PHARMIRE PTY LTD and THE PHARMACY REGISTRATION BOARD OF WESTERN AUSTRALIA

[2018] WASAT 88

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: STATE ADMINISTRATIVE TRIBUNAL ACT 2004 (WA)

CITATION:   PHARMIRE PTY LTD and THE PHARMACY REGISTRATION BOARD OF WESTERN AUSTRALIA [2018] WASAT 88

MEMBER:   PRESIDENT, JUSTICE J C CURTHOYS

MS P LE MIERE (MEMBER)

MR W BURG (SESSIONAL MEMBER)

HEARD:   23 APRIL 2018

DELIVERED          :   5 SEPTEMBER 2018

FILE NO/S:   CC 1635 of 2017

BETWEEN:   PHARMIRE PTY LTD

Applicant

AND

THE PHARMACY REGISTRATION BOARD OF WESTERN AUSTRALIA

Respondent

Catchwords:

Discontinuance - Costs

Legislation:

State Administrative Tribunal Act 2004 (WA), s 87, s 87(2)

Result:

Application dismissed
No order as to costs

Category:    B

Representation:

Counsel:

Applicant	:	Mr MN Solomon SC and Ms T Carmady
Respondent	:	Mr KM Pettit and Ms JM Tavelli

Solicitors:

Applicant	:	Williams & Hughes
Respondent	:	Integra Legal

Case(s) referred to in decision(s):

Barnett and Barrier Reef Pools (WA) Pty Ltd [2016] WASAT 50

Jeruth Pty Ltd v Haybale Pty Ltd [2004] VSC 319

Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

Western Australian Planning Commission v Questdale Holdings [2016] WASCA 32

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

1. On 8 March 2018, the Tribunal ordered inter alia that:

   1.The applicant has leave to, and does hereby, withdraw this proceeding.

   2.The proceeding is hereby dismissed.

   …

   5.The question of costs of the proceeding be adjourned to a hearing on a date to be set … [.]

2. The effect of the proceedings being withdrawn is that there was no decision on the merits.

3. The Pharmacy Registration Board of Western Australia (the Board) seeks an order for costs against the applicant Pharmire Pty Ltd (Pharmire) pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA).

4. The Board submitted that Pharmire:

   a)should have made an amended application to the Board for registration;

   b)should not have instituted Tribunal review proceedings; and

   c)thereafter should have withdrawn its application for a Tribunal review much earlier than it did.  Instead, Pharmire proposed to adjust its application for registration, apparently in the expectation that the Tribunal could and should 'review' the registration as if the Board had also rejected the amended version, regardless of the additional costs that approach would entail.  The Board submits that the additional costs incurred by that conduct should be ordered against Pharmire.

Relevant legislation and principles

1. Section 87 of the SAT Act provides:

   (1)Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal.

   …

   (3)The power of the Tribunal to make an order for the payment by a party of the costs of another party includes the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought.

   (4)Without limiting anything else that may be considered in making an order for the payment by a party of the costs of another party where the matter that is the subject of the proceeding comes within the Tribunal's review jurisdiction, the Tribunal is to have regard to ­

   (a)whether the party (in bringing or conducting the proceeding before the decision maker in which the decision under review was made) genuinely attempted to enable and assist the decision maker to make a decision on its merits;

   (b)whether the party (being the decision maker) genuinely attempted to make a decision on its merits.

   (5)The rules may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party.

   (6)The Tribunal may order that the representative of a party, rather than the party, in the representative's own capacity compensate that or any other party for costs incurred because the representative acted in, or delayed, the proceeding in a way that resulted in unnecessary costs.

2. In Barnett and Barrier Reef Pools (WA) Pty Ltd [2016] WASAT 50 (Barnett) at [14], Member Owen-Conway set out the relevant principles as expressed by the Court of Appeal in Western Australian Planning Commission v Questdale Holdings [2016] WASCA 32 as follows:

   … The following principles apply to the resolution of the costs dispute:

   1.In its original jurisdiction, by reason of s 87(5) of the SAT Act and r 42(2) of the State Administrative Tribunal Rules 2004 (WA), the Tribunal is bound to take into account the fact (if found) that:

   a)a party made a written offer of settlement that was made in compliance with r 40 and r 41 of the SAT Rules;

   b)the offer was not accepted; and

   c)in the Tribunal's opinion, the Tribunal's final orders were not more favourable than the  offer.

   2.Beyond s 87(4) and s 87(5) of the SAT Act and r 42(2) of the SAT Rules, the facts which the Tribunal is bound to consider and is precluded from considering are to be determined by implication from the subject matter, scope and purpose of the SAT Act properly construed (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [48]).

