Re Currey and Australian Community Pharmacy Authority
[2007] AATA 1963
•16 November 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1963
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/1703
GENERAL ADMINISTRATIVE DIVISION ) Re DAVID CURREY, JOHN NEILSON, BENJAMIN FEALY Applicants
And
AUSTRALIAN COMMUNITY PHARMACY AUTHORITY
Respondent
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/1704
GENERAL ADMINISTRATIVE DIVISION ) Re J N PHARM PTY LTD, HEALTHY LEVERAGE PTY LTD Applicants
And
AUSTRALIAN COMMUNITY PHARMACY AUTHORITY
Respondent
DECISION
Tribunal Deputy President P E Hack SC Date16 November 2007
PlaceBrisbane
Decision In each proceeding the Tribunal dismisses the applications for review pursuant to s 42B(1) of the Administrative Appeals Tribunal Act 1975.
..............................................
Deputy President
CATCHWORDS
HEALTH AND COMMUNITY SERVICES – pharmaceutical benefits – application for approval to supply pharmaceutical products – transfer existing approval to other premises – meaning of “nearest approved premises” – proposed premises not 1.5km from nearest approved premises – whether approved premises can also be proposed premises – literal versus purposive interpretation of “nearest approved premises” – Tribunal unable to make decision that would have any practical benefit - application dismissed
National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (Cth.) – ss 6, 9, 10
National Health Act 1953 (Cth.) – ss 90, 99J, 99L
Administrative Appeals Tribunal Act 1975 (Cth.) – s 42B(1)
Re Brian Reddish and Civil Aviation Safety Authority [1999] AATA 721
Re Williams and Australian Electoral Commission (1995) 38 ALD 366
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Newcastle City Council v GIO General Ltd (1997) 191 CLR 85
REASONS FOR DECISION
16 November 2007 Deputy President P E Hack SC Introduction
1.The applicants in each of these applications are pharmacists. They have applied for approval to supply pharmaceutical products at particular premises. The respondent, the Australian Community Pharmacy Authority (the Authority), has recommended that the applications be refused.
2.Each application raises the same narrow legal issue, which concerns the meaning of the expression “nearest approved premises” as it is used in the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (Cth.) (the Rules).
Factual Background
3.The factual context in which that issue falls to be determined is not in dispute.
4.Mr John Neilson, Mr David Currey and Mr Benjamin Fealy are the applicants in matter 2007/1703. They presently operate a pharmacy at Shop 7, Coolum Park Shopping Centre, 21 South Coolum Road, Coolum Beach. That pharmacy has an approval under s 90 of the National Health Act 1953 (Cth.) (the Act) to supply pharmaceutical benefits at or from those premises.
5.In January 2007 Mr Neilson, Mr Currey and Mr Fealy again made application for approval of the premises under s 90 of the Act. The oddity of an application for approval of premises already approved is explained by the existence of a plan these applicants had to transfer the existing approval to other premises.
6.The Authority considered the application on 30 March 2007. Those advising the Authority took the view that the proposed premises were not at least 1.5 km in a straight line from the nearest approved premises because there was already an approved premises at the proposed premises. The Authority did not consider any other aspect of the criteria. The Authority adopted that view and recommended to the Secretary that the applicants not be approved under s 90 for the premises at Shop 7, Coolum Park Shopping Centre.
7.In the case of J N Pharm Pty and Healthy Leverage Pty Ltd, the applicants in matter 2007/1704, the position is much the same. These applicants have an approval under s 90 of the National Health Act for premises at Shop T12, Parkinson Plaza Shopping Centre, corner Nottingham and Algester Roads, Algester. Their application in January 2007 for approval of those premises was motivated by a desire to transfer the existing approval to premises in South Australia.
8.Again, the Authority took the view that it was not satisfied that the proposed premises were at least 1.5 km in a straight line from the nearest approved premises and recommended to the Secretary that these applicants not be approved under s 90 of the Act.
9.In each proceeding, a review of the Authority’s recommendation is sought. The parties agree that if I were to accept the applicants’ argument I ought set aside the decision and remit the matter to the Authority to consider whether the Authority is satisfied of the other matters required by the Rules.
Legislative Background
10.The Commonwealth does not have power to make laws with respect to pharmacies but it does have power to make laws with respect to the provision of pharmaceutical benefits. The Act deals with the exercise of that power. By virtue of s 90 of the Act the Secretary of Health and Ageing, on application by a pharmacist who is willing to supply pharmaceutical benefits on demand at particular premises, may approve that pharmacist for the purpose of supplying pharmaceutical benefits at or from those premises.
