will not issue a new approval to the premises while there is a pharmacy located within 5 kilometres. Therefore it is essential that we move quickly.

If we are unable to find a mutually acceptable solution to this problem, I will have no option but to close the dispensary at the end of March, 1991. "

1. It would be unrealistic to consider the content of this letter without appreciating that Ms Allan had a direct interest in other pharmacies in the immediate vicinity.

2. On 22 February 1991 Mr Pitman replied, indicating that there had been discussions with the Pharmacy Board and expressing his belief that the requirements of the Board could be satisfied. Mr Pitman raised the question of the hours at which the pharmacy was open and the letter concluded by stating:
   

"Could I suggest to you that one of the problems might be the fact that you own all three pharmacies within 100 yards of one another, could be contributed to your loss situation and is also a conflict of interest, which doesn't help your Pharmacy in the Medical Centre. The Medical Centre, I would have thought, is a more valuable Pharmacy for you because it has a captive audience and stands little chance of leakage, particularly if we set it up correctly. "

1. On 28 February 1991 Ms Allan, on a letterhead of "Allans Burwood Road Pharmacy, 138 Burwood Road, Burwood N.S.W. 2134", wrote to Mr Pitman at the Burwood Medical Centre, tersely stating:
   

"We hereby give you notice that the lease of the premises will terminate on 31st March, 1991. We will vacate the premises on or by this date. "

1. On 8 March 1991 a solicitor on behalf of Health 24 Medical Centres wrote to Ms Allan. The letter commenced:
   

"We acknowledge receipt of your letter dated 28th February 1991 which purports to terminate the lease on the pharmacy premises on 31st March next and advises that the premises will be vacated by that date. "

Reference is then made to the question of the size of the pharmacy and then stated:

"As a result your comments in your letter of 25th January do not represent a valid reason to suggest the closing of the dispensary.

Your indication that you intend to close the dispensary can therefore only be seen by this Company as an endeavour to close the pharmacy within the centre for the benefit of your other pharmacies in the area. In our view what you propose is a restrictive trade practice and will not be countenanced by the Company. If you still intend to cease operating the Centre pharmacy at the end of March then we require that you apply for approval for transfer of the pharmacy to an incoming pharmacist of our choice. "

1. Meanwhile the Minister in the Commonwealth of Australia Gazette of 23 January 1991 published a determination pursuant to s. 99L of the Act.

2. In the Commonwealth of Australia Gazette of 29 May 1991 the Minister made a further determination which came into operation and by that determination revoked the determination under s. 99L of the Act which appeared in the Gazette of 23 January 1991. The determination of 29 May 1991, so far as is presently relevant, provided in substantially identical terms to the earlier determination concerning applications for approval to supply pharmaceutical benefits. In that respect the determination of 29 May 1991 read as follows:
   "3. For the purposes of paragraph 99K(1)(b) of the Act, the
   

following are guidelines with which the Authority must comply in making a recommendation on an application by a pharmacist under section 90 of the Act:

(a) approval of a pharmacist shall not be recommended in respect of premises located within 5 kilometres by normal access routes from other premises in respect of which a pharmacist is already approved;

(b) approval of a pharmacist in respect of particular premises shall not be recommended unless the pharmacist demonstrates to the Authority that there is a definite unmet public need for that approval;

(c) approval of a pharmacist in respect of particular premises shall not be recommended (except in the circumstances provided for in subparagraph (d)) if those premises are situated within 5 kilometres by normal access routes of other premises in respect of which there has been granted financial assistance under section 99ZC or 99ZD of the Act;

(d) approval of a pharmacist in respect of particular premises shall be recommended where those premises are located not more than 500 metres from other premises in respect of which that pharmacist is already approved under section 90 of the Act and from which the pharmacist proposes to cease supplying pharmaceutical benefits;

(e) approval of a pharmacist in respect of particular premises shall be recommended where those premises are located more than 500 metres but not more than 5 kilometres by normal access routes from other premises in respect of which that pharmacist is already approved under section 90 of the Act and from which the pharmacist proposes to cease supplying pharmaceutical benefits, provided that:-

(i) there has been no grant of financial assistance made under section 99ZC or 99ZD of the Act in respect of any other premises situated within 5 kilometres by normal access routes from the first-named premises; and

(ii) the pharmacist demonstrates to the Authority that there is a definite unmet public need for that approval;

