Warner and Secretary, Department of Health and Ageing

[2005] AATA 71

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 71

ADMINISTRATIVE APPEALS TRIBUNAL

GENERAL ADMINISTRATIVE DIVISION            N2004/242

Re: William Warner

Applicant

And:Secretary, Department of Health and Ageing

Respondent

DECISION

Tribunal:       P.J. Lindsay, Senior Member

Date:             18 January 2005

Place:            Sydney

Decision:The tribunal affirms the decision under review.

. . . . . . . . . . . . . . . . . . . . . . . .

P. J. Lindsay, Senior Member

©        Commonwealth of Australia          (2005)

CATCHWORDS

PHARMACEUTICAL BENEFITS – cancellation of approval to supply pharmaceutical benefits - approved pharmacist not carrying on business at premises in respect of which approval granted – approval deactivated – decision to cancel approval taken after five deactivations – decision to cancel affirmed.

National Health Act 1953 ss.90, 98(3),99K, 105AB(8A)

Shaffer v Secretary, Department of Health and Aged Care (2002) 124 FCR 234

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

REASONS FOR DECISION

P.J. Lindsay, Senior Member

1. This application concerns the cancellation of an approval to supply pharmaceutical benefits that had been granted to William Warner. On 5 February 2004 a delegate of the Secretary to the Department of Health and Ageing (the respondent) acted under s.98(3) of the National Health Act 1953 (the Act) to cancel Mr Warner’s approval formerly located at 438 Victoria Street, Darlinghurst (the approved premises) designated Approval Number 00944Q, to supply pharmaceutical benefits under the Act.

2. At the hearing Mr Warner represented himself and gave evidence. Mr J Stephenson of counsel appeared for the respondent. The following witnesses were called by the respondent: Karen Neale and Dallas Wong, both employees of the Health Insurance Commission (HIC). The tribunal had before it the documents (T documents) lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 and the exhibits tendered during the hearing which included the statement made on 15 September 2004 by Leanne Tulloch, an investigation officer at the HIC (exhibit R 5) and the statement made on 8 July 2004 by Craig Chapman, also an HIC investigation officer, (exhibit R4).

3. The respondent’s discretion to cancel the approval of the pharmacist under s.90 of the Act is found in s.98(3) which provides:

s. 98 Cancellation by Secretary of approval of pharmacists etc.

(3) Where the Secretary is satisfied that an approved pharmacist is not carrying on business as a pharmacist at premises in respect of which the pharmacist is approved, the Secretary may (at his or her discretion), by notice in writing to the pharmacist, cancel the approval of the pharmacist under section 90.

4. The approval mentioned to in s.98(3) is a reference back to the provisions in s.90 of the Act:

SECT 90 Approved pharmacists [see Note 1]

(1) Subject to this section, the Secretary may, upon application by a pharmacist who is willing to supply pharmaceutical benefits on demand at particular premises, approve that pharmacist for the purpose of supplying pharmaceutical benefits at or from those premises.

(2) Where a pharmacist desires to supply pharmaceutical benefits at or from several premises (being premises at which he or she carries on, or is about to carry on, business as a pharmacist) a separate application shall be made in respect of each of the premises and, where approval is granted in respect of 2 or more premises, a separate approval shall be granted in respect of each of the premises.

(3) Subject to this section, where an approved pharmacist desires to supply pharmaceutical benefits at or from premises (being premises at which the pharmacist carries on, or is about to carry on, business as a pharmacist) other than premises in respect of which approval has been granted, the Secretary may on application by the approved pharmacist, grant approval in respect of those other premises.

(3A) Subject to subsection (3AA), an application under this section must be referred to the Authority.

…

(3B) An approval may be granted under this section in respect of an application to which subsection (3A) applies 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.

5.      The tribunal’s jurisdiction in this matter is found in s.105AB(8A) of the Act:

(8A) An application may be made to the Tribunal for a review of a decision of the Secretary under subsection 98(3) or (3A) to revoke an approval.

