TFS Manufacturing Pty Limited and Minister for Health

[2017] AATA 2786

TFS Manufacturing Pty Limited and Minister for Health [2017] AATA 2786 (19 December 2017)

Division:GENERAL DIVISION

File Number:           2015/1447

Re:TFS Manufacturing Pty Limited

APPLICANT

AndMinister for Health

RESPONDENT

INTERLOCUTORY DECISION

Tribunal:The Honourable Justice D Thomas, President

Deputy President K Bean

Senior Member A Poljak 

Date:19 December 2017

Place:Adelaide

The material time for the Tribunal’s purposes is the period during which the applicant’s device was on the Australian Register of Therapeutic Goods, namely the period prior to 5 November 2014.

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The Honourable Justice D Thomas, President 

CATCHWORDS

PRACTICE AND PROCEDURE – Health – Therapeutic goods – Decision by the Therapeutic Goods Administration to cancel applicant’s registration on the Australian Register of Therapeutic Goods – Tribunal’s task to determine what was the correct or preferable decision – Whether discretion to cancel registration on the Register contains a temporal element – Whether Tribunal could consider evidence relating to the applicant’s compliance with the essential principles as at the time of the Tribunal’s decision – Whether Tribunal was limited to considering only the evidence of the applicant’s compliance with the essential principles whilst the applicant’s device was still on the Register.

LEGISLATION

Therapeutic Goods Act 1989 (Cth), ss 41GN(1)(b) and 41FN(3)(a)

Therapeutic Goods (Medical Devices) Regulations 2002 (Cth), Schedule 1

CASES

Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286

Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Aged Care Standards and Accreditation Agency Limited v Kenna Investments (2004) 138 FCR 428

REASONS FOR DECISION

The Honourable Justice D Thomas, President,
Deputy President K Bean and Senior Member A Poljak 

19 December 2017 

1. The substantive application in this matter concerns a request by the applicant (“TFS”) for review of a decision made by a delegate of the respondent on 27 February 2015 (“the reviewable decision”). That decision affirmed an earlier decision to cancel TFS’s entry for a device described as “prosthesis, incontinence” ARTG 132657 (“the Device”) from the Australian Register of Therapeutic Goods (“the Register”), pursuant to section 41GN(1)(b) of the Therapeutic Goods Act 1989 (Cth) (“the Act”), from 5 November 2014.

2. The reviewable decision was based, in part, on a conclusion that TFS had refused or failed to comply with an applicable condition, that at all times while the device was included on the Register, TFS have available sufficient information to satisfactorily establish compliance with essential principles as set out in Schedule 1 of the Therapeutic Goods (Medical Devices) Regulations 2002 (Cth) (“the Regulations”). The essential principles of relevance in these proceedings are essential principle 14 relating to clinical evidence, essential principle 6 relating to whether the benefits of medical devices outweigh any undesirable effects and essential principle 2 relating to design and construction of medical devices so as to conform to safety principles.

3. The matter was listed for what was intended to be a final hearing before us commencing for five days on 18 October 2017. However at the outset of the hearing, an issue emerged which the Tribunal and both parties thought required further consideration. That issue concerns the material time for the purposes of determining the application, which involves consideration of the decision of the High Court in Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286 (Shi) and the referring legislation in this matter.

4. Both parties took the view that it was preferable for the point to be considered and determined before proceeding further with the hearing as the determination is likely to have implications for the evidence called by the parties. The balance of the intended hearing days were vacated pending our determination of this issue. Further submissions (both written and oral) were made on this point.

   THE LEGAL CONTEXT

5. The decision making process of the Tribunal is part of the administrative continuum, within the bounds of the referring legislation. Ordinarily, the Tribunal is required to determine a matter by reference to all of the evidence before it, including evidence of events that may have occurred after the decision under review was made; although we are obliged to address the same question the decision-maker addressed. The role of the Tribunal was described by Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589 as follows:

   The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal.

