Kong & Ors v Minister for Health & Ageing & Ors

[2015] HCATrans 91

[2015] HCATrans 091

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S312 of 2014

B e t w e e n -

STEVEN LAP TAK KONG

First Applicant

BRADLEY MATTHEW COLEMAN

Second Applicant

PANNET POK

Third Applicant

and

MINISTER FOR HEALTH & AGEING

First Respondent

PATRICK MAHONY

Second Respondent

LIA MAHONY

Third Respondent

Application for special leave to appeal

HAYNE J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

FROM SYDNEY BY VIDEO LINK TO BRISBANE

ON FRIDAY, 17 APRIL 2015, AT 9.32 AM

Copyright in the High Court of Australia

____________________

MR N.J. WILLIAMS, SC:   May it please the Court, I appear with MR R.M. HENDERSON for the applicants.  (instructed by Meridian Lawyers)

MR P. MENZIES, QC:   If your Honours please, I appear with my learned friend, MS B.J. NOLAN for the first respondent.  (instructed by Australian Government Solicitor)

MR A.J. SULLIVAN, QC:   May it please the Court, I appear with my learned friend, MR J.S. EMMETT for the second and third respondents.  (instructed by Esplins Solicitors)

HAYNE J:   Yes, Mr Williams.

MR WILLIAMS:   The question raised by the application is whether a person whose economic or financial interests would be significantly impacted by a decision – impacts that go well beyond the effects on members of the public – and whose services were identified for consideration in the statutory decision‑making criteria is entitled to be heard before an adverse decision is made. 

The statutory structure is important and should be surveyed briefly.  It is to be found in the legislation for special leave application book behind tab 1.  Starting at page 108 of the print in section 90, section 90(1) confers a discretion whether to approve an application by a pharmacist to supply pharmaceutical benefits from a particular premises.  The discretion is subject to this section which, relevantly here, emphasises subsection (3A) and (3B). 

Under subsection (3A), an application must be referred to the Authority, the Australian Community Pharmacy Authority, and under (3B), over the page, at about point 8 on page 109, it can only be approved if the Authority has recommended grant.  The Authority can only recommend grant if the application complies with the relevant rules.  The Authority, under section 99K, is bound to comply with the rules determined by the Minister.

Turning then to section 90A, which is on page 111 of the print, the Minister’s discretionary power – and this is in the chapeau of subsection (1) of 90A – is only triggered where the rejection was based on non‑compliance with the rules.  So it is not triggered by a discretionary rejection by the Secretary emphasising the importance of the rules.  The power is then conditioned, and this is in subsection (2), on the Minister’s satisfaction as to two matters.  The first is that the status quo, as it were, the Secretary’s decision, will result in a community being left without reasonable access to pharmaceutical benefits and that it is in the public interest to approve.  Now, each of those were questions that had not arisen under the rules, the criteria, to which I will turn to in a moment but which are tightly defined.

Turning then to section 90D, and I notice it briefly on the way through, which starts on the foot of page 114, for the purpose of deciding whether to consider a request the Minister can require a pharmacist to provide further information or documents and, in (b), may give notice in writing to any other person advising the person of the request and inviting the person to make comments. 

This assumed some significance in the reasons of the primary judge – indeed, it was the first of the reasons that his Honour gave – and also in the majority.  In our submission, it is no more than a power within an Act which contains standard confidentiality provisions that makes express the capacity of the Minister to disclose material to third parties, and there is indeed nothing ‑ ‑ ‑

HAYNE J:   But is your submission one which would mean that the Act is to be administered on a basis that the Minister must give notice in writing to a particular class of persons inviting those persons to provide comments on, or information, at least to provide comments on the request within a specified period?

MR WILLIAMS:   Yes, that class being those who are entitled to be heard in respect of the application.

HAYNE J:   How does that fit then with the express provisions of 90D(1)(b)?

MR WILLIAMS:   Section 90D(1)(b) is a general power.  In one sense it can be seen as a Julius v Lord Bishop of Oxford provision.  Where the circumstances call for the exercise of the power then “may” becomes a “must”.  In the present case, where procedural fairness is required, then “may” becomes a “must”.  But it is, in our submission, no more than an express power, making it plain that there can be disclosure to third parties without breach of the Act’s confidentiality provisions.

