Lynch v Minister for Human Services and Health
[1995] FCA 1084
•15 DECEMBER 1995
CATCHWORDS
ADMINISTRATIVE LAW - decision of delegate of Minister in respect of application for approval of premises as an accredited pathology laboratory pursuant to s.23DN(1) Health Insurance Act 1973 (Cth) ("the Act") -whether decision was an approval or a refusal to approve - whether the Administrative Appeals Tribunal had jurisdiction to review decision - effect of principles to be applied in the exercise of the decision-making power - effect of principle that premises may not be approved unless first approved by an inspection agency - whether invalid conferral of decision-making power on inspection agency - whether invalid limitation on Minister's power and function.
Administrative Appeals Tribunal Act 1975 (Cth) - s.43
Health Insurance Act 1973 (Cth) - s.23DN, s.23DNA, s.23DO(5)(a)
Determination of Principles for the Approval of Premises as an Accredited Pathology Laboratory (made 26 November 1987, Commonwealth Government Gazette, 9 December 1987, as amended)
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Barton v Cromer Trading Pty Ltd (1984) 3 FCR 1995
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Limited (1979) 41 FCR 338
Director-General of Social Services v Chaney (1980) 31 ALR 571
Drake v Minister for Immigration & Ethnic Affairs (1979) 24 ALR 577
Hip Kwok Ma v Minister for Immigration & Ethnic Affairs (unreported, 13 October 1995, Davies J)
Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589
Preci Services Pty Ltd v Minister for Health, Housing and Community Services (1992) 36 FCR 395
Re Coldham; Ex parte Brideson (1989) 166 CLR 338
Re Dennis and the Secretary, Department of Transport (1979) 2 ALD 255
Re Hewitt Secretary, Department of Transport (1982) 4 ALD 547
Re Shortis and Secretary, Department of Community Services and Health (1991) 13 AAR 544
Riddell v Secretary, Department of Social Security (1993) 42 FCR 443
Smoker v Pharmacy Restructuring Authority (1994) 53 FCR 287
Water Conservation and Irrigation Commission v Browning (1947) 74 CLR 492
DR THOMAS BRENDAN LYNCH v MINISTER FOR HUMAN SERVICES AND HEALTH (formerly THE MINISTER FOR HEALTH, HOUSING, LOCAL GOVERNMENT AND COMMUNITY SERVICES
No G 465 of 1995
Davies, Moore & Lehane JJ
15 December 1995
Sydney
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No G 465 of 1995
)
GENERAL DIVISION )
On appeal from the General Administrative Division of the Administrative Appeals Tribunal
BETWEEN: DR THOMAS BRENDAN LYNCH
Applicant
AND: MINISTER FOR HUMAN SERVICES AND HEALTH formerly THE MINISTER FOR HEALTH, HOUSING, LOCAL GOVERNMENT AND COMMUNITY SERVICES
Respondent
Coram: Davies, Moore & Lehane JJ.
Date: 15 December 1995
Place: Sydney
MINUTES OF ORDER
THE COURT DECLARES THAT:
The Tribunal has jurisdiction to hear and determine the application for review lodged by the applicant.
THE COURT ORDERS THAT:
The matter be remitted to the Tribunal for the completion of the hearing and determination of the matter.
Costs be reserved.
THE COURT DIRECTS THAT:
The respondent file and serve written submissions as to costs by 19 January 1996.
The applicant file and serve written submissions in response by 2 February 1996.
Any submissions in reply to be filed and served by 9 February 1996.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No G 465 of 1995
)
GENERAL DIVISION )
On appeal from the General Administrative Division of the Administrative Appeals Tribunal
BETWEEN: DR THOMAS BRENDAN LYNCH
Applicant
AND: MINISTER FOR HUMAN SERVICES AND HEALTH formerly THE MINISTER FOR HEALTH, HOUSING, LOCAL GOVERNMENT AND COMMUNITY SERVICES
Respondent
Coram: Davies, Moore & Lehane JJ.
Date: 15 December 1995
Place: Sydney
REASONS FOR JUDGMENT
Davies & Lehane JJ: Section 23DN of the Health Insurance Act 1973 (Cth) ("the Act") provides inter alia:-
"23DN. (1) Where a person ... makes an application, in writing in the approved form, to the Minister for the approval of premises as an accredited pathology laboratory, the Minister may, in writing:
(a)approve in principle the premises as an accredited pathology laboratory; or
(b)refuse to approve the premises as an accredited pathology laboratory.
...
(2A)An approval in principle under subsection (1), and an approval under subsection (2), of premises as an accredited pathology laboratory must specify:
(a)the kind of pathology services in respect of which the premises are approved for the purposes of this Act; and
(b)the category of accreditation allocated to the premises; and
(c)the period (not exceeding 3 years) for which the approval is to have effect."
