Colasante v Pharmacy Board of South Australia
[2005] SASC 207
•10 June 2005
SUPREME COURT OF SOUTH AUSTRALIA
(Miscellaneous Appeal: Civil)
COLASANTE v PHARMACY BOARD OF SOUTH AUSTRALIA
Judgment of The Honourable Justice Gray
10 June 2005
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT
ADMINISTRATIVE LAW - JUDICIAL REVIEW - POWERS OF COURTS UNDER JUDICIAL REVIEW LEGISLATION - GENERALLY
PROFESSIONS AND TRADES - MEDICAL AND RELATED PROFESSIONS - PHARMACEUTICAL CHEMISTS
Appeal from decision of Pharmacy Board of South Australia - review of decision of Board not to approve appellants to trade under name, Chemist Warehouse Kilburn.
Discussion of powers of court to review decision pursuant to Pharmacists Act 1991 (SA) and Supreme Court Rules - consideration of comparable interstate legislation.
Held - appeal allowed - court empowered to substitute its decision for that of the Board - fresh decision on appellant's application for approval of trading name made - trading name approved.
Pharmacists Act 1991 (SA) s 32, s 15 and s 49; Pharmacists Regulations 1991 (SA) r 11, r 27; Supreme Court Rules r 97; Pharmacy (General) Regulations 1998 (NSW) r 16; Pharmacists Registration Act 2001 (Tas) s 12; Pharmacists Registration Act 2001 (Qld) s 130, referred to.
Shrimpton v The Commonwealth (1945) 69 CLR 613; Wigg v Architects Board of South Australia (1984) 26 SASR 111; Thompkins v South Australian Health Commission [2001] SASC 147; Westmite Pty Ltd v Law Society of South Australia (1999) 73 SASR 454; Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616; Re Coldham & Ors; Ex parte Brideson (No 2) (1990) 170 CLR 267, considered.
COLASANTE v PHARMACY BOARD OF SOUTH AUSTRALIA
[2005] SASC 207Appeal from the Pharmacy Board of South Australia
GRAY J
Introduction
This is an appeal from a decision of the Pharmacy Board of South Australia.
The Court was asked to review a decision of the Board not to approve the appellants’ proposed trading name, “Chemist Warehouse Kilburn”, in respect of a retail pharmacy located at shop 7, 398-400 Prospect Road Kilburn. The appellants contended that the Court should hear the matter de novo, and if the appellants’ contention were accepted, the Court should substitute its decision for that of the Board. The appellants submitted that the Court should set aside the decision of the Board and permit the registration of the proposed trading name.
The appellants, Philip Colasante, Mario Verrocchi and Sam Gance, are in partnership. Together, they own the retail pharmacy on Prospect Road at Kilburn. Mr Colasante is a registered pharmacist.
Mr Colasante made application to the Board in accordance with section 32 of the Pharmacists Act 1991 (SA) for registration of the premises at Prospect Road Kilburn and approval to trade under the name, “Chemist Warehouse Kilburn”. That section provides:
(1)A person must not carry on a business consisting of or involving pharmacy except at premises registered under this section in relation to that business.
Penalty: Division 7 fine.
(2)The Board may register premises if satisfied that the premises are suitable for the purpose of carrying on that business.
(3)Registration under this section remains in force until 31 December next ensuing after the grant of registration and may from time to time be renewed for successive periods of one year expiring on 31 December.
(4)The Board may refuse to renew registration of premises under this section if satisfied that the premises have ceased to be suitable.
(5)An application for registration of premises under this section or for renewal of registration—
(a) must be made to the Board in the prescribed manner and form; and
(b) must be accompanied by the prescribed fee.
(6)An application for renewal of registration under this section must be delivered to the Registrar not earlier than 1 October and not later than 30 November preceding the end of the registration period, but the Board may, if it thinks fit, determine an application notwithstanding that it is out of time.
On 3 November 2004, Mr Colasante attended at the office of the Board and met with Peter Halstead, the Registrar of the Board.
Mr Halstead reviewed the application in the presence of Mr Colasante. After consideration, he referred the application to the Board for determination at its next meeting on 6 December 2004. He told Mr Colasante that he was uncertain as to what the Board’s position on the proposed trading name would be.
Mr Colasante was eager to have the matter progressed expeditiously. Mr Halstead provided Mr Colasante with a list of names and contact details for each member of the Board, and said that he could contact each member individually to discuss the proposed name with them prior to the meeting on 6 December 2004.
Following his meeting with Mr Colasante, Mr Halstead sent the following email to the members of the Board:
Dear Members
Philip Colasante a pharmacist and his partners are about to purchase Kilburn Chemplus on Prospect Road Kilburn. No problems there, but there is one catch. Philip and his partners are asking the Board to approve the trading name “Chemist Warehouse Kilburn”. I have to say that I baulked at this and suggested that it may have trouble gaining Board approval but that I was more than happy to present it to the next Board meeting on December 6. The basis for my concern rest with both a comparison with another pharmacy and on the basis for ethical practice as nominated in the Board guidelines.
Of course, this was not acceptable and Philip needs an answer before then. As a result I have said I am unwilling to use the discretion granted to me by the Board for approval and so Philip intended to use his persuasive powers to approach Board members and gain their approval.
So be warned, expect a call at work from Mr Philip Colasante in the next day or two. If members wish to let me know their opinion that would be appreciated.
The guidelines for trading names are attached. For further information the fall-back position appears to be the trading name “Chemiststop Kilburn”. Although I am no entirely comfortable with this either, in my opinion it may be harder to justify a negative for this trading name given the existence of the trading name “Chemistworks Ingle Farm”.
Regards and thanks for your attention
Peter Halstead.
Most Board members replied to Mr Halstead via email or telephone. Andrew Gilbert, a member of the Board, replied:
Peter
I am opposed to both names as they do not meet the Boards [sic] intentions re names. The first does not include owners [sic] names or affiliation but does imply another business operation (ie warehousing). The second again does not provide names etc and implies a comparison (ie Chemists top, the top chemists). I know names are not essential and there are precedents for the less desirable option but I think both propositions move us into new territory and I am opposed to this approach.
Andy
Barry Wilmot replied on 4 November 2004:
Peter
‘Warehouse’ may indicate to the public a reference to wholesale goods for storage/sale. A warehouse does not indicate or imply a standard of professional practice in my opinion. My vote: it should not be approved.