11.The Authority is established by s 99J of the Act to consider applications for approval under s 90 and to make recommendations to the Secretary about those applications. In making those recommendations, the Authority is bound by the Rules, which have been determined by the Minister pursuant to s 99L of the Act.
12.The Rules are based on arrangements agreed to as part of the Fourth Community Pharmacy Agreement, an agreement between the Commonwealth and the Pharmacy Guild of Australia. That agreement has the objective of regulating the number and location of pharmacies within Australia. The Rules give effect to that agreement by specifying the circumstances under which the Authority may recommend approval for new premises from which pharmaceutical benefits may be supplied or the relocation of approvals of existing premises for that purpose.
13.The key provision of the Rules is s 9, which sets out the circumstances where the Authority must recommend an approval. It is sufficient for present purposes to note that, in the case of an application that does not involve the cancellation of an existing approval (which is said to be the position here), the Authority must recommend approval where:
“(i)the application states that it is of a kind mentioned in column 2 of an item of Part 2 of Schedule 1; and
(ii)the requirements set out in column 3 of that item are met;
(iii)the requirements set out in Schedule 2 are met.”
Where the Authority is not satisfied of the matters set out in Rule 9, Rule 10 requires the recommendation that an applicant not be approved. There is, thus, no discretion conferred upon the Authority when it considers the exercise of this power.
14.The applications in issue here answered the description in paragraph (i) above. Because of the view the Authority took of the matters in paragraph (ii), it was unnecessary for the Authority to consider the matters in paragraph (iii). The critical provision was the requirement of clause 1 of Column 3 at Item 113 “New pharmacy (general)” that:
“1. The proposed premises are at least 1.5 km, in a straight line, from the nearest approved premises."
15.The expression “approved premises” is defined in s 6 of the Rules as meaning “premises in respect of which an approval granted under section 90 of the Act is in force.” The expression “proposed premises”, in relation to an application, is defined as meaning “the premises at or from which an applicant proposes to supply pharmaceutical benefits.”
16.The issue here is whether the approved premises can be one and the same as the proposed premises.
The Parties’ Arguments
17.The applicants rely upon a literal interpretation of Column 3 at Item 113 and urge that those words be given their ordinary meaning. There must be a measurable distance and thus, they say, where the proposed premises are identical to the presently approved premises there can be no distance between them capable of being measured. It follows, so it is submitted, that in a case such as the present the “nearest approved premises” must be premises other than the premises with an existing approval. The applicants point to a variety of indications in the text of the Rules that suggests that what is to be measured is the distance between two separate and different locations.
18.For its part, the Authority urges a purposive approach to the interpretation of the words in issue. The literal interpretation, urged on behalf of the applicants, is inconsistent with the purpose of the legislative scheme generally and Item 113 specifically.
Frivolous or Vexatious
19.Before considering these arguments, it is necessary to consider an antecedent question, which is whether the Tribunal ought deal with the matter in any event. The Tribunal has power under s 42B(1) of the Administrative Appeals Tribunal Act 1975 to dismiss an application if satisfied that it is frivolous or vexatious. The question of the exercise of that power in the present circumstances was touched upon briefly in the course of the hearing but no argument was addressed to the point. Following the hearing submissions were sought from the parties which addressed, in particular, three questions:
·whether it is accepted that there is power to dismiss where the Tribunal is unable to make a decision that would be of any practical value;
·whether, in the present case, a favourable decision would be of any practical benefit to the applicants;
·whether, as a matter of discretion, the power ought be exercised.
20.Supplementary submissions were received from the parties addressing these questions. It was accepted that there was such a power but the parties differed on the question of its application. A convenient starting point is the reasoning of Deputy President A M Blow OAM QC (as his Honour then was) in Re Brian Reddish and Civil Aviation Safety Authority[1] where the learned Deputy President concluded that:
“an application to this Tribunal may be dismissed on the ground that it is frivolous if the Tribunal is unable to make a decision that would be of any practical benefit to the applicant.”
[1] [1999] AATA 721 at [33].
