Mark Dunsdon and Australian Community Pharmacy Authority Warwick Prentice & Chris Bonner OTHER PARTY
[2012] AATA 307
•22 May 2012
[2012] AATA 307
Division GENERAL ADMINISTRATIVE DIVISION File Number
2011/3439
Re
Mark Dunsdon
APPLICANT
And
Australian Community Pharmacy Authority
RESPONDENT
And
Warwick Prentice & Chris Bonner
OTHER PARTY
DECISION
Tribunal Deputy President P E Hack SC
Date 22 May 2012 Place Brisbane (heard in Lismore) The decision is affirmed.
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Deputy President P E Hack SC
CATCHWORDS
HEALTH AND COMMUNITY SERVICES – Pharmaceutical Benefits Scheme – proposed premises to supply – statutory criteria – catchment area population – reasonable and practical option for ordinary residents – insufficient resident population – decision affirmed.
LEGISLATION
National Health Act 1955 (Cth) ss 90, 90(3A), 99K(1), 99K(2), 99L
National Health (Australian Community Pharmacy Authority Rules) Determination 2006 Cl 9(a), Sch 1, Sch 2
CASES
Re Dunsdon and Australian Community Pharmacy Authority [2011] AATA 82; (2011) 119 ALD 696.
Re Tascone and Australian Community Pharmacy Authority [2011] AATA 724REASONS FOR DECISION
Deputy President P E Hack SC
22 May 2012
Introduction
Mr Mark Dunsdon is a pharmacist. He wishes to operate a pharmacy at Kyogle in northern New South Wales. To do so he needs a favourable recommendation from the respondent, the Australian Community Pharmacy Authority. The Authority’s recommendation was unfavourable; it decided that the resident area of the catchment area for the proposed premises did not satisfy the statutory criteria and recommended that Mr Dunsdon not be approved to supply pharmaceutical benefits at the proposed premises.
Mr Dunsdon seeks a review of the Authority’s decision.
Mr Warwick Prentice and Mr Chris Bonner have been joined as parties to the application. They operate an existing pharmacy in Kyogle and oppose Mr Dunsdon’s application. In circumstances where there is a contradictor to Mr Dunsdon’s case, the Authority has adopted a neutral stance in the proceedings, conscious of its obligations under s 33(1AA) of the Administrative Appeals Tribunal Act 1975 (Cth) to assist the Tribunal.
The legislation
By virtue of s 90 of the National Health Act 1955 (Cth) the Secretary, Department of Health and Ageing, may, on application, approve a pharmacist for the purposes of supplying pharmaceutical benefits at nominated premises. Such an application must be referred to the Authority[1] which must make a recommendation whether or not the applicant should be approved under s 90 in respect of particular premises.[2] In making that recommendation the Authority, and the Tribunal in its stead, must comply with rules determined by the Minister under s 99L of the Act.[3]
[1] See s 90(3A), National Health Act 1953 (Cth).
[2] See s 99K(1), National Health Act 1953 (Cth).
[3] See s 99K(2), National Health Act 1953 (Cth).
Those rules are set out in the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (the Rules). The application made by Mr Dunsdon involves the cancellation of an existing approval. By virtue of clause 9(a) of the Rules the Authority must recommend approval if, relevantly,
(i) the application states that it is of a kind mentioned in column 2 of an item of Part 1 of Schedule 1; and
(ii) the requirements set out in column 3 of that item are met; and
(iii) the requirements set out in Schedule 2 and Part 1 of Schedule 3 are met; and
(iv)for an application described in column 2 of an item of Part 2 of Schedule 3 — the requirement set out in column 3 of that item is met; …
It is common ground that Item 107 in Part 1 of Schedule 1 applies to this application. The requirements of that Part for such an application are:
1.The proposed premises are in a rural locality.
2.The proposed premises are at least 200 m, in a straight line, from the nearest approved premises.
3.The Authority is satisfied that:
(a)the resident population of the catchment area for the proposed premises is, for most of the year, at least 8 000; and
(b)the number of prescribing medical practitioners practising in the catchment area for the proposed premises is equivalent to at least 4 full‑time prescribing medical practitioners; and
(c)the catchment area for the proposed premises contains only 1 approved premises; and
(d)the pharmacy operating from the approved premises mentioned in paragraph (c) has not, in the 3 years before the day on which the application is made, been involved in an amalgamation with a pharmacy that had operated from other approved premises in the same rural locality, other than an amalgamation that occurred on or after 1 July 2006.
The general requirements of Schedule 2 are set out in Item 201. It will suffice for present purposes to note that it requires, amongst other things, that the Authority be satisfied that the applicant had, on the date of the application, and has, on the date of the recommendation, “a legal right to occupy the proposed premises”.