Regards
Barry
Trevor Draysey, William Dollman, Debra Rowett and Michele Rowett (“Ms Rowett”) all expressed their opposition to the proposed trading name. Rosey Batt did not respond and Polly Sumner could not be contacted.
On 4 November 2004, following a telephone conversation between Mr Halstead and Mr Colasante, Mr Halstead approved the name “Kilburn Community Pharmacy” to enable the appellants to commence trading under that name pending the outcome of the Board’s decision on “Chemist Warehouse Kilburn”.
Mr Colasante attempted to contact all of the members of the Board except Ms Sumner. He spoke to three of the Board members, Ms Rowett, Mr Wilmot and Mr Draysey. Ms Rowett informed Mr Colasante that the trading name “Chemist Warehouse” would create an invidious comparison between the appellants’ pharmacy and other pharmacies in breach of the Pharmacists Regulations 1991 (SA) and the “Guidelines for Pharmaceutical Practice in South Australia” published by the Board. Mr Wilmot and Mr Draysey both said that they would consider the matter and discuss it with the other Board members at the meeting on 6 December 2004.
On 10 November 2004, Mr Colasante sent an email to Mr Halstead with a letter attached setting out matters that he considered relevant to the Board’s consideration of his application. Insofar as it is relevant, the letter read:
Thank you for your time and advice last week in regards to this matter. I followed your advice and telephoned each of the Board members. At the time of my call, 3 were not contactable and did not return my call, 3 members expressed similar views to you and the other was uncommitted.
We are obviously extremely concerned about the board’s position and wish the matter to be considered further. To this end we provide the following additional supporting information.
1 A precedent already exists for the use of the name as proposed
a.As you are very aware, there are many Pharmacies around Adelaide and Australia that has had trading names approved that incorporate their Group name and logos. These groups include Chemmart, Amcal, ChemPlus, Chemmart Extra and Chemworld. Some examples of such names from the Yellow pages are:
i.Pooraka day/Night Chemplus
ii.Chemworld GoldenGrove
iii.Campbeltown Chemworld
iv.Marden Amcal Pharmacy
b. Also approved and trading today are
i. Chemist Works – Ingle Farm
ii. National Pharmacies – 31 stores in SA
iii. All Seasons Care Pharmacy – Kilburn
iv. Midnight Pharmacy
v. Goolwa Chemmart Extra Pharmacy & Newsagent
vi. Para Hills Chemworld
vii. The Village Pharmacy
Clearly some of these names also carry connotations re their position in the market.
In the trading name we are proposing to use
Chemist Warehouse Kilburn Pharmacy (Philip Colasante, Sam Gance, Mario Verrocchi)
The Chemist Warehouse component of this name is a Group Marketing name.
This Chemist warehouse group currently operates 12 Pharmacies in the eastern states, Victoria (7), New South Wales (1) Queensland (5). These are found at the following locations:
Victoria
a) Cheltenham
b) Dandenong
c) Footscray
d) Frankston
e) Geelong
f) Ringwood
g) Shepparton
Queensland
a) Cairns
b) Carseldine
c) Townsville
d) Toowoomba
e) Virginia
New South Wales
a) Parramatta
This group was very favourably featured on National Television over the past year in Current Affair programs that highlighted the cost of Pharmaceutical products to Australian consumers.
As these Pharmacies are now all legally trading under the Chemist Warehouse banner, this does mean that three Pharmacy Boards in Australia:
1. The Pharmacy Board of Victoria
2. The Pharmacy Board of Queensland and
3. The Pharmacy Board of New South Wales
have all considered this name and approved its use. So why should this not also be the case in South Australia. Are we not part of Australia? Surely the precedent has already been set by the other Pharmacy Boards.
In respect to the concept and operation of these Pharmacies. These Pharmacies although large in size, do adhere very strictly to the Pharmacy Code of practice detailed in the Act in respect to delivering HIGH QUALITY PHARMACEUTICAL SERVICE to the consumer at an affordable cost. The group employs only well trained staff and energetic young Pharmacist Managers who control and are totally accountable for the day to day operation of the Pharmacy. In our particular case in South Australia you are already aware of the quality of our employee [sic] and the manner in which they practice their profession.
Clearly it is our belief that the manner in which we are proposing to redevelop the current Pharmacy at Kilburn, should be welcomed by the Board. The redeveloped business will be family owned and operated and will be clearly focused on the business of PHARMACY. This we believe is more than can be said about a significant number of other Pharmacies across our metropolitan area in which Lotteries, Gifts and other Agencies seem to be the main drawcard for the Pharmacy.
In respect to your concern re the use of the term “Warehouse”, we can also point out that over the past few years that this term has become more commonly accepted by our community to simply mean a “largish store” as can be seen by the number of businesses that have also incorporated it into their name. In Adelaide alone, we have:
1. The Computer Warehouse
2. The Fitness Warehouse
3. Intimates Warehouse
4. Golf Warehouse
5. Toy Warehouse
6. Music CD Warehouse
7. The Walkers Warehouse
8. The Diabetic Warehouse
So in conclusion can we please request that based on this additional information supplied, you reconsider your earlier objections and approve the name Chemist Warehouse Kilburn Pharmacy (Philip Colasante, Sam Gance, Mario Verrocchi) in respect to premises at 400 Prospect Road Kilburn.
I look forward to your positive response on this issue.
Mr Halstead immediately responded to the letter confirming that the matters raised in the letter would be considered at the meeting on 6 December 2004.
The Pharmacy Board of South Australia
The Board is a statutory body operating under The Pharmacists Act. It is constituted by eight members appointed by the Governor. Six of the members are registered pharmacists, one a legal practitioner, and the other a lay-person appointed to represent the interests of consumers. Section 15(1) of the Pharmacists Act sets out the functions of the Board in the following terms:
(a)the registration and professional discipline of pharmacists; and
(b)exercising a general oversight over the standards of the practice of pharmacy; and
(c)keeping under review the law relating to pharmacy and making recommendations to the Minister with respect to that law; and
(d)monitoring the standards of courses of instruction and training available to—
(i) those seeking registration as pharmacists; and
(ii) registered pharmacists seeking to maintain and improve their skills in the practice of pharmacy,
and consulting with educational authorities in relation to the establishment, maintenance and improvement of such courses; and
(e)exercising the other functions assigned to it by or under this Act.
