Pharmacy NEO Pty Ltd and Secretary, Department of Health and Aged Care - [2023] AATA 4072

Pharmacy NEO Pty Ltd and Secretary, Department of Health and Aged Care [2023] AATA 4072 (7 December 2023)
Division:GENERAL DIVISION
File Number: 2022/9338
Re:Pharmacy NEO Pty Ltd
APPLICANT

AndSecretary, Department of Health and Aged Care
RESPONDENT

DECISION
Tribunal:R Cameron, Senior Member
Date:7 December 2023
Place:Melbourne

The Tribunal sets aside the reviewable decision and, in substitution, decides that the approval is not cancelled.
..................................[SGD]......................................
R Cameron, Senior Member
Catchwords
HEALTH LAW – cancellation of applicant’s approval to supply pharmaceutical benefits – pharmacy in Melbourne CBD – pharmacy not carrying on business as a pharmacist at approved premises – pharmacy not accessible by members of the public – discretion enlivened – whether discretion to cancel approval should be exercised – relocation of pharmacy to temporary location – landlord elected to redevelop site – expired tenancy – premises incorporated into other tenancy – significant deactivation period – failed ACPA application – prompt communication with respondent – exceptional circumstances of COVID-19 pandemic – significant decline in trade – applicant required to vacate premises – decision under review set aside and substituted
Legislation
National Health Act 1953 (Cth)
National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth)
Retail Leases Act 2003 (Vic)
Cases
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Inas Karem Holdings Pty Ltd and Secretary, Department of Health and Aged Care [2023] AATA 754
Martin and Secretary, Department of Health and Ageing (2004) 84 ALD 528
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Secondary Materials
The Department of Health and Aged Care, Deactivation of an approved pharmacist – Guidelines (8 November 2019)
REASONS FOR DECISION
R Cameron, Senior Member
7 December 2023
INTRODUCTION