6.      The reasons for the respondent’s decision made on 5 February 2004 (T40) were expressed in these terms:

I am satisfied that you are not now and have not been carrying on business as a pharmacist at the approved premises [438 Victoria St, Darlinghurst] since at least 21 June 2002.
As previously advised, The Deactivation of Approvals Made Under Section 90 of the National Health Act 1953 – Guidelines outlines the HIC’s policy in this area and indicates that to qualify for deactivation, an applicant must demonstrate that arrangements are in train to transfer the approval to another location and that the Australian Community Pharmacy Authority (ACPA) is aware of that transfer.
To date you have had over eighteen months in which to re-open the pharmacy or relocate it to 334 Victoria Road, Darlinghurst, 2010. I have formed the view that the closure of this pharmacy is not temporary (as that term is envisaged for the purposes of the Guidelines) and that I would be derelict in my duty to ensure the efficient distribution of pharmaceutical benefits within the community if I were to allow you further time to relocate your approval number, when you appear to be either unwilling, or unable, to continue providing pharmaceutical benefits at the approved location.

7.      The Act, broadly, provides for the situation where a pharmacist wishes to supply pharmaceutical benefits from remises other than those for which an approval has been granted. The pharmacist must apply for approval to supply pharmaceutical benefits from the new premises. Typically, but not exclusively, this situation will arise where the pharmacist is moving the place of their business. Before the respondent considers an application to supply from the new premises, the Australian Community Pharmacy Authority (the Authority) must have considered the application. The respondent may (but need not) grant the application only if the Authority has recommended approval (s.90(3B) of the Act).

8.      Division 4B of the Act, found in Part VII ‘Pharmaceutical Benefits’, establishes the Authority and makes provision for its powers and functioning. Section 99K deals with the Authority’s functions:

(1) The functions of the Authority are:

(a) to consider applications under section 90; and

(b) to make, in respect of an application under section 90:

(i) a recommendation whether or not the applicant should be approved under       that section in respect of particular premises; and

(ii) if an approval is recommended—recommendations as to the conditions (if       any) to which the approval should be subject; and

(2) In making a recommendation under subsection (1), the Authority must comply with the relevant rules determined by the Minister under section 99L.

(3) All recommendations of the Authority under subsection (1) are to be made to the Secretary.

9.      The Minister has made a determination of the rules according to which the Authority is to make its recommendations to the respondent under s.99K. The Determination differentiates approvals to supply pharmaceutical benefits at new pharmacies, from approvals to supply where an existing pharmacy is re-locating. In relation to the latter, the Authority must recommend the approval being relocated where the new premises are not more than one kilometre from the old premises, which is the case in this matter. Importantly, the Determination provides that where the Authority recommends an approval in respect of particular premises, the recommendation will lapse after six months. The Determination states:

4A Where the Authority recommends the approval of a pharmacist under section 90 of the Act in respect of particular premises, it must also make a recommendation that the recommendation for approval will lapse (unless the Authority, on application by the pharmacist, has granted an extension of time), if the pharmacist has not been granted that approval within 6 months after the day on which the pharmacist is notified of the recommendation for approval.

10.     The background to Mr Warner’s application to the tribunal for review of the respondent’s decision to cancel his approval to supply is set out in the respondent’s statement of facts and contentions that was filed in the proceedings on 18 May 2004:

1. Approval Number 00944Q (“the Approval”), being the approval the subject of these proceedings, was granted to the Applicant on 15 October 1990 in respect of a pharmacy conducted at 438 Victoria Street, Darlinghurst, New South Wales (“the Approved Premises”).
2. The Applicant also conducts another pharmacy at 376 Victoria Street, Darlinghurst, New South Wales pursuant to Approval Number 00943P.
3. The Applicant has not traded at the Approved Premises since at least 13 November 2001, and possibly as early as September 2001.         
4. On 23 September 2001, the Applicant requested that the Respondent cancel the Approval in support of a new approval to be located at 213 Darlinghurst Road, Darlinghurst (“the First Proposed Premises”). …
5. On 5 April 2002, the Applicant  …  informed the Respondent in a telephone conversation that the pharmacy at the Approved Premises had been closed since September 2001. The Applicant informed the Respondent that an application to relocate the Approval to the First Proposed Premises had been submitted to the Australian Community Pharmacy Authority (“the Authority”) in October 2001 and subsequently withdrawn. The Applicant stated that another application would be submitted to the Authority. The Respondent told the Applicant that it was necessary to apply to the Respondent for the Approval to be deactivated.
6. On 17 May 2002, the Respondent wrote to the Applicant asking that the Applicant inform the Respondent whether the closure of his pharmacy at the Approved Premises was temporary and whether arrangements were in train to allow the Approval to be transferred to another person and/or location. The Respondent informed the Applicant that if arrangements were being made to transfer the Approval, an application to the Authority requesting an approval would need to be submitted immediately.
7. On 24 May 2002, the Applicant wrote to the Respondent confirming that the closure of the pharmacy at the Approved Premises was permanent. The Applicant asked the Respondent to transfer the Approval to premises at 334 Victoria Street, Darlinghurst (“the Second Proposed Premises”).
8. On 24 May 2002, the Respondent deactivated the Approval until 24 May 2002 and informed the Applicant that the Respondent would only be prepared to extend the deactivation until 4 June 2002, being the cut off date for new applications to be submitted to the Authority prior to the Authority’s next meeting on 21 June 2002.
9. On 30 May 2002, the Applicant informed the Respondent that he was now the registered proprietor of the Second Proposed Premises. The Applicant stated that the Second Proposed Premises required extensive renovations prior to operating as a pharmacy and that plans would be submitted to Sydney Council once the Applicant’s application for approval was accepted by the Respondent and the Authority. The Applicant indicated that he expected the renovations to be completed by December 2002.
10. On 4 June 2002, the Applicant wrote to the Respondent asking for the Approval to be deactivated until 31 December 2002 in order to allow the Authority to approve his application and to allow the fit-out at the Second Proposed Premises to be completed. 
11. On 7 June 2002, the Respondent referred the Applicant’s application to the Authority.
12. On 7 June 2002, the Respondent informed the Applicant that the Applicant’s application for an approval at the Second Proposed Premises could be considered at the Authority’s meeting on 21 June 2002 and that the Approval would be deactivated until 30 June 2002. The Respondent stated that it expected that the Applicant would commence trading well before December 2002.
13. On or about 21 June 2002, the Respondent was informed by the Authority that the Applicant’s application had been recommended by the Authority.
14. On 26 July 2002, the Respondent deactivated the Approval until 21 December 2002 and informed the Applicant that based on the Authority’s recommendation the Respondent would deactivate the Approval until 21 December 2002.
15. On 23 December 2002, the Authority advised the Respondent that it had extended its recommendation in respect of the Second Proposed Premises for a further period of six months.
16. On 24 December 2002, the Respondent deactivated the Approval until 21 June 2003.
17. On 20 June 2003, the Authority extended its recommendation in respect of the Second Proposed Premises until 20 December 2003, with no further extensions.
18. On 1 July 2003, the Respondent deactivated the Approval until 20 December 2003.
19. On 20 December 2003, the Applicant advised the Respondent that he would be unable to relocate by the end of December 2003 and that he would be submitting a fresh application to the Authority.
20. On 8 January 2004, the Respondent wrote to the Applicant indicating that she was minded to cancel the approval under section 98(3) of the Act and invited submissions from the Applicant as to why the approval should not be cancelled.
21. On 21 January 2004, the Applicant indicated to the Respondent that Darlinghurst was a difficult area with considerable problems with crime. The Applicant stated that the pharmacy would be ready within a year. The Applicant stated that the fit-out was expensive and time consuming because of the problems with security and staff safety.
22. On 27 January 2004, the Respondent stated that she would require evidence as to why the Applicant had been unable to establish his pharmacy and specifically asked what progress had been made in renovating the premises.
23. On 30 January 2004, the Applicant informed the Respondent he had not lodged a formal application with the Sydney City Council. The Applicant indicated that the building was very old and that there had been little structural progress to date apart from the removal of certain washing machines.
24. On 5 February 2004, the Respondent cancelled the Applicant’s section 90 approval under section 98(3) of the Act.