Section 15(2) provides that the Board must exercise its functions with a view:
(a)to ensuring that the community is adequately provided with pharmaceutical services of the highest standard; and
(b)to achieving and maintaining professional standards of competence and conduct in the practice of pharmacy.
The regulation of the practice of pharmacy includes the specific requirement that:
[a] person must not practice pharmacy under a business or trading name unless that name has been approved by the Board.[1]
[1] Regulation 11, Pharmacists Act Regulations 1991 (SA).
The Decision of the Pharmacy Board
On 6 December 2004, the Board met and considered all of the matters raised in Mr Colasante’s letter of 10 November 2004. The Board decided not to approve the trading name “Chemist Warehouse Kilburn”. Present at the meeting were Mr Gilbert, Mr Dollman, Mr Draysey, Ms Pluck, Ms Rowett, Mr Wilmot, Mr Halstead and Mr Gross. The official minutes of the meeting included the following passage:
Letter from Mr Philip Colasante
The Registrar tabled a letter from Mr Philip Colasante requesting the Board consider and approve the name “Chemist Warehouse Kilburn Pharmacy (Philip Colasante, Sam Gance, Mario Verrocchi) for premises located at 400 Prospect Road, Kilburn.
The Board raised their concerns regarding invidious comparison and that medicines should not be advertised as an ordinary term of commerce. The Board believed the term Chemist Warehouse did not support either of these considerations
Motion: That the Board not approve the name Chemist Warehouse Kilburn Pharmacy (Philip Colasante, Sam Gance, Mario Verrocchi) (BW/BD). Motion carried.
The Board gave reasons for its decision in a letter sent to the appellants on 6 December 2004. The letter read:
Dear Philip
Thank you for the letter dated 10 November 2004. The Pharmacy Board of South Australia was, at is regular monthly meeting of 6 December, able to consider the concerns outlined in the letter.
Regulation 27(2) of the Pharmacist Act 1991 states that:
“A person must not advertise in respect of the practice of pharmacy –
(a) in a manner that is likely to bring discredit on the profession of pharmacy;
(b)in a manner that draws invidious comparisons between pharmacists or group of pharmacists
or
(c) in a manner that is likely to mislead”.
The Pharmacy Board of South Australia supplies to each registered pharmacist “Guidelines for Pharmacy Practice in South Australia”. These guidelines make reference to business or trading names. The guidelines note the Board is expressly given power to approve trading or business names under Regulation 11 of the Pharmacists Act 1991.
The guidelines make it clear that approval of trading names is at the absolute discretion of the Board and that trading names are not acceptable if they:
- imply a comparison with, or superiority to, another pharmacist
-imply the practice of any profession other than pharmacy, unless the pharmacist is registered by law to practise that other profession
- offend standards of accepted ethical and professional behaviour and
- do not comply with any other legal requirements.
The Pharmacy Board of South Australia is required to act in the public interest and in any decision the Board makes it considers the implications of the National Medicines Policy that has as a basic tenant that medicines “are not to be treated as a norm item of commerce”.
With this information as background the Pharmacy Board of South Australia considered the application to use the trading name “Chemist Warehouse Kilburn” for the pharmacy situated at 400 Prospect Rd Kilburn.
The unanimous decision of the Pharmacy Board of South Australia was not to approve the trading name “Chemist Warehouse Kilburn”.
The Board strongly believes that the word “warehouse” has the potential to be widely interpreted in the community as a pharmacy where medicines are able to be accessed cheaply and in bulk. The Board believes this is an invidious comparison between this pharmacy and other pharmacies.
The Board, having confirmed its decision again in relation to this matter, and aware that significant signage is currently displayed using the word warehouse expects all signage to display the approved trading name of Kilburn Community Pharmacy by close of business 24 December 2004.
The Pharmacy board of South Australia wishes to make it clear that it has no concerns as to the likelihood that high quality pharmaceutical services will be provided by well trained and appropriately supervised staff at the Kilburn site.
Should you have any further questions or concerns please do not hesitate to contact the Board.
Yours sincerely
Peter Halstead
Registrar
In making its decision, the Board had regard to:
- the Guidelines for Pharmaceutical Practice;
- the National Medicines Policy;
- Mr Colasante’s letter of 10 November 2004;
-the relevant provisions of the Pharmacists Act and associated regulations; and
-the email from Mr Halstead sent to members of the Board on 3 November 2004.
The reasons for the Board’s decision were further explained in Mr Halstead’s affidavit of 25 February 2005:
The Board was aware from the representations made by the applicants that “Chemist Warehouse” was a name used in other Australian States. Whilst it is relevant to note that a name is used in other States, that is not a conclusive factor. In addition, it was my understanding that the other States in which “Chemist Warehouse” currently operates do not have the same provisions in their respective Acts and Regulations as in South Australia. In particular, it is my understanding that there is no requirement for Board approval of a trading name of a pharmacy in any of those States. ...
The Board understood that the underlying philosophy of the National Medicines Policy of Australia (and of medicines policies world-wide) is that medicines should not be treated as a normal item of commerce. The Board considered that the term “warehouse” implied to the community that medicines are like any other item of commerce and could be purchased on the basis of price and in bulk quantities. The Board considered it was acting in the public interest to avoid such promotion, which, in the Board’s view, has the potential to result in the inappropriate purchase and use of medicines. In addition, although the Board understood that the pharmacy was to be operated by suitably qualified staff, it was concerned with the public perception that a pharmacy with a name including the word “warehouse” was promoting the inappropriate sale and use of medicines in a manner that was not keeping with the desired professional standards. The Board concluded that the use of the word “warehouse” in a trading name for a pharmacy is inappropriate. That was the decision of all members of the Board.
The Board also expressed concerns regarding the potential for use of the proposed trading name for advertising purposes. The Board had particular regard to the provisions of regulation 27(2) of the Regulations relating to advertising.
The Board also had regard to the terms of the Therapeutic Goods Administration of Australia Advertising Code. … The Board believed that the use of the word “warehouse” in advertising applications had the potential to contravene the Code. The Board was particularly concerned about the terms of s.4.1.2(f) and the potential for advertising using the word “warehouse” to encourage inappropriate or excessive consumption. The Board took the view that any advertising of medicines that resulted in the inappropriate and excessive consumption. The Board took the view that any advertising of medicines that resulted in the inappropriate and excessive consumption of medicines would be likely to bring discredit upon the profession of pharmacy. The Board also felt that the proposed trading name had the potential to promote the drawing of invidious comparisons between pharmacists or groups of pharmacists holding true to the concept that medicines should not be treated as a normal item of commerce and those wishing to treat medicines the same way as any other item of commence.