The applicant seeks review of a decision made by a delegate of the respondent on 24 October 2022 which cancelled the applicant’s approval to supply pharmaceutical benefits at a pharmacy known as “Pharmacy NEO”, Goldsbrough Lane, TG14, situated at 181 William Street, Melbourne in the State of Victoria (“the premises”) pursuant to s 98(3) of the National Health Act 1953 (Cth) (“the Act”) (“the reviewable decision”).[1]
[1] The reviewable decision is document T3 of the T documents.
THE EVIDENCE BEFORE THE TRIBUNAL
There was both oral and documentary evidence before the Tribunal. Ms McCarthy, a director of the applicant and a registered pharmacist, made both submissions and gave oral evidence, adopting a witness statement dated 7 September 2023 in the witness box.
The applicant lodged and served a tender bundle consisting of 13 documents, together with six pages of maps derived from “Google Maps” identifying pharmacies and chemists located in the Melbourne Central Business District (“CBD”).[2] Additionally, there were the “T” documents, Supplementary “T” documents and further supplementary “T” documents. Ms McCarthy had also made a written submission lodged with the Tribunal by email on 19 March 2023.
[2] Hereinafter referred to as the Applicant’s Tender Bundle (“ATB”).
Although not evidence, both parties lodged Statements of Facts, Issues and Contentions.
SOME BRIEF OBSERVATIONS ON MS MCCARTHY’S EVIDENCE
It is appropriate to make some brief observations with respect to Ms McCarthy’s evidence. She was an impressive witness who was both truthful and credible at all times. She did not give her evidence in a way that was exaggerated, embellished or otherwise reconstructed. Concessions were readily made by her when called for. They are the hallmarks of a good witness. The Tribunal accepts her evidence in its entirety, both as to what occurred during the relevant times prior to the reviewable decision being made, and also, with respect to her future intentions. Her evidence concerning the stress and pressure she experienced both financially and mentally, at all relevant times to this application, particularly as a result of the consequences of the COVID-19 pandemic on her and her business, was compelling.
It is readily apparent that but for the extraordinary intervention of the COVID-19 pandemic and the extreme measures introduced by the State of Victoria in response to the onset of the pandemic, such as the lockdowns and work from home rules, about which more will be said later, the applicant and Ms McCarthy would not have been in the predicament that they find themselves in, which ultimately led to the reviewable decision being made by the respondent.
THE ISSUES
In written submissions prepared by both counsel for the applicant and the respondent, several issues were enumerated by the Parties. The Tribunal considers that the issues raised correctly identify what its tasks are to determine in this application. They are as follows:
(a)is the discretion conferred upon the respondent Secretary in s 98(3) of the Act to cancel the approval of the pharmacist under s 90 enlivened because either:
(i) the applicant was not carrying on the business as a pharmacist at premises in respect of which the pharmacist was approved; or
(ii) the premises were not accessible by members of the public for the purpose of receiving pharmaceutical benefits at times that, in the opinion of the respondent, were reasonable; and
(b)if so, whether the discretion contained in s 98(3) of the Act should be exercised.
SOME RELEVANT FACTS
The applicant, Pharmacy NEO Pty Ltd, conducts the business of retail pharmacies or, as they are sometimes referred to, community pharmacies from several outlets. The applicant’s driving force and director, who was noted earlier, is a registered pharmacist, Ms McCarthy.
It is appropriate to briefly recount the history of both the applicant and Ms McCarthy with respect to the conduct of the “Pharmacy NEO” business that has been undertaken by her in the Melbourne CBD.
Since 1999 Ms McCarthy has conducted a pharmacy business from several locations in the Melbourne CBD. When she first purchased the pharmacy in 1999, she was 29 years old. That business was then conducted from premises situated at the corner of Bourke and William Streets known as AMP Plaza. In the year 2004 the pharmacy relocated to retail premises situated at Bourke Place in the building at the corner of Bourke and King Streets. The pharmacy operated from that location for 10 years until 2014 when it relocated yet again to premises known as Shop No TG17 & TG18, Ground Level, in Goldsbrough Lane, 181 William Street Melbourne which is in the precinct situated at the corner of Bourke and William Street.
The lease for the Shop No TG17 & TG18 in Goldsbrough Lane was dated 14 April 2014 between CBUS Property CBW Pty Ltd as Lessor and Ms McCarthy as Lessee.[3] The Commencement Date of the lease was 1 July 2014 for a term of 10 years from the Commencement Date expiring on 30 June 2024. Some observations should be made concerning this lease (not to mention the other leases that she had entered into which were in evidence and will be referred to later) as it was the subject of some evidence from Ms McCarthy, both in evidence-in-chief and cross-examination. She was cross-examined as to its contents quite searchingly.
[3] The lease of 14 April 2014 between CBUS Property CBW Pty Ltd is document FST1 of the Further Supplementary "T" Documents. It should be noted that later leases, which will be considered later in these reasons, identified the Lessee as Pharmacy Neo Pty Ltd the applicant in this proceeding.
The lease of 14 April 2014 was carefully drafted by a large commercial firm of lawyers. It is in a fairly typical commercial format adopted by many landlords with respect to retail leases, bearing in mind that the Retail Leases Act 2003 (Vic) imposes significant obligations on landlords. Of particular relevance concerning this lease is Clause 16 “Redevelopment and Relocation”. The Redevelopment and Relocation clause of the lease is quite extensive. It consists of 12 subparagraphs comprising in excess of three pages. The contents of the clause are referred to in their entirety for their full force and effect. However, the substance of the clause is that it reserved to the landlord the right to give notice to the tenant that it required the lease to be surrendered if it wished to extend, alter, or refurbish the centre. If the landlord served a notice requiring the lease to be surrendered, it was obliged to offer the tenant a lease of alternative premises in the centre on various terms and conditions including that such premises have an area not more than 10% greater or 10% less than the area of the existing premises the subject of the lease. Further, the alternative premises offered must be located in a position in the centre which is, in the reasonable opinion of the landlord, no less suitable for the conduct of the tenant’s business than the location of the existing premises.
Particularly in cross-examination, as noted earlier, Ms McCarthy was probed about the inclusion of Clause 16, “Redevelopment and Relocation”, in the lease concerned. She acknowledged that by 2014 she had been a pharmacist for approximately 23 years and had leased the premises for approximately 15 years. Therefore, she acknowledged that she had some experience in being a tenant and further described herself by reason of that as being reasonably commercially astute. Ms McCarthy acknowledged that she had retained lawyers to negotiate the terms of the lease. As she described the negotiations, they were, “a bit back and forward”, a not uncommon phenomenon in commercial lease negotiations. She readily conceded that her lawyers did bring the relocation clause to her attention. Her evidence was that they let it go because she realised that every lease she had been a party to included such a clause at the insistence of the landlord. She also stated that she didn’t think the landlord of the Goldsbrough Lane premises would be likely to relocate her for at least 5 years. Ms McCarthy stated in her evidence that she drew additional comfort from her belief as to the operation of the applicable rules governing pharmacies and she thought that they would take precedence. In that setting she did not think that the landlord would relocate her or that it would be an issue.
It was specifically put to Ms McCarthy in cross-examination that with respect to Clause 16, she had the opportunity to object to its inclusion before signing the lease, or put another way, she had the opportunity to walk away from the lease. It was suggested to her that another alternative or option was for her pharmacy to remain at Bourke Place. Ms McCarthy explained, by way of response, that the terms of the lease were the best that could be negotiated by her lawyers and that the prospect of remaining at Bourke Place was a tricky situation because that site was being redeveloped at the time. She also emphasised that the Goldsbrough Lane premises was a commercially favourable site from which to conduct the business of a retail pharmacy. The Tribunal accepts this evidence from her.