GAGELER J:   Mr Williams, do you accept the correctness of the decision of the Full Court in Martin?

MR WILLIAMS:   In Martin?

GAGELER J:   Yes.

MR WILLIAMS:   Well, we did accept that below.  We accepted it for what it decided.  It was, of course, a decision relating to section 90.  We sought to distinguish it.  The statement of principle which is derived from Martin is in extraordinarily wide terms and we certainly do not accept that it is correct that a mere economic interest cannot attract a duty to afford procedural fairness.

GAGELER J:   So if you accept Martin as correct then you would be drawing a distinction between the power of the Secretary under section 90 and the power of the Minister under section 90A.

MR WILLIAMS:   We certainly do see those powers as different.  What we accept in the correctness of Martin is what it stood for, which is a narrow proposition, but of course at the time that Martin was decided there was no section 90A, which was only introduced some 12 years later.  It is not necessary to go into whether Martin was correct for the purposes of this application, which focuses upon section 90A.

HAYNE J:   Is that right?  Would you not need to read the Act as it presently stands as a coherent whole?  That I think is undeniable, and would it not lead to the oddity that the Secretary need not but the Minister must?  Is that not the kind of tension you get?

MR WILLIAMS:   They are different powers and it is not necessary, in order to decide a question about 90A, to make any definitive ruling about section 90.  Certainly the wide formulation in Martin is one we do not accept.  Martin turned on quite a narrow point in the end.  So we do not need to contend that Martin was wrongly decided.  Certainly the statement of principle, in our submission, is too widely stated and, indeed, it is inconsistent with the recent statements of the Court in Argos v Corbell in the analogous context of standing, which has been described in a number of decisions of the Court, most recently in Plaintiff S10, as providing an analogue with the principles governing the invocation of a duty to afford procedural fairness.

Before leaving section 90D, there is nothing in 90D to suggest that procedural fairness duties are being excluded, contrary to the conclusion of the primary judge, which was adopted by the majority.  If I can briefly refer to the rules, which are behind tab 2 in the folder, the effect of sections 9 and 10 of the rules is that the criteria are not discretionary.  It is 9(b) and 10 that are applicable.  The Authority must recommend grant if the application satisfies the criteria and must recommend refusal under section 10 if the application does not.

The key criteria here were found in clause 107 on page 9 of the print, in particular subclause 3(c), but the reference to “catchment areas” and proximity to approved premises that appear throughout clause 107 are in many, indeed most, of the criteria that are applicable.  We emphasise clause 108 in that respect because clause 108.2 – this is dealing with urban localities – also deals with distances from approved premises.  Clause 3 deals with catchment areas and numbers of approved premises.

One of the points made against us by our opponents and by the majority in the Full Court concerns the difficulty of administration of the provisions, if they are read as importing procedural fairness.  But in all of these provisions the number of pharmacists or the particular pharmacists who will be affected will be identified in the decision of the Secretary itself, because there will be no trigger for the Minister’s power unless there has been an adverse decision based on the rules, and the rules will identify the premises that are within the catchment areas that have led to the application failing the rules.

The scheme of the legislation at the section 90 level is that there are fixed defined criteria, compliance with which determines whether the application can succeed.  The second and third respondents here clearly failed the test and, therefore, the Authority had to recommend rejection and the Secretary had to refuse.  They failed because of the applicant’s pre‑existing approvals, and only because of those pre‑existing approvals.

Now, that is the position that pertained when the applicants purchased the existing pharmacies in Moree in November 2001.  Neither the applicants nor Mr Francis were made aware that on 9 September the second and third respondents had asked the Minister to exercise a personal discretion, still less that they had criticised the services being supplied in the existing pharmacies as untimely, unreliable and unaffordable.  When the Minister decided the request on 27 February 2012, she did so without seeking any response from Mr Francis or the applicants to the criticisms that had been levelled at their services or to the application more generally.