Alleged Errors of the Board
The appellants submitted that the Board made a number of errors in reaching its decision not to approve the proposed trading name.
Discretional Powers
The appellants submitted that the Board erred in claiming to have an absolute discretion to approve trading or business names. The appellants made reference to the Board’s letter of 6 December 2004:
The guidelines make it clear that the approval of trading names is at the absolute discretion of the Board …
As earlier observed, the Board’s power to approve trading names derives from regulation 11 of the Pharmacists Regulations:
A person must not practice pharmacy under a business or trading name unless that name has been approved by the Board.
The appellants argued that if those words imply a discretion, they do not provide an absolute discretion. They said that an absolute discretion is different from a discretion in that it suggests that the decision-maker is unfettered and its decision is not conditioned.[2] They also said that the mistaken reliance on an assumed absolute discretion led the Board into further error, permitting the Board to stray into a consideration of irrelevant general policy matters and to overlook relevant considerations like the practice in other States.
[2] Shrimpton v The Commonwealth (1945) 69 CLR 613.
Counsel for the Board submitted that the reference in the letter of 6 December 2004 to “absolute discretion” in relation to the approval of trading names did not mean that the Board had exercised its power erroneously. The Board contended that in reaching its decision it had taken into account all relevant matters and had not taken into account any irrelevant matters.
There is substance to the appellant’s submission. The Board did not have an absolute discretion. Its function was to reach a decision in accordance with the requirements of the Pharmacists Act. The Board’s reference to an absolute discretion suggests that it misunderstood its duties and powers.
Irrelevant Considerations
Guidelines for Pharmaceutical Practice in South Australia
The Board produces the Guidelines for Pharmaceutical Practice in South Australia bi-annually and makes these available to every registered pharmacist. According to Mr Halstead’s affidavit of 25 February 2005, the Guidelines are intended to assist pharmacists in understanding the legislative and policy considerations that are taken into account by the Board in fulfilling its functions under the Pharmacists Act.
The appellants submitted that the Board relied inappropriately and too heavily on the Guidelines in reaching its decision. Although the Guidelines have no force in law, the Board’s letter of 6 December 2004 indicates that the Board applied the Guidelines as if they were legislative proscriptions. The appellants further submitted that, even if the Board was entitled to have regard to the Guidelines, it was not entitled to apply them as if they were inviolable standards for pharmacy practice. Counsel for the Board refuted the assertion that the Board had applied the Guidelines as though they were a strict code of pharmacy practice.
There is substance to the appellants’ submission. The Guidelines are no more than that. They do not replace the legislation. They do not dictate the result. In any event, in a number of respects they mistake the legislative and policy positions.
Regulation 27
The Board considered the application of regulation 27(2) of the Pharmacists Regulations in reaching its decision. Regulation 27(2) provides:
(2) A person must not advertise in respect of the practice of pharmacy—
(a)in a manner that is likely to bring discredit on the profession of pharmacy;
(b)in a manner that draws invidious comparison between pharmacists or groups of pharmacists;
or
(c)in a manner that is likely to mislead.
Penalty: Division 7 fine.
The appellants submitted that regulation 27(2) relates to the manner in which a pharmacist conducts his or her advertising. They said that the regulation does not, nor is it intended to, speak to matters relevant to an application for use of a name. Rather, they said, the purpose of regulation 27(2) was to regulate the manner of practice after approval of a trading name.
Counsel for the Board submitted that the Board was correct to consider the impact of regulation 27(2) when making its decision, given the close association between a trading name of a business and the advertising of a business.
Regulation 27(2) of the Pharmacists Regulations has only an indirect relevance to the approval of a trading name. The appellants were correct to submit that the regulation was related to a different activity – that is, the act of advertising.
National Medicines Policy
In its letter of 6 December 2004, the Board referred to the National Medicines Policy in support of its decision not to approve the proposed trading name. The appellants submitted that the Board misconstrued the National Medicines Policy. The appellants said that, the statement attributed to the National Medicines Policy (namely, that medicines “are not to be treated as a normal item of commerce”) does not exist anywhere in the Policy.
Mr Halstead’s affidavit of 25 February 2005, set out above, discussed the approach adopted by the Board with regard to the impact of the National Medicines Policy on their decision-making process. The Board claimed that the Policy has as its basic tenet that medicines should not be treated as normal items of commerce. The Board asserts that this is an accurate statement reflected not only in the Policy but also in medicine policies worldwide. The Board states that this is a fundamental principle, well understood by all pharmacists, and accordingly a relevant consideration for the Board to have regard to.
The appellants contended that, properly construed, the National Medicines Policy promotes as a basic tenet the goal of providing “effective mechanisms for access to medicines [to] assist quality use of medicines.”[3]
[3] National Medicines Policy (2000) at 6.
The National Medicines Policy was a relevant consideration. However, it was important that the Board not elevate policy into requirements or obligation.
“Invidious”
The appellants submitted that the Board erred in asserting that the word “warehouse” would suggest a place where medicines could be accessed cheaply and in bulk, thereby leading to an “invidious” comparison with other pharmacies. The appellants said that the proper meaning to attach to the term “invidious” in the context of regulation 27 was advertising which is in some way “odious”, “offensive” or “unfair”. An example of this would be where one pharmacy advertises in a way that improperly praises itself or demeans a competitor. In light of the existence of pharmacies currently trading under banner names such as “Chemmart”, the appellants said that the Board’s finding that “Chemist Warehouse Kilburn” was “invidious” was “patently absurd”.
Counsel for the Board reinforced the Board’s decision that the term “warehouse” has the potential to be widely interpreted in the community as a pharmacy where medicines can be accessed cheaply and in bulk. Accordingly, the Board submitted that it was reasonable to conclude that the proposed trading name would invoke an invidious comparison with other pharmacies that did not engage in the practice of selling at “wholesale” prices to the public.
It is difficult to understand how the proposed trading name could give rise to invidious comparisons. This aspect of the appeal is discussed later in these reasons.