It is perhaps appropriate at this juncture to make some observations concerning this question. The respondent, through careful cross-examination and in the submissions, about which more will be said later, suggested that when Ms McCarthy signed the 14 April 2014 lease, which included Clause 16, “Redevelopment and Relocation”, she should have protected herself through better commercial negotiations, or have made the decision to decline to enter into the lease altogether. Whilst one has to acknowledge the force of such contentions, the Tribunal does not accept them. It accepts Ms McCarthy’s evidence that the Goldsbrough Lane precinct was a highly desirable location to situate a retail pharmacy. The proposed site was on the ground floor of a significant high-rise building housing approximately 3000 office workers. Additionally, it was adjacent to, and near several other recently erected high-rise buildings whose tenants included, amongst others, major accounting and legal firms. It was some walking distance to any other nearby pharmacy. As also noted by Ms McCarthy, there was a busy medical and dental centre located nearby in Goldsbrough Lane, which was another attraction.
The Tribunal also accepts the evidence of Ms McCarthy that the terms of the 14 April 2014 lease that she signed were the best that she was able to achieve after her lawyers had conducted negotiations on her behalf. It was a term with which she had familiarity because her other leases included similar provisions. Her lawyers did bring it to her attention. This question should be looked at with a degree of realism. Most commercial landlords of retail shopping centres, or retail precincts such as the one situated in Goldsbrough Lane, take a robust view of commercial negotiations. A clause such as Clause 16, “Redevelopment and Relocation”, is a clause commonly insisted upon by commercial landlords of retail shopping precincts for all tenants. The term is even imposed upon high profile or “blue chip” tenants such as department stores and supermarkets.[4] It gives the landlord the capacity to redevelop or alter the layout of such centres to suit prevailing conditions or the changing times. It seems to the Tribunal more probable than not, that a large commercial landlord such as CBUS Property was in a position of relative commercial strength when compared to Ms McCarthy. It is perfectly understandable that she would have made a commercial judgement call to enter into the lease in the circumstances that she did. Also, it should not be lost sight of that in 2014, the premises in Goldsbrough Lane had just been built. One would have quite reasonably expected, exercising a considered commercial judgement, that the likelihood of a redevelopment in the first 10 years of that centre’s existence was fairly remote. Therefore, the Tribunal does not accept the criticisms levelled against Ms McCarthy concerning this decision.
[4] In an exchange between the bar table and counsel it was suggested that such a term would not be imposed upon significant commercial tenants such as Coles Supermarkets. More often than not most commercial shopping centre landlords insist on the same clause for all tenants for sound commercial reasons. One compelling commercial reason is that in the absence of a relocation clause, if the landlord seeks to redevelop a shopping centre or shopping precinct and desires an existing tenant to move or relocate, it is forced to have to buy out the tenant and the remaining term of the lease. These negotiations are inevitably difficult and expensive.
In or about August 2018 the landlord of Shop No TG14 approached Ms McCarthy and informed her that it was intending to undertake a complete redevelopment and renovation of that site. It also informed her pursuant to the provisions of Clause 16 of the 14 April 2014 lease that the pharmacy would have to temporarily relocate to other premises in the Goldsbrough Lane precinct. It was also explained to Ms McCarthy that once the redevelopment works had been completed, the pharmacy could return back to the same or largely similar location at Shop No TG18 & TG19. It was further explained to her by the landlord’s representatives that the redevelopment works would take in the vicinity of 1 year and 9 months to complete.
Following discussions between the landlord and Ms McCarthy, the landlord’s Regional General Manager wrote to the Victorian Pharmacy Authority concerning the proposed relocation. The contents of that letter speak for itself, however the Manager advised the Victorian Pharmacy Authority that the landlord was intending to complete redevelopment works of the site that would include partial demolition of the current premises. The Manager advised the Authority that the applicant would relocate to temporary premises at Shop No TG14 Goldsbrough Lane and that the expected relocation would occur no later than 4 February 2019.[5]
[5] The letter from the Regional General Manager of the Landlord to the Victorian Pharmacy Authority is document ATB 2.
A fresh lease was entered into on 5 December 2018, this time between GPT Pty Ltd and GPT Funds Management 2 Pty Ltd as Lessor, and Pharmacy Neo Pty Ltd as Lessee for shop number TG14 in the Goldsbrough Lane precinct.[6] Whilst the terms of the lease should be considered in their entirety, reference should be made to several clauses in it. Under Clause 63 of the 5 December 2018 lease, the existing lease being the 14 April 2014 lease was surrendered. The term reserved by the lease was 1 year and 9 months. Under Clause 74 the lessor and lessee acknowledged that they had entered into that lease to provide the lessee with temporary premises in the centre until such time as the new premises were available and the lessee had completed its fitting out of the new premises in accordance with the requirements of the new lease. It should be observed that obviously, this clause reflected what Ms McCarthy described in her evidence as the intended temporary nature of the tenancy of Shop No TG14. Additionally, Clause 41, “Relocation” was yet again included in this lease which enabled the lessor to require the lessee’s business to be relocated to other premises in the centre if it gave notice of a genuine proposal to carry out a refurbishment, redevelopment or extension of the premises. There was also Clause 42, “Demolition”, which gave a similar power to the landlord to terminate the lease if it decided to demolish, substantially repair, renovate or reconstruct the centre or any part of the centre and the work could not be carried out practically without vacant possession of the demised premises. Clause 62, “Conditions precedent to the grant of this lease”, provided that the obligations of the lessor and the lessee under the lease were subject to and conditional upon Australian Community Pharmacy Authority (“ACPA”) approval.
[6] The 5 December 2018 lease is document FST2 of the Further Supplementary T documents.
The relocation of Pharmacy NEO to the temporary location at the premises (Shop No TG14) was affected on 4 February 2019.
Since 4 February 2019 the applicant has held approval from the respondent to supply pharmaceutical benefits at the premises pursuant to s 90(1) of the Act.
Ms McCarthy gave evidence that when the applicant moved into the temporary premises in Shop No TG14, it took a long time to gain traction, as she put it. After trading for approximately a year at the temporary location, she stated that she decided she was getting back on her feet. At about this time she had discussions with the landlord to find out what was occurring with respect to the old site Shop No TG17 & TG18. The upshot of these discussions was that the landlord informed Ms McCarthy that if she wanted to, she could stay at the temporary premises Shop No TG14. Her evidence was that she weighed it all up and decided to keep the Pharmacy NEO business where it was in Shop No TG 14.
Accordingly, following these negotiations, yet another lease was drafted with respect to the applicant’s tenancy at Shop No TG 14. Ms McCarthy’s evidence was that she negotiated very hard for the lease, and it took several months to finalise. The lease dated 1 March 2020 is again between GPT as lessor and Pharmacy NEO Pty Ltd as lessee.[7] The term of that lease was for 5 years commencing on 1 March 2020 with an option of one further term of 4 years and 4 months commencing on 1 March 2025 and expiring on 30 June 2029. Insofar as it is relevant, that lease also had a relocation clause contained in Clause 41, “Relocation”. Ms McCarthy stated that upon execution of this lease she also informed the Victorian Pharmacy Authority and the Department of Health that she was now intending to permanently operate the pharmacy from those premises and approval was granted by those agencies. Ms McCarthy’s evidence was, with respect to those agencies, that she intended to remain there for at least 5 years, if not longer.
[7] The lease of 1 March 2020 is document FST3 of the Further Supplementary T documents.