   3.The discretionary power is to be exercised judicially.  That is, not arbitrarily, capriciously or so as to frustrate the legislative intent (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [48]).

   4.Although not expressed in s 87(2) of the SAT Act or elsewhere that the power is to be exercised if it is fair and reasonable in all the circumstances of the case to do so. The 'judicial nature' of the exercise of the scheme of the SAT Act indicates that legislative intention (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [49]).

   5.The presumptions as to costs orders that operate in curial litigation have no application, given the provisions of s 87(1) of the SAT Act and the directive contained therein (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [50]).

   6.The onus is on the party seeking an order in its favour to establish that a favourable order should be made (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [51]).

   7.The nature of the dispute is a relevant consideration in any application for costs (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [58]).

   8.Every party to proceedings before the Tribunal is taken to be cognisant of the objectives of the Tribunal as expressly provided for in s 9 of the SAT Act (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [54]).

   9.It will be relevant to the Tribunal to consider whether and to what extent the party who bears the onus on costs, can establish that the other party's conduct in connection with the proceedings has impaired the attainment of the Tribunal's statutory objectives to have the proceedings determined fairly and in accordance with the substantial merits of the matter, with as little formality and technicality as possible and in a way which minimises the costs of the parties (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [54]).

   10.The mere fact that a party fails on some contentions advanced does not of itself signify that that party has acted 'inconsistently with the objectives in s 9 [of the SAT Act]' (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [55]).

   11.Unmeritorious claims or claims made or pursued involving misconduct or which are vexatious or grossly exaggerated or presented in a way that is unduly burdensome may justify an exercise of the discretion conferred by s 87(2) of the SAT Act.

   12.The relevance of a compliant offer and the weight to be attributed thereto 'is influenced by the evident legislative intent, that where possible, parties to proceeding should endeavour to consider settlement' (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [59]).

   13.The weight to be given to the mandatory consideration of a complaint offer is a matter for the Tribunal in each individual case (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [59])

3. The Board submitted that:

   [T]hose principles generally support the Tribunal's discretion under s 87(2) being a necessary bulwark against abuse of the usual rule that each party bears it own costs. Such abuses arise where a clear path to a less costly resolution is rejected in favour of instituting or continuing proceedings. One of the main objectives of SAT under section 9 of the SAT Act is to 'minimise the costs to the parties.' The discretion should be exercised to ensure basic cooperation by parties in that objective.

4. The Board's submission states an incorrect test.  An abuse does not arise simply because a 'clear path to a less costly resolution is rejected'.  Parties may differ as to whether or not a particular path is 'clear' and 'whether it constitutes a less costly resolution'.

The Board's statement of the background

1. The Board provided the following background as part of its submissions:

   4.On 21 August 2017, pursuant to section 29(3)(c)(i) of the SAT Act, Pharmire applied to SAT in these proceedings for review of a decision by the Board to refuse an application by Pharmire for registration of premises as a pharmacy.

   5.On 26 September 2017, the solicitors for the Board wrote to Pharmire's solicitors advising that any new documentation should be assessed under a new application for registration of the pharmacy.

   6.On 3 October 2017, a mediation was held before Member Carey at SAT.  The mediation, was adjourned for the Applicant to consider its position and a directions hearing was listed for 24 October 2017.

   7.Pursuant to orders made at the directions hearing on 24 October 2017, the Board filed a statement of issues, facts and contentions on 1 December 2017 (Board's SIFC) and Pharmire filed a statement of issues facts and contentions on 22 December 2017 (Pharmire's SIFC).

   8.Pharmire's SIFC at [2(d)] stated that that question whether Pharmire's application for registration offended the Pharmacy Act should not be decided on the documents before the Board, but on new documents yet to be disclosed.

   9.Pharmire's SIFC at [4] stated that documents, upon which the Board made its decision, 'are no longer relevant' because, in short, they were to be replaced.

   …

   11.At the directions hearing on 16 January 2018, Pharmire referred to 'presently proposed arrangements which are being finalised and will be disclosed to the respondent (Board) as soon as practicable'.

   12.At the directions hearing on 30 January 2018 it was submitted by counsel for Pharmire that a document forming part of proposed new arrangement had been provided to the solicitors for the Board but that further revised documents were expected. Counsel for the Board again submitted that, if new arrangements were to become part of the application for registration, then a fresh application for registration should be brought to the Board rather than proceed with the SAT Proceedings.

