PKCW PTY LTD and Australian Community Pharmacy Authority
[2024] AATA 184
•5 February 2024
PKCW PTY LTD and Australian Community Pharmacy Authority [2024] AATA 184 (5 February 2024)
Division:GENERAL DIVISION
File Number(s): 2023/2004
Re:PKCW PTY LTD
APPLICANT
AndAustralian Community Pharmacy Authority
RESPONDENT
DECISION
Tribunal:Senior Member A Poljak
Date:5 February 2024
Place:Sydney
The decision under review is set aside and substituted with a decision to recommend the applicant’s application.
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Senior Member A Poljak
Catchwords
HEALTH – Pharmacists – retail pharmacy – Application for approval to supply pharmaceutical benefits at premises other than premises in respect of which approval already granted – Where lease was terminated – Item 312(b)(v) – National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) – Whether exceptional circumstances exist – Decision under review set aside and substituted.
Legislation
National Health Act 1953 (Cth)National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth)
Cases
BVZ16 v Minister for Immigration and Border Protection [2017] FCA 958
Clare v Australian Community Pharmacy Authority [2015] FCA 653Clyne v. Deputy Commissioner of Taxation [1981] HCA 40; (1981) 150 CLR 1, (1981) 35 ALR 567
Secondary Materials
Explanatory Statement issued by authority of the Minister for Healthwhich accompanied the amendments in the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth)
REASONS FOR DECISION
Senior Member A Poljak
5 February 2024
On 9 February 2023, the applicant, PKCW Pty Ltd, applied for the relocation of an existing PBS approval from the premises at Shops 2-8, 189 Toorak Road South Yarra VIC (the Existing Premises) to premises at 235 Toorak Road, South Yarra VIC (Proposed Premises).
The applicant seeks review of a decision by the Australian Community Pharmacy Authority (Authority) made on 23 March 2023. In that decision, the Authority recommended to the Secretary of the Department of Health and Aged Care (Secretary) that an application to supply pharmaceutical benefits at premises located at the Proposed Premises not be approved under section 90 of the National Health Act 1953 (Cth) (Act).
The Authority considered that the applicant’s application did not meet the requirements set out in rule 10(3)(e) and Item 312(a) and (b) of Schedule 2 of Part 1 of the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) (Rules).
Facts
On 27 July 2020, CW Leasing Services Pty Ltd (CW Leasing) commenced a lease of the Existing Premises.
At the time, the applicant commenced a licence agreement with CW Leasing for use of the Existing Premises as a retail pharmacy and was approved to supply pharmaceutical benefits at the Existing Premises.
From 27 July 2020, the applicant began operating a pharmacy business from the Existing Premises, including the supply of pharmaceutical benefits.
The applicant received its PBS approval in relation to 210 Swan Street Richmond on 29 March 2022.
On 28 April 2022, the applicant was approved by the Secretary (subsequent to recommendation from the respondent) to relocate its PBS approval from the Existing Premises to premises known as 372 Chapel Street, Prahran VIC (April Relocation). In order to affect the April Relocation, the PBS approval for the Existing Premises was cancelled and a new PBS approval was granted at 372 Chapel Street, Prahran VIC.
After 28 April 2022, the applicant continued to occupy the Existing Premises with the intention of being granted a further PBS approval to supply pharmaceutical benefits at the Existing Premises shortly thereafter.
On 27 June 2022, the applicant received a further PBS approval from the Secretary (subsequent to recommendation by the respondent) to relocate a PBS approval from 210 Swan Street, Richmond VIC to the Existing Premises. Similar to the April Relocation, the PBS approval at 210 Swan Street, Richmond was cancelled, and a new PBS approval was granted at the Existing Premises
Since then, the applicant continued to conduct its primary pharmacy business at the Existing Premises, including the supply of pharmaceutical benefits.
On 27 July 2022, the Lessor of the Existing Premises served a Notice of Early Termination on CW Leasing. On that date, the Notice of Early Termination was subsequently forwarded to the applicant.
