Raw, I.L. v Pharmacy Restructuring Authority

[1993] FCA 422

IAN LAWRENCE RAW v. PHARMACY RESTRUCTURING AUTHORITY; MUSSAR KADERBHAI and
DILSHAD KADERBHAI
No. G368 of 1993
FED No. 422
Number of pages - 11
Administrative Law
(1993) 30 ALD 376 (extract)

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J(1)

CATCHWORDS

Administrative Law - Whether the postponement of the making of a decision by the Pharmacy Restructuring Authority was unreasonable - whether the Authority took into account an irrelevant consideration

National Health Act 1953: s. 90

Administrative Decisions (Judicial Review) Act 1977

Judiciary Act s. 39B

HEARING

SYDNEY, 23 June 1993

#DATE 25:6:1993

Counsel for the Applicant : A Hughes

Solicitors for the Applicant : Ebsworth and Ebsworth

Counsel for the First Respondent : R M Henderson

Solicitors for First Respondent : Australian Government

Solicitor

Counsel for Second Respondents : G M Egan

Solicitors for Second Respondents : Turner Whelan

ORDER

The Court orders that:

1. The application be dismissed;

2. Ian Lawrence Raw pay the costs of the proceedings of Pharmacy Restructuring Authority and Mussar and Dilshad Kaderbhai, on the basis of one set of costs as between all respondents.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

LOCKHART J The applicant, Ian Lawrence Raw, owns a pharmacy in Tweed Heads. He wishes to move his business to other premises nearby. He cannot do so without the permission of the respondent, Pharmacy Restructuring Authority ("the Authority"). Technically, the power of the Authority is to recommend to the Secretary of the Department of Health that a pharmacist should or should not be approved under s. 90 of the National Health Act 1953 ("the Act"), an approval which entitles the pharmacist to supply pharmaceutical benefits at or from certain premises. It is this right which entitles a pharmacist to recoup from the Australian Government some of the cost of customers' prescriptions. In practice this means that a chemist cannot open or move premises unless a favourable recommendation is given by the Authority. It is an interesting example of modern bureaucracy at work which substantially restricts the freedom of movement and choice of pharmacists and citizens.

1. Mr Raw is the proprietor of Ian Raw Chemist located at the corner of Brett Street and Recreation Street, Tweed Heads, New South Wales. Mr Raw wishes to move his pharmacy to a site located at the corner of Leisure Drive and Darlington Drive, Banora Point, New South Wales. He has under offer from the owner of the Banora Point Shopping Centre the lease of a shop in which to conduct his pharmacy business. The owner requires Mr Raw to make a decision as to whether he will in fact take up the lease within the next few days; but Mr Raw cannot commit himself unless and until he knows whether the Authority will make a favourable recommendation to the Secretary or not.

2. Mr Raw first applied to the Authority to relocate his premises on 2 September 1992, but this application was rejected on the ground that it had not been established that there was "a definite unmet public need" for the granting of the approval. This is the language of what is described in the evidence as Guideline 3(b) of the Guidelines determined by the Minister for Health under s. 99L of the Act to which I shall refer later.

3. Mr Raw made a second application on 27 January 1993 which has come before the Authority on a number of occasions, but the Authority has not yet decided its fate. Mr Raw's application for approval as a pharmacist to supply pharmaceutical benefits from the new premises is linked with an application by other pharmacists Mussar and Dilshad Kaderbhai ("the Kaderbhais") for favourable recommendations from the Authority to enable them to open a pharmacy in Tweed Heads close to the premises to which Mr Raw wishes to move. The reason why the two applications are linked for practical purposes will appear later.

4. The Authority is a statutory body established under s. 99J of the Act. Its functions include considering applications made by pharmacists under s. 90. Section 90 empowers the Secretary to the Department of Health upon application by a pharmacist who is willing to supply pharmaceutical benefits on demand at particular premises to approve that pharmacist for the purpose of supplying pharmaceutical benefits at or from those premises. An application by a pharmacist under the section must be referred initially to the Authority (s. 90(3A)). An approval may be granted by the Secretary only if the Authority has recommended the grant of the approval, but the Secretary may refuse to grant an approval even if the grant has been recommended by the Authority (s. 90(3B)). Once the Authority has made a recommendation whether or not the pharmacist should be approved under s. 90 in respect of particular premises then the matter comes before the Secretary who may grant or refuse the approval (s. 99K(b) and s. 90).

5. The Authority is empowered to do all things necessary or convenient to be done for or in connection with the performance of its functions (s. 99M).