Ms McCarthy gave evidence that shortly after execution of the 1 March 2020 lease when COVID-19 restrictions commenced to be imposed later in that month of March 2020, the pharmacy’s trade declined virtually overnight by approximately 90%. Her evidence was that for approximately 2 years, the pharmacy averaged less than $500 in sales each day. Such a small turnover resulted in the pharmacy business losing money each day it remained open. The reason for this sudden decline in turnover was of course because of the introduction of working from home requirements and “lockdowns” arising from the COVID-19 restrictions imposed by the State of Victoria. Virtually overnight the Melbourne CBD had comparatively few people working there on a daily basis. The dramatic decline in turnover experienced by the applicant in the pharmacy business conducted from the premises continued into the year 2021. As Ms McCarthy stated, “I was smashed by COVID in the working from home mandate for 2 years”. Ms McCarthy’s evidence was that given the gravity of the financial situation, an option for her to consider, in cost-effective terms, was to close the pharmacy and just pay the rent when due. Other businesses in the Goldsbrough Lane precinct adopted this approach. The applicant did not.
The Tribunal should also observe that Ms McCarthy gave evidence that she worked in the city pharmacy most days for nearly 2 years during the period in which there were significant COVID-19 restrictions. Such restrictions, as observed earlier, included requirements for office staff employed in the Melbourne CBD to work from home and also significant restrictions by way of what are known as “lockdowns”. She also gave evidence that over the period of the COVID-19 pandemic she took out a combination loan which included borrowings against her business and her home amounting to approximately $600,000, to enable the pharmacy business to continue.
By an email of 10 February 2021, Ms McCarthy, on behalf of the applicant, sent an email to the Department of Health and Aged Care (“the Department”).[8] The contents of that email are referred to in their entirety and speak for themselves. However, it is worthwhile briefly noting some of the matters canvassed in it. She explained, as noted earlier, that since March 2020, the pharmacy trade had declined by approximately 90%. She stated that things had still not improved because, by that time, very few workers had returned to their offices. Further, it was explained what steps she had undertaken to keep the business afloat. She noted that each week she stayed open she was losing money. In that setting, the email stated that the applicant wished to discuss the potential of temporarily deactivating its approval number for a period of approximately 12 to 18 months. She also raised the option of closing the store, vacating the premises until such time as the CBD picked up again, which she considered would be in excess of 12 months, then look for a new site nearby, and reopen the pharmacy. She expressed the concern that if she were to just close up and walk away there would be loss of a business that was quite valuable “pre-COVID”, when she was shouldering a debt associated with it.
[8] The email is document T8 of the T documents.
An officer of the respondent on 11 March 2021 provided a response by email to the applicant’s enquiry of 10 February 2021.[9] The author of that email explained to the applicant that a deactivation of a PBS approval is for a short and specific period of time, with the intention of reopening the same premises once circumstances have changed. It was further explained that to relocate a pharmacy to new premises, the applicant was required to be trading at the approved premises when submitting an application to the ACPA. A further warning was contained in that email to the effect that if the applicant was planning on permanently closing the pharmacy, it would need to advise the Department as it would result in the cancellation of the PBS approval.
[9] The email is document T10 of the T documents.
Sometime after the onset of the COVID-19 restrictions and the drastically reduced pharmacy turnover, Ms McCarthy spoke to GPT about the applicant’s predicament. Negotiations ensued which, in September 2021, resulted in a further lease being entered into between the parties commencing on 16 September 2021 for a term of 9 months and 15 days with a reduced rent being payable by the applicant.[10] However, as a condition of GPT as landlord agreeing to a reduced rent was an additional condition that the term reserved by the lease of the premises would be altered to 30 June 2022. Ms McCarthy gave evidence that the intention of the parties in agreeing to a shorter term of the lease was to enable them to have a better indication of what occupancy patterns of offices in the Melbourne CBD would be. Ms McCarthy explained that this was so that the parties could in good faith negotiate a further lease of the premises that would realistically reflect the prevailing economic conditions of the time, or as it was put by her, “the CBD landscape at the time”.
[10] The further lease commencing on 16 September 2021 is document FST4 of the further supplementary T documents.
The mental and financial strains experienced by Ms McCarthy led her to retain the services of a pharmacy broker to find a potential purchaser of the pharmacy. A potential purchaser was found. The potential purchaser, amongst other things, agreed to negotiate with GPT for a lease of the premises to them to commence in July 2022 when the term reserved by the existing lease between GPT and the applicant had expired. It took some time for documentation to be signed by the prospective purchasers.
On 17 February 2022 GPT wrote to the applicant concerning several matters.[11] The letter advised the applicant that GPT was no longer able to allow Pharmacy NEO to return to occupy the premises from which it previously conducted the pharmacy business, namely Shop No TG17 & TG18, as that tenancy was no longer available. Further, the letter advised that with respect to the lease over the premises then currently occupied by the applicant, Shop No TG14, GPT required the applicant to vacate them at the expiration of the lease. The reason for this requirement was explained in the letter to be that GPT decided that the current retail climate provided a perfect opportunity to commence redevelopment works. It was also recorded in that letter that preliminary negotiations were underway regarding an alternative site within the precincts of GPT’s property at the corner of Bourke and William Streets Melbourne (Goldsbrough Lane).
[11] The letter is ATB 5.
Eventually on 22 April 2022 an agreement in writing was signed by the applicant and the purchasers for the sale of the pharmacy, including its goodwill. Commensurate with the execution of the sale of pharmacy agreement, the purchasers submitted an application to the ACPA seeking to relocate the premises from which the pharmacy business was to be conducted to the Flinders Street Station Concourse and a change of ownership, in anticipation of such applications being considered for approval by that Authority at its scheduled June 2022 meeting.
The applicant retained lawyers who wrote to the Department on 5 May 2022.[12] In that letter the Department was advised that on 28 April 2022, an application had been submitted to the ACPA for the relocation and change of ownership of Approval Number 24850X. It was also explained in that letter to the Department that the applicant’s then current lease of the premises was to expire on 30 June 2022 and that the landlord required the site to be vacated. As a result, it was stated that the applicant had no prospect of obtaining a new lease, extending the current lease, or otherwise continuing to conduct the pharmacy at the premises.
[12] T12 page 38 of the T documents.
An officer of the Department by an email of 9 May 2022 responded to the applicant’s lawyer’s letter of 5 May 2022.[13] That email stated that based upon the information provided by the applicant in its lawyer’s letter, there were circumstances beyond the pharmacist’s control and that an application for relocation with a change of ownership had been submitted for the June 2022 ACPA meeting. Therefore, the request to deactivate the approval was granted. The deactivation was approved for the period between 9 May and 10 June 2022. This was to allow sufficient time for the application to the ACPA to be determined at its meeting on 3 June 2022.
[13] T13 page 46 of the T documents.
The application to the ACPA was not finalised for some time. Correspondence passed between the applicant and the Department seeking an extension of time in anticipation of a finalisation of the applications to the ACPA. Further extensions of the deactivation were granted to the applicant on 24 June 2022 and 22 July 2022.[14]
[14] The correspondence concerned that passed between the applicant's lawyers and the Department is found in the following T documents: T13 page 45 and T13 page 44.
Unfortunately, the ACPA did not provide a recommendation approving the purchasers’ relocation application. The letter from the ACPA to the prospective purchasers was in evidence before the Tribunal.[15] It contained detailed reasons why ACPA decided not to approve the application. It was found by ACPA that it was not satisfied the application met the requirements of all the criteria under the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (“Pharmacy Location Rules”). In particular, ACPA was not satisfied that Item 312 of the Pharmacy Location Rules had been complied with, in that one or more approvals in relation to the existing premises were not in force, immediately before the day the application was made, for a continuous period of at least 5 years, or alternatively that an exemption applied. The reason, of course that the approval in relation to the existing premises from which the Pharmacy NEO business was conducted had not been in force for a continuous period of at least five years was because the applicant had been required by its landlord GPT, as noted earlier, to relocate to the premises Shop No TG 14 on 4 February 2019.