The review by the Administrative Appeals Tribunal of such decisions of the Minister is provided for by s.23DO(5) of the Act which reads:-
"(5)Applications may be made to the Administrative Appeals Tribunal for review of:
(a)a decision by the Minister, under subsection 23DN (1), approving in principle or refusing to approve premises as an accredited pathology laboratory for the purposes of this Act;
..."
In the operation of these provisions, an approval in principle of premises as an accredited pathology laboratory under s.23DN(1) is an approval in principle also for the purposes of s.23DO(5)(a), notwithstanding that the applicant for approval may be dissatisfied with an aspect of the matters specified under s.23DN(2A). Section 27 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") provides that, where an enactment provides that an application may be made to the Administrative Appeals Tribunal ("the Tribunal") for a review of a decision, the application may be made by or on behalf of any person or persons whose interests are affected by the decision. An applicant for approval who is dissatisfied with a matter specified under s.23DN(2A) of the Act is such a person.
Although s.23DO(5)(a) does not refer in terms to the specification of matters under s.23DN(2A), the reference to approving in principle of premises or refusing to
approve of premises as an accredited pathology laboratory includes a reference to matters dealt with under s.23DN(2A), for the specification of those matters is an integral part of the giving of an approval in principle. Section 43(1) of the AAT Act provides that, for the purposes of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision. Such powers and discretions include the specification of the matters referred to in s.23DN(2A) of the Act.
Similar issues were discussed in Hip Kwok Ma v Minister for Immigration & Ethnic Affairs (unreported, 13 October 1995, Davies J), where the Court held that, for the purpose of the review provisions in the Migration Act 1958 (Cth), the grant of a visa subject to conditions constituted the grant of and not a refusal to grant a visa. In that case, as the Migration Act limited review to the circumstance where a visa had been refused, review was held not to be available.
In the present case, on 5 December 1991, a delegate of the Minister approved in principle, as an accredited pathology laboratory, premises at 1-13 East Street, Rockhampton, Queensland, which were occupied by the applicant, Dr T.B. Lynch, a pathologist. The approval specified seven kinds of pathology services in respect of which the premises were approved, but it omitted histopathology, a pathology service for which Dr Lynch had sought approval. On the following day, a formal instrument of approval was signed by a delegate of the Minister. It was to the same effect as the approval in principle.
Dr Lynch applied to the Tribunal for a review of the decision of 5 December 1991. On 31 May 1995, the Tribunal declared that it did not have jurisdiction to hear and determine the matter.
The Tribunal considered that, as there was not before the Minister a report by an inspection agency that the subject premises complied with the standards referrable to histopathology, the Minister's delegate did not enter upon a decision-making process which would lead to an approval or a refusal to approve. We are satisfied, however, that the delegate of the Minister did enter upon a decision-making process and made a decision which was reviewable under s.23DO(5)(a). On 5 December 1991, a delegate of the Minister approved the premises in principle as an accredited pathology laboratory. Dr Lynch, whose interests were affected by that decision, applied to the Tribunal for review, as he was entitled to do, being a person affected by the decision. The Tribunal therefore had jurisdiction to hear and determine the matter.
Section 23DNA, which provides for the promulgation of principles to be applied in the exercise of the s.23DN discretion, provides, inter alia:-
"23 DNA (1) The Minister may, in writing, determine the principles that are to be applied in the exercise of his or her powers under subsection 23DN(1).
(2) Without limiting the generality of subsection (1), the principles may provide for the allocation of different categories of accreditation as a pathology laboratory to different premises in accordance with the criteria set out in the principles."
Section 23DN(3) provides:-
"(3) The Minister shall, in exercising the Minister's powers under this section at a particular time, apply the principles determined under section 23DNA that are in force at that time."
The Minister promulgated such principles on 26 November 1987. These principles were published in the Government Gazette on 9 December 1987. Amendments to the principles were made on 26 July 1989 and were published in the Gazette on 29 July 1989. Part IV of the principles provided:-
"4.1 An inspection agency shall be approved to inspect premises the subject of an application for approval as an accredited pathology laboratory if there is in existence an agreement between it and the Commonwealth for the inspection of premises for the purpose of approval as an accredited pathology laboratory.
4.2 Premises shall not be approved as an accredited pathology laboratory unless the applicant has, at the time that the application was made, provided evidence that -
(a)the premises have been inspected by an agency which has reported that the premises comply with the Standards; or
(b)the premises are at the time that the application is made, registered with the National Association of Testing Authorities and the Royal College of Pathologists of Australasia, provided that -
(i)the premises were registered by reason of complying with the Standards; and
(ii)the Minister is satisfied that the premises have, since being registered, complied with the Standards." (emphasis added)
The words "shall not" and "unless" in clause 4.2 of the principles were inserted by amendments made in July 1989.