11.     The parties disputed two factual matters. One concerns the date in which Mr Warner notified HIC of the closure of the pharmacy business at the approved premises. The other is the state of the second proposed premises and the likely period of time it would take to make them ready for business as a pharmacy. 

12.     In his evidence Mr Warner said he has been a pharmacist operating from leased premises at 376 Victoria Street, Darlinghurst for over 30 years. That pharmacy is subject to a different approval being No 00943P. The pharmacy is open from 8.30am -6.30pm Monday to Friday and until 1pm on Saturday afternoon, but he often stays later. It is a family business, and it keeps him very busy. He said that there is a lot of paper work required from him by the HIC.

13.     Mr Warner tendered documents relating to the fines imposed on 18 February 2004 in respect of his committing offences under s.8C(1)(a) and s.8E of the Taxation Administration Act 1953 relating to his failure to furnish his income tax returns for the 2002 and 2003 income years on a timely basis (Ex A4). He explained that he has now lodged those returns and he is no longer tied down by paper work so he is able to devote more time to getting the second proposed premises in order.

14.     Mr Warner’s evidence was that he recalled receiving a letter dated 9 April 2001 from Ebsworths, solicitors, giving him notice to quit the approved premises by 30 September 2001 and realised that he would have to relocate the pharmacy (exhibit R2). He added that he did vacate the approved premises by around 30 September 2001. He recalled a telephone discussion with Ms Dallas Wong, an approvals clerk at HIC, on or about 23 September 2001. He said he did not tell Ms Wong during that conversation that he had closed the pharmacy. In amplification, he said that he did not close the pharmacy until 30 September 2001 so there was no reason to tell her at that point. He added that it was not in his commercial interest to do so.  It is not disputed and I find that the applicant ceased to carry on a pharmacy business at the approved premises from 30 September 2001.

15. Mr Warner agreed that on 23 September 2001 he completed an application for approval under s.90 of the Act in respect of the first proposed premises (T12). Mr Warner said that he filled in the form and stated that the proposed opening date of the first proposed premises was 29 October 2001. He did not in fact end up re-locating to the first proposed premises. Instead he proposes to open a pharmacy at the second proposed premises. Mr Warner acknowledged that on three occasions he requested the Authority to defer consideration of his application for approval in respect of the first proposed premises. Ultimately, around February 2002, he withdrew his application for a recommendation in respect of the first proposed premises.

16.     In cross-examination Mr Warner agreed that, despite making the request for approval in respect of the first proposed premises, he did not tell the HIC that he had ceased trading at the approved premises. It was his evidence that, when he submitted to HIC his last claim for reimbursement in relation to the approved premises which he thought would have been in October 2001, he attached a note stating that he would not be making any further claims for reimbursement in relation to the approved premises because the pharmacy was closed. He did not keep a copy of the note.

17.     The HIC wrote to him on 17 May 2002 (T15) to advise that his application to the Authority to relocate his approval had been withdrawn. The letter stated:

Should another application be submitted, based upon the proposed cancellation of the approval number 00944Q as inferred in your telephone contact last month, the ACPA cannot consider that application unless the relevant pharmacy ceased trading with the permission of the HIC.

Given that the pharmacy has been closed for over six months, you are required to urgently write to me to advise whether the closure is temporary, or confirm if arrangements are in train to allow the approval to be transferred to another person and/or location. If the latter, I expect the application to be submitted immediately.