(f) approval of a pharmacist in respect of particular premises shall be recommended where a pharmacist is approved under section 90 of the Act in respect of those premises and where that approval is to be cancelled immediately prior to the granting of the first-named approval, as a consequence of a change of ownership arrangements of the premises;

(g) notwithstanding anything contained in subparagraphs (a) to

(f), approval of a pharmacist in respect of particular premises shall be recommended where the pharmacist entered into a financial commitment prior to 9 August 1990 (being the date on which the granting by the Secretary of approvals to pharmacies under section 90 of the Act was restricted pending the passage of legislation for pharmacy restructuring) in the expectation that an approval would be granted in respect of those premises, provided that the Authority is satisfied that there was such a prior commitment and the pharmacist produces to the Authority either -

(i) a bank statement, supported if necessary by an affidavit by the pharmacist's solicitor or accountant; or

(ii) details of any contractual arrangements together with an affidavit by the pharmacist's solicitor or accountant attesting to the correctness of the date that commitment was entered into.

(h) notwithstanding anything contained in subparagraphs (a) to

(g), approval of a pharmacist in respect of particular premises shall be recommended where the application for approval of the pharmacist in respect of those premises was made prior to 9 August 1990 (being the date on which the granting by the Secretary of approvals to pharmacists under section 90 of the Act was restricted pending the passage of legislation for pharmacy restructuring). "

1. It is apparent that as a result of the agreement between the Commonwealth and the P.G.A., these guidelines confer a valuable benefit on existing pharmacies, and create significant statutory barriers to entry to new entrants. Guidelines (a) and (b) are cumulative, so that irrespective of public need, over time each pharmacist would have a monopoly over approximately 75 square kilometres.

2. In ordinary circumstances, having regard to the Commonwealth payments associated with pharmaceutical benefits, a pharmacy would not be able to be profitably operated without a registered pharmacist being approved in respect of the provision of pharmaceutical benefits at the premises of that pharmacy.

3. On 11 April 1991, the Pharmaceuticals Benefits Branch of the Commonwealth Health Insurance Commission received a document headed "National Health Act - Section 98" and signed by Ms Allan. The document bears date 31.3.91 and in term states:
   

"With effect from 31/3/91 I/We Robin Elizabeth Allan with to cancel the approval granted to me/us to supply Pharmaceutical Benefits under the National Health Act, 1953 in respect of the pharmacy situated at: 85 Burwood Rd Burwood

The said business having (X) closed. (in handwriting) amalgated (sic) with John Cumming Chemist."

1. Earlier, on 5 April 1991, Mr Smoker had telephoned the Health Insurance Commission in New South Wales and spoke with Ms Dallas Judith Wong, a Pharmacy Approvals Clerk employed by the Health Insurance Commission. Ms Wong says that on that day, Mr Smoker advised her of his intention to:
   

"reopen a pharmacy situated at 85 Burwood Road, Burwood in the State of New South Wales after closure of the pharmacy already on that sight (sic) currently operating under approval number 2181T. "

Ms Wong says that:

"As at 5 April 1991 the approval for the pharmacy situated at 85 Burwood Road, Burwood was still current although the approved pharmacist operating at those premises being (Robin Allan) had advised the Commission on 29 January 1991 that the pharmacy was going to close though a date of closure had not yet been decided. "

The reference to "approval for this pharmacy" is noted. The approval under s. 90 is personal, but one that relates to particular premises. The "advice of 29 January 1991" sits awkwardly with the correspondence from Ms Allan to Cenrin.

1. Ms Wong says that she sent an application form for approval as a pharmacist to Mr Smoker on 5 April 1991. Mr Smoker says that he already had a form, but in any event a completed form dated 8 April 1991 was received by the Health Insurance Commission on 18 April 1991 nominating Mary Colleen Smoker, Mr Smoker's wife, as the applicant. That application form indicates that the nature of the arrangements was to be a "transfer" and that Mrs Smoker would be the sole proprietor of the pharmacy. It was stated on the application form "change of ownership immediate to cancellation of prior approved pharmacist".

