Darnell v Stonehealth Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Darnell v Stonehealth Pty Ltd [2022] FCAFC 76    

Appeal from: Darnell v Stonehealth Pty Ltd (No 4) [2021] FCA 823
File number: QUD 263 of 2021
Judgment of: MARKOVIC, THOMAS AND STEWART JJ
Date of judgment: 11 May 2022
Catchwords: ADMINISTRATIVE LAW – appeal from Federal Court of Australia – where primary judge dismissed an application for judicial review brought under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B(1A) of the Judiciary Act 1903 (Cth) – where appellant seeks to quash the decisions of the Australian Community Pharmacy Authority (Authority) and the Secretary of the Department of Health to approve the first respondent’s application under the National Health Act 1953 (Cth)(Act) to supply pharmaceutical benefits at certain premises – whether the primary judge erred in finding that the premises occupied by Coles at Flagstone Village Shopping Centre, Flagstone, Queensland (Coles Flagstone) was on 20 March 2020 operating as a “supermarket” for the purposes of s 5 and Item 130 of Sch 2 to the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Rules) – where Coles Flagstone was operating as a supermarket as required by the Rules – where the role played by “primary” in the definition of “supermarket” is only to identify the primary business of the retail store in question, namely selling groceries as opposed to selling other goods or providing services – whether the primary judge erred in failing to hold that the decision of the Authority was affected by materially false or misleading information – whether the primary judge’s finding that the Authority’s decision was not affected by misleading or false statements made by the first respondent was “glaringly improbable” or contrary to compelling inferences to be drawn having regard to the underlying facts – where primary judge’s findings were open on the evidence – whether the opening of Coles Flagstone was a sham – where strategy devised by the first respondent was permitted under s 90 of the Act and did not “cross the line” – whether the primary judge erred in finding that the Authority was entitled to take into account information provided to it on 11 November 2020 (11 November Letter), despite the operation of s 9 of the Rules – where it was open to find that the 11 November Letter was provided to the Authority at the request of the first respondent rather than on its behalf or as its agent – appeal dismissed
Legislation:

Administrative Decisions (JudicialReview) Act 1977 (Cth)

Evidence Act 1995 (Cth)

Judiciary Act 1903 (Cth)

National Health Act 1953 (Cth)

National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth)
Cases cited:

Darnell v Stonehealth Pty Ltd (No 4) [2021] FCA 823

Fox v Percy (2003) 214 CLR 118

Hope v Australian Community Pharmacy Authority (2017) 156 ALD 130

Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123

Minister for Immigration…

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Details
Case
[2022] FCAFC 76
Decision Date

CaseChat Overview and Summary

The case of Darnell v Stonehealth Pty Ltd involved the appellant challenging the decision of the Australian Community Pharmacy Authority (Authority) and the Secretary of the Department of Health to approve the application of Stonehealth, the respondent, to supply pharmaceutical benefits at certain premises. The dispute centred on whether the premises occupied by Coles at Flagstone Village Shopping Centre, Flagstone, Queensland, was operating as a "supermarket" on 20 March 2020, as required by the rules under the National Health Act 1953. The appellant argued that the primary business of Coles Flagstone on that date was not the sale of groceries, but rather preparatory activities for its official opening the next day. Additionally, the appellant contended that the decision of the Authority was influenced by materially false or misleading information.

The court was required to determine whether the primary judge erred in finding that the premises met the definition of a supermarket and whether the primary judge's findings on the misleading information were correct. The court considered the definition of "supermarket" in the rules, which requires a retail store with the primary business of selling a range of food, beverages, groceries, and other domestic goods. The court also examined whether the primary business of Coles Flagstone on 20 March 2020 was the sale of groceries, despite the limited trading hours and preparatory activities.

The court found that the primary judge's conclusions were open on the evidence presented. The court held that the definition of "supermarket" required a retail store with commercial activity, which must consist primarily of the sale of the specified goods. The limited trading hours on 20 March 2020 did not preclude Coles Flagstone from being a supermarket, as the business of selling groceries to the public for profit involved a range of preparatory activities. The court also found that the primary judge's findings on the misleading information were not clearly erroneous, as the evidence did not compel a different conclusion.

In conclusion, the appeal was dismissed. The court upheld the primary judge's findings that the premises occupied by Coles at Flagstone Village Shopping Centre met the definition of a supermarket and that the decision of the Authority was not affected by misleading information. The appellant was ordered to pay the costs of the first respondent.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the first respondent’s costs as agreed or taxed.