Should I not hear from you by the close of business on 24 May 2002 I will have no other option but to cancel the approval, number 00944Q under s.98(3) of the National Health Act 1953, in my capacity as delegate.

Mr Warner acknowledged that he did not write back to say he had already informed HIC of ceasing to trade in a note written in October 2001.

18. Early in 2002 Mr Warner successfully bid at auction for a building at 334 Victoria Street Darlinghurst (the second proposed premises). The purchase was completed in March 2002. The second proposed premises is a two-storey building with a laundromat on the ground floor, and the upper floor is divided into 10 flatettes. At the hearing, Mr Warner said the flatettes were now unoccupied and although the laundromat is closed, there are still a number of washing machines and related equipment still on site. On 24 May 2002 he made a formal application for a s.90 approval in respect of the second proposed premises.

19.     Mr Warner was extensively cross examined about his intentions for the second proposed premises. He maintained that the building would not require extensive renovations for a pharmacy fit out, because he intended to use only a small part of the building for that purpose. Mr Warner’s letter of 30 may 2002 to HIC (T20) stated that the renovations of the second proposed premises would be finished by December 2002. His next letter of 4 June 2002 to the HIC (T21) requested the park or deactivation of his approval be extended until the end of the year so a pharmacy could be fitted out. The HIC’s response was to remind him that the Authority had recommended the relocating the approval and he was advised that he had  “ … six months in which to convert the recommendation. Based upon that recommendation I have agreed to continue your approval’s ‘deactivation’ period to coincide with the timeframe of the ACPA recommendation. Therefore, approval number 00944Q will continue to be recognised as ‘deactivated’ until 21 December 2002.” (T26). A similar letter was written on 24 December 2002 (T31) confirming deactivation until 21 June 2003 and again on 1 July 2003 (T34) confirming deactivation until 20 December 2003. Mr Warner wrote to HIC on 20 December 2003 (T35).

20.     By letter dated 8 January 2004 (T36) HIC invited the applicant to make a submission to explain why his approval should not be cancelled. Mr Warne’s response, sent to HIC on 23 January 2004, made the point that  “334 Victoria Street is not an area where you do a normal shop fit and open a pharmacy … “. He went into detail about the drug use, violence and crime in the neighbourhood.  He stated  “ … after careful consideration I have decided to proceed in two phases, ie establish a pharmacy ground floor and at a later date develop existing empty boarding house upstairs. I have had discussion with pharmacy shop fitters and outside pharmacy designers and pharmacy should be ready to operate within a year …”.(T37)

21.      It was put to Mr Warner that despite the five separate deactivations of his approval he is still not in a position to operate a pharmacy from the second proposed premises. His evidence was that he had not yet engaged an architect and the necessary council building and development approvals had not been sought. He also said he has not applied to the NSW Pharmacy Board in relation to a pharmacy at that location. He explained that he is very concerned about making the pharmacy a secure and safe place to work, which is an important consideration given its proximity to Kings Cross, the needle exchange and the level of crime in the area. His experience as a pharmacist with 31 years experience in that area has exposed him to a number of robberies and threats of violence personally and to his staff. Despite the obvious obstacles that are still present, Mr Warners asserted that the pharmacy could be fitted out within 2-3 months of obtaining the necessary approvals.

22.     According to Ms Wong’s statement (ex R2):

3. On or about 23 September 2001, I had a telephone conversation with Mr Warner regarding a proposed relocation of his pharmacy from premises at 438 Victoria Street Darlinghurst, New South Wales (“the approved premises”) to 213-219 Darlinghurst Road, Darlinghurst, New South Wales and his proposed submission of an application to the ACPA via the HIC. I advised Mr Warner of the documentation required to support such an application. Mr Warner did not mention that he had ceased trading from the approved premises during my conversation with him on or about 23 September 2001.

4. On 5 April 2002, I had a further telephone conversation with Mr Warner regarding an alternate relocation that Mr Warner was proposing. The first time that Mr Warner mentioned to me that he had ceased trading from the approved premises at 438 Victoria Street, Darlinghurst, New South Wales was during this conversation.

