Ropapharm Pty Ltd and Australian Community Pharmacy Authority and Ly and Phillips (Joined Parties)

[2011] AATA 357

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 357

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/5307

GENERAL ADMINISTRATIVE DIVISION		)
Re		ROPAPHARM PTY LTD

Applicant

And AUSTRALIAN COMMUNITY PHARMACY AUTHORITY

Respondent

And LIEN LY and GARRETH PHILLIPS

Joined Parties

DECISION

Tribunal Deputy President P E Hack SC

Date27 May 2011

PlaceBrisbane

Decision The decision under review is affirmed. 

..........Signed...................

Deputy President

CATCHWORDS

HEALTH & COMMUNITY SERVICES – pharmaceutical benefits – application for approval to supply pharmaceutical benefits – catchment area – whether resident population of catchment area for proposed premises is, for the most part of the year, 8000 – statutory requirement not met – decision under review affirmed.

National Health Act 1953 (Cth) ss 90, 99L

National Health (Australian Community Pharmacy Authority Rules) Determination 2006 ss 9, 10, Item 107

ReElkhishin and Australian Community Pharmacy Authority [2008] AATA 1134

Re Dunsdon and Australian Community Pharmacy Authority  [2011] AATA 82; (2011) 119 ALD 696

REASONS FOR DECISION

27 May 2011  Deputy President P E Hack SC    

Introduction

1. Maleny is a small village at the southern end of a plateau to the west of the Sunshine Coast. It is served by one pharmacy. The applicant, Ropapharm Pty Ltd, wants to establish another pharmacy in Maleny however the respondent, the Australian Community Pharmacy Authority, decided that it was not satisfied that Ropapharm’s proposal satisfied the statutory criteria for establishing a new pharmacy.

2. Ropapharm seeks a review of the Authority’s decision. The proprietors of the existing pharmacy were joined as parties to the proceedings. They support the Authority’s decision.

   The statutory framework

3. By virtue of s 90(1) of the National Health Act 1953 (Cth) the Secretary to the Department of Health and Ageing may approve the supply of pharmaceutical benefits by a pharmacist at particular premises. An application for approval is considered by the Authority which must make a recommendation to the Secretary whether or not the applicant should be approved under s 90 of the National Health Act. In making that recommendation the Authority, and the Tribunal in its stead, must comply with rules determined by the Minister under s 99L of the National Health Act.

4. Those rules are to be found in the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (the Determination). Section 9 of the Determination requires the Authority to recommend approval if the requirements specified in the Schedule to the Determination are satisfied. Conversely, s 10 requires that the Authority recommend that an applicant not be approved if any of those requirements are not met.

5. The application by Ropapharm was one that involved cancellation of an existing approval of premises at Elizabeth Street Kenilworth and relocation to a rural locality. The requirements to be satisfied were set out in Item 107 of the Schedule to the Determination as follows:

   “1. The proposed premises are in a rural locality.

   2. The proposed premises are at least 200m, in a straight line, from the nearest approved premises.

   3. The Authority is satisfied that:

   (a) the resident population of the catchment area for the proposed premises is, for most of the year, at least 8 000; and

   (b) the number of prescribing medical practitioners practising in the catchment area for the proposed premises is equivalent to at least 4 full-time prescribing medical practitioners; and

   (c) the catchment area for the proposed premises contains only 1 approved premises; and

   (d) the pharmacy operating from the approved premises mentioned in paragraph (c) has not, in the 3 years before the day on which the application is made, been involved in an amalgamation with a pharmacy that had operated from other approved premises in the same rural locality, other than an amalgamation that occurred on or after 1 July 2006.”

   The issues

6. The Authority recommended that the application not be approved because it was not satisfied that Item 107(3)(a), the requirement for a resident population of the catchment area for the proposed premises of at least 8000 for most of the year, was met. It maintains that position as do the joined parties. Ropapharm contends that the catchment area for the proposed pharmacy exceeds 8000.

7. Where the parties differ is in the definition of what is the catchment area for the proposed premises. Subject to one qualification there is no suggestion from the Authority or the joined parties that the other requirements of Item 107 are not satisfied. The qualification relates to the requirement of Item 107(3)(c) that the catchment area for the proposed premises contain only one approved pharmacy premises. The Authority and the joined parties now contend, contrary to their earlier contentions, that the catchment area for the proposed premises contains at least two, and possibly three, approved premises – the existing pharmacies at Maleny, Kenilworth and Montville.

   What is the catchment area

8. All parties accept that the test to determine a catchment area is that in ReElkhishin and ACPA[1] and ReDunsdon and ACPA[2], that is,

   “…whether the ordinary resident of an area would regard a particular pharmacy as a reasonable and practical option in all the circumstances.”