Failure to take account of relevant considerations
Interstate Chemist Warehouse registrations and experience
The appellants submitted that the existence of “Chemist Warehouse” pharmacies currently operating in four other Australian States was a highly relevant matter for the Board to consider in reaching its decision. The appellants said that the absence of any reference to interstate experience in the Board’s letter of 6 December 2004 strongly suggested that the Board had not had sufficient regard to this factor.
As set out above, in his affidavit of 25 February 2005, Mr Halstead deposed to the Board’s awareness of the existence of pharmacies trading under the name “Chemist Warehouse” interstate. Mr Halstead explained that whilst it is relevant to note that a name is used in other States, in the Board’s view it is not a conclusive factor. The Board also emphasised that there are significant differences between the South Australian legislative provisions with respect to the approval of trading names for pharmacies. These differences are discussed at length below.
Counsel for the Board did not address the absence in the Board’s reasons of any reference to interstate experience. Nor did it address whether that experience indicates that the name “Chemist Warehouse” misleads or misinforms the public.
It would appear that the Board gave little or inadequate weight to this relevant consideration. It was one factor to be weighed with others in reaching a decision.
Existence of names such as “Chemmart”
The appellants submitted that the trading name “Chemmart”, a name currently used by pharmacies operating within South Australia, is comparable to “Chemist Warehouse” in the sense that it combines the words “chemist” and “market”. The appellants said that the existence of such a trading name in South Australia is a matter that the Board should have considered when determining their application for approval of the proposed trading name.
It is clear from Mr Halstead’s affidavit of 25 February 2005 that the Board was aware of the existence and use of other “banner group names” in South Australia. He noted:
I am aware that the banner group name “Chemmart” has been in use in South Australia since the late 1970s, at which time the previous Act did not provide for names to be approved by the Board.
However, there is no reference in the Board’s letter of 6 December 2004 to the existence of “Chemmart” pharmacies.
A further matter
Bias
A further matter raised by the appellants on appeal to challenge the Board’s decision were allegations of bias against some of the members of the Board who had participated in the decision not to approve the proposed trading name. The appellants subsequently abandoned this ground during the hearing of the appeal. Affidavits of certain Board members filed after the commencement of the hearing of the appeal indicate that abandonment of this ground was entirely appropriate.
Conclusion
The Board erred in reaching its decision not to approve the proposed trading name. Accordingly, it is appropriate for this Court to redetermine the appellants’ application for approval of the trading name, “Chemist Warehouse Kilburn”.
Nature of the Appeal
Rule 97 of the Supreme Court Rules governs appeals to this Court. Rule 97.01 defines the scope of rule 97:
Rule 97 applies to all appeals to the Supreme Court other than those which are by any Act, rule or order to be heard by the Full Court, but it is subject to any other rule dealing with such appeals.
Rule 97.17 stipulates that an appeal under Rule 97 is to be by way of rehearing. However, the right to appeal a decision of the Pharmacy Board is subject to the terms of section 49 of the Pharmacists Act, which relevantly provides:
(1)A right of appeal to the Supreme Court lies against any decision or order of the Board made in the exercise or purported exercise of its powers or functions under this Act.
(2)The appeal must be instituted within one month of the making of the decision or order appealed against.
(3)The Supreme Court may, on the hearing of the appeal, exercise any one or more of the following powers according to the nature of the case:
(a)affirm, vary or quash the decision or order appealed against, or substitute, or make in addition, any decision or order that should have been made in the first instance;
(b)remit the subject matter of the appeal to the Board for further hearing or consideration or for rehearing;
(c)make any further or other order as to costs or any other matter that the case requires.
…
Section 49 does not provide specific guidance as to the nature of the appeal. The appellants submitted that the appeal hearing provided by section 49 is a hearing de novo and as such, this Court is able to determine the appeal on the material before it and is not in any way limited by the decision of the Board.
The appellants contend that the word “appeal” is a word of flexible meaning.[4] It is capable of describing at least three different kinds of appeal, namely, an appeal strictly so called, an appeal by way of re-hearing, and an appeal de novo.
[4] Wigg v Architects Board of South Australia (1984) 26 SASR 111 at 112.
Counsel for the Board submitted that the terms of section 49 of the Pharmacists Act do not support the appellants’ contention that the nature of this appeal should be a hearing de novo. Counsel for the Board said that this Court is conferred a discretion to exercise one or more of the powers set out in section 49(3) “according to the nature of the case.” Counsel argued that there would be no purpose in the power to remit a matter to the Board pursuant to section 49(3)(b) if it was intended that appeals to this Court were to be heard de novo.
Counsel for the Board further submitted that the decision under appeal is that of a specialist board and involves consideration of matters of professional judgment about the appropriate conduct of the practice of pharmacy. As such, the Board argued that this Court should be careful not to intervene to substitute its own view unless a clear error in the Board’s decision could be demonstrated.
Martin J in Thompkins v South Australian Health Commission[5] addressed the relationship between rule 97 and the right of appeal granted by section 57 of the Controlled Substances Act 1984 (SA). He observed:
… as Cox J pointed out in Wigg v Architects Board of South Australia (1984) 36 SASR 111 at 117, if an examination of the language and policy of the Act granting the right of appeal leads to a conclusion that Parliament intended to create a particular kind of appeal, a Supreme Court rule cannot be applied to define the nature of the appeal. In addition, classifying an appeal as an appeal by way of “rehearing” does not in itself provide an answer as to the nature of the appeal.
[5] [2001] SASC 147.
Cox J in Wigg v Architects Board[6] undertook an examination of the different types of appeal that may be created with respect to the decisions of judicial and administrative bodies. Martin J adopted this analysis in Thompkins v South Australian Health Commission:[7]
[6] (1984) 36 SASR 111 at 112-113.
[7] [2001] SASC 147 at [28]-[31].
His Honour identified three types of appeal. First, an appeal “strictly so called” in which the question is whether the judgment complained of was right when given and there is no issue of introducing fresh evidence in the appeal court. All that is decided is whether the court below came to the right decision on the material that was before it.
The second type of appeal identified by Cox J is the appeal by way of rehearing. His Honour described this appeal as follows (p 111):
“This is a rehearing on the documents, but with a special power to receive further evidence on the appeal. The latter power is necessary, because the question on a rehearing of this kind is whether the order of the court below ought to be affirmed or overturned in the light of the material before the appeal court at the time it hears the appeal.”