   13.The new document referred to was an amended version of the Franchise Agreement Annexed to this submission [and annexed to these reasons] is a table prepared by the Respondent for the purposes of this allocation for costs.  The table shows the amendments that were made to clauses which were previously of influence in the Board's decision to refuse registration.

   14.By letter dated 9 February (sic. January) 2018, the solicitors for Pharmire notified the Board that Pharmire intended to withdraw the SAT application for review.

   15.On 9 March 2018, SAT made orders granting leave to withdraw the SAT proceedings with the question of costs to be adjourned for hearing.

Application of the principles to the Board's application for a costs order

1. The Board submitted:

   20.Before and during the SAT proceedings, Pharmire confirmed that it intended to amend the arrangements that had been subject to the Board's Decision and were the subject of the SAT Review Proceedings:  (Pharmire's SIFC paragraph 2(d), correspondence and emails).

   21.Pharmire was invited by the Board on 26 September 2017 to submit a fresh application to the Board for registration under the Pharmacy Act, with any 'new arrangements': Not to do so was a failure by Pharmire to 'genuinely attempt to enable and assist the decision-maker to make a decision on its merits' and was also 'conduct which led to unnecessary costs to the other party' (see [17] above).

   22.As to duration of the impugned conduct, the Board, on notice of new documentation being prepared, advised Pharmire on 26 September 2017 to make a new application for registration. Pharmire instead instituted the SAT Proceedings while the new arrangements were still being prepared, and pursued the SAT Proceedings for six months before withdrawing.  Therefore, the period which a costs order should cover is the entire SAT Review Application period.

2. The Tribunal does not accept that the failure to file a new application was a failure by Pharmire to generally attempt to enable and assist the decision­maker.

Pharmire's submissions

1. Pharmire submitted:

4.Principles of particular significance in this matter include the following:

4.1the onus is on the Board to satisfy the SAT that it is fair and reasonable in all of the circumstances of the case that its costs should be paid:  Questdale Holdings Pty Ltd [2016] WASCA 32 at [49], [51];

4.2the SAT should not make an order for costs unless it finds that Pharmire has conducted itself in such a way as to unnecessarily prolong the hearing or has acted unreasonably or inappropriately:  Chew and Director General of the Department of Education and Training [2006] WASAT 248 at [85];

4.3unlike in curial litigation, the important principle commonly referred to as the 'usual order as to costs', under which the successful party is prima facie entitled to his or her costs, has no application given the presumptive position or starting point under s 87(1) that each party is to bear its own costs;

4.4the mere fact that a party fails on some contentions advanced does not of itself signify that that party has acted inconsistently with the objectives of the Act: Questdale at [55];

4.5unmeritorious claims or claims made or pursued involving misconduct or which are vexatious or grossly exaggerated or presented in a way that is unduly burdensome may justify an exercise of the discretion conferred by s 87(2);

4.6even in a jurisdiction where the general rule is that costs follow the event, it does not follow that the grant of leave to withdraw attracts an order that the withdrawing party pay the costs of the other party.  The withdrawing party does not carry any onus to establish it ought not pay the other party's costs: Questdale at [65];

4.7further, withdrawal does not amount to a concession that the claim was without foundation or that the dispute was not genuine.  The SAT cannot draw any adverse inference against a withdrawing party: WA Country Builders Pty Ltd and Hathersage Nominees Pty Ltd [2016] WASAT 70 at [16].

5.As discussed further below, in its application for costs the Board attributes particular significance to the series of amendments made by Pharmire to the Franchise Agreement the subject of the application and to section 29(9).  Accordingly, it is necessary to consider the principles applicable to that issue.

6.The nature of a review or an appeal depends upon the terms of the statute conferring the right of review or repeal.  The statute in question may confer limited or large powers on the review body; it may confer new powers that are unique to the tribunal concerned or powers that are common to other appellate bodies: Coal and Allied Operations v AIRC (2000) 203 CLR 194 at [11].

7.The combined effect of sections 67 and 68 of the Pharmacy Act 2010 is that a person who is aggrieved by a decision of the Board to refuse an application for registration may apply to the SAT for a review of that decision. The Pharmacy Act is an 'enabling Act' within the meaning of that term in section 3 and a review of the decision therefore falls within Division 3 of the SAT Act dealing with review jurisdiction.

8.Section 27 provides expressly that the review by the SAT is to be by way of a hearing de novo ­ it is not confined to matters that were before the decision-maker but may involve the consideration of new material whether or not it existed at the time the decision was made.  The purpose of the review is to produce the correct and preferable decision at the time of the decision upon review, that is, at the time of the SAT's decision.  The SAT is required to give attention to the state of affairs existing at the date of its decision, and is not confined to the circumstances existing at the date of the decision under review: LS v Mental Health Review Board [2013] WASCA 18 at [93].