2. In a letter dated 18 April 1991 addressed to "R. E. Allan, Allan's Burwood Road Pharmacy, 138 Burwood Road, Burwood", Mr. Hickey, the Manager of the Pharmaceutical Benefits Branch and a delegate of the Secretary, Department of Community Services and Health, wrote:
   

"I hereby cancel as from 31 March 1991 the approval (no 2181T) which was granted to you for and on behalf of L C Allan to supply pharmaceutical benefits at the pharmacy situated at 85 Burwood Road, Burwood, 2134. "

There is the suggestion in the material that Ms Allan applied for what is termed "closure or amalgam funding" under the arrangements of the agreement to rationalise the number of pharmacies but that she was ineligible. It is a possibility that she sought to enhance the competitive position of her other pharmacies by having the approval in respect of a pharmacist at the premises leased from Cenrin cancelled, but as well attempted to be paid for the exercise.

1. The Commission received a photocopy of an application for approval as a pharmacist form completed by Mr Smoker and bearing date 8 April 1991. This appears to be a photocopy of the altered application form submitted in the name of Mrs Smoker. With that application is a handwritten letter signed by Mr Smoker dated 30 May 1991 addressed to Ms Wong, the body of which reads:
   

"Please change application for approval as Pharmacist received on 18th April 1991 from Mary Smoker to Gary Smoker in respect of premises at 85 Burwood Rd Burwood. My new application is enclosed. You may need to provide me with a cancellation form for Mary. "

1. After various delays, not relevant to the issues that fall to be decided in these proceedings and being accepted by senior counsel for the respondents as not constituting disqualifying latches, at least so far as the period after early June 1991, Mr Smoker was advised by letter bearing date 29 April 1992 from one Stephen Dawson, the Manager of the Policy and Compliance Section of the Pharmaceutical Benefits Branch, in these terms:
   

"I refer to your application for approval to supply pharmaceutical benefits from proposed premises at 85 Burwood Road, Burwood, NSW.

The Authority applied the guidelines, which have been determined, to your application. The Authority was of the view that your application did not meet Guideline 3(a), in that there are other pharmacies within 5kms, nor Guideline 3(f), in that there is not a pharmacy approved at the site, and has recommended the rejection of your application.

Accordingly, the delegate of the Secretary to the Department of Health, Housing and Community Services has rejected your application to supply pharmaceutical benefits from the proposed location."

1. Guideline 3(f) is said not to have been met because "there is not a pharmacy approved at the site".

2. It seems to me unusual that an officer of the Health Insurance Commission, which is an independent corporation set up under the Health Insurance Commission Act 1973, should be writing to Mr Smoker telling him of the results of the deliberations of another independent body, the PRA.

3. Mr Smoker through his solicitor requested reasons for the decision and a statement of reasons pursuant to s. 28 of the Administrative Appeals Tribunal Act 1982, signed by R G Candy (who describes himself as Secretary to the PRA) and dated 16 June 1992) was forwarded to Mr Smoker.

4. The gravamen of those reasons appears in paragraphs 19, 20 and 21 of the reasons as follows:
   

"19. The PRA considered the relevant material provided by the Applicant and agreed that the application could not be recommended under Guideline 3(a) as there are other pharmacies within 5 kilometres.

20. While the PRA did not have to make a decision with respect to Guidelines 3(b), because of the number of other pharmacists within 5 kilometres, the PRA noted that on the evidence before it there was not an established "unmet public need". It was noted that there is no provision in the Guidelines to take account of special circumstances.

21. The PRA noted that Guideline 3(f) was not applicable because the previous approval of a pharmacist in respect of the subject premises was not sought to be cancelled immediately prior to the granting of an approval to the applicant in consequence of a change of ownership arrangements of the premises. "

1. Under the heading "Findings on Material Questions of Fact", the following appears:
   

"1. On 5 April 1991 the applicant telephoned the Health Insurance Commission in NSW and spoke to Ms Dallas Wong. Ms Wong recorded a file note as follows: ' On 5.4.91 Gary Smoker advised of his intention to 'continue' the pharmacy known as Burwood Medical Centre Pharmacy. I advised that, as the phcy was not being sold to him his application for an approval would be considered as a 'new phcy'. Mr Smoker stated that the Medical Centre's owners would like to contest paragraph 3(f) of the Guidelines.

(paragraph 3f) of the Guidelines refers to the granting of an approval where it involved the purchase of an existing phcy)

As the approval number of the phcy (2181T) had not yet been cancelled by the Commission an application was sent to Mr Smoker that day (5.4.91). ..."