The proposed premises
The proposed premises are located in the Kyogle Shopping Centre. Construction of those premises was completed in mid-2011. The Centre has a floor area of 2000m² comprising, at this stage, a medium sized supermarket (1714m²) and some vacant speciality tenancies. It had been intended that part of the premises, an area of 280m2, would contain a medical centre incorporating the proposed pharmacy, a doctor’s centre and a pathology centre but that has not yet proceeded and it is not clear whether it will proceed at all. The shopping centre is located a short distance to the north of the central business district. That district is centred along a 450 – 500 metre portion of the Summerland Way, the main highway running north/south through the township.
Kyogle is the administrative base of the Kyogle Council. The Kyogle region is in Northern New South Wales, immediately to the south of the Border Ranges and to the east of the Great Dividing Range. In 2006, at the time of the last census, the Kyogle Council area had a population of 9,256 persons – 2,731 in the urban area and 6,525 in the rural areas. There is controversy, dealt with below, about the extent of population growth since the census.
What is a catchment area?
The Rules do not define what is meant by the term “catchment area”. The applicant and the joined party made reference to an earlier case involving Mr Dunsdon, Re Dunsdon and Australian Community Pharmacy Authority[4], where the catchment area was considered to be the area from which pharmacy users, either actual or potential, come or will come. In that case it was suggested that the question posed, in determining the extent of a catchment area, was whether the ordinary resident of an area would regard a particular pharmacy as a reasonable and practical option in all the circumstances.
[4] [2011] AATA 82; (2011) 119 ALD 696.
Subsequently in Re Tascone and Australian Community Pharmacy Authority[5], a decision relied upon by the Authority, Deputy President Forgie described a catchment area as “the area encompassing those people who would be expected to make use of [the proposed premises] if they were approved under the Act”.
[5] [2011] AATA 724 at [44].
If there be a difference between these approaches it is not evident to me nor did any party suggest that there was.
What is this catchment area?
The principle issue in the proceedings is whether the resident population of the catchment area for the proposed premises is, for most of the year, at least 8,000. The experts relied upon by Mr Dunsdon – Mr James Turnbull and Mr Steve McElroy – contend that it is, whilst Mr Graham Meineke, relied upon by the joined parties, says that it does not. Mr Turnbull and Mr McElroy have, throughout, undertaken their analysis of the catchment area by reference to the Australian Bureau of Statistics (ABS) census collection districts (CCD’s). Mr Meineke, at least initially, undertook his analysis by a different method, which he says confirms his later views reached by an analysis of CCD’s. I propose to first consider Mr Meineke’s first analysis, undertaken primarily by reference to Huff’s Law of Shopper Attraction.
Huff’s Law, first postulated some 40 years ago, gives mathematical effect to the eminently sensible proposition that the greater the size and variety of shops, the longer distances potential shoppers are prepared to drive to those premises rather than to smaller, but closer centres. Mr Meineke, in his report of June 2011, took as a starting point the population within the Kyogle Council local government area in June 2006 i.e. 9,250 persons. He concluded that the approximately 2,000 residents who resided in eight CCD’s in and around the small centres of Woodenbong and Bonalbo (both to the west of Kyogle) should be excluded because “road network and natural barriers would dictate” that those residents would use the existing pharmacies in their centres. That left an “expected” catchment of 6,750 who, on Mr Meineke’s analysis, would be subject to the attraction of the competing, and much larger, urban centres of Lismore and Casino. By the application of Huff’s Law Mr Meineke reached the conclusion that 52% of Kyogle’s catchment may well shop in Lismore (as opposed to Kyogle). For Casino the prediction was 55%. Taking what Mr Meineke described as a “conservative” figure of 25%, led to the conclusion that only 5,000 people “would naturally and reasonably gravitate”[6] to the proposed premises.
[6]The expression comes from the decision in Re Hargreaves and Australian Community Pharmacy Authority [1995] AATA 326; (1995) 41 ALD 147 and is used in the Authority’s policy document.
There are many reasons to reject Mr Meineke’s reliance on Huff’s Law to inform his conclusion. First, it seems to me to be entirely irrelevant in determining the catchment area. Huffs Law might have some application in the case of shoppers who were proposing to add a pharmacy visit to other shopping but it could not assist in determining the likelihood of use of a shopper who proposes only pharmacy shopping. So much is evident in Mr Meineke’s rejection of the inclusion of residents in areas around Bonalbo and Woodenbong on the ground that those residents would use the local pharmacies.