9.In the case of a hearing de novo, the matter is heard afresh and a decision is given on the evidence presented at that hearing: Coal and Allied Operations v AIRC at [13]. Such a hearing involves the exercise of the original jurisdiction and the informant or complainant starts again and has to make out the case and call its witnesses. It means a matter is heard afresh and a decision is given on the material presented at the hearing. The SAT is placed 'in the shoes of” the original decision maker: LS v Mental Health Review Board [2013] WASCA 128 at [91].

10.Section 29(9) provides that notwithstanding anything in sections 27 or 29, the SAT is neither required nor enabled to deal with a matter that is different in essence from the matter that was before the decision-maker.

11.Section 29(9) plainly does not prevent the SAT from considering an application that has been amended from the application that was determined by the original decision maker: Moore River Company Pty Ltd and Western Australian Planning Commission [2006] WASAT 269 at [13].

12.Rather, the question is whether the nature of the amendments is so sweeping as to effectively convert the proposal the subject of the appeal into a new proposal:  Moore River Company at [14], [22], [24].  In Moore River Company Deputy President Chaney concluded that although the changes were significant, they did not amount to a substantially different proposal.

13.The limiting words 'different in essence' in section 29(9) must be construed by reference to the scope of the original application, but bearing in mind the fact that the SAT review is by way of hearing de novo and the SAT is entitled to consider new material.  Whether a modified application before the Tribunal is a 'substantially different application as opposed to an amended application' is a question of degree Gay and City of South Perth [2017] WASAT 94 at [52].

14.It should first be noted that Pharmire's application for leave to withdraw was made because the sale agreement for the purchase of the pharmacy business in respect of which it sought registration was terminated: affidavit of Tully James Carmady sworn 26 February 2018.  The underlying substratum of fact changed and the need for the proceedings had gone.  In those circumstances it was entirely appropriate for Pharmire to seek leave to discontinue the proceedings.

15.The Board substantially rests its application on the changes made to the Franchise Agreement in the course of the application before the Board and then again in January 2018 when the matter was before the SAT.  The Board contends that Pharmire should not have instituted and thereafter maintained this proceeding.  Rather, Pharmire 'should have made an amended application to the Board' and therefore 'the additional costs incurred by that conduct should be ordered against Pharmire': Board submissions at [3].

16.Notably, the Board does not advance its application on the basis that the proceedings themselves had no merit.  The Board is correct in that approach.  As noted above, the fact that Pharmire has withdrawn its claim does not suggest a concession that its claim was without merit or that the dispute is not a genuine dispute.  The SAT can draw no inference from the fact that Pharmire has withdrawn its proceeding.

17.Moreover, there has been no substantive hearing of the merits.  In the absence of evidence and submissions following a substantive hearing, the strength and weaknesses of the claim cannot be determined by the SAT:  WAPC and Graham [2013] WASAT 112 (S) at [77]. In such a costs application it is generally inappropriate to form a view about the underlying merits of the matter: Dubow v Fitness First Australia Pty Ltd [2006] FMCA 1959 at [5].

18.Before considering the Board's central contention that Pharmire ought to have brought an amended application before the Board, it is necessary to review the chronology of the original application.  This is also necessary to properly appreciate the contentions of the Board in respect of the changes between the various versions of the Franchise Agreement.  This background is set out in some detail in the Board's Reasons for Decision dated 20 July 2017 (Reasons).  The Reasons are annexure DT2 to the affidavit of Daniel Tassone sworn 19 April 2018.

19.The following matters in relation to the application are apparent from the Reasons:

19.1the application to the Board was initially made on 13 December 2016:  Reasons at [1.1];

19.2the application to the Board annexed a number of documents including an unsigned franchise agreement (Version 1):  Reasons [3.3.1];

19.3on 15 February 2017, Pharmire provided the signed Franchise Agreement which contained some amendments (Version 2):  Reasons at [3.10];

19.4between 23 and 28 February 2017, Pharmire provided documents which included a variation to clause 32 of the Franchise Agreement (Version 3):  Reasons at [3.13];

19.5no further versions of the Franchise Agreement were made prior to the Board's determination and refusal of the application on 21 June 2017.  Accordingly, the Reasons were based on a consideration of Version 3.

