Friendly Society Medical Association Limited and Australian Community Pharmacy Authority
[2008] AATA 1055
•28 October 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 1055
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/4594
GENERAL ADMINISTRATIVE DIVISION ) Re Friendly Society Medical Association Limited Applicant
And
Australian Community Pharmacy Authority
Respondent
DECISION
Tribunal Deputy President D G Jarvis Date28 October 2008
PlaceAdelaide
Decision For reasons given orally at the hearing, the decision of the respondent made on 26 September 2008 is set aside, and in place of that decision the tribunal decides to recommend that the applicant be approved pursuant to s 90 of the National Health Act 1953 (Cth). ..............................................
(D G Jarvis)
Deputy President
CATCHWORDS
HEALTH AND COMMUNITY SERVICES – pharmaceutical benefits – application for approval to supply pharmaceutical benefits at proposed premises – application involved cancellation of existing approval and relocation of pharmacy to new premises – Australian Community Pharmacy Authority Rules – requirement that the proposed premises could be used for the purpose of operating a pharmacy under the applicable local government and State and Territory laws relating to land development – held that planning approval alone, and not also building approval, satisfied requirement – held that requirement must be satisfied as at date of application for approval and not when information in application was finally supplemented by later information – requirements of Development Act 1993 (SA) – meaning of “to undertake development” – decision under review set aside
National Health Act 1953 (Cth), ss 90 and 99K
National Health (Australian Community Pharmacy Authority Rules) Determination 2006, ss 6(1), 9 and10, Sched 1, Pt 1, Item 112 and Sched 2, Item 201
Development Act 1993 (SA), ss 4, 32 and 33
Jackson v Australian Community Pharmacy Authority [2008] AATA 656
Kemp v Pharmacy Restructuring Authority [1993] AATA 201
Ranallo v Australian Community Pharmacy Authority [2008] AATA 533
Re Drake and Minister for Immigration (No 2) (1980) 2 ALD 634
Shi v Migration Agent Registration Board 82 ALJR 1147
REASONS FOR ORAL DECISION
24 November 2008 Deputy President D G Jarvis 1. The respondent, Australian Community Pharmacy Authority, has requested written reasons for the decision of the tribunal that I delivered orally at the conclusion of the hearing of this matter. The following is an edited version of the reasons I gave orally for my decision. I have supplemented my oral reasons by referring in greater detail to certain background facts which were not in contention and to the competing contentions of counsel, and by referring in detail to the relevant provisions of the applicable legislation.
2. The applicant, Friendly Society Medical Association Limited, sought approval under Item 201, Sched 2 of the National Health (Australian Community Pharmacy Authority Rules) Determination 23 of 2006 as amended by the National Health (Australian Community Pharmacy Authority Rules) Determination 30 of 2007 (the Rules), to relocate an existing pharmaceutical benefits scheme health licence (PBS licence) to premises in Littlehampton, South Australia (the premises).
3. On 15 August 2008, the relevant authority, the District Council of Mount Barker, granted the Society development plan consent for a change of use of the premises (which had previously been used as a dwelling) to allow the operation of a pharmacy.
4. The Society lodged its application and supporting materials with Medicare on 15 August 2008. The application was received by the Authority on 18 August 2008.
5. On 20 August 2008, the District Council of Mount Barker granted building rules consent to the Society in respect of certain alterations to the premises, and on 18 September 2008, it granted the Society development approval in respect of the premises.
6. The Authority considered the Society’s application at its meeting on 26 September 2008, and decided to recommend that the application not be approved on the basis that the requirements of Items 201(b) and 201(c) of the Rules had not been met. On 1 October 2008, the Authority conveyed its recommendation to Medicare Australia (the delegate of the Secretary of the Department of Health and Ageing). The Authority notified the Society of its decision by letter dated 1 October 2008. The Society then applied to this tribunal for review of the Authority’s decision. The hearing of the application for review was expedited at the request of the Society, as a competing application within the relevant area was to be considered at an imminent meeting of the Authority. I delivered an ex tempore decision in consequence of the urgency of the matter.