1. The primary submission by the applicants is that the guidelines said to be made pursuant to s. 90L of the Act absolutely dictate the result in each particular case. That is to say they do not 'guide', they 'require' a particular result in relation to an application coming before the PRA.

2. The sub-paragraphs of clause 3 of the determination dated 29 May 1991 by the Minister are each cast in mandatory terms either prohibiting the grant of a recommendation for approval or requiring the recommendation of approval.

3. In some circumstances it would be necessary for the PRA to exercise a judgment, for instance, as to whether there is an "unmet public need", but generally speaking, the PRA is mechanically directed by the guidelines to the result it should reach concerning its recommendation.

4. As the PRA acknowledged in the reasons given in para. 20, it was not able to look at special circumstances in any particular case. On the view it took of the determination, it would seem that, even if the criterion in 3(b) were met, i.e. that an unmet public need could be demonstrated, the PRA would be unable to recommend approval of a new applicant if there was in fact an approved pharmacy within 5 kilometres.

5. The submission of the applicant is that when the Act conferred on the Minister the power to determine the guidelines subject to which the authority make recommendations, it did not permit him to dictate the circumstances in which approval should or should not be granted and, to the extent that the guidelines of the Minister amounted to directions, they were ultra vires. This submission depends on an understanding of what is a "guideline". The applicant submits that where there is a complete absence of discretion, the direction by the Minister was not properly to be characterised as a "guideline" but was a command or a mandatory direction.

6. According to the Macquarie Dictionary, a guideline is "a line drawn as a guide for further writing, drawing etc." or "a statement which defines policy or the area in which a policy is operative". According to the same dictionary, "to direct" is "to guide with advice; regulate the course of; conduct; manage; control" or "to give authoritative instructions to; command; order or ordain (something)".

7. There is no doubt that the matters the subject of the Minister's determination published in The Commonwealth Gazette leave little room for discretion to the authority. However, in my view, a guideline does not cease to be a guideline simply because of the degree of control inherent in it. I am not here concerned with the wisdom or sense of the guidelines but with their validity, and in my opinion they are not invalid.

8. As to the purported cancellation of the approval as a pharmacist to Ms Allan, the word "cancel" means to "obliterate or cross out, annul or make void, abolish". In my opinion, in its ordinary connotation, a cancellation cannot be retrospective. In my view, an authorisation can be cancelled from the time of cancellation or from some future point in time.

9. As to the effect of the decision contained in the letter by Mr Hickey, the Manager of the Pharmaceutical Benefits Branch and delegate of the Secretary, Department of Community Services and Health, of 18 April 1991 , purporting to cancel as and from 31 March 1991 the approval which had been granted to Ms Allan for and on behalf of L. C. Allan, it was submitted by Mr Shaw QC, senior counsel for Cenrin, that there had in fact been no cancellation of the approval because of the purported backdating of operation of the cancellation. I think the better view is that, notwithstanding that Mr Hickey purported to cancel the approval as from 31 March 1991, the approval was in fact cancelled on 18 April 1991.

10. It is admitted by the first, second, third and sixth respondents that prior to 18 April 1991 the applicants were not advised by the sixth respondent of the application to cancel Ms Allan's approval number. Having regard to the mandatory nature of s. 98(1), there is no question in my view that as a matter of procedural fairness, either Cenrin or Mr Smoker was entitled to notice of Ms Allan's application prior to any cancellation of her approval.

11. There seems to be, in various areas in which this matter has been considered, confusion between approval of a person and approval of premises. There seems further to be confusion between change of ownership of a pharmacy business with change of ownership arrangements of the premises on which a pharmacy is conducted. The reasons of the Authority are deficient as to its view in relation to the application or otherwise of guideline 3(f). The mere recitation of the guideline is hardly sufficient, particularly in the light of the detailed application relying on guideline 3(f) that was made to it. It seems to be implicit in its recitation of the advice by Ms Wong on 5 April 1991 that it accepted that it was only on a sale of a pharmacy that guideline 3(f) would have any application, reinforced by her statement which the Authority incorporated in its reasons:
    

"Paragraph 3(f) of the Guidelines refers to the granting of an approval where it involves the purchase of an existing pharmacy. "

1. I note that in a letter of 21 December 1990 by the Secretary of the Authority which was sent to every pharmacist, the Authority stated:
   