23.     Counsel for the respondent asked Mr Warner whether he told Ms Wong in the discussion on 23 September 2001 that he had ceased trading at the approved premises. He said he did not, because he did not close down until 30 September 2001. It was put to him that he delayed telling the HIC that he had ceased trading at the approved premises until 5 April 2002 which Mr Warner disputed.

24.     In her oral evidence Ms Wong expanded on her statement by saying that Mr Warner had phoned her on 23 September 2001. She felt the call was more in the nature of a general enquiry, than a request for advice specifically relating to a particular application to relocate an approval. Ms Wong said the applicant did not ask her to send him the necessary forms, one of which is the notice of intention of ceasing to trade at an approved pharmacy. Ms Wong’s evidence was that, where a pharmacist informs HIC that they have ceased trading, HIC will confirm that in writing. It was until the later telephone conversation in April 2002 that Ms Wong sent him the paperwork at his request. She told the tribunal that during their conversation on 5 April 2002, Mr Warner expressed surprise that she was not already aware that he had ceased trading at the approved premises.

25.     Mr Warner’s evidence tended to confirm Ms Wong’s evidence because he said he did not expect to receive paperwork as a consequence of the conversation in September 2001. His criticism was that Ms Wong then failed to mention to him that he must notify if he was ceasing to trade from approved premises.

26.     Karen Neale, manager, coordination support, pharmaceuticals benefits scheme branch at HIC, gave oral evidence at the hearing. Her statement dated 12 July 2004 (exhibit R1) referred to the approval that is the subject of the cancellation decision, being deactivated from 13 November 2001. The Authority’s recommendation in respect of the second proposed premises has lapsed and the applicant does not have a current recommendation in respect of any premises. She concluded her statement by noting that Mr Warner would have to apply to the Authority to establish a new pharmacy in respect of the proposed premises. In her later statement dated 17 September 2004 (exhibit R2), Ms Neale said that it would be necessary for the applicant to apply for, and obtain, a further recommendation from the Authority prior to any approval being issued in respect of the second proposed premises. In response to a question from Mr Warner, she said that his approval had not resulted in blocking any other pharmacy’s approval.

27. Given the finding that the applicant has ceased to carry on business as a pharmacist at the approved premises, the tribunal’s task is to review the respondent’s decision under s.98(3) of the Act to cancel Mr Warner’s approval (designated approval no. 00944Q) to supply pharmaceutical benefits. Section 98(3) was examine3d by the Federal Court in Shaffer v Secretary, Department of Health and Aged Care (2002) 124 FCR 234 where it was said:

… I think it is clear from the whole statutory context that cancellation under s98(3) may be done at the discretion of the decision-maker. As the Health Insurance Commission guidelines recognise, a business may have to close for reasons beyond the control of the pharmacist. …  It can hardly have been intended that a temporary cessation of a pharmacy business would require the cancellation of an approval. That is not likely to be conducive to the efficient and equitable supply of pharmaceutical benefits. …  … the decision-maker’s satisfaction that a pharmacist is not carrying on business enlivens the discretion but does not dictate the outcome of its exercise.” (at xxx, Whitlam J)

28.     The respondent submitted that the discretion is to be exercised by having regard to the relevant factors to be identified by reference to the subject matter, scope and purpose of the Act (Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24). I accept that submission.