[15] Document ATB 7.
The applicant, by an email from its lawyers to the Department on 22 July 2022, advised that it had elected to seek Ministerial discretion to obtain a favourable recommendation enabling it to relocate its business.[16] Contrary to what was mentioned in the email from the applicant’s lawyers to the Department on 22 July 2022, the purchasers intended to make such an application pursuant to an understanding between the parties to the sale of pharmacy agreement. Whilst the purchasers were in the process of undertaking that application, it sought an extension of the deactivation until 5 August 2022. The Department approved a further deactivation on 22 July 2022 until 5 August 2022.[17]
[16] The email is document T13 page 43 of the T documents.
[17] The approval of the further deactivation by the Department on 22 July 2022 is document T13 page 42 of the T documents.
On 2 August 2022 the applicant, by email, requested an extension of the deactivation until 26 August 2022, as the application for the exercise of the relevant ministerial discretion was taking some time.[18]
[18] The email is document T13 page 41 of the T documents.
Unfortunately, it appears that the purchasers made an application seeking the exercise of Ministerial discretion under s 90A of the Act but did not complete the process. Accordingly, no exercise of the relevant Ministerial discretion occurred with respect to the premises.
The purchasers, under the sale of pharmacy agreement, served a “Notice of Termination of Contract” on the applicant on 22 August 2022.[19] The purchasers relied upon subclause 3.4(a) of the sale of pharmacy agreement to terminate that contract on the grounds that the ACPA had rejected the purchasers’ relocation application, which was a condition precedent contained in clause 3.2 of that agreement. The applicant accepted the termination by the purchasers.
[19] The Notice of Termination of Contract of 22 August 2022 is document ATB 8.
By an email of 25 August 2022, the applicant’s lawyers advised the Department that the transaction between the applicant for the relocation and the current owner of the Approval Number had come to an end. It sought an extension of the deactivation until 2 September 2022 to enable the applicant to consider its options.[20] The Department by an email of 25 August 2022 approved a further deactivation until 2 September 2022, to provide the applicant the opportunity to further consider the available options.[21]
[20] The email is document T13 page 41 of the T documents.
[21] The email from the Department is document T13 page 40 of the T documents.
The applicant’s lawyers sent a further email to the Department on 31 August 2022 seeking an extension of the deactivation until April 2024.[22] The email from the applicant’s lawyers briefly outlined the reasons why the extension of the deactivation until April 2024 was sought. They were:
(a)by April 2024 the applicant’s approval number would have been in its current location for approximately 5 years, by which time there would be no restrictions on it relocating the same;
(b)the requested indulgence from the Department was being sought because of circumstances that had occurred outside the applicant’s control. Those circumstances being that the lease at the current site had ended without the prospect of a new lease being entered into because the landlord had elected to redevelop the site, which prevented the applicant from continuing to trade and operate the pharmacy from such site. The applicant’s understanding was that the existing site from which it conducted the pharmacy had now been incorporated into another tenancy.
(c)the previous relocation application had not been pursued by the applicant, and in any event, the relocation required the exercise of Ministerial discretion, as at present the Approval Number was not capable of relocation;
(d)if the applicant were to pursue its own relocation application, the application would again be restricted and require the Minister’s approval for which there could be no certain outcome;
(e)the deactivation would allow the applicant to find a new site and make preparations to recommence supply to the community at a time when the relocation would be unobstructed and when it could make arrangements to fit out a new pharmacy; and
(f)additionally, the deactivation would preserve a number in the Melbourne CBD, as it was understood that any application for a new number would be difficult given the current applicable rules and the location of existing pharmacies in the city of Melbourne.
[22] The email from the applicant's lawyers to the Department is document T13 page 39 of the T documents.
By an email of 6 September 2022 from the Department to the applicant’s lawyers, a further period of deactivation was granted until 21 September 2022 so as to allow time for the applicant’s request for the extension of the deactivation until April 2024 to be properly considered.[23]
[23] The email from the Department to the applicant’s lawyers is document T13 page 39 of the T documents.
On 19 September 2022 a delegate of the Secretary of the Department forwarded to the applicant a “Notice of Intent – supply of pharmaceutical benefits 24850X”.[24] The purpose of the Notice of Intent was to invite the applicant, the approved pharmacist, to show cause as to why the delegate should not make a decision to cancel the approval then presently held by the approved pharmacist under s 90 of the Act. Further, the Notice of Intent extended the deactivation period until 21 October 2022. The Notice of Intent also invited the applicant to make any submissions with respect to possible cancellation of the approval on or prior to 14 October 2022, which would be considered by the delegate.
[24] Document T16 page 78 of the T documents.
In accordance with the invitation to lodge submissions with the delegate contained in the Notice of Intent, the applicant’s lawyers lodged detailed submissions by way of a letter on 14 October 2022.[25] The contents of those submissions are referred to in their entirety and have been considered by the Tribunal. They outlined the history of the matter including the impact of COVID-19 on the subject pharmacy’s client base and turnover as has been previously recorded, the difficulties encountered with the landlord, the failed attempt to sell the Approval Number and the commensurate failed ACPA application, together with the applicant’s future intentions. On this note, it was stated that the applicant had the intention of relocating the Approval Number when the relocation is allowed, being sometime in early 2024. The applicant’s intention was explained to be to secure a new site and rebuild the pharmacy, which was its preferred course of action. It was emphasised that the circumstances or situation faced by the applicant were outside of its control and, as such, warranted a favourable consideration and application of the Pharmacy Location Rules by the Department in making an assessment to extend the deactivation of the Approval Number to approximately April 2024. If this were permitted the applicant would be able to relocate the Approval Number without any restrictions as the 5-year continuous operation period will have lapsed.
[25] Document T18 page 96 of the T documents.
The delegate made the reviewable decision on 24 October 2022. The reviewable decision in some detail outlined the “Material Facts” with respect to this matter. As noted, a decision was made to cancel the approval of the approved pharmacist to supply pharmaceutical benefits at the approved premises with effect from 18 November 2022. In a section entitled “Reasons for decision”, the grounds relied upon by the delegate in deciding to cancel the approval were articulated. It is appropriate to briefly recount these reasons. The delegate stated that based on the material facts, in particular that the pharmacy had not traded since May 2022 and was not able to recommence trade at the approved premises due to such premises having been leased to another business, she was satisfied that the approved pharmacist was not carrying on business as a pharmacist at the premises in respect of which the pharmacist was approved, and the premises were not accessible by members of the public for the purpose of receiving pharmaceutical benefits. An additional reason provided was that as the pharmacy was no longer registered with the VPA, she was satisfied that the pharmacist was not permitted under the law of the relevant state (Victoria) to carry on business at the approved premises.
At this stage some further reference should be made to other aspects of Ms McCarthy’s evidence at the hearing of the application which is relevant to the considerations that the Tribunal, as decision-maker, should take into account.
Ms McCarthy, in her evidence, emphasised several of the matters that have already been touched on which led to the predicament that the applicant finds itself in presently. They were described by her as matters that occurred outside of her control. The principal matters to which she referred related to the landlord’s conduct over several years. There was the decision in 2019 by the landlord which required her to move from the premises that the pharmacy previously occupied, namely Shop No TG17 & TG18, in the Goldsbrough Lane precinct. Later there was the decision in 2022 to carry out the redevelopment works of the premises. Had the temporary relocation not occurred, the Pharmacy NEO business would have remained at the same premises for more than 5 years.
Finally, with respect to Ms McCarthy’s evidence, she stated, and the Tribunal has no reason to not accept such evidence, that she does not intend to sell the Pharmacy NEO business and/or the approval. Her evidence was that if this application is successful, she intends to relocate the Pharmacy NEO business herself, to a location subject to the applicable Pharmacy Location Rules or Ministerial discretion.