CW Leasing commenced an agreement for lease for the Proposed Premises on 1 February 2023. On 1 February 2023, the applicant commenced a licence agreement with CW Leasing for use of the Proposed Premises as a retail pharmacy.
Issues
In light of the evidence that the applicant has provided to the Tribunal in the witness statement of Peter Kim dated 5 June 2023, the Authority accepts that the requirement in rule 10(3)(e) of the Rules has now been met. That is because Mr Kim’s statement annexes evidence that the Proposed Premises are now vacant. As such, the only issue in the proceeding is whether the application by the applicant meets the requirement in Item 312(a) and (b) of Schedule 2 of Part 1 of the Rules (Item 312).
It is not in dispute that the applicant’s application does not meet the requirements of Item 312(a), Item 312(b)(i)-(iv), or Item 312(b)(vi)-(vii). Instead, the applicant relies only upon the exemption in Item 312(b)(v), which is in the following terms:
(v)because of a disaster or exceptional circumstances pharmaceutical benefits are unable to be supplied at the existing premises, and will not be able to be supplied at the existing premises in the future, and the application is not of the kind mentioned in item 125 of Part 1 of Schedule 1…
Consideration
By the time of the scheduled hearing before the Tribunal on 9 October 2023, it was the case that “pharmaceutical benefits are unable to be supplied at the existing premises and will not be able to be supplied at the Existing Premises in the future”. The Authority accepts that the applicant’s application is not of the kind mentioned in Item 125 of Part 1 of Schedule 1 of the rules.
The applicant contends that the early termination of the lease of the Existing Premises, as a result of the purchase and redevelopment of the site, are circumstances which constitute “exceptional circumstances” for the purposes of Item 312(b)(v) of the Rules. The applicant further contends that the proposed relocation is a move of approximately 109 metres along the street and will have no effect on other pharmacies. If the relocation is not permitted, the existing pharmacy will be forced to cease to exist, affecting the stability of the network serving the local area.
The term “exceptional circumstances” is not defined in the Rules and should be given its ordinary meaning. I do not accept that the test is merely whether circumstances affecting an applicant are exceptional in the general sense. The question is whether the inability to supply pharmaceutical benefits is the result of exceptional circumstances.
The Explanatory Statement to the Rules provides some guidance to its interpretation. That Explanatory Statement sets out that Item 312:
“…aims to ensure the distribution and stability of the network of approved pharmacies is not adversely affected by the relocation of existing approvals, whilst allowing some flexibility for relocations within the local area… an approval cannot be relocated more than once every 5 years, except in specified circumstances.
The intention of this provision is to prevent the establishment of a temporary/demountable pharmacy which is subsequently relocated, where there is no intention of servicing the community at the temporary location long term…The provision relating to disaster or exceptional circumstance, under paragraph 312(b)(v), is not intended to be an alternative to section 91A of the Act, but rather is intended to be for situations where the relocation is long term (i.e. not temporary), as a result of the disaster.”.
This is consistent with the objective of maintaining the stability of the scheme for the distribution of pharmaceutical benefits. In Clare v Australian Community Pharmacy Authority [2015] FCA 653 at [55], Reeves J considered the purpose of restricting relocation of premises to which an approval relates:
Having created this broad network of pharmacies providing convenient community access to those dispensing pharmacies operating under the PBS, it was obviously important for the integrity of the scheme to ensure that the distribution and stability of that network would not be adversely affected by the relocation of pharmacy premises once they became approved premises under the scheme. It is therefore unsurprising to find limitations placed upon the circumstances in which any approved pharmacy premises may be relocated from the originally approved locations. That is what the requirements in Part 1 of Schedule 1 and the additional requirements in Part 1 of Schedule 3 of the 2011 Rules are directed to.