"Pharmacists are reminded that with these new arrangements approval of applications cannot be given until the Pharmacy Restructuring Authority has considered the application and made its recommendation. This has particular implications in matters such as the sale of pharmacies, where the guidelines are not applicable but the application for approval of the new owner(s) has to go to the Authority for recommendation. "

1. The agreement made on 6 December 1990 between the Minister and the P.G.A. contained in clauses 8.1 to 8.6, guidelines relating to the granting of an approval pursuant to s. 90 of the Act. Clause 8.5 (a) and (b) provided:
   

"(a) a new approval will not be granted where there is an existing approved pharmacy operating within 5 kilometres by normal access routes from the proposed site;

(b) a new approval will require the demonstration of a definite unmet public need; "

1. Clause 8.6 stated:
   

"Nothing in this Agreement will prevent the granting of a new approval number to a pharmacy which continues to operate on the occasion of or following its sale, amalgamation or change in ownership arrangements. "

This clause again speaks of an "approval number to a pharmacy".

Cenrin, as the operator of a medical centre, has a real

interest in the operation of a pharmacy on the premises it leases. Prior to the cancellation of the approval to Ms Allan, Mr Smoker had made it plain that he wished to carry on a pharmacy business in the premises from which Ms Allan was conducting her pharmacy business. It is a clear inference from all the material that Cenrin was willing to grant to Mr Smoker a lease of the premises from which Ms Allan was conducting her pharmacy business.

1. It seems to me to have been a matter for the Authority to consider whether the cessation of occupation by Ms Allan of the pharmacy premises at 85 Burwood Road, the cessation of the pharmacy business conducted by her on those premises, and the proposed leasing of those premises and the conduct of the pharmacy business on those premises by Mr Smoker, would constitute "a change of ownership arrangements of the premises". The contemporaneity, or otherwise, of approaches by Mr Smoker concerning approval, including the approaches recorded by Ms Wong, as well as the entirety of the written communications, would be relevant in the context of such a consideration of the proper application of guideline 3(f).

2. It is not to be doubted that there are difficulties in the manner in which guideline 3(f) is expressed, but its clear intent was to permit continuity of the conduct of a pharmacy business from premises from which a pharmacy business had previously been conducted. It clearly encompasses having an operation in circumstances of the sale of a pharmacy business but, in my view, it is not restricted to that circumstance. The unwieldy phrase "change of ownership arrangements of the premises" clearly focuses on a change in the right to occupy the premises.

3. In Stroud's Judicial Dictionary (4th ed.) under the entry "owner" the following appears:
   

"(1) The 'owner' or 'PROPRIETOR' of a property is the person in whom (with his or her assent) it is for the time being beneficially vested, and who has the occupation, or control, or usufruct, of it; e.g. a lessee is, during the term, the owner of the property demised (see judgment of Bramwell LJ, Eglinton v. Norman, 46 LJQB 559; see also Chauntler v. Robinson, 4 Ex 163; Russell v. Shenton, 3 QB 449; Lister v. Lobley, 6 LJKB 200). "

1. In my opinion, the Authority did not properly consider the application of guideline 3(f) to the circumstances of the application by Mr Smoker. I am reinforced in this view by what appears in the reasons in respect of the decision of the delegate of the Secretary not to approve the applicant's application. The delegate had on 28 April 1992 rejected the application under s. 90 of the Act and the reasons make it plain that the Secretary is able to grant an approval only when the P.R.A. has recommended such approval. However, the delegate's reasons, which are dated 2 June 1992, state:
   

"The P.R.A. considered the Applicant's application at its meeting on 22 April 1992. In its notification to the H.I.C. of 27 April 1992, the P.R.A. recommended that the application be rejected as it did not meet Guideline 3(a) or Guideline 3(b). "

1. Each of those guidelines is in fact a prohibition. The significance of this statement is considerable. It reinforces my view that there was never a proper consideration by the Authority of whether guideline 3(f) applied in all the circumstances of Mr Smoker's application. The notification was on 27 April 1992; the reasons which make the reference to guideline 3(f), even if in its terms, are dated 16 June 1992. Reasons were requested on 21 May 1992.

2. I propose to make an order in terms of paragraph (c) of the application for order of review filed 1 July 1992 and remit the matter to the Pharmacy Restructuring Authority for further consideration, with or without further evidence, according to law. I will hear the parties as to any further orders I should make and as to costs.