The Tribunal should observe that if this application for review is unsuccessful, it is highly likely that the applicant and, for that matter, Ms McCarthy, would completely lose the significant investment that they have tied up in the Pharmacy NEO business that was previously conducted from the premises. Ms McCarthy’s evidence was that the Pharmacy NEO business conducted from the premises was, prior to the outbreak of the COVID-19 pandemic, worth approximately $2,500,000.
THE LEGISLATIVE REGIME
Section 90(1) of the Act provides that the respondent Secretary may, upon application by a pharmacist for approval to supply pharmaceutical benefits at particular premises, approve that pharmacist for the purpose of supplying pharmaceutical benefits at those premises.
Pursuant to s 90(3B) of the Act, upon a recommendation for grant of approval from the Authority, the respondent may grant approval to supply pharmaceutical benefits at particular premises.[26]
[26] The "Authority" is defined as the Australian Community Pharmacy Authority.
The section of the Act that is the fulcrum of this case is s 98(3). Section 98, “Cancellation by Secretary of approval of pharmacists etc”, vests a discretion in the Secretary to cancel the approval of a pharmacist under s 90 if certain circumstances arise. Section 98(3) provides as follows:
(3) If the Secretary is satisfied that:
(a)an approved pharmacist is not carrying on business as a pharmacist at premises in respect of which the pharmacist is approved; or
(b)the premises are not accessible by members of the public for the purpose of receiving pharmaceutical benefits at times that, in the opinion of the Secretary, are reasonable;
then the Secretary may (at his or her discretion), by notice in writing to the pharmacist, cancel the approval of the pharmacist under s 90.
For the purposes of s 98, an approved pharmacist is taken not to be carrying on business as a pharmacist if the approved pharmacist is not supplying pharmaceutical benefits in the course of carrying on the business (s 98(6) of the Act).
Under s 98(5) of the Act a reference to, “an approved pharmacist carrying on business as a pharmacist at premises” is a reference to an approved pharmacist carrying on a business for the supply of pharmaceutical benefits at the premises.
CONSIDERATION
Is the discretion under s 98(3) to cancel the approval of the pharmacist under s 90 enlivened?
The Tribunal considers that there is ample evidence to establish that the discretion to cancel the approval of the pharmacist under s 90 has been enlivened.
There is ample evidence to establish that at all times relevant to this application, the applicant was not carrying on business as a pharmacist at the premises and that they were not accessible by members of the public for the purpose of receiving pharmaceutical benefits at times that were reasonable.
The evidence establishes that the applicant’s tenancy of the premises came to an end on 30 June 2022 when the term reserved by the lease over them expired. The landlord did not grant the applicant a further lease of the premises and instead elected to redevelop the site, which, as observed by its lawyers in an email to the respondent on 31 August 2022, prevented it from continuing to trade and operate the pharmacy. The premises were vacated.
As also contended for by the respondent, the applicant did not renew the lease or obtain a fresh lease over the premises. The premises were incorporated into another tenancy. The applicant did not enter into a fresh lease for other premises from which to conduct the “Pharmacy NEO” business, situated in Goldsbrough Lane, 181 William Street Melbourne or that precinct.
Ms McCarthy in her evidence readily conceded that the pharmacy ceased trading upon the expiration of the term reserved by the lease and that the premises were vacated.
On this question, in written submissions lodged by both parties, it was readily acknowledged that it was uncontroversial that both of the preconditions to the exercise of the power (or, perhaps more accurately, the discretion) in s 98(3) were enlivened when the reviewable decision was made.[27]
[27] Paragraphs 6, 16 and 29 of the applicant's Statement of Facts, Issues and Contentions of 7 September 2023 are referred to. Sub-paragraphs 5.1 to 5.5 of the respondent's Statement of Facts, Issues and Contentions of 20 April 2023 are also referred to.
The applicant also acknowledged in its Statement of Facts, Issues and Contentions that the issue in this matter is whether the discretionary power in s 98(3) to cancel the approval should be exercised. In other words, it contended, whether it is the correct or preferable decision. The Tribunal agrees with this analysis.
Finally, Mr Katz of counsel, who appeared for the applicant, sensibly and properly conceded in submissions from the bar table that the discretion was enlivened.
Should the discretion to cancel the approval of the pharmacist under s 90 of the Act be exercised?
The respondent relies upon several grounds which he says justifies the exercise of the discretion under s 98(3) to cancel the approval under s 90 when one considers all of the circumstances surrounding this application. Those grounds will be briefly touched on.
It is contended that the closure of the pharmacy conducted at the premises is not temporary and that there will be a significant timelapse before the applicant would be able to secure a lease over new premises and reopen. Given that the closure of the pharmacy occurred on or about 30 June 2022, if the applicant does not reopen until April 2024, as contemplated, given that it has sought a period of “deactivation” until then, that will be a time span of over 20 months. The applicant’s period of deactivation has already been significant and certainly not “a short and specific period of time”.
This does of course require the Tribunal to consider the approach adopted by the Department with respect to considering applications for deactivation. As noted in submissions lodged by both parties to the application, the terms “deactivation” and “deactivate” are not terms used or defined in the Act. It is an administrative concept, intended to describe situations which arise when the respondent or his or her delegate decides not to cancel an approval under s 98(3), notwithstanding that the statutory precondition or foundation for the making of such a decision has been satisfied. That precondition or foundation is, of course, that the approved pharmacist has ceased to carry on business as a pharmacist at the premises in respect of which the pharmacist is approved.
Both parties referred to the Department’s guidelines entitled, “Deactivation of an approved pharmacist – guidelines” (“The guidelines”).[28] The guidelines themselves quite properly record that a delegate is not bound by them and is legally obliged to take into consideration all relevant circumstances in reaching a decision in individual cases. Naturally, in the event of any conflict between the guidelines and the enabling statute, in this case the Act, such statute prevails.[29]
[28] Document ST 3.
[29] Re: Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 640.
In the section of the guidelines entitled “Important considerations”, it is recorded that in considering a request for deactivation, the need for the community to have access to the supply of pharmaceutical benefits is important when deciding whether or not to grant deactivation. It is also a relevant factor in determining the length of time to grant deactivation. Additionally, it is recorded that the continuing commercial viability of a pharmacy is not generally a relevant consideration when deciding whether to grant deactivation.
Several sections of the guidelines were referred to. The guidelines address “Requests for deactivation”. They observe that the delegate will consider a request to deactivate an approval for “a short and specific period of time” in several circumstances. The term “a short and specific period of time” is not defined. As the applicant did point out in previous iterations of the guidelines, a maximum duration of 6 months for deactivation has been referred to. One of those circumstances is (Paragraph 3) where there is a proposed change in the location of the pharmacy, irrespective of whether there is also a proposed change in the approved pharmacist. One such circumstance is where the approved pharmacist wishes to relocate the pharmacy to other premises and is intending to make an application to ACPA to relocate and the approved pharmacist cannot, for reasons which are beyond their control, continue to carry on business as a pharmacist at the premises in respect of which the pharmacist is approved.
It is also noted in that section that a request to deactivate where the premises have been vacated and the approved pharmacist is looking for alternative premises, may not be a sufficient reason to grant deactivation.
The respondent contends that there is no evidence establishing that the applicant has located or is in the process of locating other premises from which the pharmacy business previously conducted could be established. Additionally, the respondent contends that a further period of deactivation, as sought by the applicant, is inconsistent with the guidelines where alternative premises have not been located. It is submitted that the language of the relevant section of the guidelines contemplates other premises being identified and steps undertaken to secure a lease over those premises and occupy them as soon as practicable.
Another contention advanced by the respondent, relying upon the guidelines, arises from a consideration of the language used in a section entitled, “Extending the deactivation period”. That section of the guidelines specifies that the delegate will only consider extending the period of deactivation beyond the original period in exceptional circumstances and with supporting documentation. The respondent contends, with some force and effect, that the deactivation of the applicant’s approval in this instance has been extended six times prior to the reviewable decision being made. Therefore, further deactivation would be inconsistent with the spirit of the guidelines.