I do not accept that reliance should be placed on the meaning of “exceptional circumstances” in the Rules as it appears in relation to Item 315. The context of Item 315 is vastly different to that of Item 312. Item 312 appears in Part 1 of Schedule 2 of the Rules and applies to applications involving the cancellation of an existing approval, that is, applications to relocate an existing approval that is in force in respect of the existing premises, or applications to expand or contract premises. Item 312 relates to the period of time the existing approval must have been in force before it can be relocated. Item 315 appears in Part 2 of Schedule 2 of the Rules and applies to particular applications involving the cancellation of an existing, that is, an application described in an item in Part 2 of Schedule 2 must meet the requirements set out in that item. Item 315 relates to the relocation from a small shopping centre or a large shopping centre under exceptional circumstances. As described in the Explanatory Statement:
Item 315 applies to an application to relocate an approval granted following an application made under the provisions of item 133 – new pharmacy in a designated complex (small shopping centre), item 134 – new pharmacy in a designated complex (large shopping centre with no approved premises) or item 134A – new additional pharmacy in a designated complex (large shopping centre with approved premises). The intention is that where a new approval was granted to serve the community of a shopping centre, the approval remain in that same shopping centre for a minimum of 10 years, unless there are exceptional circumstances.
As discussed by the High Court in Clyne v. Deputy Commissioner of Taxation [1981] HCA 40; (1981) 150 CLR 1, (1981) 35 ALR 567 at 572:
No doubt there is a presumption that where the same word is used on more than one occasion in a section it is intended to have the same meaning in each case, but this is not a presumption of very much weight; there is no rigid rule; it all depends on the context: see McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 53 ALJR 423 at 424 ; 24 ALR 175 at 178 .
In BVZ16 v Minister for Immigration and Border Protection [2017] FCA 958 at [39]-[41], White J set out a number of authorities dealing with the term “exceptional circumstances”:
39. Generally, and subject to the particular statutory context, circumstances will be exceptional if they are unusual or out of the ordinary: An v Minister for Immigration and Citizenship [2007] FCAFC 97; (2007) 160 FCR 480 at [7] (Lindgren J). In Hatcher v Cohn [2004] FCA 1548; (2004) 139 FCR 425, Keifel J said of the term “exceptional circumstances”:
[49] ‘Exceptional’ circumstances, in general terms, are those circumstances which are unusual or out of the ordinary. But the term is also one which may have a wide operation. Factors affecting a person and which set them apart from other persons in a comparable situation may amount to exceptional circumstances. Speaking in the context of extradition, Gleeson CJ, McHugh and Gummow JJ have held that ‘special circumstances’ need to be ‘extraordinary and not factors applicable to all defendants facing extradition’. It was not necessary that any particular circumstance be regarded as special; several factors in combination could constitute special circumstances: ... And in Baker v R (2004) 78 ALJR 1483; [2004] HCA 45 at [13] Gleeson CJ considered the use of ‘special circumstances’ to condition the exercise of judicial discretion. His Honour said:
‘This is a verbal formula that is commonly used where it is intended that judicial discretion should not be confined by precise definition, or where the circumstances of potential relevance are so various as to defy precise definition. That which makes reasons or circumstances special in a particular case might flow from their weight as well as their quality, and from a combination of factors.’
[50] Although his Honour was speaking of judicial decision-making the observations are apposite here. The words ‘exceptional circumstances’ may apply to a variety of circumstances and no definition which limits their application should be adopted, unless the limitation appears from the words of the relevant statutory provision...
40. In Maan v Minister for Immigration and Citizenship [2009] FCAFC 150; (2009) 179 FCR 581, the Full Court cited with approval a passage from the judgment of Lord Bingham of Cornhill CJ in R v Kelly [1999] UKHL 4; [2000] QB 198 at [51] as follows:
We must construe “exceptional” as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.
41. Generally, consideration of whether exceptional circumstances exist will require consideration of all the relevant circumstances. That is because even though no one factor may be exceptional, in combination the circumstances may be such as reasonably to be regarded as exceptional: Griffiths v The Queen [1989] HCA 39; (1989) 167 CLR 372 at 379 (Brennan and Dawson JJ); Ho v Professional Services Review Committee No 295 [2007] FCA 388 at [23][26] (Rares J); Hasim v Attorney General of the Commonwealth [2013] FCA 1433, (2013) 218 FCR 25 at [65] (Greenwood J).