6. However, the authorities also make clear that if the relevant legislation makes reference to a particular point in time then the Tribunal will be limited to deciding the matter by reference to that particular time. In Shi at [44], Kirby J observed that “sometimes, it may be inherent in the nature of a particular decision that review of that decision is confined to identified past events”. At [99], Hayne J and Heydon JJ stated: 

   Once it is accepted that the Tribunal is not confined to the record before the primary decision-maker, it follows that, unless there is some statutory basis for confining that further material to such as would bear upon circumstances as they existed at the time of the initial decision, the material before the Tribunal will include information about conduct and events that occurred after the decision under review. If there is any such statutory limitation, it would be found in the legislation which empowered the primary decision-maker to act; there is nothing in the AAT Act which would provide such a limitation.

7. Similarly, Kiefel J observed at [142]-[143]:

   In considering what is the right decision, the Tribunal must address the same question as the original decision-maker was required to address. Identifying the question raised by the statute for decision will usually determine the facts which may be taken into account in connection with the decision. The issue is then one of relevance, determined by reference to the elements in the question, or questions, necessary to be addressed in reaching a decision. It is not to be confused with the Tribunal’s general procedural powers to obtain evidence. The issue is whether evidence, so obtained, may be taken into account with respect to the specific decision which is the subject of review.

   Where the decision to be made contains no temporal element, evidence of matters occurring after the original decision may be taken into account by the Tribunal in the process of informing itself. Cases which state that the Tribunal is not limited to the evidence before the original decision-maker, or available to that person, are to be understood in this light. It is otherwise where the review to be conducted by the Tribunal is limited to deciding the question by reference to a particular point in time.

8. It is clear that in determining whether we must decide this matter by reference to a particular time, we must look to the referring legislation and the nature of the decision under review.

9. The provisions which are most relevant for our purposes are ss 41GN(1)(b) and 41FN(3)(a) of the Act, which relevantly provide as follows:

   41GN Cancellation of entries of kinds of medical devices from the Register after notice of proposed cancellation

   (1)The Secretary may, by written notice given to the person in relation to whom a kind of medical device is included in the Register, cancel the entry of the kind of device from the Register if:

   …

   (b)the person in relation to whom the kind of medical device is included in the Register refuses or fails to comply with a condition to which that inclusion is subject; or

   …

   41FN Conditions applying automatically

   Availability etc. of information

   (3)The inclusion of a kind of medical device in the Register is subject to conditions that:

   (a)at all times while the inclusion in the Register has effect, the person in relation to whom the kind of device is included in the Register:

   (i)has available sufficient information to substantiate compliance with the essential principles; or

   (ii)has procedures in place, including a written agreement with the manufacturer of the kind of devices setting out the matters required by the regulations, to ensure that such information can be obtained from the manufacturer within the period specified in the regulations; and

   … (Emphasis added)

   CONTENTIONS

10. Both parties initially contended that although the relevant provisions contained a clear temporal element, the discretion conferred by s 41GN(1) could nevertheless be exercised by reference to events and circumstances occurring after the relevant non‑compliance and after the reviewable decision. The parties submitted there were two decisions involved in the task facing the Tribunal. First, the Tribunal was required to determine whether, as at the date of the reviewable decision (or another time while the device was on the Register), the applicant had refused or failed to comply with a relevant condition. In the event that the Tribunal was so satisfied, the parties contended the Tribunal could then proceed to exercise the discretion whether or not to cancel the device from the Register by reference to all relevant facts and circumstances, including those arising after the device had been removed from the Register and up to the date of the hearing.

11. This led the parties to submit that, even if there was an established failure to comply with a condition at the time the reviewable decision was made, it was potentially open to the Tribunal to set aside the decision under review and place the device back on the Register, on the basis that the relevant non‑compliance had been rectified after the device was removed from the Register, and the applicant was compliant with the relevant conditions at the time of the Tribunal’s decision.