Moreover the application of Huff’s Law involves a calculation that incorporates the relative distances (expressed as travel time) to competing centres and, in the calculation, that time is a constant in circumstances where is must necessarily, vary considerably.
There is, in any event, reason to doubt the reliability of the primary data used by Mr Meineke to represent the total commercial floor spaces in the three centres. It is enough for me to say that I reject the reliance on Huff’s Law and the conclusion, predicated on its use, that the resident population of the catchment area is 5,000.
Mr Meineke ultimately undertook a consideration of the catchment with reference to CCD’s but did so, not in a narrative report (as might have been expected) but by reference to the reports of other witnesses.
As will appear from the discussion that follows I have not accepted the entirety of the opinions of any of the three expert witnesses; I have considered the overall logic of the various opinions and reached a view about that to be preferred, assisted considerably by a day long inspection undertaken with the parties at the outset of the hearing. The experts seem to have a common failing which is that all of them appeared to concentrate on the question of the number or percentage of potential shoppers that might come from a particular area rather than whether the hypothetical shopper within that area would regard the proposed pharmacy as a reasonable and practical option. It is, however, common ground that there are four types of shopping trips that need to be considered,
· initial script filling – coupled with a doctor’s visit;
· convenience shopping – a purchase based on proximity (and a top-up shop);
· convenience purchase – coupled with a weekly/higher order shopping trip;
· convenience purchase – coupled with a daily working trip.
It is convenient to commence with an examination of common ground, that is, CCD’s that all expert witnesses agreed were within the catchment area of the proposed premises.
All parties are agreed that the CCD’s that go to make up Kyogle township and its immediate surroundings form part of the catchment. Thus CCD’s 1060204 (Kyogle Hillside), 1060205 (Highfield), 1060206 (Geneva), 1060207 (Homestead) and 1060208 (North Kyogle) form part of the catchment. Similarly, there is unanimity that CCD’s 1060106 (Eden Creek), 1060107 (Ettrick) and 1060108 (Wangaree) along the Summerland Way to the north-west of Kyogle should be included in the catchment. Four CCD’s to the north and north-east of Kyogle – 1060201 (Collins Creek), 1060202 (Homeleigh), 1060104 (Terrace Creek) and 1060105 (Warrazambil) – are also agreed. A further CCD in this area, 1060203 (Boorabee) is subject of partial agreement; all agree that at least 80% of its population ought be regarded as coming within the catchment however Mr Turnbull regards all of it as falling within the catchment area.
It seems convenient to consider the CCD’s in dispute by reference to their broad geographic relationship to Kyogle.
Northwest and west of Kyogle
To the north-west of Kyogle, and surrounding the Summerland Way, is CCD 1060103 (Unumgar). Mr Turnbull regards the whole of this CCD as falling within the catchment, Mr McElroy says 80% of the area (and thus the population within it) are within the catchment area and Mr Meineke puts the figure at 50%. The CCD is quite large. Its approximate midpoint, the township of Unumgar, is some 42 kilometres from Kyogle and some 17 kilometres from Woodenbong. Woodenbong has a pharmacy, a medical practitioner and a small grocery store. Given the distances involved I regard Mr Meineke’s opinion as preferable; I consider that only the southern half of the CCD ought be regarded as falling within the catchment of the proposed pharmacy. I will adopt the common assumption of parties that the population is spread evenly across the CCD and that 50% of the population of the CCD are to be regarded as falling within the catchment area.
CCD’s 1060102 (Urbenville) and 1060303 (Capeen) can be considered together. They are considerably to the west of Kyogle. Mr McElroy regards 50% of CCD 1060102 and 25% 0f CCD 1060303 as falling within the catchment. Neither Mr Turnbull nor Mr Meineke regards any part of either CCD as being within the catchment. I agree. The distances involved are too great to regard a pharmacy in Kyogle as a reasonable and practical option. There are pharmacies in Woodenbong and Bonalbo. The distances to Kyogle are up to 100 kilometres.
Mr McElroy claims that 20% of CCD 1060306 (Tabulum) is within the catchment area. This CCD is to the south of Bonalbo. Again I am unable to accept that opinion and prefer the contrary views of Mr Turnbull and Mr Meineke. The larger regional centre of Casino is closer than Kyogle. A pharmacy and small grocery shop are much closed at Bonalbo. It is neither reasonable nor practical for residents within this area to visit a pharmacy at Kyogle. For similar reasons I do not accept Mr McElroy’s opinion that 20% of CCD’s 1060307 and 1060308 ought be regarded as coming within the catchment area. Again, the distances are too great and Bonalbo or Casino presents a much more practical and reasonable alternative.