A body called the National Association of Testing Authorities ("NATA") has been approved as the inspection agency. NATA inspected Dr Lynch's premises and operations. The agency reported favourably, save that it was not satisfied that the operations proposed by Dr Lynch with respect to histopathology complied with the
standards for pathology laboratories specified by the National Pathology Accreditation Advisory Council, which were standards to which the principles referred.
However, the Minister is not empowered by s.23DNA of the Act to confer a decision-making role upon an inspection agency. The primary decision-making power is conferred upon the Minister, which includes his delegates. The Minister and his delegates are the primary decision-makers and, in respect of all relevant decisions of the Minister and his delegates, the Act provides for review by the Tribunal, which under the AAT Act has the power to review decisions on their merits and to exercise the powers and discretions of the primary decision-maker. Those are the authorities on which Parliament has reposed the decision-making powers and functions. Section 23DNA (1) provides for the promulgation of principles to be applied in the exercise of the Minister's powers, and therefore by the Tribunal, not for the conferral of a decision-making power upon another body.
Had cl 4.2(a) of the principles merely provided a procedure whereby the Minister and his delegates could be advised with respect to relevant matters, there would have been no problem with it. The Minister is entitled to take advice, as other clauses of the principles, such as cl 7.4, contemplate. But cl 4.2(a) of the principles purports to have a determining effect.
A decision-making power is conferred when, inter alia, the exercise of a function or power serves as an "ultimate and operative determination" which affects legal rights and obligations: Australian Broadcasting Tribunal v Bond (1990) 170 CLR
321 at 335-9, or when, to use the words of Deane J in Director-General of Social Services v Chaney (1980) 31 ALR 571 at 590, there is "a determination effectively resolving an actual substantive issue." If the formation by NATA of a view unfavourable to an applicant's case determines the application, as cl 4.2(a) provides, then the inspection agency has a decision-making role. Its adverse finding operates as the final and operative decision determining the application.
The conferral of such a decision-making role upon the inspection agency is not authorised by s.23DNA(1). The Act does not enable the Minister to repose in an inspection agency a power to refuse applications for the approval of premises or (which is substantially the same thing) a power, by the terms of its report, to compel the Minister to refuse such an application. It is also inconsistent with the Act that any such decision of an inspection agency should not be reviewable by the Tribunal or should effectively exclude the Minister's decision from the Tribunal's review. Cf. Riddell v Secretary, Department of Social Security (1993) 42 FCR 443.
This Court should declare that the Tribunal has jurisdiction to hear and determine the application for review lodged by Dr Thomas Brendan Lynch. The Court should remit the matter to the Tribunal to complete the hearing and determination of the matter. As the merits of the matter have been heard by the Tribunal over a number of days, the Tribunal should continue to perform its function as previously constituted, if that is practical. In general the respondent should pay the costs of the application to the Court. However, costs will be reserved as the respondent wishes to put submissions that certain costs were unnecessarily incurred.
The issue will be dealt with by way of written submissions without oral hearing. The respondent should serve and file submissions by 19 January 1996. The applicant should respond by 2 February 1996. Submissions in reply should be filed and served by 9 February 1996.
In the further hearing of the matter, the Tribunal will be entitled to have regard to the report of NATA as evidence which is before it. However, the report will not bind the Tribunal which will have the function and duty of arriving at "the correct or preferable" decision: Drake v Minister for Immigration & Ethnic Affairs (1979) 24 ALR 577 at 589.
I certify that this and the 7 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Justices Davies & Lehane.
Associate:
Date: 15 December 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 465 of 1995
)
GENERAL DIVISION )
On appeal from the General Administrative Division of the Administrative Appeals Tribunal
BETWEEN: DR THOMAS BRENDAN LYNCH
Applicant
AND: MINISTER FOR HUMAN SERVICES
AND HEALTH formerly THE MINISTER
FOR HEALTH, HOUSING, LOCAL
GOVERNMENT AND COMMUNITY
SERVICES
Respondent
Coram: Davies, Moore & Lehane JJ
Date: 15 December 1995
Place: Sydney
REASONS FOR JUDGMENT
MOORE J: This is an appeal by Dr Thomas Lynch under s44 of the Administrative Appeals Tribunal Act 1975 (AAT Act) from a decision of the Administrative Appeals Tribunal. The decision of the Tribunal was that it had no jurisdiction to hear and determine an application by Dr Lynch seeking the review of a decision made on 5 December 1991 by a delegate of the Minister for Health Housing and Community Services under s23DN(1) of the Health Insurance Act 1973. Section 23DN concerns the approval of premises as an accredited pathology laboratory.