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

Background

Background to the litigation

The following terms used in item 130 are defined in s 5 of the Rules:(1)“all relevant times” is defined to mean, in relation to an application:(a) the day on which the application was made; and(b) the day on which the application is considered by the Authority; and(2)“supermarket” is defined to mean “a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods”.BACKGROUND The Stonehealth Application had the following features:(1)the applicant was Stonehealth as trustee for Stonehealth Pharmacy Trust and as trustee for AndyStone Pharmacy Trust. The authorised person for each of those entities was respectively Mona Bakshi and Tam Minh Nguyen;(2)the contact nominee was Stuart Mihulka of Ann Mihulka & Associates, health industry consultants. An authority for a representative to prepare and submit an application on behalf of the applicant naming Mr Mihulka as authorised representative accompanied the Stonehealth Application;(3)the anticipated opening date of the pharmacy business was 20 April 2020; and(4)it was accompanied by a letter from Ann Mihulka & Associates which, among other things, enclosed:(a)a copy of a lease for the Premises between Coles Group Property Developments Ltd (Coles Developments) as lessor and Stonehealth as trustee for the Stonehealth Pharmacy Trust as lessee;(b)a distance measurement showing the distance from the Premises to the nearest approved premises;(c)images of the Premises in relation to which it was said that:The proposed premises are stocking shelves with a completed fitout, and will be ready for trade on 21 March 2020, the day after the Coles supermarket opening. There is no access to a supermarket.(d)a stamped plan of the Flagstone Village Shopping Centre indicating “that the supermarket has a GLA of 3,665 sqm, excluding loading dock”;(e)images of the Coles supermarket and Flagstone Village Shopping Centre in relation to which it was said that “[t]he supermarket shelves are stocked as of 18 March 2020 and the supermarket is ready for trade”; and (f)a letter dated 17 March 2020 from John Morgan, senior development manager, Coles Developments, to Ann Mihulka (17 March Letter). The 17 March Letter provided (as written):Coles Group Property Developments Ltd (CGPD) is currently constructing a new shopping centre in Flagstone Qld, known as Flagstone Village Shopping Centre, which includes a Coles supermarket and approximately 10 other specialty tenancies. Works are almost complete.The Coles supermarket will commence trade on Friday 20 March 2020. This Coles supermarket has a GLA of approximately 3,600m2 excluding loading docks and car parks. The Flagstone Village Shopping Centre will have an opening celebration for the entire shopping centre on Saturday 21 March 2020. CGPD (Lessor) has leased Shop 6 & 7 to Stonehealth Pty Ltd atf Stonehealth Pharmacy Trust (Lessee). Coles has also consented to a sublease from the Stonehealth Pty Ltd atf Stonehealth Pharmacy Trust (Lessee) to Stonehealth Pty Ltd atf Stonehealth Pharmacy Trust and Andystone Pharmacy Trust (Sublessee).Development Approval for the Flagstone Village Shopping Centre indicates the street address of the shopping centre as “New Beith Road and Homestead Drive Undullah”. The street address of the shopping centre is now “6-24 Gates Road, Flagstone QLD 4280”.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