12. The parties were asked to provide examples of the approach for which they advocated being taken in other matters.

13. Ultimately, the respondent changed the position taken earlier and contended that:

    the statutory language does not support the conclusion that the Minister’s delegate (in reviewing a cancellation decision) or the Tribunal (in reviewing the decision of the Minister’s delegate), may take into account facts and circumstances arising subsequent to the period of time the device was included in the Register. That is because to do so would undermine the temporal limitation imposed by s 41FN(3)(a).[1]

    [1] Respondent’s Outline of submissions dated 20 November 2017, at [9].

14. The respondent now contends:

    The Tribunal should not construe the power to cancel in s 41GN(1) as involving two “decisions” that are reviewable under the Act. Properly construed, s 41GN(1) confers a power to cancel if the statutory criteria are met (in this case, the criteria in s 41GN(1)(b)). The word “may” means the power is discretionary, not mandatory, but there is nothing in the statutory language to suggest that there are two decisions to be made. There is a single decision – the decision to exercise the power to cancel.[2]

    [2] Ibid, at [8].

15. In addition, the respondent made reference to Shi and submitted as follows:

    In considering the nature of the decision at issue in Shi, Hayne and Heydon JJ expressly compared the legislation with which they were concerned (and which they considered did not have a temporal element) to legislation in which the “critical statutory question is whether a criterion was met or not met at a particular date, such as the date of cancellation of entitlements”.[3] Section 41GN(1)(b), read with s 41FN(3)(a), is legislation of that character – the critical statutory question when deciding whether to cancel under s 41GN(1)(b) is whether the condition in s 41FN(3)(a)(i) was met while the Device was included on the Register. To permit the Minister’s delegate or the Tribunal to (for example) revoke a cancellation decision because of information or circumstances arising after the registration period would serve to undermine this critical statutory criterion, and therefore undermine the statutory purpose of these provisions of the Act.[4]

    [3] Ibid, at [9]; citation omitted (emphasis in original).

    [4] Ibid; (emphasis added).

16. Counsel for the respondent, Mr Hanks QC, submitted that s 41FN(3)(a) does not, in its terms, provide that the entry on the Register may be cancelled due to non‑compliance with essential principles. Rather, it was submitted, the entry on the Register may be cancelled due to non‑compliance with a condition to which the inclusion is subject, the relevant condition imposed by s 41FN(3)(a) being that at all times while a device is on the Register the person in relation to whom the kind of device is included in the Register must “have available sufficient information to substantiate compliance with the essential principles” (emphasis added) or have “procedures in place, including a written agreement with the manufacturer of the kind of devices setting out the matters required by the regulations, to ensure that such information can be obtained from the manufacturer within the period specified in the regulations”. That requirement does not relate to substantive compliance with the essential principles – it requires that at defined times, a person in relation to whom a device is registered must have available or be able to obtain certain information.

17. For its part, the applicant maintained a position closer to its original position.

18. Counsel for the applicant, Mr Harris QC, directed our attention to provisions considered in other cases which imposed a timeframe on the making of the original decision. A contrast was drawn between provisions of that kind and the provisions of the Act, in which there was no specified timeframe within which the decision under s 41GN(1) was required to be made. The applicant further pointed out that the temporal element of the decision in question here arises from “the underlying statement of conditions of registration in s 41FN(3)(a)” rather than from s 41GN(1)(b) itself.[5]

    [5]     Applicant’s written submissions dated 21 November 2017, at [5.1].

19. The applicant also contended that the fact s 41FN(3) specifically required that a device comply with certain conditions at all times while it was on the Register did not necessarily distinguish this matter from Shi, in which there was an implicit requirement that while a migration agent was registered, the agent must comply with the requirements of registration.