   [1] [2008] AATA 1134 at [22].

   [2] [2011] AATA 82; (2011) 119 ALD 696.

9. As is common in cases of this nature the evidence was directed to census collection districts (CCD) which the parties used as a convenient means of determining population.

10. The town of Maleny is described in the report of Mr James Turnbull, in these terms:

    “41. The township of Maleny accommodates a range of commercial, retail, business services, community and education facilities typically found in a rural town. It is the largest town in the catchment area and contains three schools, a hospital and major retail anchors.

    42. The township accommodates a 2,500m2 Woolworths supermarket, a 1600m2 Supa IGA supermarket as well as specialty stores, cafes, restaurants, food stores, retail services, banking facilities, accountants, real estate agents and pubs.

    43. The township accommodates two (2) medical centres and the Maleny Soldiers Memorial Hospital as well as other allied health and alternative health practices. The two medical centres are:

    a. Maleny Medical Centre, Maple Street (6 full time equivalent doctors)

    b. Medicine on Maple, Maple Street (4 full time equivalent doctors)

    44. The township accommodates one (1) pharmacy, the Maleny Amcal Chemist located at 1/25 Maple Street. This pharmacy trades seven days a week, 830-530 Monday to Friday, 830-4pm on Saturday and 10-1pm on Sunday.”[3]

    [3] Exhibit 6, page 10.

11. Approximately 15 kilometres to the north of Maleny is the town of Montville. It has a pharmacy and two medical practices. There is a small independent supermarket in Montville. To the south of Maleny, and at the foot of the plateau, is the small town of Landsborough with a pharmacy, a medical practice and a small independent supermarket. To the north east of Maleny some 41 kilometres is Kenilworth. It has a medical practice staffed by one general practitioner and a pharmacy; however, if approval were to be given to the present application the Kenilworth approval would be cancelled.

12. The pharmacy proposed would be situated at the Coral Street Professional Centre. That was in the course of being constructed at the time of the hearing. When completed it will house a general medical practice with two full time medical practitioners, a dental practice and a physiotherapist. The town planning approval requires the provision of 52 off-street car parking spaces.

13. I had the benefit of the evidence of three expert witnesses – Mr Stephen McElroy, Mr James Turnbull and Mr Anthony Dimasi – as well as the opportunity to inspect the Maleny township and the parts of the adjoining districts that the parties regarded as being relevant.

14. All of the witnesses agree that the areas in and immediately surrounding Maleny ought to be included within the catchment for the proposed premises. On Mr McElroy’s calculations there are 6654 residents within those CCD’s. CCD’s 3120203 (787 residents), 3120204 (650 residents), 3120205 (976 residents), 3120206 (399 residents), 3120207 (477 residents), 3120209 (627 residents), 3120210 (650 residents), 3120211 (313 residents), 3120212 (398 residents), 3120213 (799 residents) and 3120214 (578 residents) are in that category. At the outset of the hearing, and on the basis of the reports of the three witness, the contest centred on three areas – one to the north-west in the direction of Kenilworth, one to the north towards Montville and one to the south-east towards Landsborough.

15. In Mr McElroy’s view a substantial part of each of CCD’s 3120201 and 3120202, areas to the north-west of Maleny, ought to be included. Mr Turnbull did not consider that any part of those districts should be included however Mr Dimasi considered that a part of each of those districts was within the catchment.

16. CCD 3120208, to the north, was included by both Mr McElroy and Mr Turnbull but part of it was excluded by Mr Dimasi.

17. Finally, in relation to areas to the east, Mr McElroy included a part of CCD’s 3120310, 3120315 and 3120316 in what he regarded as the catchment area, Mr Dimasi included a smaller part of CCD 3120310 only and Mr Turnbull included none of them within his catchment.

18. I propose to deal first with the areas to the east, CCD’s 3120310, 3120215 and 3120316, and to the north, CCD 3120208. I do so because my conclusions regarding those areas are sufficient to determine that the decision ought to be affirmed even if I were to accept a view of the evidence regarding the north-west areas most favourable to Ropapharm.

19. CCD 3120310 lies to the east of Maleny and has the Maleny-Montville road as its western boundary and the Landsborough-Maleny road as its southern boundary. The land slopes down from the Maleny-Montville road into the valley below. No expert suggests that all of this CCD ought to be included. According to Mr Dimasi the majority of the population reside in the eastern part of the CCD, in and about Diamond Valley Road and Ratcliffe Road. These residents would, in effect, drive past the Landsborough pharmacy to travel to Maleny. No one suggests that they form part of the catchment population. Mr McElroy included residents of Eagles Nest Court and Hovard Road as falling within the catchment area for the proposed pharmacy. Those residents are considerably closer to Landsborough and, as Mr Dimasi points out, travel to Maleny requires the residents in a climb up the escarpment whereas the drive to Landsborough is more straightforward. I do not think these residents would regard the proposed pharmacy as a reasonable and practical option and would not include them within the catchment.