Therefore, it is submitted that deactivation of the applicant’s approval is not appropriate. Accordingly, cancellation of the approval is the only appropriate course when one examines the language used in s 98(3) of the Act, the thrust of which is that the approved pharmacist is required to carry on business as a pharmacist at premises in respect of which the pharmacist is approved.
This then raises the grounds relied upon by the respondent to contend that the discretion reserved to the Secretary (or, in this case, the Tribunal as decision-maker) by s 98(3) to cancel the approval of the pharmacist under s 90 should be exercised.
The closure of the pharmacy at the premises is not in any way temporary. A new pharmacy would not be able to commence trading within a reasonably short time. The pharmacy has now been closed for over a year and if the period of deactivation sought by the applicant were permitted, it would be approximately 22 to 23 months in which the approved pharmacist was not carrying on business. This significant lapse of time cannot on any true and proper construction of the language used in the guidelines be said to be for a short and specific period of time.
The respondent also, quite understandably and for that matter correctly, contends that the discretion conferred upon the Secretary (and, in this instance, the Tribunal as decision-maker) by s 98(3) should be exercised taking into consideration the nature, scope and purpose of the power identified by reference to the statutory scheme created by the Act.[30]
[30] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24.
The power or discretion created by s 98(3) is found in Division 2 (“Supply of pharmaceutical benefits”) of Part VII (“Pharmaceutical benefits”). Part VII has as its overarching purpose the supply of pharmaceutical benefits by way of provision of drugs and medicinal preparations to members of the public through the agency of approved pharmacists carrying on the business of community pharmacies or, as most laymen would know them, retail pharmacies or chemist shops.[31] The Tribunal acknowledges the force of the respondent’s contention that the statutory scheme with respect to pharmaceutical benefits is directed at ensuring that the community or members of the public have access to an effective supply of drugs and medicinal preparations.
[31] It should be observed here that the term "pharmaceutical benefit” is defined in s 84 of the Act. It is a reasonably detailed definition but, subject to an appropriate declaration or determination under section 85, applies to various drugs or medicinal preparations. The definition need not be reproduced in full for the purposes of these reasons.
The mechanism created by s 90, “Approved pharmacists”, is referred to.
Section 90(1) provides that the Secretary may, upon application by a pharmacist for approval to supply pharmaceutical benefits at particular premises, approve that pharmacist for the purpose of supplying pharmaceutical benefits at those premises.
Section 90(3A) provides that, subject to certain provisions, applications for approval to supply pharmaceutical benefits at particular premises must be referred to the Authority.
Section 90(3B) provides that an approval may be granted under that section in respect of an application that has been referred to the Authority only if the authority has recommended the grant of the approval. The Secretary, however, may refuse to grant the approval even if the grant has been recommended by the Authority. The respondent referred to ss 10 and 11 of the Pharmacy Location Rules which prescribe when the authority must recommend that an applicant be approved and when it must recommend that an applicant not be approved. The Authority must not make a recommendation that an application be approved under s 90 of the Act unless, amongst other things, the proposed premises would be accessible to the public and, within 6 months after the day on which the Authority makes a recommendation in relation to the application, the applicant will be able to begin operating a pharmacy at the premises proposed.
The respondent also observed that whilst approval of a pharmacist to supply pharmaceutical benefits at particular premises under s 90 of the Act is in force, other pharmacists seeking to supply pharmaceutical benefits at a new pharmacy in a nearby location are unable to meet the requirements necessary to be granted an approval. The reason for this is that the Authority is required to recommend an applicant not be approved under s 90 of the Act in respect of proposed premises if it is not at least 1.5 km, in a straight line, from the nearest approved premises (Item 130 of Part 2 to the Authority Rules).
Another submission made by the respondent was that even if the reviewable decision is set aside, there are two further significant hurdles that the applicant faces before it could recommence trading. Firstly, it would have to successfully apply for a further period of deactivation. Given that there have been several periods of deactivation already granted from May of last year, the prospect of a further successful application is by no means certain. It was submitted in any event, that a further extension is inconsistent with the guidelines.
Then, assuming a further period of deactivation of sufficient length were granted, there would have to be a further successful application made to the ACPA. This also is by no means certain.
Finally, it is contended by the respondent that the applicant could make a fresh application for approval under s 90 with respect to any new proposed premises (Part 2 of Schedule 1 to the Pharmacy Location Rules.)
The net effect of all this, the respondent submitted, is that if the discretion to cancel the approval is not exercised, the effect would be to reinstate the applicant’s approval with respect to the approved premises. However, the applicant no longer has an entitlement to occupy the approved premises as its tenancy has expired and it has not entered into any fresh lease of new premises from which a retail pharmacy business could be conducted. The totality of this would be to continue to deny the public the service of the supply of pharmaceutical benefits in the location of the approved premises, which has now occurred for a period in excess of 12 months.[32]
[32] See Inas Karem Holdings Pty Ltd and Secretary, Department of Health and Aged Care [2023] AATA 754, 15 [48].
The applicant submits that the correct and preferable decision is that in all the circumstances, the discretion to cancel the approval should not be exercised and the reviewable decision be set aside.
In support of the submission that the discretion to cancel the approval should not be exercised and the reviewable decision set aside, the applicant relies on several grounds that emerged from the subject matter of the evidence that have been touched on above. These grounds will be briefly recounted.
It points to the unforeseen and what it describes as exceptional circumstances facing the applicant prior to and during the onset of the COVID-19 pandemic. These events together have the effect of substantially limiting its options having regard to the applicable Pharmacy Location Rules.
The decisions of the landlord have been recounted in some detail above. Firstly, in 2019, the landlord required the Pharmacy NEO business to move to what was described as a temporary location prior to the pandemic. Then there was the effect of the pandemic itself which had a devastating financial effect on the pharmacy business, causing it to incur significant losses. These losses required Ms McCarthy to draw down approximately $600,000 against her home mortgage and borrow against the pharmacy business to keep the business afloat. The applicant did not reject a tenancy or a lease because they might be on non-commercial terms.[33] On the contrary, Ms McCarthy continued to keep the pharmacy open during the pandemic, when most other businesses in the Goldsbrough Lane precinct had closed, when a more commercially realistic option for her was to simply cease trading but continue to pay the rent on the premises so as to minimise the applicant’s losses.
[33] The applicant, by way of comparison referred to the facts of a recent decision of this Tribunal, in Inas Karem Holdings Pty Ltd and Secretary, Department of Health and Aged Care [2023] AATA 754 at [21] where the landlord of the approved premises concerned attempted to have the applicant enter into a new lease. The applicant in that case was not comfortable doing so as it had concerns about economic uncertainty due to COVID-19 restrictions and the potential redevelopment of the premises concerned, which had led to a decline in interest by prospective purchasers due to possible disruption such redevelopment would cause.
Further, the applicant submits that it diligently and actively communicated with the respondent at all relevant times.[34] It did promptly communicate with the respondent concerning its circumstances, making requests for deactivation and extension of the deactivation periods.
[34] The applicant also compared its conduct with that of the applicant in the decision of this Tribunal in Inas Karem Holdings Pty Ltd and Secretary, Department of Health and Aged Care [2023] AATA 754 at [42] and [47]. There is some force in this contention as in that case the applicant, amongst other things, failed to inform the respondent Department that it had ceased carrying on business as a pharmacist at the approved premises.
When considering all circumstances that have emerged from the evidence adduced in this application, the Tribunal considers that the discretion to cancel the approval should not be exercised and the reviewable decision should be set aside. There are several reasons for reaching this conclusion. The Tribunal finds that the unforeseen circumstances surrounding this case are truly exceptional and unique. The reasons for reaching this conclusion will be outlined hereunder in no particular order of priority or importance.