The third type identified is an appeal de novo in which the appeal court hears the matter afresh. Regardless of which party appeals, the appeal is conducted as an original cause and all the evidence is given afresh unless the parties agree to the material used before the original body being used on the appeal. The judge who hears such an appeal will determine the question upon the material presented before the judge and will not be limited in any way by the decision that has been made by the body appealed from.
As Cox J observed (p 113):
“Which type of appeal is given by a particular Act will depend upon its construction. The use of the word “rehearing” will not be decisive, because that is a word to which different meanings have been given ... . It will be a matter of discerning Parliament’s intention from an examination of the legislation as a whole.” (footnotes omitted)
Which of these three kinds of appeal is designated by a statutory provision will depend upon the legislative intention as disclosed by an examination of the legislation as a whole.[8] Both Cox J and Martin J observed that a statutory appeal procedure does not always fit easily into one of the three categories. It is open to the legislature to create any kind of appeal, including an appeal that combines features of one or more of the traditional categories.
[8] Westmite Pty Ltd v Law Society of South Australia (1999) 73 SASR 454 at 455.
Where the legislature confers upon a court the power to review or hear an appeal against a decision of an administrative body, a presumption arises that the court is to exercise its original jurisdiction[9] and to determine the matter on the evidence and law applicable as at the date of the proceedings.[10] Mason J discussed the application of this presumption in Builders Licensing Board Sperway Constructions (Syd) Pty Ltd:[11]
Where a right of appeal is given to a court from a decision of an administrative authority, a provision that the appeal is to be by way of rehearing generally means that the court will undertake a hearing de novo, although there is no absolute rule to this effect. Despite some suggestion in argument to the contrary, I do not read Ex parte Australian Sporting Club Ltd.; Re Dash [(1947) 47 SR (NSW) 283] as enunciating such an absolute rule. There are, of course, sound reasons for thinking that in many cases an appeal to a court from an administrative authority will necessarily entail a hearing de novo and I exclude for present purposes the case of an appeal to a federal court exercising the judicial power of the Commonwealth under Ch.III of the Commonwealth Constitution. The nature of the proceeding before the administrative authority may be of such a character as to lead to the conclusion that it was not intended that the court was to be confined to the materials before the authority. There may be no provision for a hearing at first instance or for a record to be made of what takes place there. The authority may not be bound to apply the rules of evidence or the issues which arise may be non-justiciable. Again, the authority may not be required to furnish reasons for its decision. In all these cases there may be ground for saying that an appeal calls for an exercise of original jurisdiction or for a hearing de novo.
On the other hand the character of the function undertaken by the administrative authority in arriving at its decision may differ markedly from the instances already supposed. The authority may be required to determine justiciable issues formulated in advance; to conduct a hearing, at which the parties may be represented by barristers and solicitors, involving the giving of oral evidence on oath which is subject to cross-examination; to keep a transcript record; to apply the rules of evidence; and to give reasons for its determination. In such a case a direction that the appeal is to be by way of rehearing may well assume a different significance.
But in the end the answer will depend on an examination of the legislative provisions rather than upon an endeavour to classify the administrative authority as one which is entrusted with an executive or quasi-judicial function, classifications which are too general to be of decisive assistance. Primarily it is a question of elucidating the legislative intent, a question which in the circumstances of this case is not greatly illuminated by the Delphic utterance that the appeal is by way of rehearing.
[9] Re Coldham & Ors; Ex parte Brideson (No 2) (1990) 170 CLR 267 at 273.
[10] Westmite Pty Ltd v Law Society of South Australia (1999) 73 SASR 454 at 455.
[11] (1976) 135 CLR 616 at 621-622.
In the present case, a number of the factors identified by Mason J as favouring a hearing de novo are present. Although the appellants made written representations to the Board through Mr Colasante’s letter of 10 November 2004, they had no right to be present when the application was heard. The appellants were not able to call witnesses or to present oral argument to the Board. The only record of what occurred at the Board meeting is contained in the minutes extracted above. There is no transcript of the proceedings at the meeting. The rules of evidence had no application before the Board. The Board was not required to provide reasons for its decision, although to some extent it did do so in Mr Halstead’s letter of 6 December 2004. An appeal to this Court was the only opportunity for the appellants to adduce evidence, to be heard and to have their proposal properly ventilated.
Ultimately, the nature of the appeal must depend on the terms of the statute conferring the right.[12] Section 49 of the Pharmacists Act confers wide powers upon this Court supporting the conclusion that this appeal is a hearing de novo.
[12] Re Coldham; Ex parte Brideson (1990) 170 CLR 267.
Having reached this conclusion, there is no need to determine finally whether the Board’s decision-making process was erroneous. All that is strictly required of this Court is to re-decide the appellants’ application for approval of the trading name “Chemist Warehouse Kilburn.”
Framework for making a fresh decision
Having determined that this appeal to this Court is a hearing de novo, in reaching its decision on the application, the Court is in the same position as the Board was on 6 December 2004. The Court must reach its decision in accordance with the legislation that governs the approval of trading names.
As earlier observed, regulation 11 of the Pharmacists Regulations provides:
[a] person must not practice pharmacy under a business or trading name unless that name has been approved by the Board.
In keeping with the object of the Pharmacists Act as set out in section 15(2), the Court must reach its decision with a view:
(a)to ensuring that the community is adequately provided with pharmaceutical services of the highest standard; and
(b)to achieving and maintaining professional standards of competence and conduct in the practice of pharmacy.
Fresh Decision
The appellants put forward a number of matters favouring the registration of the proposed trading name.
Interstate Experience
The appellants submitted that the use of the banner name “Chemist Warehouse” by pharmacies trading in most other Australian States was a material factor for the Court to consider in deciding whether to approve the proposed trading name. The appellants said that the name “Chemist Warehouse” has been approved and accepted by various Pharmacy Boards in other States, supporting the conclusion that it should be approved in this State.
Mr Verrocchi’s affidavit of 25 February 2005 sets out the practice and experience of “Chemist Warehouse” pharmacies interstate. The first Chemist Warehouse pharmacy began trading in May 2000 in Footscray, Victoria. A further seven pharmacies have since commenced trading in Victoria, as well as five in Queensland, two in Tasmania and one in New South Wales. Mr Verrocchi expects that a further ten new “Chemist Warehouse” pharmacies will commence trading across Australia within the next twelve months.