As noted at [5] above, on 11 December 2020 the Authority made its decision to recommend approval of the Stonehealth Application to the Secretary. THE AUTHORITY’S DECISION On 28 January 2021, in response to a request from Mr Darnell under s 13 of the ADJR Act, the Authority provided its reasons for making its approval recommendation decision to the Secretary (Statement of Reasons). Commencing at [17] of the Statement of Reasons the Authority set out its findings on the material questions of fact. The Authority was satisfied that the Premises were at least 1.5 km in a straight line from the nearest approved premises as required by item 130(a) of Pt 2 of Sch 1 to the Rules. The Authority then considered the requirements in item 130(b)(ii) of Pt 2 of Sch 1 to the Rules that there is within 500 m, in a straight line, a supermarket that has a gross leasable area of at least 2,500 m2. At [23]-[24] of the Statement of Reasons the Authority set out the material it considered in relation to that requirement (as written):23. The Authority considered:(a)the Application;(b)the letter from the Applicant’s representative summarising supporting evidence referring to: a plan of the Coles supermarket in the Centre which confirms that the Coles supermarket has a gross leasable area of 3,665 nr excluding loading dock; advising that the Coles Supermarket is a straight line distance of approximately 10 m from the proposed premises; and advising that the Coles supermarket would commence trade on 20 March 2020;(c)the letter dated 17 March 2020 from a representative of Coles Group Property Developments Ltd to the Applicant’s Representative. The Authority found that the representative of Coles Group Property Developments Ltd advised that ‘the Coles supermarket will commence trade on Friday 20 March 2020 and that the Centre will have an opening celebration for the entire Centre on Saturday 21 March 2020’;(d)correspondence received from the third party dated 12 November 2020, which stated that the Coles Supermarket in Flagstone did not open to the public until Saturday 21 March 2020;(e)the email dated 9 December 2020 from the Applicant’s representative responding to the Authority’s request for additional information, including annexures: Federal Court judgment dated 25 August 2020; Full Federal Court of Australia judgment dated 9 November 2020; Statutory Declaration made on 4 December 2020 by a representative of Coles Group Property Developments Pty Ltd, scans of four receipts of purchases made at the Coles supermarket Flagstone on 20 March 2020 and photographs taken at the Coles supermarket in Flagstone on 20 March 2020;(f)further correspondence from the third party dated 30 November 2020 including local news extracts.24.The Authority took into account the correspondence provided by the third party dated 12 November 2020 and further correspondence dated 30 November 2020 which:(a)Referred to the judicial review proceedings in the Federal Court and Full Federal Court, and an affidavit made by a party to the proceedings, and stated that ‘it was common ground in both proceedings that the Coles supermarket in the Centre opened to the public for the first time and commenced trading on 21 March 2020’;(b)Submitted that as the Applicant’s application was made on 20 March 2020, being one day before the Coles supermarket opened to the public for the first time and commenced trading on 21 March 2021, the Authority should conclude that Item 130(b) was not met because there was not at all relevant times, a supermarket;(c)Claimed that the local news extracts further supported the submissions made that the supermarket opened to the public on 21 March 2020.(Emphasis in original.)The “third party” referred to by the Authority was Mr Darnell.

Ratio Decidendi

Legal Principle Established

Mr Darnell submitted that on 20 March 2020, Coles Flagstone may have made some sales of the relevant goods, but that was not its primary business on that day: its primary business activity or function on that day was preparatory in nature for the following day when its primary business of a supermarket commenced. Mr Darnell also submitted that the activities on 20 March 2020 were primarily intended to advance a strategy between Coles Flagstone and Stonehealth of furnishing evidence to support the Stonehealth Application, and that the selling of goods was merely an aspect of that strategy.Consideration This ground of appeal fails for the following reasons. In the Rules, “supermarket” is defined as “a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods”. In ZAA, Rangiah J (at [59]) identified that there are three requirements in that definition. First, there must be a retail store. Secondly, the retail store must have business. Thirdly, the primary business must be the sale of a range of food, beverages, groceries and other domestic goods. In respect of the second requirement, namely that the retail store have business, it was held in ZAA (at [62]) that the retail store must have commercial activity. It was then said (at [64]) that that requires:the existence of business, which must consist primarily of the sale of a range of food, beverages, groceries and other domestic goods. A retail store cannot have business (let alone primary business) until it has commenced trading. Mr Darnell focused on those statements in support of his submission that the preparatory business of Coles Flagstone on the day in question, which he says was its primary business on that day, does not meet the requirement of the definition because the sale of goods was not the primary business on that day. Mr Darnell’s submissions conflate the notions of “business”, in the sense of the presence of commercial activity, and the activities that constitute a business. Given the short opening time late in the day on 20 March 2020, it may be accepted that the principal (or primary, to use the word Mr Darnell insists on) activities of Coles Flagstone on that day were preparatory in nature – they were activities directed at preparing the store for its grand opening to the public the following day. Indeed, the limited opening on 20 March 2020 may itself be characterised as preparatory in as much as it was said to be for the testing of systems, queueing, security and the like for the grand opening the following day. All those activities were undoubtedly part of the business of the supermarket, but none of them constituted a business themselves. The business of the supermarket was to sell groceries (to use a compendious term) to the public for profit. That involved a range of activities including sourcing goods, buying them, warehousing them, packing them as required on the shelves, maintaining an inventory of them, price tagging them, providing baskets and trolleys for the convenience of shoppers, installing and maintaining systems for checking-out the goods against the payment of money, and so on. All those activities were aimed at the ultimate commercial activity of the business, namely selling the goods for profit.