20.In section 5 of the Reasons, the Board sets out the basis for its refusal of the application.  A number of those reasons overlap. In summary the substance of the Board's concerns was as follows:

20.1the Board considered that the arrangement amounted to a beneficial interest of Ramsay Pharmacy Retail Services (RPRS) in the pharmacy business by reason of:

(a)the call option which amounted to a contingent equitable interest by providing an option to become the legal owner:  Reasons at [6.11];

(b)the terms of the various payments payable by Pharmire to RPRS, namely, the interest payment on the loan facility, the lease rental, establishment and ongoing fees and the terms of the option to purchase, in aggregate, amounted to an impermissible proprietary interest:  Reason at [6.12];

20.2the Board considered that the arrangements created the possibility that all profits could be diverted to RPRS and thus the arrangement was impermissible because it gave RPRS the profits or a share of the profits in the pharmacy business.  In this regard, that Board was concerned with the range of the establishment costs, the franchise fee, the core services fee, the occupancy costs, staff expenses, the percentage increase to the franchise fee, and the core services fee and other listed expenses, which when added up produced a sum (in the aggregate upper limit) in excess of the historical revenue of the pharmacy business: Reasons at [6.14]­[6.19].  The Board further considered that the arrangements were so objectively uncommercial that it could not credibly be inferred that Mr McFadden or Pharmire stood to derive any profit from the pharmacy business which gave rise to the contrary inference ­ that the beneficial interest was to be held by RPRS:  Reasons at [6.20]­[6.25];

20.3the Board considered that the arrangements were such that the consideration payable to RPRS varied with the income of the pharmacy business.  As the upper limit of the aggregate costs payable by Pharmire to RPRS exceeded the revenue of the pharmacy business, it suggested that the amount payable to RPRS would be tailored in accordance with Pharmire's revenue.

21.The Reasons indicate that the Board also refused the application because, in breach of the statutory requirements, the application failed to include all information required by the Regulations and was misleading in material particulars. However, it is plain that these matters themselves turned on the Board's characterisation of the arrangements. The substance of the Board's decision was based on its firm view that the arrangements offended the prohibitions in section 54 of the Pharmacy Act.

22.Following the directions hearing before the SAT on 16 January 2018, Pharmire provided a further executed amended Franchise Agreement (Version 4).

23.Against that background the Board now contends that:

23.1Pharmire ought not to have instituted and maintained this proceeding, but rather ought to have lodged a fresh application before the Board;

23.2Pharmire's conduct in instituting and maintaining this proceeding reflected an expectation that the SAT could and should review the application as if the Board had also rejected the amended version: Board submissions at [3];

23.3the position taken by Pharmire amounted to a contention that the amendments were of such magnitude that it had converted the application from the one which was before the Board and arguably in breach of the Pharmacy Act into one before the SAT that did not so offend the Pharmacy Act: Board submissions at [10]; and

23.4such a position is inconsistent with section 29(9), meaning the SAT was not empowered to hear these proceedings.

24.In substance, the Board's position is this:

24.1Pharmire's application before the Board failed because it offended the provisions of the Pharmacy Act as identified by the Board in the Reasons;

24.2Pharmire amended the arrangements to address the deficiencies/transgressions in the arrangements;

24.3what it then should have done was lodge an amended application with the Board;

24.4instead, Pharmire instituted and pursued its application before the SAT and sought a ruling on the new amended arrangement thus seeking a 'review' as if the Board had refused that new amended arrangement; and

24.5by doing so, Pharmire sought to have the SAT deal with a matter that was different in essence from the matter before the Board.

25.Necessarily implicit (and indeed to some extent, explicit) in the Board's position is the proposition that the amendments to the arrangements made by Pharmire as reflected in Version 4 of the Franchise Agreement were of such magnitude that they rendered the application 'different in essence', and that the efficient course and proper 'genuine attempt' to enable a decision on the merits required the lodgement of a fresh / amended application before the Board rather than instituting and pursuing the proceeding before the SAT.  In other words, the Board contends the amendments addressed the substantive bases of the Board's rejection of the initial application and thereby transformed the essence of the application, such that the appropriate and efficient course was to lodge a fresh application so that the Board could address the transformed application before steps were taken or continued before the SAT.

26.Indeed, the Board must advance such a contention.  As is plain from the principles set out above, it cannot be the case that amendments which make no difference to the heart and substance of the decision-maker's concerns would necessitate the lodgement of a fresh application before the decision-maker.  Such a course would reflect the opposite of efficiency and a genuine attempt to enable a decision on the substantive merits.

27.It is therefore necessary to consider whether the proposition advanced by the Board is correct; that is, were the amendments of 'such substance' (Board submissions at [10]) so as to transform the application into one that was 'different in essence' and necessitated the lodgement of a fresh application before the Board?