7. The costs incurred by the Society prior to 21 October 2008 in preparing the premises for operation of a pharmacy were $257, 000, and costs were continuing to be incurred as at that date to complete exterior works. The Society opened the premises for business as a pharmacy on 3 October 2008, and has not been approved to claim the difference between the price of products listed on the Pharmaceutical Benefits Scheme paid by customers and the actual costs of those products.
Issues
8. The issues before me are as follows:
(a)whether the Society satisfies Item 201(b) of the Rules, that is whether this tribunal, standing in the shoes of the Authority, is satisfied that the premises could, on the date of the application be used for the purpose of operating a pharmacy under the applicable local government and State laws relating to land development;
(b)whether the date of the application was the date of its receipt by the Authority, or the date when information accompanying the application was finally supplemented by later information (namely, advice of the subsequent grant of building rules consent and development approval); and
(c)whether a recommendation to approve the Society’s application should be made to the Secretary of the Department of Health and Ageing under s 99K of the National Health Act 1953 (Cth) (the Act).
Legislative Scheme
9. Section 90(1) of the Act provides in effect that 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.
10. Division 4B of the Act provides for the establishment, functions and membership of the Authority. Under s 99K its functions are to consider applications under s 90 and to make recommendations as to whether or not an applicant should be approved under that section in respect of particular premises, and if so, the conditions (if any) to which the approvals should be subject. Under s 99K(2), the Authority must comply with the relevant rules determined by the Minister under s 99L. That section requires the Minister to determine the rules subject to which the Authority is to make regulations under s 99K(1).
11. Under s 9 of the Rules, an application, whether involving the cancellation of an existing approval or not, must (amongst other requirements) meet the requirements of Schedule 2. This Schedule provides as follows:
“201 The Authority is satisfied that:
(a) the applicant had, on the date of the application, and has, on the date on which the Authority makes a recommendation in respect of the application, a legal right to occupy the proposed premises; and
(b) the proposed premises could, on the date of the application, and can, on the date on which the Authority makes a recommendation in respect of the application, be used for the purpose of operating a pharmacy under the applicable local government and State or Territory laws relating to land development; and
(c) within 6 months after the date on which the Authority makes a recommendation in respect of the application, the applicant will be able to begin operating a pharmacy at the proposed premises; and
(d) the proposed premises are not directly accessible by the public from within a supermarket.”
12. The relevant local government and State law relating to land development is the Development Act 1993 (SA). Section 4 of that Act defines the word “development” so as to give it a series of alternative meanings, one of which is “a change in use of land”. The definition also includes such things as building work, or the division of an allotment, or the construction or alteration (except by certain public authorities) of a road, street or thoroughfare on land, as well as other specified activities.
13. The expression “to undertake a development” is defined in s 4 of the Development Act to mean:
“to commence or proceed with development or to cause, suffer or permit development to be commenced or to proceed.”
14. Part 3 of the Development Act provides for planning schemes, and includes s 23, which provides for the preparation and publication of Development Plans.
15. Section 32 of the Development Act provides that:
“…no development may be undertaken unless the development is an approved development.”
16. Section 33 provides for matters against which a development must be assessed. It provides relevantly as follows:
“(1) A development is an approved development if, and only if, a relevant authority has assessed the development against, and granted a consent in respect of, each of the following matters (insofar as they are relevant to the particular development):
(a) the provisions of the appropriate Development Plan (development plan consent);
(b) the provisions of the Building Rules (building rules consent);
…
(4) A development will be taken to be an approved development when all relevant consents have been granted and a relevant authority has, in accordance with this Act, indicated that the development is approved.”