Mr Verrocchi’s affidavit of 25 February 2005 states the following in relation to the existence of “Chemist Warehouse” pharmacies interstate:
… the Pharmacy Boards of New South Wales, Tasmania, Victoria and Queensland have not raised any objection to the trading name “Chemist Warehouse” being used, ...:
Counsel for the Board conceded that interstate use of the banner group name, “Chemist Warehouse”, was relevant. However, Counsel for the Board emphasised that the legislative framework for the use and approval of trading names differs from State to State such that not all Pharmacy Boards in other States possess the power to approve trading names of pharmacies. Counsel for the Board submitted that in light of the different legislative provisions and functions operating interstate, the fact that the name “Chemist Warehouse” is used in other States is not “highly relevant” as asserted by the appellants.
Pursuant to Guide Note 1 of the Guidelines published by the Pharmacy Board of New South Wales, the Pharmacy Board of New South Wales considers whether a proposed trading name would offend regulation 16(2) of the Pharmacy (General) Regulations 1998 (NSW) by, for example, claiming or implying that the pharmacist seeking to use the proposed trading name is superior to other pharmacists in the practice of pharmacy.
Guide Note 1 of the Board’s guidelines provides:
The Pharmacy Board understands that pharmacy business names are required by the Department of Fair Trading to be registered. However, it is in proprietor’s best interests to make their own enquires of that Department.
If the business name contains words such as “pharmacy”, “chemist”, “pharmacist”, or other words list in section 3 or section 30 of the Act, or the principal activity of the business is pharmacy, the registration of the business name will not be complete without written confirmation of the Pharmacy Board.
…
Pharmacy names that are false, misleading, deceptive, or imply beneficial treatment or superior service (see clause 16(2) of the Regulation) … will not be approved. Names which suggest or imply an activity or a location which cannot be supported may also be rejected.
The situation in New South Wales differs to that in South Australia in that the power to approve the registration of trading names in New South Wales is not strictly legislative. However, the Pharmacy Board of New South Wales is nonetheless involved in the approval of trading names for pharmacies and has decided to approve the use of the name “Chemist Warehouse.” A letter sent by the Pharmacy Board of New South Wales to the Department of Fair Trading recording its approval of the name “Chemist Warehouse” stated the following:
With reference to the application of Mario Verrocchi to register the business name of Chemist Warehouse.
…
Providing Mario Verrochi is the only applicant to be registered as carrying on business, under the above name, the Board has no objection to the registration of the business name.
Clause 9 of the Pharmacy Code, made by the Pharmacy Board of Tasmania pursuant to section 12 of the Pharmacists Registration Act 2001 (Tas)[13], provides:
9.1A pharmacist is a professional person providing services to this public. It is not, in these circumstances, either professional or appropriate to, in effect, compete with other pharmacists for business by promoting that one’s services are better than anyone else or that one’s stock of medicines are superior to those offered by other pharmacists. Such claims are not capable of being objectively verified by members of the public and accordingly may either be likely to mislead or cause confusion amongst the public.
9.2Pharmacists must not advertise in a manner which:
a) is of a character that could be regarded as likely to bring pharmacists into disrepute;
b) suggests that, in relation to the provision of pharmaceutical services or the sale of medicines, that the quality of those services or medicines are superior to those offered by any other pharmacist;
c)abuses the trust, or exploits the lack of knowledge of a member of the public.
[13](1) The Board, by resolution in accordance with subsection (2), may make by-laws consistent with this Act or the purpose of providing practical guidance and direction to pharmacists.
…
(3)A by-law made under subsection (1) is not a statutory rule within the meaning of the Rules Publication Act 1953.
…
Section 12 of the Pharmacists Registration Act 2001 (Tas) expressly provides that the Pharmacy Code is intended to provide practical guidance and direction to pharmacists. Neither the Act nor the Code makes any provision for the Pharmacy Board’s power to approve or register trading names for pharmacies.
Part 5, paragraph 507 of the Pharmacy Board of Victoria’s Guidelines for Good Pharmaceutical Practice 2004 provides:
A pharmacist practising alone or in partnership with other pharmacists under a business name must notify the Board of that business name within 14 days of the commencement of the use of that business name.
The following then appears in parentheses below paragraph 507:
Note:
1. If a pharmacist chooses to practice under a business name, the Board strongly encourages:
- the use of the word ‘pharmacy’ or ‘pharmacist’ in the business name in place of the word ‘chemist’,
- the inclusion in the business name of the full name of the properitor, or the surname and initials, and
- limiting other descriptions in the business name to a location and/or the name of a recognised trading group
eg Smith’s Guardian Pharmacy, R Smith Proprietor
Smith’s Mid-City Pharmacy, R Smith Proprietor
Mid-City Pharmacy, R Smith Proprietor
Ray Smith’s Mid-City Pharmacy
Ray Smith’s Pharmacy (Mid-City)
2. The Office of Fair Trading and Business Affairs must approve business names
…
This is the only provision in the Victorian framework that deals with trading names, and it clearly does not empower the Board to approve or disapprove of trading names.
Pursuant to section 130 of the Pharmacists Registration Act 2001 (Qld), a pharmacist must, before carrying on a business of a pharmacy under a business name other than under the pharmacist’s own name, give the Pharmacists Board of Queensland notice of the proposed business name. It makes no provision for the approval or disapproval of trading names.
The differences between the South Australian legislative framework and those of the other States in which “Chemist Warehouse” pharmacies currently trade make it difficult to argue that because that name has been approved in other States it should be approved in South Australia. However, the experience of “Chemist Warehouse” pharmacies interstate is relevant to drawing a conclusion as to whether the name has the potential to mislead or misinform the public. There was no evidence before the Court to indicate that the name “Chemist Warehouse” has had such an affect.
Existence of other banner trading names
The second factor that the appellants said supported the approval of the proposed trading name is that the Board acknowledged that “Chemist Warehouse Kilburn” would provide high quality pharmaceutical services through well-trained and appropriately supervised staff. As such, approval of the trading name would not result in harm to the community or degradation of the professional standards expected of pharmacies.
The existence in South Australia of pharmacies trading under names such as “Chemmart” and “Chemworld” further supports the argument in favour of approving the trading name, “Chemist Warehouse Kilburn.” There is little difference between those banner names already trading and the proposed trading name. To the extent that the banner name “Chemist Warehouse Kilburn” could be viewed as invidious, it was no more so than other banner names already operating in South Australia.