28.It should first be observed as noted above that the Reasons of the Board were based on Version 3 which was made available to the Board at the end of February 2017 and was the subject of the Board's determination in June 2017 and the Reasons in July 2017.

29.In support of its application for costs, the Board has produced a table annexed to the Board's submissions which purportedly 'shows the amendments that were made to clauses which were previously of influence in the Board's decision to refuse registration': Board's submissions at [13].

30.The table includes a heading 'Changes between Version 1.0 and Signed Version Franchise Agreement/Version 2.0'.  Unhelpfully, the table does not explain precisely which agreement is intended by those descriptions. However from the narrative in the table it is apparent that the following is intended:

30.1'Version 1.0' is the initial unsigned Franchise Agreement provided to the Board in December 2016 with the initial application, referred to above as Version 1;

30.2'Signed Version Franchise Agreement' is the signed Franchise Agreement provided to the Board in February 2017 (Version 2) and subsequently amended by the variation provided to the Board later that same month, referred to above as Version 3;

30.3'Version 2.0' is the amended and executed Franchise Agreement provided to the Board following the directions hearing before the SAT on 16 January 2018, referred to above as Version 4.

31.The table refers to 8 amendments which are said to have transformed the application into one that was different in essence from that considered by the Board in the Reasons, thus necessitating (on the Board's case) a fresh application to the Board.

32.The first five of those amendments may be dealt with summarily.  They are all comparisons between Version 1 and Version 3.  In other words, they are all provisions of the Franchise Agreement that were already before the Board from February 2017 and were the subject of the Board's decision in June 2017 and the Reasons in July 2017.  With respect, it is not sensible to assert that those amendments necessitated a fresh application to the Board ­ they were part of the application which the Board considered.

33.The other three amendments numbered 6, 7 and 8 in the table are changes from Version 3 (which was before the Board) to Version 4.  Those changes are marked up in the version of the Franchise Agreement which is annexure DT1 to the affidavit of Daniel Tassone sworn 19 April 2018.

34.Amendments numbered 6 and 7 in the table are reductions to two types of fee.  The Core Services fee is reduced from $125,000 per annum to $100,000 per annum.  The Franchise Fee is reduced from $75,000 per annum to $50,000 per annum. As the table itself expressly notes, the fee is still adjustable by the Percentage Increase which remains unchanged. The substantive change is the addition of a clause in respect of each fee that it must not be varied by reference to the turnover or profitability of the Franchised Business.

35.Those amendments cannot be said to render the proposal something different in essence to that which was before the Board under Version 3.  The amendments are plainly not 'so sweeping is to effectively convert the proposal the subject of the appeal into a new proposal' (Pacesetter Homes Pty Ltd v State Planning Commission (1993) 84 LG EERA 71 at 85 per Murray J, adopted as the test in Moore River supra). The application in essence has not changed at all.  Nor could the amendments be expected to have motivated any change in the position of the Board and indeed it did not ­ the Board continued to defend the proceeding before the SAT notwithstanding those changes.

36.Amendment number 8 conditions the exercise of the contractual power pursuant to which RPRS is irrevocably appointed as the Franchisee's attorney.  Again, it cannot sensibly be suggested that this somehow renders the application different in essence. Moreover, the assertion in the Board's submissions (at [13]) that this issue was 'previously of influence in the Board's decision' cannot be sustained. The Reasons make no reference to this at all.

37.It therefore follows that the gravamen of the Board's submission ­ that the changes to the Franchise Agreement were so substantial as to have necessitated a fresh application to the Board ­ cannot be sustained. 

38.It is plain from the Reasons that the fundamental differences between the Board and Pharmire remained to be determined in the SAT proceeding.  A fresh application to the Board on the basis of Version 4 was doomed to fail for the very same reasons as those set out in the Reasons and would have been a waste of time, effort, and money.  As much is evident from the correspondence relied upon by the Board itself and annexed as 'TKC1' and 'TKC2' to the affidavit of Thomas Kevin Carmody dated 10 April 2018.  In that exchange the Board said expressly:

38.1'to be acceptable to the Board, any new set of documents from Pharmire is likely to involve reconstruction of the arrangements, not mere variations of the existing documents'; and

38.2'the conclusions reached by the Board under the existing application are not conducive to amendment'.

39.The fresh application to the Board which the Board contends Pharmire ought to have lodged on the basis of Version 4 would have been a token application which the Board was clearly going to reject.  Such a course would not be consistent with the objectives of the SAT prescribed by section 9.