Parties’ Contentions
17. Counsel for the applicant, Mr Cox, contended that Item 201(b) should be interpreted so as to refer to a requirement to obtain the necessary zoning or land use permit, and not so as to require approval to building works. He drew attention to interstate legislation that differentiated between planning consent and building work consent, and also the necessity to obtain an “occupation certificate” for any change in the use of an existing building or for any new building, and submitted that the position is similar in South Australia under the Development Act. He contended that the “laws relating to land development” concerning the “use (of the proposed premises) for the purpose of operating a pharmacy” in Item 201(b) should be interpreted to encompass statutory or regulatory provisions relating to land use requirements, being in the present case the requirement under s 33(1)(a) of the Development Act to obtain a consent in respect of the provisions of the appropriate Development Plan. Mr Cox contrasted this with statutory provisions requiring building approvals or consents, such as consents in respect of the provisions of the Building Rules under s 33(1)(b) of the Development Act or occupancy certificates under s 67 of that Act, which he contended were rules relating to building and construction and not relating to the use of premises or the purpose for which a building was to be used.
18. In the alternative, Mr Cox contended that an “application” means not merely the form originally lodged, but also supporting information and evidence, and that the application may be supplemented with further information or evidence during the application process. He said that that is what occurred in the present matter, because after the application had been lodged, the Society obtained a consent in respect of the provisions of the Building Rules under s 33(1)(b) of the Development Act, and was also advised that the development had been approved pursuant to s 33(4), so that the development was thereby an “approved development” for the purposes s 32. He adduced certain evidence that suggested that the Authority had been made aware that the District Council had issued development approval prior to recommending that the application not be approved. Mr Cox accordingly contended that “application” referred to the application in its final form, as considered by the Authority, and not in its original form when it was first lodged, and that the words “date of the application” in Item 201(b) should be interpreted to mean the date of the application in its final form.
19. Counsel for the Authority, Mr Dillon, pointed out that Item 201(b) was a Commonwealth instrument that had application in all States and Territories, and it was necessary to interpret the laws of each State or Territory relating to land development in order to determine whether the proposed premises could on the relevant dates be used for the purpose of operating a pharmacy under the applicable law. He pointed out that the word “development” was defined in the Development Act to mean a change of use of land, and said that by virtue of sections 32 and 33, three steps were necessary under the South Australian legislation before the premises could be used as a pharmacy, namely:
(a)a development plan consent granted under s 33(1)(a) by reference to the Development Plan;
(b)a building rules consent granted under s 33(1)(b) by reference to the Building Rules; and
(c)the grant of all relevant consents and advice by the relevant authority that the development is approved, as required by s 33(4).
Mr Dillon contended that the development, being the change of use, could not, by virtue of s 32, be undertaken as at the date of the Society’s application, because steps (b) and (c) had not occurred as at that date.
20. Mr Dillon further contended that Item 201(b) referred to two dates, namely the date of the application and the date on which the Authority makes a recommendation, and the requirements of paragraph (b) must be fulfilled on each date.
Consideration
Interpretation of Item 201(b) of the Rules
21. The present matter involves the proper interpretation of Item 201(b) of schedule 2 to the rules. The Rules are a statutory instrument and must be construed in accordance with the approach of the High Court of Australia to the interpretation of legislation as outlined in cases such as Project Blue Sky Incorporated v Australian Broadcasting Authority (1998) 194 CLR 355. These authorities indicate that a decision-maker must give effect to the intention of Parliament, or in this case the Minister who made the Rules. The best guide to that intention is to look at the words of the Act or instrument, and to construe the Act or instrument in its context so that it is consistent internally and also with the language and purpose of the legislation itself, or in this case with the purpose of the instrument.
22. I turn then to the specific words of Item 201 and, in doing so, I think it appropriate to refer to the words of paragraphs (a), (b) and (c) of that Item. The first thing to observe about Item 201(a) and (b) is that those paragraphs differentiate between the date of the application and the date on which the Authority makes a recommendation in respect of the application. For reasons referred to below, I reject the alternative argument put by the Society that if, after an application has been lodged, some further evidence is provided by an applicant or by some third party, the date of the application, in effect, is projected forward to the date when any such further evidence is provided. I think in this case the date of the application was 18 August 2008, which was the date when the application reached the hands of the Authority.