The Court has in Plaintiff S10 stated that the interests that tend to attract the protection of procedural fairness may be equated with interests that give standing at common law to seek public law remedies.  In doing so, the Court cited the passage from Justice Brennan, which is set out on page 70 of the book in the judgment of Justice Logan from about line 25, dealing with the presumption of the applicability of procedural fairness.  It applies to:

any statutory power which is apt to affect any interest possessed by an individual whether or not the interest amounts to a legal right or is a proprietary or financial interest –

which obviously we emphasise.  Then at about line 30:

If a power is apt to affect the interests of an individual in a way that is substantially different from the way in which it is apt to affect the interest of the public at large, the repository of the power will ordinarily be bound or entitled to have regard to the interests –

Then again at about lines 40 to 45:

the presumption applies to any statutory power the exercise of which is apt to affect the interests of an individual alone or apt to affect his interests in a manner which is substantially different from the manner in which its exercise is apt to affect the interests of the public.

In our submission, the present facts fell clearly within that formulation.  It is a formulation which finds echoes in the recent decision in Argos v Corbell.  The majority reached a conclusion adverse to the applicants by reasoning which is found really from page 56.  First, at paragraphs 90 to 95, and this is in the judgment of Justice Jacobson, it held that the position of a third party had to be analysed differently from that of an applicant, but of course Justice Brennan’s formulation, like that of the plurality of Plaintiff S10, was expressed generally and there is no reason to read it as inapplicable here.

Secondly, in paragraph 96, the majority classified the interests as a mere “economic or commercial interest”.  But that is not sufficient to render procedural fairness inapplicable as Kioa shows, and as recently affirmed in the parallel context in Argos, indeed references to the same effect in Bateman’s Bay in the standing context. 

Thirdly, at 98, the majority identified a supposed inconsistency with the statutory scheme.  Of course, here the applicants’ interest in asserting that the services were adequate was precisely co‑ordinate with the interests identified in the first lines at the top of page 57.  Thirdly, and this is in paragraph 100, the majority identified serious practical difficulties – difficulties, in our submission, that are illusory when one has regard to the decision‑making context in which the Minister will start with a decision which has refused on the basis of an application of the rules identifying the catchment area and the competing pharmacists.

GAGELER J:   Mr Williams, is it relevant to take into account that the statutory criteria for the Minister’s decision involve an evaluation of the effect on the community and on the public interest?

MR WILLIAMS:   Yes, it is.

GAGELER J:   How does that consideration get accommodated to your argument?

MR WILLIAMS:   It is accommodated because the question of the sufficiency of the service to the community focuses directly upon the services being provided by my clients.  It is a question of ‑ ‑ ‑

GAGELER J:   Would it follow from your argument that any member of the community whose interest in the receipt of pharmaceutical services, or pharmaceutical benefits, was significantly greater than that of other members of the community would also need to be afforded an opportunity to be heard?

MR WILLIAMS:   No, because that would be an interest which is not different from that of other members of the community.  It may be greater than in some quantitative capacity, but that would be a question of degree rather than kind.  The difference in the position of my client is one of kind rather than degree, as well as degree.  It is a different impact to any other member of the community and it is also a much greater impact and it is a significant impact.

GAGELER J:   The difference in kind being what, being a competitor, another pharmacist?

MR WILLIAMS:   Being the pharmacist that supplies the services that are under consideration when the Minister is exercising the discretion, being the pharmacist whose services are either adequate or not adequate - reasonably adequate, I think, might be the phrase, or not reasonably adequate.

HAYNE J:   It is reasonable access to – it is reasonable access to benefits, is it not?

MR WILLIAMS:   Yes.

HAYNE J:   That is a question which directs attention to the beneficiary of pharmaceutical benefits rather than the provider, is it not?

MR WILLIAMS:   They are inseparable.  There can be no receipt without a provider.  The question might be asked from the perspective of those who

look for pharmaceutical services, but the answer must involve a focus upon the provider because the two are, indeed, inseparable. 

HAYNE J:   It is confined, is it not, to provision of pharmaceutical benefits, that is, dispensing of PBS drugs?  We are not talking about general provision of pharmaceutical services, are we, but the dispensing of PBS drugs?