21.The submissions for the Authority relied upon the decision in Re Williams and Australian Electoral Commission[2]. In that case, the Tribunal, constituted by three judicial presidential members, dismissed an application in reliance upon the s 42B power, saying[3]:
“(33) … we consider that the situation in any event falls within the provisions of s 42B. It does so not only because of the futility of the proceedings, but also because they are being pursued for a collateral purpose – a purpose which is irrelevant to any issue which could legitimately be raised in these proceedings.”
[2] (1995) 38 ALD 366 per Matthews, Beaumont & Hill JJ.
[3] At 373, paragraph [33].
22.The Authority submits that the present is a case where there is both a lack of utility and a collateral purpose. The applicants submit that there is practical benefit and that the “collateral purpose” is a legitimate commercial objective to the applications, even now that the underlying cancellation applications have been refused. To understand the argument it is necessary to set out the material relied upon by the applicants as demonstrating utility. The applicants say, on this aspect:
“Schedule 1 of the Rules specifies the “kinds of Applications, and requirements in relation to those Applications”. Part 1 of Schedule 1 relates to “Applications involving cancellation of existing approval” and contains Items 101-112. Part 2 of Schedule 1 relates to “Applications not involving cancellation of existing approval” and contains Items 113 and 114.
It is submitted that most recommendations made by the Respondent, (it is suggested more than 90% of recommendations) relate to Applications made under Part 1 of Schedule 1, that is Applications involving, or more precisely requiring, the cancellation of an existing approval.
The Applicant submits that there is a well established commercial market for the “purchase and sale” of approvals suitable for cancellation in support of another Application for approval. The consideration generally paid is currently between $300,00.00 and $370,000.00 and is in the public domain.
The market, which has existed since the Ministerial Rules made pursuant to the Second Community Pharmacy Agreement in 1995, is not an unfortunate by-product of the Rules nor is it inconsistent with the proper purposes of the legislative scheme. It is the essence of the scheme. The approval of Applications to facilitate the supply of pharmaceutical benefits to the community and achieve the objectives of the various Community Pharmacy Agreements is almost wholly dependent upon the cancellation of existing approvals.
It is not contended on behalf of the Applicants that it is their intention, should favourable recommendations be forthcoming, to secure second approvals to supply at either or both of the premises. Each of these Applications followed an Application by other pharmacists to supply pharmaceutical benefits at or from other premises supported by a request for cancellation of each Applicant’s existing approval. The Respondent was made aware of this by an Officer of Medicare Australia (T9 in No. 2007/1703 and T25 in No. 2007/1704). Neither of those earlier Applications was successful and accordingly is no longer relevant save that they clearly indicate an intention by the Applicants to cancel their existing approvals and obtain a new approval under Item 113. That remains their intention.
The Applicants believe that in relation to each of the approved premises (the proposed premises for the purposes of these Applications) the requirements specified in Item 113 and the general requirements of Item 201 are satisfied.
The process of making Application under Item 113 or 114 of the Rules in anticipation of cancellation of an existing approval, referred to in the T Documents as ‘backfilling’, has been permissible under various Ministerial Rules since 1995 and there are any number of precedents for it. It is submitted that from the Respondent’s perspective it is irrelevant whether the Application for approval under Item 113 or 114 is made before or after the cancellation of an existing approval as no distinction is drawn between the two in the Rules.
A decision to recommend approval of these Applications is of practical benefit to the Applicants because:
(a)It allows the Applicant to make Application for approval in respect of other premises supported by a request for cancellation of the existing approval; or
(b)It allows the Applicant to cancel the existing approval for valuable consideration in support of an Application for approval by another pharmacist,
and simultaneously with or shortly after such cancellation to obtain approval to supply pharmaceutical benefits at the existing premises, on the basis of the favourable recommendation of the Respondent.
A decision to favourably recommend these Applications while the existing approvals remain in place is of practical benefit to the Applicants because:
(a) It eliminates the risk of the Applicants being unable to obtain a favourable recommendation for approval after the cancellation of the existing approval; and
(b)It permits the Applicants to cancel each approval immediately before or simultaneous with the grant of an approval pursuant to the favourable recommendation for approval made by the Respondent, minimising the risk of a delay between cancellation of the existing approval and grant of the new one.
It is submitted that it is not necessary that a decision must be of practical benefit to the Applicant. It is sufficient that it may be. No favourable recommendation is of practical effect unless and until approval is granted. A favourable recommendation under any circumstances does not guarantee approval as a residual discretion rests with the Secretary Department of Health and Ageing. The Applicants belief that the requirements of Item 113 are met is not unreasonable. If there is doubt as to whether the requirements of Item 113 are met it is because the Respondent has failed to give proper consideration to the Applications.