40.Indeed, the course adopted by Pharmire would ultimately have saved costs.  The course adopted by Pharmire was consistent with the SAT's jurisdiction to hear the matter de novo on the basis of the new, amended (but not fundamentally different) application.  The manner in which Pharmire proceeded was consistent with the objectives of the SAT: to achieve a review of the Board's decision fairly and according to the substantial merits of the case, to encourage a speedy resolution of the matters in issue between the Board and Pharmire, and to minimise the cost to the parties.

41.There was a genuine dispute as to the correctness of the Board's decision and so Pharmire was entitled to seek a review of that decision.  In no way did Pharmire act inappropriately or unreasonably in relation to the application to the SAT.  There is no basis for an award of costs against Pharmire.

Analysis

1. The parties have filed extensive submissions on what is ultimately a short point.

2. Amendments are a common part of court and tribunal proceedings.  Although in an ideal world amendments would not be required the reality is rather different.  The fact that Pharmire proposed to amend its application is not of itself reason to order costs against it.  In saying this, the Tribunal should not be taken to be encouraging such conduct.

3. The Tribunal is not satisfied that Pharmire has conducted itself in such a way as to unnecessarily prolong the hearing or that it acted unreasonably or inappropriately.  This is not the occasion to determine whether Pharmire could have amended its application.  It is sufficient to say that the point is arguable.  Pharmire's conduct in proceeding on the basis that it could amend, cannot be said to have unnecessarily prolonged the hearing or to have contributed unreasonable or inappropriate behaviour.  If Pharmire's contentions were correct and it could have amended it would ultimately have saved both parties from unnecessary expense in re­stating the application.

4. A costs application is not intended to be a trial of the matter where an application has been discontinued.  It is intended to be dealt with in a substantially summary manner.  An award of costs is meant to be compensatory in nature not punitive.

5. The Tribunal also notes that the reason for the discontinuation was that the sale agreement was terminated.  Even had the matter proceeded on what the Board alleges to be a 'proper' basis, the matter would not have gone to hearing and the costs are likely to have been thrown away in any event.

6. The termination of the sale agreement constitutes a supervening event and it is not appropriate for the Tribunal to assess the merits of the application (Jeruth Pty Ltd v Haybale Pty Ltd [2004] VSC 319 at [4]).

The public board argument

1. The Board submitted:

   23.In order to perform its functions under the Pharmacy Act, the Board relies on the revenue generated from application and licence fees. SAT, when making a decision in relation to costs, is required to consider the subject matter, scope and purpose of the Pharmacy Act. The funding that the Board obtains from application fees and licences is intended to cover the costs of the Board exercising its statutory obligations including proper consideration of applications for registration. Unless excessive litigation is discouraged by costs orders, the risk is that pharmacists may face increased costs.

   24.In these proceedings, the Board has incurred unnecessary costs. Pharmire has acted unreasonably to cause those costs. The administration of the Pharmacy Act as self-funding should influence the SAT on the issue of costs in this case.

2. Pharmire submitted:

   42.Beyond s 87(4) and s 87(5) of the SAT Act and r 42(2) of the SAT Rules, the facts which the Tribunal is bound to consider when deciding whether to award costs against a party are to be determined by implication from the subject matter, scope and purpose of the SAT Act properly construed (i.e. the objectives provided by section 9):  Questdale (supra) at [48], [58]; WA Country Builders (supra) at [14].

   43.The fact the Board relies on revenue generated from applications and licence fees in order to perform its functions under the Pharmacy Act is irrelevant.  Nothing in the SAT Act (section 9 or otherwise) requires the Tribunal, expressly or by implication, to consider the funding and cost of administration of the Pharmacy Act and/or to 'discourage excessive litigation by costs orders' (Board's submissions at [23]).  This is particularly so in circumstances where the starting point is that parties bear their own costs in the SAT.

3. There is no general rule that self­funded disciplinary bodies should recover costs.  Each application is to be considered on its merits.  Thatfact that the Board is self­funded does not displace the general rule under s 87(2) of the SAT Act. There is not otherwise anything in Pharmire's conduct to displace the general rule.

Conclusion

1. The Board's application for costs thrown away should be and isdismissed.

Orders

1.The application is dismissed.

2.There is no order as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.