29.     The policy considerations that are relevant to deactivation requests are contained in the respondent’s document ‘Deactivation of Pharmacist Approvals Made Under s90 of the National Health Act 1953 – Guidelines’:

1.        PURPOSE OF THESE GUIDELINES
These guidelines aim to assist pharmacists who wish to temporarily ‘deactivate’ an approval to supply pharmaceutical benefits under s.90 of the National Health Act 1953.
This process was formerly known as ‘parking an approval’.
2. BACKGROUND
Section 98(3) of the National Health Act 1953 provides that the Secretary of the Department of Health and Aged Care (or his/her delegate, normally an officer of the Health Insurance Commission) may cancel an approval where he./she is satisfied that an approved pharmacist is not carrying on business as a pharmacist at the premises in respect of which the pharmacist is approved.
Accordingly, any pharmacist who ceases to carry on business at the premises in respect of which he/she is approved – subject to these guidelines – places themselves at immediate risk of having their approval cancelled.
Meaning of the term ‘deactivate’
These guidelines outline the circumstances in which the delegate may be prepared to allow an approval to be temporarily ‘deactivated’.
This is not an expression used or defined in the National Health Act 1953. It is, instead an administrative concept, intended to describe – in a shorthand way – the situation which arises when a delegate decides not to cancel an approval under s98(3) notwithstanding that the statutory precondition to such a decision (namely, that the holder of an approval under s90 of the National Health Act 1953 has ceased tom carry on business at relevant premises) has been satisfied.
This process involves the exercise of a statutory discretion. These guidelines are designed to ensure the consistent and appropriate use of that discretion by delegates on a national basis.
…
3. GENERAL STATEMENT OF POLICY
In general terms, delegates will give consideration to permitting an approved pharmacist to deactivate as s.90 approval by closing a pharmacy where it can be shown that that:
- arrangements are in train to allow the approval to be ‘transferred’ to another location and the Australian Community Pharmacy Authority (ACPA) is aware of, and has approved, that transfer, or
- the holder is able to demonstrate that the closure is temporary and that the premises will re-open within a reasonably short time frame (not more than 6 months).

In all cases, the delegate will not entertain an application for deactivation where the decision to close the premises is linked to the continuing commercial viability of the site.

As set out below, circumstances which may warrant the favourable exercise of the discretion to deactivate an approval may include:

·     where the holder wishes to relocate the approval to new premises;

·     where there has been a change of ownership at the premises;

·     where the holder is obliged to close the pharmacy in order to take leave of absence;  and

·     where the premises are closed to allow a redevelopment to the premises themselves or the surrounding commercial areas.

WARNING No approved pharmacist should close their pharmacy or otherwise cease trading without first notifying the HIC Pharmaceutical Benefits Scheme Manager, in their state of their intention to do so. Persons who close their pharmacy without proper notice to the HIC should expect to be advised that their approval has been cancelled under s.98(3).

...

30. It is of course the case, that each matter must be addressed on its own merits. As is noted in the Guidelines, they do not bind delegates in the exercise of their discretion under s.98(3) nor should the tribunal consider itself bound by them. Nevertheless, on review, the tribunal should take account of the Guidelines in coming to the correct and preferable decision concerning the exercise of the discretionary power in the particular case (Re Drakeand Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634). It was accepted in Shaffer that the Guidelines are properly to which a decision-maker should have regard:

Counsel for the applicants are critical of the Tribunal's alleged failure to balance "the interests of the Commonwealth in ensuring an effective distribution of pharmaceutical benefits, and the interests of pharmacists supplying the benefits which facilitate the distribution process". Considered against the policy stated in the Health Insurance Commission's guidelines, especially the maximum period of 6 months allowed for a deactivation, the applicant's case was hopeless. (at 240)

31.     The respondent submitted that the Guidelines place a significant emphasis on the requirement that an applicant wishing to deactivate their approval should inform HIC in advance of closing their pharmacy. I find that, as required by the notice to quit, Mr Warner ceased carrying on business at the approved premises on or about 30 September 2001. He chose not to inform Ms Wong of the impending closure in their call on 23 September 2001. I find that, even if his evidence was accepted regarding the note about closure of the pharmacy that he said he sent with a claim for reimbursement, that note was not given to HIC until some point in October 2001 and not until after closure. 

32.     The respondent submitted that the following matters are relevant to the exercise of the discretion and indicate that the correct and preferable decision is to affirm the decision to cancel the approval:

– Mr Warner has not traded pursuant to the approval for a period of at least          two years which is far in excess of the six months referred to in the       Guidelines.