It is submitted that it is not necessary that the benefit be consistent with the purposes of the Act and that is in fact not a relevant consideration for the Respondent. In any event it is reiterated that cancellation of existing approvals is essential to the operation of the legislative scheme and that approval of “backfilling” Applications have previously been granted on the basis of the Respondent’s favourable recommendation.”
23.While I accept the accuracy of these matters as far as they deal with factual matters, I do accept the arguments the applicants put forward. It is undoubtedly true that there a recognised practice of “backfilling” where approval is sought in anticipation of cancellation. But the present situation is quite different from that process. The anticipated cancellation has been refused. It can no longer be anticipated. The key to my rejection of the applicants’ argument lies in their acceptance that the applications by other pharmacists to supply pharmaceutical benefits at or from other premises, supported by a request for cancellation of the existing approvals, were unsuccessful. So long as there was a prospect of success in that process, these present applications had a utility. But that utility was lost once the underlying applications had been refused. From that point, the only practical outcome was that premises already approved could be again approved. There is no utility in that.
24.In my view, these applications ought be dismissed under s 42B(1) of the Administrative Appeals Tribunal Act 1975. There is no decision that I could make that would be of any practical benefit to the applicants. The subject premises already hold s 90 approvals. A decision in favour of the applicants would lead, at best, to a recommendation to the Secretary that the applicant be approved for the purposes of supplying pharmaceutical benefits at or from the premises at Shop 7 Coolum Park Shopping Centre or Shop T12, Parkinson Plaza Shopping Centre.
25.But the applicants already hold approval to supply pharmaceutical benefits at or from those premises. In the absence of any suggestion that the existing approvals are likely to terminate a decision, which, at best, could lead to a recommendation for approval of premises already the subject of an approval, is a decision that would be of no practical benefit to the applicants.
26.I would add that I do not however accept the Authority’s argument that the applications are being pursued for a collateral purpose. The fact that the applicants might obtain, or are seeking to obtain, a commercial benefit does not make the purpose of the applications collateral. That seems to me to be the necessary consequence of the existence of a limited market in approvals. If such a benefit exists, the pursuit of it is not collateral in the sense used in the cases, so long as there is otherwise a purpose to the applications.
27.Given the conclusion that I have reached I would dismiss each application pursuant to s 42B(1)(a) of the Administrative Appeals TribunalAct1975.
28.Against the possibility that this conclusion be held to be in error I will briefly deal with the substance of the application.
29.I accept, as the applicants submit, that a literal and strict interpretation of the words in Item 113 leads to the conclusion that where the proposed premises are already approved premises some other premises must be regarded as the comparator. However, to construe the language in that way would be to depart from the modern approach to construction of statutes and other legislative instruments. That approach requires that a provision be construed in its context so that it is consistent with the language and purpose of all of the statute or instrument[4].
[4] See e.g. Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
30.To some extent, the construction for which the Authority contends does strain the language. It requires Item 113 to be read as if the words “other than the proposed premises” appeared parenthetically. However, the modern approach permits a strained construction in order to achieve a clear legislative purpose if the construction adopted is not unreasonable or unnatural[5].
[5] Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 131.
31.Item 113 is part of an overall scheme (that the Parliament considers to be in the public interest) to regulate the number and location of pharmacies by ensuring the cost to the taxpayer of providing pharmaceutical benefits is kept in check and by ensuring there is proper access to the provision of pharmaceutical benefits. Item 113 acts as a mechanism for limiting the number of new pharmacies that may be established. The present applications are not applications that relate to a “new” pharmacy. But even if they were regarded as such, the effect of an approval would be to increase, nominally at least, the number of approvals. I consider that I ought adopt an approach to construction that gives effect to the overall purpose. Thus I consider that I ought construe Item 113 in the manner in which the Authority contends.
32.For these reasons, had I not taken the view regarding the dismissal of the applications, I would have affirmed the decision under review in each case.
I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC
Signed: .....................................................................................
Eleanor O’Gorman, AssociateDate of Hearing 10 September 2007
Date of final submissions 24 October 2007
Date of Decision 16 November 2007
Solicitor for the Applicants McCarthy Holzberger Solicitors
Solicitor for the Respondent Australian Government Solicitor
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