South and south-west of Kyogle
CCD 1060301 (Doubtful Creek/Stratheden) has an unusual shape which has the effect of dividing it into two separate areas – a northern section which includes Edenville and the southern section which includes Doubtful Creek. Mr Meineke expressed the view that only those residents who access the Summerland Way at Cedar Point via Edenville ought be regarded as coming within the catchment. He estimates the areas, and thus the population, at 45%. Both Mr McElroy and Mr Turnbull originally were of the view that only 50% of the area come within the catchment. At the hearing they each revised their opinions to increase the percentage to 75%. Their reasons for doing so do not persuade me. It can only be an estimate but I consider that their original opinion of 50% is to be preferred on the footing that in my judgment 50% (rather than 45%) of the area of CCD 1060301 could be regarded as coming within Kyogle catchment. Casino would be the logical destination for residents in the southern segment of CCD 1060301.
CCD 1061303 (Piora) almost intersects the northern and southern segments of CCD 1060301. It is to the south of that part of CCD 1060301 that I regard as forming part of the catchment area and thus a greater distance along the Summerland Way from Kyogle. Those residents are closer to Casino than to Kyogle. Neither Mr McElroy nor Mr Meineke regards it as forming part of the catchment. They are correct to do so. I do not accept Mr Turnbull’s allocation of 25% of this CCD to the Kyogle catchment. On my reading of the map all residents of the CCD join the Summerland Way much closer to Casino than to Kyogle.
CCD 1060302 (Sextonville) is to the west of CCD 1060301 and thus further to the west of Kyogle. Mr Turnbull regards it as being within the catchment; Mr McElroy puts only 40% in the catchment; Mr Meineke 45%. The road layout does present northern and southern options – to Kyogle in the north and to Casino in the South. It is not realistic, in light of the road structure, to regard the southern portion of the CCD as being within the catchment. I accept Mr Meineke’s estimate of 45%.
CCD 1060309 (Dyraaba) is to the south of CCD 1060302. Mr McElroy claims 40% as being within the catchment. Mr Turnbull did not regard any of the CCD as falling within it. Mr Meineke considered that 10% was in the catchment. Despite the evidence of the experts, I am not satisfied that any of CCD 1060309 ought be considered as coming within the catchment. The logical traffic direction from all of the CCD leads to Casino; Kyogle is not a reasonable and practical option. That is not to say that no pharmacy shopper would ever travel from within CCD 1060309 into Kyogle. But that would, I think, be an idiosyncratic choice. It is not a logical choice for residents of CCD 1060309.
CCD 1061304 (Fairy Hill) is situated between Kyogle and Casino and to the east of the Summerland Way. To the east of the CCD there is a major road from Lismore to Kyogle. Mr McElroy and now Mr Turnbull (having originally not made any claim in respect of this CCD) claim that 10% of this CCD comes within the catchment. I do not accept that view. So far as I am able to tell either Lismore or Casino is more readily accessible and presents a logical choice. Kyogle, in my view, is not a reasonable choice.
East of Kyogle
CCD’s 1060203 (Boorabee), 1061707 (Stoney Chute East) and 1061708 (Back Creek) are to the southeast of Kyogle. All experts regard at least 80% of CCD 1060203 as being within the catchment however Mr Turnbull would put the whole of the district within it. Mr McElroy and Mr Meineke have excluded the most southerly portion of CCD 1060203 on the basis that Casino is the logical choice for those residents. I agree. I propose to treat only 80% of this CCD as being within the catchment area.
CCD 1061708 is further to the southeast; in fact the eastern end is quite close to Lismore. CCD 1061707 lies to the east of CCD 1061708. Mr Turnbull has accounted for the northern parts of these CCD’s, including 50% of each,[7] on the basis that Kyogle represents the closest pharmacy. Mr McElroy is of a similar view. Mr Meineke considers that only those residents in the far west of CCD 1061708 (he estimates 5% of the whole) would regard Kyogle as a logical choice. He refers to the superior road system leading to Lismore as a reason for a preference for that destination. I consider that the opinions of Mr McElroy and Mr Turnbull are to be preferred. The distances do not seem to me to be greatly different in the western and northern parts of the CCD. I accept that 50% of this CCD falls within the catchment.
[7]Contrary to the submission of the joined party Mr Turnbull has always been of this view.
CCD 1061707 is even further to the east and I consider that Mr Meineke’s point regarding ease of travel is well made. Nonetheless there is an area to the north of the CCD where Kyogle is a logical choice. Mr McElroy and Mr Turnbull whilst originally claiming 50%, have now reduced the claim to 25% and 0% respectively. I consider that 25% represents an appropriate part of CCD 1061707 for which Kyogle is a reasonable and practical choice.