MR WILLIAMS:   That is so.  That is a question raised by the statute.

HAYNE J:   Yes.

MR WILLIAMS:   Of course, in this area, as the evidence showed, over 80 per cent of the prescription work was PBS work, so the economic effect, the financial effect, the commercial effect, was a very significant one, and it was quantified in evidence below.  The question, we submit, is of general importance at the narrow level because of the importance of the Pharmaceutical Benefit Scheme itself, but more generally because it calls into focus the criteria for deciding when procedural fairness is to be implied in cases of decisions affecting the many, but some in particular. 

The formulations upon which we rely from Kioa find their echoes in Argos v Corbell, but the extent to which the decisions of the Full Court remain good law after Argos v Corbell in light of the parallel between procedural fairness implication and standing is a question of general importance which, in our submission, the Court should decide.  Your Honours, I apprehend my time may have expired.

HAYNE J:   Thank you, Mr Williams.  Yes, Mr Menzies.

MR MENZIES:   If your Honours please.  The propositions that are raised by my learned friend are dealt with conveniently in the judgment of Justice Pagone at paragraphs 183 and 184 and I need to do no further than to draw your Honours’ attention to his Honour’s judgment because both of those paragraphs deal with the matters that my learned friend seeks to identify as being the error.  At 183 his Honour said this:

The interest of the appellant in this case is the authorisation to supply pharmaceutical benefits from two premises in Moree.  That interest is unaffected by the grant of approval to the Mahonys, or to any other person, except to the extent that the supply of pharmaceutical benefits by others might have an economic impact upon the profits which may flow to the appellants directly from the supply of pharmaceutical benefits or indirectly from the supply of other products from their premises.  The protection of their commercial interests is not within the scope and purpose of the Act . . . The Full Court in Martin observed that the relevant provisions were not concerned with minimising competition in the pharmaceutical industry but with reducing the Commonwealth’s financial burden in providing pharmaceutical benefits while maintaining an acceptable level of community service.

I just pause there.  His Honour then went on to deal with the proposition that my learned friend raises, that is to say that Martin was before section 90A, everything has changed and therefore one can safely put Martin to one side.  That is dealt with specifically by his Honour and, in our respectful submission, perfectly correctly -

The introduction of s 90A has not altered the correctness of that view, nor is s 90A itself directed to promoting, limiting or in any way concerned with, the competitive supply of pharmaceutical benefits as between competitors.  The purpose of s 90A can be seen from the matters the Minister is to be satisfied about before making a decision under s 90A(2), namely, whether the adverse decision by the Secretary under s 90 resulted in a community being left without reasonable access to pharmaceutical benefits supplied by an approved pharmacist and that it is in the public interest to approve a pharmacist seeking approval.

I pause again.  That harks back to the proposition that the scheme introduced by section 90 was not to limit competition among pharmacies but to lessen the burden on the State of the provision of pharmaceutical benefits.  Section 90A effectively deals with what might be unforeseen circumstances if the regime was applied strictly, that is to say, if the rules were strictly complied with, if that caused a community to be left without reasonable access, coupled with the proposition that the public interest must be taken into account, then the strict effect of the rules is ameliorated.  That is what section 90A does.  It does not affect the underlying scheme, purpose or object of the statute.  He goes on -

The power conferred by s 90A(2) is designed to further the objects of the scheme in the Act by ensuring reasonable access to pharmaceutical benefits in the public interest and operates where the scheme is found to be inadequate by reference to the only two criteria stated in the provision:  neither is concerned with the economic or commercial interest of an existing approved pharmacist whose economic interest might be affected by approval of another pharmacist within the same catchment area.

Paragraph 184 he deals with the other proposition that my learned friend asserts which is, to paraphrase him, that his client had something akin to a statutory monopoly:

The rights conferred upon an approved pharmacist ‑ ‑ ‑

HAYNE J:   We are, I think, generally familiar with what Justice Pagone and the other members of the Full Court wrote, Mr Menzies.  I am not sure that it is necessary to read it extensively.  What is it you say we should take out of paragraph 184 that presently is particularly pertinent?