It was common ground in this appeal that the decision of the Tribunal was wrong in that it was accepted by the parties, with one qualification, that the Tribunal did have jurisdiction to hear and determine the application. However what was in issue, and is the matter of substance this Full Court should address, is the manner in which the power arising under 23DN(1) of the Health Insurance Act 1973 might be exercised in the circumstances. The resolution of that issue would determine the manner in which the power might be exercised by the Tribunal as the Tribunal is, in the review, to exercise the power as if exercised by the Minister or a delegate: see s43 of the AAT Act. The resolution of that issue would also determine whether any purpose would be served by remitting the matter to the Tribunal to further consider the application.
Factual Background
The relevant facts to this appeal are not in issue and concern the consideration of an application made by the applicant for the approval of premises as an accredited pathology laboratory. The history of the matter is described in detail by the Tribunal in its reasons for decision and it is unnecessary to repeat all of it. The following is, in the main, derived from the Tribunal's reasons.
The applicant is a pathologist who operates a pathology laboratory in premises in Rockhampton. He first applied for approval of the premises under the Health Insurance Act 1973 in November 1986 which resulted in the grant of approval operative from August 1987 and expiring on 31 July 1988. This occurred at a time when the Commonwealth introduced a new legislative regime for the accreditation of pathologists. A further application was made in June 1988 which resulted in approval operative from August 1988 and expiring on 31 July 1989. On 9 and 10 March 1989 an initial assessment was made of the laboratory by the National Association of Testing Authorities Australia (NATA) which has been given a central role in the operation of the scheme for considering applications for approval. That scheme will be discussed shortly. The initial report resulting from that assessment and dated 17 April 1989 was critical of the operation of the laboratory in several respects. It commenced with a summary in which it was said "(a) recommendation for registration cannot be made for the following reasons." Twelve reasons were then enumerated. Further applications were made and approvals given. NATA undertook a further inspection in December 1990 and provided a report in January 1991.
The application for approval of the premises that resulted in the decision of the delegate of the Minister of 5 December 1991 was made on 7 November 1991. The delegate's decision read:
"COMMONWEALTH OF AUSTRALIA
HEALTH INSURANCE ACT 1973
APPROVAL OF PREMISES AS AN ACCREDITED PATHOLOGY LABORATORY
I,BRIAN JOHN CANDLER, Delegate of the Minister of State for Health, Housing and Community Services, pursuant to sub-section 23DN(1) of the Health Insurance Act 1973, hereby APPROVE the premises, or each of the premises, specified in the first Schedule as an Accredited Pathology Laboratory for the
purposes of the Act and vary the approval previously granted in respect of each of the premises listed in the second Schedule in accordance with that Schedule.
DATED THIS fifth DAY OF DECEMBER 1991
DELEGATE OF THE MINISTER OF STATE FOR HEALTH, HOUSING AND COMMUNITY SERVICES"
While the decision was to approve the premises as a pathology laboratory, the schedule only identified seven classes of pathological services for which the approval was given. Significantly the schedule did not include histopathology as one of the services that might be provided. It was a service for which earlier approvals had been given. The manner in which histopathology services had been provided was criticised in NATA's report of 30 January 1991.
The Legislative Framework
One purpose of the Health Insurance Act 1973 is to authorise the Commonwealth to pay for certain medical services, including pathology services, provided to members of the Australian community. Payment is not made for pathological services unless provided by an accredited pathological laboratory: see s16A(2). Division 4 of Part IIA of the Health Insurance Act 1973 provides for a system of accreditation. That system has already been considered by a Full Court of this Court in another context: see Preci Services Pty Ltd v Minister for Health, Housing and Community Services (1992) 36 FCR 395.
Division 4 empowers the Minister, or his delegate: see s131, to approve of premises as an accredited pathology laboratory: see s23DN. To that end, the Minister may determine principles that are to be applied in exercising the power arising under s23DN; see s23DNA, and if principles are determined they must be applied: see s23DN(3). Section 23DO(5)(a) enables application to be made to the Tribunal for review of a decision approving or refusing to approve premises as an accredited pathology laboratory. In the present case the applicant sought a review by the Tribunal of the decision not to approve histopathology as one of the pathology services to be provided at the premises.
The terms of the legislative provisions I have just referred to in outline are of significance and should be set out in full. Section 23DN relevantly provides:
"(1)Where a person (in this section called the "applicant") makes an application, in writing in the approved form, to the Minister for the approval of premises as an accredited pathology laboratory, the Minister may, in writing:
(a)approve in principle the premises as an accredited pathology laboratory; or
(b)refuse to approve the premises as an accredited pathology laboratory.
(2)...
(2A)...