- the approval has been deactivated on five occasions, starting on 24 May           2002 and the last occasion being on 1 July 2003.

– the applicant has had sufficient time to plan for and arrange a relocation of        the approval.

I find that he has owned the second proposed premises since March          2002. His evidence was that at the date of the hearing in October 2004, the     property was in the same state as when he bought it and that it needs    extensive renovations but that the space required for a pharmacy could be fitted out in 2 to 3 months.  He said he has the financial resources to carry            out      the necessary work to the premises. He offered a partial, but            unsatisfactory, explanation for the delay by saying that he did not wish to deal        with South Sydney Council for the approvals. He conceded, however, that a    proposed amalgamation of councils did not prevent him from making a   development application or a building application.

– the applicant has not established that the closure of the approved premises      was temporary or that a new pharmacy would be able to commence trading      within a reasonably short time of say six months.

– it is not the respondent’s policy to allow the deactivation of an approval   unless there is evidence that a relocation of the approval number is the        subject of a favourable recommendation by the Authority. Mr Warner has no   current recommendation from the Authority for any relocation nor does he            have an application to the Authority for a recommendation. He would have to          apply for and obtain a new recommendation before he could operate a new            pharmacy from the second proposed premises or any other premises.

– he has sought recommendations from the Authority for the grant of a new          approval firstly in respect of the first proposed premises and then later in       respect of the second proposed premises. He withdrew the first application        after requesting the Authority to defer its consideration on three occasions and the recommendation of the Authority regarding the second proposed      premises has lapsed despite two six month extensions.

– it is necessary for the discretion to be exercised in such a way as to have          regard to the efficient distribution of pharmaceutical benefits to the Australian            community. It is not consistent with the policy to have an approval deactivated      for in excess of two years in circumstances where it will take a considerable            time before a new pharmacy at the second proposed premises can be            established.

33.     Mr Warner was very candid in his evidence. He said the HIC had been very generous to him with the period of deactivation that he has been allowed. He expressed his predicament quite simply – “I just ran out of time”.  I am satisfied that he is a very busy and successful professional. Unfortunately, he has not given enough time to this project. His major concerns, and they are concerns that the tribunal does not treat as insignificant, have been how to modify the second proposed premises to make them attractive yet secure. He said he has had designers involved but nothing definite has emerged. He has looked also at the prospect of a boarding house on the upper floor but that too has not yet progressed beyond the stage of discussion. His estimate of 2- 3 months for fitting out a pharmacy at the second proposed premises appears to be overly optimistic. In further considering Mr Warner’s interests I note that he has an approval for the premises at 376 Victoria Street, 00943P. He said the lease there will expire in 2007. Mr Warner could apply then for relocation of that approval to the second proposed premises. He would not have to wait until 2007. His investment in the second proposed premises, vacant now for some time, could also be turned to profitable account by other means apart from putting in a pharmacy on the ground floor.

34.     I accept the respondent’s submission and consider the matters referred to in par 32 above to be relevant. It would be, in my view, contrary to the policy underlying the discretion whether to cancel an approval, to allow Mr Warner any more time in which to carry out works and seek approvals. He has had 2½ years since ceasing to trade at the approved premises until February 2004 when the respondent cancelled the approval.  It is not assisting in the efficient distribution of pharmaceutical benefits to have an approval tied up for such a long period of time. The six month period for a deactivation referred to in the Guidelines seems, in the majority of cases, to be an appropriate period for an approval holder to do whatever is necessary to ensure relocation of the approval. I am not satisfied that there is sufficient reason in this matter to reverse the decision to cancel the approval.

35.     It follows that the decision under review should be affirmed.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of P.J. Lindsay, Senior Member:

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

Date of Hearing  26 October 2004
Date of Decision  18 January 2005
Applicant  Self-represented

Respondent’s counsel  J Stephenson