20. It is common ground that residents in and around Sinclair’s Lane, in the most westerly part of CCD 3120310 ought to be included. I would include Mr Dimasi’s estimate of 103 residents within CCD 3120310.

21. CCD 3120316[4] is on the southern side of the Landsborough-Maleny road. The area identified by Mr McElroy as being part of the catchment is the area in and around Mount Mellum Road. It is a considerable distance to the east of the contentious area of CCD 3120310, virtually on the doorstep of Landsborough. I find it inconceivable that residents of this area could regard Maleny as a reasonable and practicable option. I would not include any part of CCD 3120316 as being within the catchment area for the proposed pharmacy.

    [4] In some of the evidence e.g. Mr McElroy’s report, this CCD is wrongly described as CCD 3122006.

22. CCD 3120315 is also on the southern side of the Landsborough-Maleny road. Mr McElroy identifies an area of population in and around Bald Knob Road within that CCD. To access Maleny residents of Bald Knob Road would join the Landsborough-Maleny road approximately one kilometre to the east of the Mount Mellum Road intersection. In that position they are considerably closer to Landsborough than to Maleny. Again I do not think that those residents would regard Maleny as a reasonable and practical option and would not include any part of CCD 3120315 within the catchment of the proposed pharmacy.

23. Both Mr McElroy and Mr Turnbull include all of the residents of CCD 3120208, to the north of Maleny, within the catchment. Mr Dimasi has included the major part of that CCD but has excluded a portion. Unusually (apparently) CCD 3120208 is divided into two distinct parts that are separated by Lake Barron. Mr Dimasi has excluded the residents in the more northerly part. In my view he was right to do so because any resident within that part of CCD 3120208 must either travel past, or travel within 300 metres of, the Montville pharmacy in order to travel a further 15 kilometres to Maleny.

24. Given those distances, I do not regard Maleny as a reasonable and practical option to the residents of the northern segment of CCD 3120208. Mr Dimasi has calculated that 20% of this CCD is within the excluded segment. I accept the accuracy of his calculation and would propose to reduce Mr McElroy’s calculation of the population of CCD 3120208 by 20%.

25. The result of all of this is as follows. On the most favourable view of Mr McElroy’s evidence he calculates the catchment population as 8,247 which is the sum of his calculation in the joint expert report[5] (8163) and the further 84 persons in CCD 3120315.

    [5] Exhibit 8, Table D2 (as amended in the course of the evidence).

26. I would reduce that figure by 84 because I do not accept his reasoning in relation to CCD 3120315, by a further 103 because I do not accept his logic in relation to CCD 3120316. I would reduce his estimate for CCD 3120208 by 20% i.e. from 356 to 284, a further reduction of 72, and would use Mr Dimasi’s figure of 103 for CCD 3120310 instead of Mr McElroy’s figure of 159.

27. The consequence is that Mr McElroy’s figure is reduced to 7932. Thus, and assuming that CCD’s 3120201 and 3120202 to the north-west were regarded as being within the catchment, the evidence that I accept does not satisfy me that the catchment area for the proposed pharmacy has a resident population of at least 8000. I would then affirm the decision under review.

    The alternative argument

28. In the course of oral submissions the representatives of the Authority and of the joined parties advanced an alternative and entirely new argument. It relied upon evidence given by the various experts that residents of Kenilworth and Montville would regard Maleny as a reasonable and practical option because Maleny has, but those towns do not have, a major supermarket. On this basis, it was said, contrary to the thrust of those parties’ cases, and the reports of the experts engaged by them, that Kenilworth and Montville must be regarded as being within the catchment area of the proposed pharmacy.

29. If that proposition was accepted, the argument was that Item 107(3)(c) was not satisfied because the catchment area did not contain only one approved premises. I express no opinion on the merit of the argument and need not decide whether it is correct. 

    I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

    Signed: .........Signed..........................................................
      Associate

    Dates of Hearing  6 – 7 April 2011       
    Date of final submissions  12 May 2011 
    Date of Decision  27 May 2011
    Solicitor for the Applicant  Gadens Lawyers 
    Solicitor for the Respondent  Australian Government Solicitor
    Representative of the joined parties         Ann Mihulka & Associates