20. In addition, the applicant sought to draw a further parallel with Shi, by pointing out that two out of the three relevant essential principles, namely principles 2 and 6, were not “time sensitive”. The applicant pointed out that essential principle 2 relates to safety and submitted that:

    by its nature, this Essential Principle is not a time‑sensitive condition, provided that the device does not change. If it conforms on one date, it would be expected to conform at both earlier and later dates. It is analogous to a ‘fit and proper person’ test considered in Shi, which was found not to be temporally limited …[6]

    [6]     Ibid, at [5.8].

21. The applicant made a similar submission with respect to essential principle 6, which concerns whether the benefits of a medical device outweigh any undesirable effects. The applicant contended “the benefits and any undesirable effects would not be expected to change if the device does not change”.[7]

    [7]     Ibid, at [5.9].

22. The applicant acknowledged that essential principle 14 was time sensitive, as it required every medical device to have clinical evidence, appropriate for the use and classification of the device, demonstrating that the device complies with the applicable provisions of the essential principles. The applicant did not dispute that this evidence was required to be available at particular times, namely at all times while the device was on the Register which, in the case of this matter, was the time prior to when the device was removed from the Register on 5 November 2014.

23. The applicant proceeded to contend that:

    In summary, the effect of s 41FN(3)(a) is that non‑compliance with the Essential Principles (and, in particular in this case, Essential Principle 14) is a pre-requisite which, by its nature can only be met while the device is on the Register. However, the fact or otherwise of technical non‑compliance with Essential Principle 14 does not change the substance of compliance or otherwise with Essential Principles 2 and 6.

    Once the pre‑requisite is met, the power to make a single decision by exercise of discretion under s 41GN(1)(b) is enlivened, but is not temporally limited. This is because the question of substantive compliance with Essential Principles 2 and 6 is not temporally limited.[8]

    [8]     Ibid, at [5.16] and [5.17].

24. In effect, the applicant sought to rely upon the nature of the issues made relevant by essential principles 2 and 6 to support an argument that the decision under review in this matter had more in common with Shi than other cases, and therefore the discretion to be exercised was not temporally limited. On that basis, the applicant maintained that the discretion whether or not to cancel the registration of the device could be exercised by reference to “evidence of subsequent and ongoing compliance with Essential Principles 2, 6 and 14”.[9]

    [9]     Ibid, at [7.2].

    CONSIDERATION

25. We are not persuaded by the applicant’s submissions on this point, and have concluded that the position ultimately adopted by the respondent is correct. There are a number of reasons for that conclusion.

26. The provisions with which we are concerned here are of a very different kind from those considered in Shi. By reason of the statutory context and circumstances, there is a clear temporal element arising in these proceedings by reason of s 41FN(3)(a) of the Act which commences with the words “at all times while the inclusion in the Register has effect…”. These words make it plain that there must be compliance with this condition throughout the period that the medical device is included in the Register. The nature of the decision is whether to cancel registration based on a state of facts (namely whether there was compliance with the conditions) as at a particular point in time (namely while the device is on the Register). The decision, which based on ss 41GN and 41FN, is whether the entry on the Register should be cancelled if, while the device is included on the Register, there is a failure to comply with a condition (s 41GN) in that the applicant does not have available sufficient information to substantiate compliance with s 41FN(3)(a).

27. It is submitted that essential principles 2 and 6 require regard to be had to matters which are not time sensitive in the sense that, for example, if a device is safe at one point in time the same device could be expected to be safe at a later point in time. Equally, if a device is shown to be unsafe now, the same device will also have been unsafe in the past. However, as the respondent has pointed out, the provisions of relevance here do not concern direct compliance with the essential principles. They provide that the entry on the Register may be cancelled due to non‑compliance with a condition to which the inclusion is subject. The relevant condition imposed by s 41FN(3)(a) is that at all times while a device is on the Register the person in relation to whom the kind of device is included in the Register must “have available sufficient information to substantiate compliance with the essential principles”. For that reason whether or not aspects of the essential principles are time sensitive does not assist us in determining the material time for current purposes.