6. The Minister is required by s. 99L(1) to determine in writing the guidelines subject to which the Authority is to make recommendations under s. 99K(1). The guidelines were determined by the Minister and appeared in the Gazette of 29 May 1991. So far as relevant for present purposes the guidelines provide that for the purposes of s. 99K(1)(b) the Authority must comply with the guidelines in making a recommendation on an application by a pharmacist under s. 90 of the Act. The guidelines are eight in number (paras. (a) to (h)), but the material guideline for present purposes is guideline (e) which requires the Authority to comply with it before making a recommendation on an application by a pharmacist under s. 90. It reads as follows:-
   

"(e) approval of a pharmacist in respect of particular premises shall be recommended where those premises are located more than 500 metres but not more than 5 kilometres by normal access routes from other premises in respect of which that pharmacist is already approved under section 90 of the Act and from which the pharmacist proposes to cease supplying pharmaceutical benefits, provided that -

(i) there has been no grant of financial assistance made under section 99ZC or 99ZD of the Act in respect of any other premises situated within 5 kilometres by normal access routes from the first-named premises; and

(ii) the pharmacist demonstrates to the Authority that there is a definite unmet public need for that approval;"

1. On 3 July 1991 the Kaderbhais applied for approval as a pharmacist for premises at the corner of Leisure Drive and Darlington Drive, Banora Point, the same site as is the subject of Mr Raw's present application. On 26 August 1991 the Kaderbhais were informed that the application had been refused based on the fact that there were six pharmacies within five kilometres by normal access routes from other premises in respect of which the Kaderbhais were already approved under s. 90 of the Act.

2. The Kaderbhais made a subsequent application for approval as a pharmacist for premises situated at the Tweed Heights Shopping Centre, Ash Drive, South Tweed. The Authority considered the application and reported to the Secretary who informed the Kaderbhais in due course of the rejection of their application. The Kaderbhais then proceeded to apply for a review of the decision before the Administrative Appeals Tribunal. That application for review has come before the Tribunal and is part-heard. It is proposed that the hearing may conclude in July this year.

3. As mentioned earlier Mr Raw applied on 2 September 1992, for cancellation of the approval concerning his premises at the corner of Brett Street and Recreation Street, Tweed Heads and for approval as a pharmacist for the premises situated at the corner of Leisure Drive and Darlington Drive, Banora Point. The Authority considered the application and on 28 September 1992 Mr Raw was informed that his application had been rejected on the ground that the application did not meet guideline 3(b), namely, that it was not established that there was a "definite unmet public need for" the approval.

4. On 27 January 1993 Mr Raw applied for cancellation of the approval with respect to the premises situated at the corner of Brett Street and Recreation Street, Tweed Heads and applied for approval with respect to the same premises at the corner of Leisure Drive and Darlington Drive that had been the subject of his earlier unsuccessful application. The application was received by the Commission on 29 January 1993. On 18 February 1993 the Authority requested further information from Mr Raw and on 8 March 1993 Mr Raw provided further information to the Authority. On 22 April 1993 the Authority informed Mr Raw that the consideration by it of his application would not be dealt with until the Kaderbhai's application, the subject of the review before the Tribunal, had been completed.

5. The Authority has apparently received advice from its lawyers that it should not proceed to consider further the relocation application of Mr Raw until the appeal of the Kaderbhais has been determined by the Tribunal.

6. Mr Raw has been informed by the real estate agents who act for the owner of the shopping centre in the shopping village at Banora Point that practical completion of the Banora Village Shopping Centre will be on 28 June 1993 and that Mr Raw would be allowed three weeks from that date to fit out the premises. His liability for rent would commence three weeks after the date of practical completion. The agents have informed Mr Raw that all leases must be executed by 28 June as that is the date allocated for access being available to tenants to enter premises and equip them. It appears that other people may be interested in obtaining a lease of the premises to which Mr Raw wishes to relocate his pharmacy. He fears that if he is not able to execute the lease and take up the tenancy in the time allotted by the agent for the owner of the shopping centre, he will lose the site.

7. It is in these circumstances that Mr Raw seeks from the Court orders under the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") and s. 39B of the Judiciary Act (the latter being sought not against the Authority as such because it is not an officer of the Commonwealth, but against certain of its members although they are not parties). What he seeks in essence is an order in the nature of mandamus directed to the Authority requiring it to hear and determine his application to relocate on the basis that its failure to deal with his application adversely affects him and that he is being denied natural justice by this delay. It is also alleged that the Authority is not entitled to take into account the appeal to the Tribunal by the Kaderbhais because it is said, that is taking into account an irrelevant consideration. Other grounds of attack are set out in the amended application but the essential grounds are those which I have mentioned.

8. The relevant provisions of the Act and the guidelines were considered by Spender J in Cenrin Pty Limited v Lamb and Ors, unreported, 23 April 1993. The case turned on points quite different from those which arise in this case.