Not invidious
The important factor when considering whether or not the name “Chemist Warehouse” has the potential to give rise to an invidious comparison with other pharmacies is not the perception of the business; rather, it is the manner in which the business is conducted. The Board considered there to be no concern that the pharmacy at Kilburn would be conducted professionally. This is clear from Mr Halstead’s letter of 6 December 2004:
The Pharmacy Board of South Australia wishes to make it clear that it has no concerns as to the likelihood that high quality pharmaceutical services will be provided by well trained and appropriately supervised staff at the Kilburn site.
One of the appellants, Mr Verrocchi, is part-owner of the trademark “Chemist Warehouse”. In Mr Verrocchi’s affidavit of 25 February 2005, Mr Verrocchi states that the reason for using the name “Chemist Warehouse” as trading names for pharmacies is to:
(a)reflect retail trends to name large format retail stores such as “Chemist Warehouse” pharmacies as “warehouse”. Examples include “Vitamin Warehouse”, “Hair Warehouse”, “Golf Warehouse”, “IT Warehouse”, “Computer Warehouse”, “Toy Warehouse”, “The Walker’s Warehouse” and the like;
(b)reflect the nature and environment of the “Chemist Warehouse” pharmacy stores. To keep fit-out costs down, relatively inexpensive racking style-shelves are used in each “Chemist Warehouse” pharmacy to display items. The fit-out costs of “Chemist Warehouse” pharmacies are approximately $600 per square metre compared to approximately $1,200 per square metre for traditional retail pharmacies. The lower cost fit-out enables “Chemist Warehouse” pharmacies to pass on price savings to consumers and the name “Chemist Warehouse” was intended to convey this to consumers.
The affidavit then goes on to provide further information regarding the “ethos” of the “Chemist Warehouse” group generally:
Each “Chemist Warehouse” pharmacy is owned by registered pharmacists either alone or in partnership. Those pharmacists in turn collectively form the buying and marketing group known as “Chemist Warehouse”. By individual pharmacists pooling their resources together under the “Chemist Warehouse” banner, individual pharmacists realise the benefits of greater purchasing power by being able to negotiate favourable terms with suppliers for purchasing stock, advertising and marketing, property leases, store-fit-out, IT systems and the like. The cost savings “Chemist Warehouse” stores obtain by pooling their resources together in this way enables them to pass on these savings to consumers in the form of discounted prices wherever possible.
…
“Chemist Warehouse” pharmacies operate as large retail stores, with the average floor space for each “Chemist Warehouse” pharmacy being approximately 850 square metres.
The exterior presentation of each “Chemist Warehouse” pharmacy store is substantially identical, allowing for differences in the physical layout of each premises.
…
The interior design of each “Chemist Warehouse” pharmacy is substantially identical, with fit-out being as uniform as possible, allowing for differences in the physical layout of each premises.
…
The “Chemist Warehouse” pharmacies trading across Australia:
(a) carry substantially the same product lines and maintain similar stock levels;
(b) charge uniform prices for identical product lines;
(c) have similar store opening hours of 7 days per week until late;
(d)have an average of 2 registered pharmacists in attendance at all times during open hours;
(e) implement the same policies and training in relation to staff; and
(f) have an average of 6 other employees on duty at all times during opening hours.
On average, 4,000 to 6,000 customers visit each “Chemist Warehouse” pharmacy per week, with “Chemist Warehouse” pharmacies, having a significantly larger geographical catchment area than traditional retail pharmacies.
All “Chemist Warehouse” pharmacies across Australia are accredited or in the process of gaining accreditation under the Quality Care Pharmacy Program (“QCPP”). The QCPP is a quality assurance program developed and nationally administered by the Pharmacy Guild of Australia (“Guild”) to raise the standard of customer service in individual pharmacies across Australia and provide an industry-wide guarantee of retail service quality, professional practice and customer care. The Chemist Warehouse Group engages the services of an external consultant, Peter Valastro, who is accredited by the Guild to train pharmacists and pharmacy staff under the QCPP. The consultant is in regular contact with “Chemist Warehouse” pharmacies across Australia. The consultant has been employed to ensure all “Chemist Warehouse” pharmacies across Australia have appropriately trained staff and to assist in the implementation of policies and procedures under the QCPP. The consultant assesses each “Chemist Warehouse” pharmacy and runs a maintenance program. This ensures all “Chemist Warehouse” pharmacies gain QCPP accreditation as soon as possible and that those “Chemist Warehouse” pharmacies already QCPP accredited maintain the standards required to remain accredited. By doing so, the standards of best practice under the QCCP are uniformly applied across all “Chemist Warehouse” pharmacies irrespective of the location from which they trade.
…
Since the first “Chemist Warehouse” pharmacies commenced trading in or about May 2000:
(a)over $4,000,000 has been spent on marketing and promotional activities in relation to the “Chemist Warehouse” pharmacies; and
(b)the “Chemist Warehouse” pharmacies have gained a reputation for offering consumers significant savings on over the counter lines and non-Pharmaceutical Benefit Scheme medicines (medicines listed on the PBS cannot be discounted). Discounts of up to 50% are available and the average discount is approximately 25%.
The Board submitted that the name “Chemist Warehouse Kilburn” could invoke an invidious comparison with other pharmacies that did not engage in the practice of selling at wholesale prices to the public. Essentially, the Board was arguing that the invidious comparison arises from the intimation that medicines will be accessed at a lower cost to the consumer from “Chemist Warehouse Kilburn” than from other pharmacies. This is not an invidious comparison in the sense intended by Parliament. A finding that the use of the trading name “Chemist Warehouse” gives rise to an invidious comparison is contrary to the principles of increased market competition for the benefit of consumers and greater consumer choice.
Conclusion
The appeal is allowed.
This Court is invested with the power to substitute its decision for that of the Board pursuant to section 49 of the Pharmacists Act.
The name “Chemist Warehouse Kilburn" should be approved as a trading name in respect of the pharmacy located at Shop 7, 398-400 Prospect Road Kilburn.
The decision of the Pharmacy Board of South Australia not to approve the proposed trading name on 6 December 2004 is quashed in accordance with section 49(3)(a) of the Pharmacists Act and substituted by the decision of this Court to approve the proposed trading name.
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