(3)The Minister shall, in exercising the Minister's powers under this section at a particular time, apply the principles determined under section 23DNA that are in force at that time.
(4)...
(5)Where the Minister makes a decision under subsection (1) approving in principle or refusing to approve premises as an accredited pathology laboratory, the Minister shall give notice in writing of the decision to the person who applied for the approval.
(6)Where the Minister varies or revokes an approval given under subsection (1) in relation to premises, the Minister shall give notice in writing of the variation or revocation to the proprietor of the premises.
(7)A notice under subsection (5) or (6) shall include a statement to that effect that, subject to the Administrative Appeals Tribunal Act 1975, application may be made to the Administrative Appeals Tribunal for review of the decision to which the notice relates by or on behalf of a person whose interests are affected by the decision.
(8)..."
Section 23DNA provides:
"(1)The Minister may, in writing, determine the principles that are to be applied in the exercise of his or her powers under subsection 23DN(1).
(2)Without limiting the generality of subsection (1), the principles may provide for the allocation of different categories of accreditation as a pathology laboratory to different premises in accordance with the criteria set out in the principles.
(3)The criteria referred to in subsection (2) may include, but are not limited to, criteria relating to:
(a)the location of the premises; or
(b)the range of pathology services to be performed on the premises; or
(c)the extent to which pathology services performed on the premises are to be performed under the direction, control or supervision of a pathologist, scientist, senior scientist, medical practitioner or any other person having specified qualifications or skills."
Sub-section (4) defines pathologist, scientist and senior scientist.
Section 23DO(5) provides:
"(5)Applications may be made to the Administrative Appeals Tribunal for review of:
(a)a decision by the Minister, under subsection 23DN (1), approving or refusing to approve premises as an accredited pathology laboratory for the purposes of this Act;
(b)a decision by the Minister varying or revoking an approval given under subsection 23DN(1);
(c)...
(d)...
(e)...
The Principles
The power conferred by s23DNA to determine principles has been exercised by the Minister and the principles, and variations to them, have been published in the Commonwealth of Australia Gazette. The result is an instrument setting out matters relevant to the exercise of the power to determine an application for accreditation of premises. I will shortly refer to some of the principles in detail. However described generally, they are constituted by Part 1 which defines certain terms and describes categories of laboratory by reference to the nature of the supervision of the staff; Part 2 which sets out principles of approval expressed in terms of when premises are not to be approved; Part 3 which deals with the operation of state law concerning accreditation of pathology laboratories; Part 4 which is entitled "Inspection by an Agency" but deals not only with inspection but with an additional principle expressed in terms of when premises are not to be approved; Part 5 which deals with approval when an inspection is pending; Part 6 which deals with categories of accreditation; and Part 7 which deals with miscellaneous matters.
The critical provisions of Parts 2, 4 and 7 provide:
"Part 2 - Principles of Approval
2.1Premises shall not be approved as an accredited pathology laboratory unless -
(a)the premises are situated in a relevant State and are the subject of an application for approval in accordance with Part 3;
(b)the requirements of Part 4 have been satisfied; or
(c)the premises are eligible to be approved in accordance with Part 5.
...
2.2Premises shall not be approved as an accredited pathology laboratory in accordance with Parts 3 or 4 unless the Minister is satisfied that the premises to which the application relates are operated to comply with the Standards, and in particular that there is, or are, in respect of the premises -
There follows ten paragraphs identifying criteria that must be satisfied.
Part 4 - Inspection by an Agency
4.1An inspection agency shall be approved to inspect premises the subject of an application for approval as an accredited pathology laboratory if there is in existence an agreement between it and the Commonwealth for the inspection of premises for the purpose of approval as an accredited pathology laboratory.
4.2Premises shall not be approved as an accredited pathology laboratory unless the applicant has, at the time that the application was made, provided evidence that -
(a)the premises have been inspected by an agency, which has reported that the premises comply with the Standards; or
(b)the premises are at the time that the application is made, registered with the National Association of Testing Authorities and the Royal College of Pathologists of Australasia, provided that -
(i)the premises were registered by reason of complying with the Standards; and
(ii)the Minister is satisfied that the premises have, since being registered, complied with the Standards."
Standards are defined in Part 1 in the following way:
""Standards" means the standards adopted by the National Pathology Accreditation Advisory Council and as in force on the date on which this determination is made.