MR MENZIES:   What one takes out of 184 is that the rights – there was no monopoly, preferred position, pole position for the pharmacist.  That pharmacist continues in the position that pharmacist always was in.  The fact that that pharmacist may be subject to some competitive pressure is not a relevant consideration.  Those are our submissions, if your Honours please.

HAYNE J:   Thank you, Mr Menzies.  Mr Sullivan.

MR SULLIVAN:   Your Honours, acceptance of my learned friend Mr Williams’ propositions does involve the anomalies identified by your Honour the presiding Judge.  One needs to consider that in this regime under sections 90 to 90B there are three decision involved, or potentially three.  First, the decision by the Secretary which, on the authority of Martin’s Case, would be one to which the rules of procedural fairness did not apply.  Secondly, a decision by the Minister once the request is made whether to consider that request, which is expressly by the statute not the subject of procedural fairness. 

My learned friend would have a construction of this legislative regime that although the first two decisions are not the subject of procedural fairness, the third which, in our respectful submission, is a fortiori because it is a personal, non‑compellable, public interest power by a senior official standing at the peak of the administration of the statute, to use the language of the plurality in S10, would be the subject of a right of procedural fairness. 

In our respectful submission, consistently with the principles that your Honour the presiding Judge indicated and consistently, indeed, with the principles stated as recently as a couple of days ago by the Court in Cunneen’s Case, one needs to strive for an harmonious interpretation of this statute and of these provisions.  That is what the majority judgment does and the presiding judge’s judgment does, in our respectful submission, in the decisions below.

The difficulty for my learned friend’s case, your Honours, is that he says that here is construction, we will not promote any serious practical difficulties and they are illusory.  That is not the case.  The Minister here

has a personal non‑delegable power – that is section 6.  She must exercise it.  She must exercise it or he must exercise it in a finite period of time which is not differentiated and cannot be extended – that is three months.

The number of people – the number of approved persons or holders who may need to be given a hearing, if my learned friend’s contentions are correct, may be hundreds because under the various items - although in an urban area, for instance, there could be hundreds of approved pharmacies within a short distance - my learned friend’s contention would require a situation where the Minister, exercising a personal discretion within a finite period of time, would have to notify and hear from in many cases hundreds of people.

That is the personal severe practical difficulties which were alluded to, correctly, in our respectful submission, by Justice Jacobson in the Full Court.  Your Honours, subject to anything your Honours wish to ask of me in addition to what we say in our written submissions, that is all we wish to say orally.

HAYNE J:   Thank you, Mr Sullivan.  Yes, Mr Williams.

MR WILLIAMS:   Your Honours, there is no anomaly in the different position of sections 90 and 90A.  Section 90 deals with the decision of the Secretary based on the recommendation of the Authority following the application of strict mechanical rules of the kind that your Honours have seen in the determination.  By contrast, section 90A starts by asking about the adequacy of the existing services, that is, those supplied by the existing pharmacists, and that is a critical point of distinction between the two, if one be needed.

Secondly, to respond briefly to Mr Sullivan’s point about the difficulty, your Honours will have seen in item 108 that there are references to proximity of the pharmacy to other approved pharmacies and there are references to the catchment.  By the time the Secretary makes a decision, the catchment will have been defined, the proximate pharmacists will have been defined and the Department, of course, like all departments, has databases by which the approved pharmacists within the catchment can be identified in the space of minutes if not seconds.  So the difficulty is, in our submission, indeed, illusory.  Unless there are matters your Honours wish to raise, those are our submissions.

HAYNE J:   Thank you, Mr Williams.

There are insufficient prospects of the applicant disturbing the actual orders made by the Full Court of the Federal Court of Appeal in this matter to warrant a grant of special leave to appeal.  Therefore this is not a convenient vehicle in which to consider any more general question about the relationship between questions of standing and questions of procedural fairness.  Special leave to appeal is refused.

MR MENZIES:   We would seek costs, your Honour.

HAYNE J:   Yes, there was some issue about costs, was there not, or is that ‑ ‑ ‑

MR MENZIES:   Only if leave were granted, your Honour.

HAYNE J:   Yes, with costs.

AT 10.04 AM THE MATTER WAS CONCLUDED