23. It seems to me that Item 201(b) is capable of two meanings. The first is that the Item is simply referring to the permissible land use of the relevant premises; that is, the issue of whether relevant planning approval has been obtained or, indeed, whether the premises are situated in an area where the use of the premises for the purposes of a pharmacy is permissible by reference to applicable local government and State or Territory laws relating to land development. The second possible interpretation is whether the premises can physically be used for the purposes of a pharmacy (a matter which might entail carrying out building work and obtaining permits to undertake that building work, or obtaining other relevant permits), and in the present matter, that entails whether the use of the premises could be changed from that of a dwelling to that of a pharmacy. I have reached the conclusion that the former of those two possible meanings is the correct interpretation of Item 201(b), and I have reached that conclusion for a number of reasons.
24. I will not necessarily refer to those reasons in any order of priority but, first of all, the intention of the Minister in formulating the Item can be seen from the explanatory statement that was issued by the Minister when the Item was included in the Determination. That explanation commences at page 72 of exhibit R1 (the T documents), and continues on to page 73. At page 73, after repeating, in effect, the wording of paragraph (b), the following passage appears:
“For example, the applicant may produce a notice from their local Council that advises that the permitted use for the proposed premises includes operating a pharmacy, or may produce evidence that confirms that the proposed premises are situated on land which is zoned for retail purposes which includes pharmacy usage.”
That part of the explanatory statement confirms my view that the proper interpretation of Item (b) is related to land use and permissible land use, and not an entitlement to physically go into premises and commence to use them as a pharmacy.
25. I think that interpretation is also supported by the wording of Item 201(c), which provides that the Authority must be satisfied that within 6 months after the date of the Authority’s recommendation the applicant will be able to begin operating a pharmacy at the proposed premises. That paragraph clearly talks about the physical operation of the pharmacy and before that can happen, of course, a development approval in the present matter would have to have been issued, and any building work would have to have been completed, and a certificate of occupancy in relation to that building work would be needed under s 67 of the Development Act.
26. I also think that my interpretation is consistent with the Authority’s handbook, and I refer to the extract appearing in exhibit T6 in exhibit R1 at page 126. The fact that the interpretation is consistent both with the explanatory statement and with the handbook is an important consideration, having regard to the decision in Re Drake and Minister for Immigration(No 2) (1982) ALD 634 at 645, where the then President of this tribunal, Brennan J as he then was, referred to the reasons and advantages for decision-makers following departmental policy in making decisions, and to the fact that following that policy would lead to consistency in decision-making.
27. I am mindful that paragraph (b) talks about laws relating to land development. The expression “land development” is, of course, consistent with laws requiring planning approval as well as building approval, but in the context of Item 201(b) I think the reference is to laws relating to planning approval.