The Authority contends that regard should be had to the following when considering whether exceptional circumstances are established:
(a) the calculated sequence of pharmacy relocations with which the applicant has been involved in recent years;
(b) the fact that the applicant’s application would allow, in effect, the indirect relocation of pharmacy premises from their original location at 210 Swan Street to the Proposed Premises at 235 Toorak Street in circumstances where a relocation directly between those locations would not be permitted under the Rules;
(c) at the time the applicant received its 27 June 2022 approval to operate from 189 Toorak Street, there was publicly available information that 189 Toorak Street had been sold to a developer, of which information the applicant and/or its licensor CW Leasing Pty Ltd ought to have been aware;
(d) the lease of the Existing Premises at 189 Toorak held by CW Leasing Services Pty Ltd (Lease) contains an express and non-standard early termination clause; and,
(e) the applicant’s licence with CW Leasing Services Pty Ltd for the use of the Existing Premises provided that the licence could be terminated if the Lease was terminated for any reason and included a copy of the Lease as an attachment.
Previous pharmacy relocations by the applicant, and the fact that a direct relocation of pharmacy premises from their original location at 210 Swan Street to the Proposed Premises would not be permitted under the Rules, are irrelevant when considering whether exceptional circumstances are established in the current application. It appears that this is put forward by the Authority in an attempt to demonstrate that the applicant’s previous relocations were strategic or a deliberate attempt to bypass the Rules. This is purely speculative and not born out by the evidence.
The circumstances of the applicant’s application are commercial in nature. A lease has been terminated earlier than expected due to the purchase and redevelopment of the Existing Premises site. However, the unchallenged witness statement of Peter Kim, director of the applicant, dated 5 June 2023, makes it plain, that prior to receiving the Notice of Early Termination on 27 July 2022, he had no notice that the lease was going to be terminated as a result of a prospective purchase and redevelopment of the site within which the Existing Premises was located. The submission that the applicant ought to have known about the redevelopment of the Existing Premises through publicly available information is speculative at best. Mr Kim’s evidence is that he was unaware of news articles dated 24 August 2021, 12 December 2022, and 16 December 2022 prior to 9 February 2023. The granting of a further PBS approval in June 2022 for the Existing Premises, which the applicant had leased since 27 July 2020, demonstrates that the applicant was never concerned the lease would be terminated. Since this time, the applicant had operated a large pharmacy business from, including pharmaceutical benefits, the Existing Premises.
The Authority further contends that the Early Termination Clause of the lease for the Existing Premises was not a standard clause and the applicant ought to have been aware of its possible operation. The Authority contended that although clauses of this nature may not commonly operate, it does not make it exceptional when they are exercised.
John Pamouktsis, building developer manager for CW Leasing Services, stated in an unchallenged witness statement dated 25 September 2023, that he is directly involved with new leasing arrangements and negotiations of existing leases for approximately 350 sites for retail pharmacies on behalf of Chemist Warehouse franchise business and respective individual pharmacy owners trading as Chemist Warehouse branded stores. In his experience, he said approximately 90% of those leases contained clauses regarding relocation and/or early termination of the lease. Mr Pamouktsis stated that in his experience, he could recollect only 4 of those leases have been terminated early by a landlord and, the exercise of such a clause by a landlord is rare and only done when the tenancy is being partially or fully demolished for redevelopment.
Having regard to the available relevant evidence, I am convinced that the circumstances leading to the applicant’s inability to supply pharmaceutical benefits, namely, the unexpected purchase and redevelopment of the site of the Existing Premises and the subsequent early termination of its lease, are rare, and cannot be said to be regularly, or routinely, or normally encountered events for businesses of this nature. Exceptional circumstances are established in the circumstances of this case.
Decision
The decision under review is set aside and substituted with a decision to recommend the applicant’s application.
31. I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak
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Associate
Dated: 5 February 2024
Date of hearing: 9 October 2023 Counsel for the Applicant: Mr T Flaherty, Seven Windeyer Chambers Solicitor for the Applicant:
Counsel for the Respondent:
Mr M Flaherty
Ms A Hammond, Wentworth Chambers
Solicitors for the Respondent: Ms H Kim, Australian Government Solicitor
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