1. It is the intention of the Act that the conditions be complied with at all times while a device is on the Register, and that a device which does not comply with all of the conditions at a particular time, will be liable to be removed from the Register.

2. On our reading of the applicable provisions, once the entry of a device is removed from the Register, other than in specific circumstances (ss 41GLA and 41GLB), there is no power to revoke the cancellation or reinstate the device onto the Register in the absence of a further application for registration. This suggests that the remedy in respect of a device which was non‑compliant at the time of removal from the Register but has subsequently become compliant is an application for re‑registration.

3. It would not sit comfortably with the statutory scheme for a device to be removed from the Register on the basis of failure to comply with a condition and for that removal decision to be set aside a number of years later on the basis that at the later time the applicant did comply with conditions. That approach would effectively allow a device to be reinstated on to the Register, despite a demonstrated period of non‑compliance with a condition to which the device’s inclusion on the Register was subject.

4. Temporally separating the decision contemplated by s 41GN(1) into a ‘pre-requisite’ followed by the exercise of a discretion by reference to different time periods would thus defeat the objective of the underlying condition and so the intent of the legislation.

5. We have not overlooked the applicant’s reliance upon the absence of a defined timeframe within which the original cancellation decision was required to be made. However, although we note that was a feature referred to in earlier decisions of the Federal Court, such as Aged Care Standards and Accreditation Agency Limited v Kenna Investments (2004) 138 FCR 428, it was not a feature of the High Court’s reasoning in Shi. We do not consider that the absence of a clear timeframe for the original decision is of assistance to us in determining the proper application of Shi to this matter.

   CONCLUSION

6. Having regard to the nature of the decision, the statutory context, construction of the relevant provisions and the authorities to which we have referred, we are satisfied that the provision in question here, unlike the provision under consideration in Shi, has a clear temporal element. It requires, in the context of the exercise of the relevant discretion, that while the device was on the Register the applicant had not complied or was not complying with a condition for its inclusion on the Register.

7. We are not convinced that the power to cancel the device from the Register provided by s 41GN(1) involves two decisions, or two distinct steps, which must be taken by reference to different points in time. We accept the respondent’s submission that, properly construed, s 41GN(1) confers power to cancel if the statutory criteria are met (in this case, the criteria in s 41GN(1)(b)). The word “may” plainly means that the power is discretionary, not mandatory (which would require that the surrounding circumstances must be taken into account – the parties have each noted that compliance with essential principles will likely be the subject of evidence and submissions) but there is nothing in the statutory language to suggest that there are two decisions to be made by reference to different time periods.

8. In the event of non‑compliance with the condition, we have concluded that the task before us is to determine, whether as at the date of any non‑compliance being made out to our satisfaction, the discretion in relation to the decision to cancel the entry of the device from the Register should be exercised (or some other result should follow). For abundant clarity, in our view, this discretion must be exercised by reference to the time at which we are satisfied that the non‑compliance was established, which will necessarily be a time when the device was still on the Register.

9. It follows that evidence should be directed to the period the device was included on the Register. The Tribunal may receive evidence which came into existence after the material time, providing it bears upon the exercise of the discretion at the relevant time.

   DECISION

10. The material time for the Tribunal’s purposes is the period during which the applicant’s device was on the Register, namely the period prior to 5 November 2014.

I certify that the preceding 37 (thirty-seven) paragraphs are a true copy of the reasons for the decision herein of The Honourable Justice D Thomas, President, Deputy President K Bean and Senior Member A Poljak

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Associate

Dated: 19 December 2017

Dates of hearing:	18-19 October and 28 November 2017
Date final submissions received:	21 November 2017
Counsel for the Applicant:	Mr A Harris QC
Advocate for the Applicant:	Mr A Rosser Cossoff Cudmore Knox Lawyers
Counsel for the Respondent:	Mr P Hanks QC Ms K Foley
Advocate for the Respondent:	Mr K Teoh Minister for Health