28. The interpretation that I have arrived at also gives effect to the objectives of the Location Rules, and I accept the analysis of counsel for the Society, Mr Cox, in his references to those Rules and their relevance to this matter. Counsel referred to clause 25 of the Compilation of the Fourth Community Pharmacy Agreement of 16 November 2005 and the Amending Agreement of 2 March 2007, and to clause 25 of the Compilation which states that the objectives of the Location Rules include the objectives of ensuring:
“
·all Australians have access to PBS medicines (clause (a));
·a commercially viable and sustainable network of community pharmacies dispensing PBS medicines (clause (b));
·improved efficiency through increased competition between pharmacies (clause (c));
·improved flexibility to respond to the community need for pharmacy services (clause (d));
·continued development of an effective, efficient and well-distributed community pharmacy network in Australia (clause (f)).” (exhibit A6)
29. Mr Cox submitted that on the Authority’s interpretation of Item 201(b), the requirements of the Rules would be less flexible and more restrictive, in that potential entrants would be discouraged from seeking to establish pharmacies because of the costs and delays entailed in obtaining building approvals. Further, he pointed out that under legislation that applies in every State and Territory of Australia an occupancy permit must be obtained after building work has been carried out, or in some cases where there has been a change in use of an existing building, before premises can be occupied. In his written submissions in reply, Mr Cox summarised the position in the various States and Territories of Australia as follows:
“Legislation in every State and Territory of Australia requires an occupancy permit to be obtained after building work has been undertaken in a broad range of circumstances:
1.1in New South Wales for the occupation or use of a new building or the change of use for an existing building (Environmental Planning and Assessment Act 1979 (NSW), ss 109M and 109N);
1.2 in Western Australia for occupation of a new building or the change in use of an existing building (ss 20 and 22 of the Building Regulations 1989 (WA));
1.3 in Queensland for the occupation or use of a building the subject of a building development approval (Building Act 1975 (Qu.), s 114);
1.4 in the Australian Capital Territory for the occupation or use of a building that has been erected or modified by building work (Building Act 2004 (A.C.T.), ss 69 and 76 and the Planning and Development Act 2007 (A.C.T.), s 199);
1.5in the Northern Territory for the occupation of a building in or on which building work is carried out (Building Act (N.T.), ss 65, 70-72);
1.6 in Tasmania for the occupation of a building in respect of which building work is being or has been carried out or the occupation of a building involving a change in use of a building (Building Act 2000 (Tas), s 93);
1.7 in Victoria for the change in use of a building (Building Regulations 2006 (Vic.), s 1011); and
1.8 in South Australia for the occupation of a building on which “building work” was carried out (being the construction, demolition or removal of a building) or if the relevant council has revoked the certificate of occupancy (which may be done in the case of a change of use) (ss 4 and 67 of the Development Act 1993 (SA) and reg. 83 of the Building Regulations 2008 (SA)). ”
30. As Mr Cox pointed out, the interpretation of Item 201(b) for which the Authority contends would mean that applicants for approval to provide pharmaceutical benefits from proposed premises would not only have to incur the costs and expense of obtaining building approvals, but would also have to undertake actual building work before they have an immediate right to occupy premises for the operation of a pharmacy. I accept his contention that applicants would be deterred from entering the industry, because of the considerable expense they would have to incur before they knew whether a viable pharmacy could be established; even after they had incurred the expense of complying with Item 201(b) (as interpreted by the Authority) the expense they had incurred might be wasted, because the Authority might ultimately refuse approval for other reasons (including discretionary reasons) or, during the construction and/or approval period, because another applicant might be approved for the relevant area. The Authority’s interpretation of Item 201(b) would accordingly deter potential applicants and would be inconsistent with the objectives of the Location Rules.
31. I also think that the interpretation that I have adopted would also lead to the Rules having a commonsense practical application, and would avoid difficulties that would otherwise arise if the Rule required an applicant to obtain all consents necessary to use the land physically, thus necessitating the completion of building work before the requisite certificate of occupancy could be obtained from the relevant development authority. That would be an unsatisfactory and unworkable interpretation to give to item 201(b).
Interpretation of Development Act 1993(SA)
32. Item 201(b) must of course be read in conjunction with the provisions of the Development Act. Where a particular development (to use the words appearing in the introductory words of s 33(1)) or a project (to use a neutral term) entails both development plan consent and building rules consent, as is the case with the present matter, the combination of s 32, the preparatory words of s 33(1) and s 33(4) requires the three steps contended for by Mr Dillon, as outlined in paragraph 19 above, before the developer can undertake development. But by virtue of the definition in s 4 the concept of undertaking development entails “commencing or proceeding with development”, and that in turn involves undertaking the physical activities of proceeding with the building work and changing the use of the subject premises. On my interpretation of Item 201, those matters are relevant to the issues to be considered under Item 201(c), but Item 201(b) merely requires the applicant to show that development plan consent has been obtained. The Society had obtained that consent as at the date of its application.