"The Council" is also defined:
""National Pathology Accreditation Advisory Council" means the body of that name established by Order made pursuant to sub-section 9(1) of the National Health Act 1953;"
It can be seen that clauses 2.1 and 2.2 are expressed in terms of "premises shall not be approved ... unless". The language of the prefatory words of clause 2.1 is clear and directs that approval not be granted unless one of the conditions identified in paragraphs (a), (b) and (c) of the clause is satisfied. The condition in paragraph (b) is that the requirements of Part 4 have been satisfied. This condition is in language that is not entirely clear, as Part 4 does not simply identify requirements to be met but, in clause 4.2 and independently of clause 2.1, directs that approval not be given if one of the requirements specified in clause 4.2(a) or (b) are not met. However the intention of clause 2.1 (b) is to create, as a condition precedent to approval, satisfaction of the requirements in clause 4.2 unless clause 2.1(a) or 2.1(c) apply.
Part 4 firstly deals with inspection. Clause 4.1 provides for the Commonwealth to enter an agreement with an agency to undertake the inspection of pathology laboratories for which an application for approval has been made. An agreement exists between NATA and the Commonwealth for NATA to undertake such inspections. As just discussed clause 4.2 identifies two conditions precedent to approval. Approval may be given if either are satisfied and the principles are otherwise complied with. The first, in paragraph (a) of clause 4.2, is that the agency has inspected the premises and has reported that the premises comply with the Standards. It is to be noted that clause 4.2 is drafted in a way that requires evidence to be provided, at the time an application is made, of inspection and a favourable report. It thus assumes an inspection and report prior to the making of the application. However clause 4.2 speaks of "(the) inspect(ion) (of) premises the subject of an application" which assumes that an application has been made prior to inspection. However nothing presently turns on this anomaly.
The second condition, in paragraph (b) of clause 4.2 is that the premises are registered with NATA and the Royal College of Pathologists and were registered because they comply with the Standards. Paragraph (b) requires, in sub-paragraph (ii), that the Minister must be satisfied that there has been compliance with the Standards. This is to be contrasted with paragraph (a) where the condition precedent to approval is inspection by the agency and a report that the premises comply with the Standards. Paragraph (a), unlike paragraph (b), operates on the opinion of the agency as to compliance and it is that opinion that determines whether the condition precedent is satisfied. The language of paragraph (a) is relatively clear and, in my opinion, bears only the construction that approval should not be given if the agency reports that the premises do not comply with the Standards.
Thus the principles required the applicant to demonstrate that NATA held the opinion that the Standards were complied with after inspection of the premises. If he could not, the combined effect of clauses 4.2(a) and 2.1(b) would be that approval would not be granted though plainly the delegate took the view that approval could be granted save in relation to the provision of a service that, as provided, did not comply with the Standards in NATA's opinion. The refusal to approve would depend, not on the opinion of the Minister as to compliance with the Standards, but the opinion of NATA. The decision of the Minister would, if the opinion was not favourable, be dictated by that opinion.
The application to the Tribunal and the Tribunal's decision
The applicant applied to the Tribunal for a review of the decision of the delegate not to include histopathology as one of the pathology services to which the approval related. However the delegate had decided to approve the premises though the approval was qualified. His decision was not to refuse to approve. Section 23DO(5)(a) confers a right to seek a review of a decision to approve or a decision to refuse to approve. The better view is that in the circumstances the applicant should have sought a review of the decision to approve with a view to demonstrating that the approval should not have been qualified: see Re Dennis and Secretary, Department of Transport (1979) 2 ALD 255 and Re Hewitt Secretary, Department of Transport (1982) 4 ALD 547.
The decision of the Tribunal and its reasons are set out in the concluding paragraphs of its published reasons:
The Tribunal has considered the contention of the respondent, the argument in support of it and the submissions raised on behalf of the parties to this application, and is of the opinion that there is merit in the contention, the arguments and the submissions so placed before it on behalf of the respondent ... which Standards are those identified in the Principles as determined by the Minister. As with other parts of the Principles and the Principles themselves, the identification of the Standards can be altered or varied at the discretion of the Minister.
The Tribunal does not accept that the statute and the Principles are to be construed as sought on behalf of the applicant. More aptly, the question arises as to whether there is here a delegation of power or rather the Minister determining the procedure to be adopted preparatory to his exercising the discretion to grant or withhold approval. There is not, as we see it, a delegation of the power to approve or not approve. The Minister requires a report by NAATA as to compliance with the standards before ... The decision-maker has not divested himself of the statutory power to make the decision (see Birkdale District Electric Supply Co Limited v Corporation of Southport (1926) AC 353 at 364. The Minister may approve accreditation or not. He requires information as to compliance with standards, decided upon himself. He has there exercised a power vested in him by Parliament.
It is our opinion for the reasons set forth herein that there was not before the Minister a report as to the subject premises complying with the Standards as referable to histopathology, and in accord with the guidelines determined by the Minister, he did not enter upon a decision-making process which would lead to notice of approval or a refusal to approve being given (s. 23DN(5)). In the event of notice of a decision to refuse the application then being given, application for review would have been open to the applicant (s. 23DN(7)).