CCD 1061706 (Lillian Rock) lies to the east of CCD 1061707. It runs south from Nimbin on either side of a well-made road that joins Nimbin and Lismore. Nimbin has a pharmacy and a small grocery shop. Mr McElroy is the only expert to suggest that it is partly within the catchment area; he suggests 50%. I do not agree. The road network makes Kyogle an illogical choice for these residents.
CCD’s 1060209 (Stoney Chute) and 1060210 (Wadeville) lie to the northeast of Kyogle and are on either side of the road connecting Kyogle and Murwillumbah. Mr Turnbull regarded both CCD’s as being within the catchment; Mr McElroy believed 75% and Mr Meineke considered 30% appropriate. I think that Mr Turnbull’s opinion overlooks the effect of Nimbin which is quite close, particularly to CCD 1060210 and that Mr Meineke’s view overlooks the attraction of a reasonably sized shopping centre in Kyogle. I am satisfied that Mr McElroy’s opinion of 75% is to be preferred in relation to both of these CCD’s.
Whilst it did not form part of the original opinions of either Mr Turnbull or Mr McElroy each of them, in the course of the hearing, identified a cluster of what was said to be 15 houses near Lillian Rock and within CCD 1070715. These houses, it was said, would be expected to have 38 residents. Proof of these dwellings was quite unsatisfactory, coming quite late in the day and, in particular, after an entire day had been spent on an inspection. Nonetheless the evidence is not inherently unreliable and I am prepared to accept that some 38 persons within this CCD would regard Kyogle as a reasonable and practical alternative.
Mr Dunsdon places some store on residents in unapproved dwellings. I am not prepared to have regard to the evidence of such dwellings. The evidence satisfies me that the ABS goes to some lengths to ensure that all residents are accounted for in a census; any that were missed would be de minimis.
What is the population of the catchment area?
An issue has arisen between the parties about the correct population estimates for the catchment area determined. The original reports were based upon the 2006 census, projected forward using later ABS data. Mr Meineke however relied upon a June 2011 publication by the New South Wales Department of Planning to conclude that the resident population had actually fallen from 2006 Census levels. That led Mr Turnbull to undertake a further calculation based on ABS June 2010 estimated residential population. To those figures he applied a multiplier of 101.5% to reflect population growth in the 18 months since June 2010.
I am of the view that data produced by ABS is to be preferred. The Department of Planning research was considerably dated and I would regard it as less reliable, in any event, to that of the ABS. Moreover I prefer Mr Turnbull’s multiplier which is slightly less than that of Mr McElroy. I propose then to apply the population estimates of Mr Turnbull[8] to the catchment area as I have determined it to be. The result is as follows:
[8]Column (c) on the final version of Exhibit 8.
CCD
Name
% (if not 100)
Population
1060204
Kyogle Hillside
671
1060205
Highfield
686
1060206
Geneva
627
1060207
Homestead
418
1060208
North Kyogle
584
1060106
Eden Creek
444
1060107
Ettrick
464
1060108
Wangaree
141
1060201
Collins Creek
578
1060202
Homeleigh
396
1060104
Terrace Creek
219
1060105
Warrazambil
197
1060103
Unumgar
50%
154
1060301
Doubtful Creek/Stratheden
50%
185
1060302
Sextonville
45%
85
1060203
Boorabee
80%
261
1061708
Back Creek
50%
298
1061707
Stoney Chute East
25%
235
1060209
Stoney Chute
75%
356
1060210
Wadeville
75%
330
1070715
38
Total
7,367
The result is that I am not satisfied that the resident population of what I regard as being the catchment area for the proposed premises is, for most of the year, at least 8,000. It follows that I would affirm the decision under review. I would add only that had I been satisfied of the population I would have been satisfied of the other matters required to be demonstrated under the Rules in respect of this application. Ultimately no argument was presented by the joined party in relation to the applicant’s right to occupy the premises or in relation to the number of full-time prescribing medical practitioners. I would have had no reason to doubt the correctness of the Authority’s views on these aspects of the matter.
I certify that the preceding 39 (thirty-nine) paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC.
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Associate
Dated 22 May 2012
Date(s) of hearing 6, 7 & 8 February 2012 Date final submissions received 6 March 2012 Counsel for the Applicant Mr M Steele Solicitors for the Applicant Stoddart Legal Solicitors for the Respondent Australian Government Solicitor Counsel for the Joined Party Mr H Woods Solicitors for the Joined Party Michael Flaherty
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