33. An alternative construction of the above provisions of the Development Act would be to read the word “development” wherever it appears in those sections to refer only to the particular development under consideration. The development relevant to Item 201(b) is the change of use of the subject premises. Confining the meaning of “development” in this way is consistent with the fact that the meanings of “development” in s 4 are alternative meanings. If this alternative construction were adopted, the Society would not as at the date of the application be prohibited by s 32 from undertaking the change of use of the premises, because it had obtained a development plan consent, and it had been advised that that consent had been granted, so that that development had been approved within the meaning of s 33(4).
34. I have considered the cases of Ranallo v Australian Community Pharmacy Authority [2008] AATA 533 and Jackson v Australian Community Pharmacy Authority [2008] AATA 656. In each case the tribunal pointed out that planning consent was required and that an application had to be lodged by the applicant in each case for such consent, but that no application had been lodged; and so the tribunal in each case was not satisfied that the requirements of item 201(b) had been met. However, in the present matter the relevant planning consent had been applied for and had been obtained, and for that reason the present matter is distinguishable from Ranallo and Jackson.
Applicant’s alternative argument
35. Because I have accepted the applicant’s first argument, it is unnecessary for me to deal with the applicant’s alternative argument but, for the sake of completeness, I indicate I reject that argument. The Society adduced certain evidence that suggested that an officer of the Department of Health and Ageing had, prior to the Authority’s decision to recommend that the application not be approved, been informed of the issue of the building rules consent and the development approval. The officer in question disputed this, and said that she only became aware of these matters when she made further enquiries after the Authority had made its decision.
36. I find it unnecessary to determine the conflict of evidence as to this issue. I accept the argument of counsel for the Authority, Mr Dillon, that the present matter is an example of the sort of matter that was referred to by Kirby J in the case of Shi v Migration Agents Registration Authority (2008) 82 ALJR 1174 where his Honour said at [44] that sometimes it may be inherent in the nature of a particular decision that review of that decision is confined to identified past events. In this case the identified time is the date of the application and, as I have said, I do not think that date can be, in effect, projected forward to a later date because some further evidence may become available, either from the applicant or, more inappropriately still, from some third person as a result of inquiries made by the Authority after the application had been lodged or determined. That is not to say that the Authority, or this tribunal standing in the shoes of the Authority, could not receive further evidence as to the situation that existed at the date of the application, but any information as to events that occur after that date are not relevant to the position as at the date of the application itself so as to postpone the effective date of the application.
37. In support of his alternative argument, Mr Cox relied on the matter of Re Kemp v Pharmacy Restructuring Authority [1993] AATA 201, but the issue that Deputy President Breen in that case had to consider was whether the application for the pharmacy was in the approved form. He decided that it did contain the elements required for it to be in the approved form, even though the identity of the premises had been changed after the original application had been lodged, and he thought it was not appropriate to exercise his discretion to refuse to entertain the application because it was not in the prescribed form. That is quite a different situation than the facts that the Society sought to rely on in support of its alternative argument.
38. If the further information did come to the Authority’s attention after it had made its decision not to approve the applicant, that would raise the issue of whether the Authority by then was functus officio. It may well be that that was not the case, because the Authority’s decision had not been communicated to the Secretary’s delegate at the time when further information came into the possession of the Authority. However, it is not necessary for me to determine that issue.
Decision
39. My decision, therefore, is that the decision under review should be set aside, and in place of that decision the tribunal decides to recommend that the applicant should be approved under section 90 of the National Health Act1953 (Cth).
I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President D G Jarvis.Signed: .....................................................................................
Louise Staker AssociateDates of Hearing 27 and 28 October 2008
Date of Decision 28 October 2008
Counsel for the Applicant Mr T Cox
Solicitor for the Applicant DMAW Lawyers
Counsel for the Respondent Mr A Dillon
Solicitor for the Respondent Australian Government Solicitor
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