The deactivation of the applicant’s approval had already been extended six times prior to the reviewable decision being made. The first deactivation of the approval number was approved and commenced on 9 May 2022. The cancellation of the approval pursuant to the terms of the reviewable decision took effect from 18 November 2022. The total period of deactivation was in excess of 6 months. The totality of the deactivation in this setting does not seem to be for “a short and specific period of time” as contemplated by the guidelines.
By way of comparison, the Tribunal does observe that previous iterations of the guidelines specified a maximum 6-month duration for deactivations. In a previous decision of this Tribunal, it recorded the guidelines as describing deactivation as a process in which the Secretary of the Department would refrain from revoking an approval temporarily where it was anticipated that the pharmacy would reopen, “within a reasonably short time frame (not more than 6 months).”[35] Whilst the duration of the deactivations that were granted by the Department to the applicant in this case is marginally longer than 6 months, it does in the view of the Tribunal, reflect the unique and truly exceptional circumstances of this case. The exceptional circumstances in this case include, firstly, the effects of COVID-19 restrictions on the applicant’s business, and secondly, the unfortunate and unique circumstances with respect to the acts of its landlord.
[35] Re: Martin and Secretary, Department of Health and Ageing (2004) 84 ALD 528, 7 [20].
The Tribunal considers that the imposition of the COVID-19 restrictions by the State of Victoria were amongst the most severe imposed by any government in the world. This is not in any way to be critical of the government’s decision but to simply state as a fact the unique commercial and social circumstances that were faced at that time. No one could have predicted the severity of the pandemic and the crippling effect that it had on many businesses including, in this case, retail pharmacies as situated in the Melbourne CBD. Not only were the restrictions by way of the work from home mandate and the “lockdowns” severe, but they also lasted for an extraordinarily long time. In this case, approximately a 2-year time span. The guidelines, as noted earlier, do recognise the concept of “exceptional circumstances” as a reason for extending the period of deactivation. Whilst not wholly determinative of the issue for determination by the Tribunal in this application, nonetheless, the concept of exceptional circumstances is apposite to the situation that the Tribunal as decision-maker has to consider in this application. It considers that the COVID-19 restrictions, let alone the acts of the landlord, do amount to truly exceptional circumstances that justify not exercising the discretion conferred by s 98(3) of the Act to cancel the approval of the pharmacist.
Further mention should be made about the position that Ms McCarthy and the applicant found themselves in with respect to the lease that had been entered into with the landlord. When the short-term lease was entered into for the premises for a limited term of 9 months and 15 days commencing on 16 September 2021, the applicant’s financial position was in peril. There was, at that time, no clear indication as to how long the COVID-19 restrictions would continue and it seems that from both parties’ perspective at that time, there was a measure of sensible commercial reality in the short term or temporary arrangement that lease reflected. The parties intended to review the situation at the expiration of the term reserved by the lease in the hope that the commercial landscape would have, by then, become more settled. It was simply unfortunate for Ms McCarthy and the applicant that the landlord subsequently, when the term reserved by that lease expired, required the applicant to vacate the premises.
The language used in the guidelines does provide some platform or foundation for the proposition that the discretion vested in the decision-maker in s 98(3) should not be exercised in favour of cancellation of the approval. As was noted earlier, subparagraph (3), “Requests for deactivation”, applies where there is a proposed change in the location of the pharmacy, irrespective of whether there is also a proposed change in the approved pharmacist. This is the situation faced by the applicant here. Reference is made to a delegate considering a request to deactivate when “the approved pharmacist cannot, for reasons which are beyond their control, continue to carry on business as a pharmacist at the premises”. Ample reference has been made throughout these reasons to the several facts and circumstances which have directly led to the applicant’s predicament that it finds itself in now, being the loss in trade caused by the imposition of COVID-19 restrictions and the unexpected acts of the applicant’s landlord with respect to the premises. They are clearly circumstances or reasons that were beyond the applicant’s control. They are facts or circumstances that the Tribunal considers weigh against the exercise of the power in s 98(3) of the Act to cancel the approval of the pharmacist.
The Tribunal acknowledges the force in the respondent’s contention that even if the reviewable decision is set aside, the applicant will still face hurdles. Those hurdles being the need to seek a further period of deactivation and subsequent approval by the ACPA. However, those hurdles are matters that no doubt Ms McCarthy, as the driving force of the applicant, has taken into account and is prepared to address whatever the outcome may be.
The Tribunal also acknowledges the respondent’s contention that the public would continue to be denied the service of the supply of pharmaceutical benefits at the location of the premises, which has now been the case for over 12 months. There is much force in this contention. However, the Tribunal does acknowledge the contentions made by the applicant that when one examines the contents of the maps of the Melbourne CBD that were produced and tendered in evidence, there are a significant number of retail pharmacies both in the CBD and relatively close to the approved premises which are open and trading with members of the public and retail consumers.
As for the contention that the applicant could reapply for approval under s 90 with respect to any proposed new premises (Part 2 of Schedule 1 to the Pharmacy Location Rules) (Applications not involving cancellation of existing approval), it seems more likely than not that such an application would be bound to fail, certainly with respect to seeking to obtain approval for a new pharmacy in the Melbourne CBD.
If the reviewable decision were to be affirmed, the reality is that the applicant is unlikely to have a pharmacy in the Melbourne CBD again. By setting the reviewable decision aside, it does provide the applicant an opportunity to rebuild.
CONCLUSION AND DECISION
By reason of the foregoing matters, the Tribunal concludes that the correct and preferable decision is to set aside the reviewable decision and, in substitution, decides that the approval is not cancelled.

I certify that the preceding 101 (one hundred and one) paragraphs are a true copy of the reasons for the decision herein of R Cameron, Senior Member

.......................[SGD]..........................
Associate
Dated: 7 December 2023

Date of hearing: 14 September 2023

Counsel for the applicant:

Solicitors for the applicant:

Counsel for the respondent:

Mr Tamir Katz

Australian Pharmacy Group

Ms Louise Martin

Solicitors for the respondent: Ashurst