JUSTICE J CURTHOYS, PRESIDENT

5 SEPTEMBER 2018

Annexure 1

Changes between Version 1.0 and Signed Version Franchise Agreement/Version 2.0
1.	Cl 12.2	"If, with RPRS's approval, the Franchisee is to own the fit-out, the Franchisee must appoint RPRS as its agent to manage the fit-out of the Site according to the RPRS Standards" This is amended in the Signed Version Franchise Agreement and Version 2.0 to: "If the Franchisee funds the acquisition of the fit-out of the Site, the Franchisee owns the fit-out and it must appoint RPRS as its agent to construct and maintain the fit-out of the Site in accordance with RPRS' standards"	The Board contested that this clause provided RPRS with a high degree of control over the pharmacy premises and did not allow the Franchisee with any discretion in respect of the fit out.
2.	Cl 13.2	The Franchisee must purchase (or lease) and install the Equipment and Computer System at the Site before the Commencement Date and use them in the Franchised Business in accordance with any specifications set out in the Manual." This is amended in the Signed Version Franchise Agreement and Version 2.0 to CI 13(b): "If the Franchisee requests, RPRS must supply the Computer System for the Franchised Business. If the Franchisee does not so request, RPRS must provide the Franchisee with details of the suggested Computer System, together with a list of persons who are able to supply the items"
3.	Cl 14.1 and cl 14.2	"RPRS to provide the Initial Training Program, if the Franchisee Requests" "The Franchisee must ensure that every person who is to work in the Franchised Business (and any person required by RPRS): (a)     completes the Initial Training Program to the satisfaction of RPRS; and (b)     has every qualification, registration accreditation, licence or approval required by law, or reasonable required by RPRS ...      before the Commencement Date or, if later, before commencing work in he Franchised Business." This is amended in the Signed Version Franchise Agreement and Version 2.0 to Clause 14.1: "RPRS acknowledges that … the Franchisee may want its staff to be familiar with the RPRS Core Services ... Accordingly, RPRS must provide the Initial Training Program and reasonable further training for Labour Hire Staff, if the Franchisee requests."	Clause 14.1 provided an opt-in provision.  However clause 14.2 made it mandatory that all persons working in the business had completed the Initial Program. There is no longer any requirement for every person in the Franchised Business to have completed the Initial Training Program.
4.	Cl 33	States that the Franchisee must supply products and services from the Product Range. Product range is defined in cl 1.1 as all health, beauty and gift related items and other goods and services approved by RPRS. This is amended in the Signed Version Franchise Agreement and Version 2.0 in cl 34.3(b) which states that Ramsay cannot unreasonably without its consent to the Franchisee buying Products from other suppliers or supply products not included in the Product Range.	This was a main reason for the Board's objection as it is one of the underlying principles of the Act that the Pharmacist should have complete control over its dispensing functions.
5.	Cl 40.2	All Customer Information collected by the Franchisee is the property of RPRS" This is amended in the Signed Version Franchise Agreement and Version 2.0 to cl 40(d): "The Franchisee must grant RPRS a licence (on terms acceptable to RPRS, acting reasonably) for RPRS and its Related Entities to access the Customer Information of each customer who has consented to their information being collected, used and disclosed to RPRS and its Related Entities …"
Changes between Signed Version Franchise Agreement and Version 2.0
6.	Details and cl 50.3	The Core Services fee is reduced from $125,000 p.a under the old FA to $100,000 p.a. (Nb: it is still adjustable by the Percentage Increase, which remains unchanged in the new FA.) A new subclause (d) has been inserted which states: (d)     Notwithstanding any other provision to the contrary; RPRS must not vary the Core Sen/ices fee by reference to the turnover or profitability of the Franchised Business.	The Core Services Fee is adjusted by the Percentage Increase.  RPRS maintains the discretion to determine the Percentage Increase to be applied, which is to be exercised on the basis of 'policy indicators' (which, under the new subclause (d), cannot be by reference to turnover or profitability.)
7.	Details and cl 50.2	The Franchise Fee is reduced from $75,000 p.a. to $50,000 p.a. (it is still adjustable pursuant to the Percentage Increase. As in the above change, a new subclause (d) has been inserted which states: (d)     Notwithstanding any other provision to the contrary, RPRS must not vary the Core Services Fee by reference to the turnover or profitability of the Franchised Business.
8.	Cl 62	The Power of Attorney clause has changed to include new sub clauses (A) & (B), which provide that RPRS is only appointed as attorney: (A)  On and from the date that is ten Business Days after the date RPRS notifies the Franchisee that is has failed to do that signing or other thing to be done by the Franchisee; and (B)  Until the date that the signing or other thing to be done, has been done, at which point the specific appointment as the Franchisee Company's attorney with respect to that particular signing or other thing to be done. Additionally, new sub clauses (b) and (c) have been inserted which limit the attorney's exercise of rights and clarify the appointment provisions.	These clauses limit the circumstances in which RPRS can be appointed with power of attorney.