The Tribunal is of the opinion that it does not have jurisdiction to hear and determine this matter."
These reasons confuse questions of jurisdiction and power. Plainly the delegate of the Minister made a decision and did so purportedly in conformity with the principles. If the principles dictated the result decided by the delegate,it would dictate the result in the review by the Tribunal: see Re Shortis and Secretary, Department of Community Services and Health (1991) 13 AAR 544. Notwithstanding that the outcome of the review might be dictated by the principles, the Tribunal nonetheless had jurisdiction to hear and determine the application for review.
The validity of the principles
As already discussed the scheme embodied in the principles, as applied in the present case, is directed to ensuring that premises are accredited as a pathology laboratory only if they comply with standards determined by the National Pathology Accreditation Advisory Council. Section 23DN confers on the Minister a discretionary power to approve or refuse to approve of premises as an accredited pathology laboratory. Viewed in isolation, s23DN does not identify criteria by reference to which the discretionary power is to be exercised and it would be necessary for it to be exercised in conformity with the scope, purpose and objects of the Health Insurance Act 1973: see Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J, see also: Re Coldham & Ors; Ex parte Brideson (1989) 166 CLR 338 at 347. Plainly, approval based on compliance with the Standards would accord with the objects of the Health Insurance Act 1973 of, inter alia, enabling the Commonwealth to meet the cost or partial cost of providing specified health services to members of the Australian community. Requiring compliance with those standards would be a means of maintaining the quality of those health services. However consideration has to be given not only to s23DN as a whole but s23DN(3) in particular, together s23DNA.
I have already discussed the combined effect of clauses 2.1 and 4.2. The critical question is whether ss23DN(3) and 23DNA authorise the formulation of principles which can have the effect, and in the present case do have the effect, of dictating that the delegate of the Minister either refuse the application because the opinion of NATA was that there has not been compliance with the Standards or grant approval subject to limitations. Thus, the issue is whether the Health Insurance Act 1973 authorises the making of principles that have the effect of precluding the exercise of the discretionary power in s23DN(1).
Section 23DN(3) authorises the determination of "principles". However the word "principles" in ss23DN(3) and 23DNA has no obvious single meaning. Its meaning was considered by the Full Court in Preci Services (supra) at 404:
"The term "principles" used in this context suggests "a general rule as a guide to action" (the Shorter Oxford English Dictionary). That these rules are to be applied "in the exercise of the Minister's powers" indicates that they regulate the manner of their exercise and the criteria to be applied in determining whether or not to grant an approval."
The respondent submitted that, consistent with one of its defined meaning, the word "principles" should be treated as a reference to "a fixed rule or adopted method as to action". In my opinion the word, in context, has the meaning attributed to it by the Full Court in Preci Services (supra). Sections 23DN(3) and 23DNA contemplate the formulation of principles that guide the Minister in exercising the discretionary power in s23DN(1). That guidance may concern the manner in which the discretionary power might be exercised or the criteria by reference to which it is to be exercised.
The former would comprehend matters such as the way in which and the time within which an application will be considered and the latter criteria dealing with matters such as the standards maintained by the laboratory. Section 23DNA(3) provides some indication of what is comprehended by the word "principles" in s23DNA(1). What s23DNA(3) says the Minister may do, is formulate categories of laboratories for which approval can be given. It may be accepted that s23NDA(2) is prefaced by the words "without limiting the generality of subsection (1)..." and the identification of criteria in s23DNA(3) is qualified by the words "may include, but are not limited to...". Nonetheless the combined effect of s23DNA(2) and (3) serves to illustrate the character of the principles that might be determined under s23DNA(1) without exhaustively or prescriptively identifying their contents. The Minister may determine categories of accreditation and the clear implication is that, having done so, would approve accreditation in one of those categories if satisfied that the laboratory fell within the category and it was otherwise appropriate to grant approval. What the terms of s23DNA do not suggest is that it is permissible to formulate principles that would not involve the Minister determining whether or not approval should be granted. Indeed the expression "principles to be applied" in s23DNA is plainly a reference to the application of them by the Minister. That is also apparent from the terms of the statutory directions in 23DN(3) which, in terms, requires the Minister to apply the principles. The use of the word "apply" connotes some positive act on the Minister's part and is apt to describe a process where the Minister must bring to bear in his or her decision making the principles before making the decision authorised by s23DN(1). In my opinion, what s23DNA authorises is the formulation of principles which will guide the Minister in the exercise of the discretionary power conferred by s23DN(1). However s23DNA does not authorise principles that deny to the Minister the capacity to exercise the discretionary power to determine whether approval should be granted or refused.