9. The relevant principles governing applications for review under s. 7(1) of the Act on the ground that there had been unreasonable delay by the decision-maker in making his decision were expounded by Fisher J in Fulton v Repatriation Commission (1981) 35 ALR 485, namely, that the reasonableness of delay on the part of a decision-maker is a matter for objective determination and the question is whether a reasonable person acting in good faith could consider the decision to defer deciding an application pending the delivery of a High Court judgment, as appropriate or justified in the circumstances or whether it was capricious and irrational. His Honour held that in that case it could not be said that the decision to delay was unreasonable. His Honour referred in particular to the fact that the delay was for a considered reason and not the result of neglect, oversight or perversity and was for a finite and not indefinite period. Fulton has since been followed and applied by Neaves J in Wei v Minister for Immigration Local Government and Ethnic Affairs (1991) 29 FCR 455.

10. The primary reason for the Authority determining that the application of the Kaderbhais should not be recommended for approval was because it had not been established that there was a "definite unmet public need" for the approval. The relevant guideline applied by the Authority was guideline 3(b) which provides as follows:
    

"(b) approval of the pharmacist in respect of particular premises shall not be recommended unless the pharmacist demonstrates to the Authority that there is a definite unmet public need for that approval;"

It is this decision of the Authority that is currently under review before the Tribunal. The evidence before the Court establishes that the distance between the site at which the Kaderbhais wish to establish their pharmacy and the site to which Mr Raw wishes to relocate his pharmacy is approximately two kilometres. There is conflicting evidence as to the distance between Mr Raw's present pharmacy in Tweed Heads and the site to which he wishes to relocate in Banora Point. The evidence varies between something under five kilometres to a distance in excess of five kilometres. I do not regard it as appropriate in this case to make a finding as to what the distance in fact is because that is an issue which will be considered by the Tribunal on the material before it and it is not necessary that I determine the question.

1. In my view the Authority is justified in awaiting the result of the appeal to the Tribunal by the Kaderbhais, before making a final decision on Mr Raw's application. If the Kaderbhais' appeal to the Tribunal succeeds, it will be inherent in the Tribunal's decision that the Kaderbhais have established that there is "a definite unmet public need" for a grant of the necessary approval within Guideline 3(b). The Kaderbhais' application to the Secretary of 23 September 1991 precedes Mr Raw's application of 2 September 1992. If the Authority proceeds to consider Mr Raw's application before the result of the appeal to the Tribunal by the Kaderbhais is known, then the Authority will have to be satisfied under Guideline 3(e) not only that there is not more than five kilometres by normal access routes between Mr Raw's present pharmacy and the proposed pharmacy but also that Mr Raw has demonstrated to the Authority that there is a "definite unmet public need" for the approval of his application. Relevant to that question must be the question whether the Kaderbhais will succeed or not in obtaining their requisite approval. If they do not succeed it will strengthen Mr Raw's argument that there is an "unmet public need"; but if they succeed it will follow that approximately two kilometres from the proposed pharmacy of Mr Raw will be a pharmacy owned by the Kaderbhais. That fact, coupled with the fact that the nearest pharmacy to the proposed pharmacy of Mr Raw is the pharmacy known as the Seagull Pharmacy which is distinctly less than five kilometres from the proposed site is another relevant consideration. Of course if the material before the Authority establishes that the proposed pharmacy of Mr Raw is more than five kilometres by normal access routes from his existing pharmacy then his application cannot succeed in meeting Guideline 3(e).

2. I am satisfied that the decision by the Authority to postpone its further dealing with Mr Raw's application until the fate of the Kaderbhai's application for review is known is not unreasonable. The delay is for a considered reason and is for a finite period. It is not a decision which could be characterised as capricious or irrational. By taking into account the application and the appeal by the Kaderbhais when considering Mr Raw's application, the Authority has not taken into account an irrelevant consideration, nor has it otherwise erred in law in that regard.

3. The application must be dismissed. It is unfortunate that Mr Raw will probably be unable to obtain a lease of the premises to which he wishes to relocate his pharmacy; but it is not because of unreasonable conduct of the Authority, rather because of the Government scheme which is in place relating to approvals to supply pharmaceutical benefits which necessarily involve the passage of time and in this case works against the business interests of Mr Raw.

4. As to costs, the Authority was named as the respondent in the proceeding and was represented by counsel and solicitors on the hearing. However, when the matter was fixed for hearing by another judge of the Court his Honour was informed that the Authority proposed to adopt a submitting role. His Honour gave leave to the applicant to join the Kaderbhais as respondents to the proceeding, which they did. The Kaderbhais were represented by solicitors and counsel on the hearing before me. The Authority was also represented by solicitors and counsel who opposed Mr Raw's application. Although the applicant has failed, he should not in my view have to pay two sets of costs. In my opinion the fair order to make is that there be one set of costs between the respondents to be borne by Mr Raw.

5. The order of the Court is that the application be dismissed and that the applicant pay the costs of the respondents on the basis of one set of costs being allowed between the respondents.