The respondent referred to two recent Full Court decisions involving consideration of the National Health Act 1953 (Cth) ("the Health Act"): see Smoker v Pharmacy Restructuring Authority & Ors (1994) 53 FCR 287 and Pharmacy Restructuring Authority & Anor v Martin & Ors (1994) 53 FCR 589. The Health Act creates a scheme for the approval of pharmacists to provide pharmaceutical benefits from nominated premises. The approval is given by the departmental Secretary. The Health Act provides that approval is to be given only if it is recommended by the Pharmacy Restructuring Authority. It requires the Minister to determine guidelines to apply to the Authority when making its recommendations. The Authority is obliged, by the Act, to comply with the guidelines.
The relevant guideline considered in Smoker was in terms that directed the Authority not to recommend approval if the nominated premises were located within 5 kilometres of other premises which were already approved. The Full Court held that the guideline was authorised by the Act and validly operated to require the Authority to recommend that approval be refused. In issue was the nature of the instrument that was authorised by a legislative provision requiring the determination of "guidelines". Hill J gave the leading judgment and it is plain from a reading of his Honour's reasons that he was substantially influenced, in concluding the guidelines were valid, by the existence of an agreement between the Pharmacy Guild of Australia and the responsible Minister which preceded the amendments to the Health Act that created the legislative scheme of approval. The agreement itself adverted to the refusal of approval of a pharmacy located in the way described in the operative guideline. His Honour treated the agreement as part of the legislative history of the relevant provisions. It is also plain that Burchett J attributed the same significance to the agreement, though it may be accepted that Wilcox J did not. However the existence of the agreement was a critical feature of the facts in Smoker (supra) that is not present in these proceedings.
Smoker (supra) is to be contrasted with Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 in which a Full Court determined that a Ministerial direction, purporting to limit the circumstances in which a discretionary power conferred by the Social Security Act 1947 (Cth) on the departmental Secretary might be exercised, was invalid. That was so notwithstanding that the legislation authorised the giving of directions by the Minister and obliged the Secretary to act in accordance with them. The Court took the view that the legislation authorised directions but only if they preserved the discretionary power conferred on the Secretary.
Further support for the construction of 23DNA I prefer derives from the existence of a right to seek a review by the Tribunal of a decision made under s23DN(1). Not only is the right conferred by 23DO(5)(b) but Parliament was alive to the need to ensure that a person affected by a decision under s23DN(1) was aware of the right: see s23DN(5) and (7). A hearing by the Tribunal by way of review ordinarily involves a review of the decision on the merits: see ss25 and 43 of AAT Act. It is unlikely that Parliament would confer a right to seek the review of a decision of the Minister to grant or not to grant approval of premises as an accredited laboratory on its merits and also authorise the determination of principles by the primary decision maker, the Minister, that would render nugatory that right. There is no manifest legislative intention that the role of the Tribunal should be limited: compare Shortis (supra). If clause 4.2(a) of the principles was authorised by s23DNA and operated to require the Minister not to grant approval, it would similarly require the Tribunal not to grant approval: see 43(1) of the AAT. That is not the intended effect of s23DNA.
The preceding discussion is not intended to suggest that the Minister may not, in principles made under s23DNA, indicate compliance with the Standards would lead to the grant of approval and create a process in which the Minister or a delegate has the benefit of the opinion of an agency such as NATA on whether there was compliance. I have already said that compliance with the Standards is plainly consistent with the objects of the Health Insurance Act 1973. However the material difference between the scheme just outlined and the principles determined by the Minister is that the former would, in conformity with s23DO(5)(b), expose the determination of the Minister that the Standards were not complied with to review by the Tribunal on the merits. It would thus permit, indirectly, consideration of the opinion formed by the agency charged with the task of assessing compliance with the Standards. The principles as they are presently framed do not.
In my opinion the Minister had no authority to make clause 4.2(a) of the principles. It is invalid. Accordingly the Minister's delegate was not required, by virtue of NATA's adverse report, to refuse the application or exclude from the approval histopathology as one of the services that might be provided, nor would the Tribunal have been. Clause 4.2(a) is a severable provision of the principles and the remaining
principles may operate independently of it notwithstanding its invalidity: see s46(1)(b) of the Acts Interpretation Act 1901 (Cth) and see: Barton & Croner Trading Pty Ltd (1984) 3 FCR 95.
The application for review should be remitted to the Tribunal. I agree with the orders proposed by Davies J.
I certify that this and the preceding nineteen (19) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.
Associate: ........ ........ ......
Dated: ..../..../....
APPEARANCES
Counsel for the Applicant: G Flick SC
Solicitors for the Applicant: Minter Ellison
Counsel for the Respondent: A Benett SC
R Beech-Jones
Solicitors for the Respondent: Australian Government Solicitor
Date of Hearing: 27 November 1995
Date of Judgment: 15 December 1995
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