White v District Court

[1999] NSWCA 406

CITATION:	WHITE v DISTRICT COURT [1999] NSWCA 406
FILE NUMBER(S):	CA 40511/98; 40515/98
HEARING DATE(S):	14 October 1999
JUDGMENT DATE:	29 October 1999
PARTIES :	RHONDA MARY WHITE v DISTRICT COURT OF NEW SOUTH WALES & ANOR
JUDGMENT OF:	Handley JA at 1; Beazley JA at 1; Stein JA at 1

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S) :	834/96; 833/96
LOWER COURT JUDICIAL OFFICER:	Coleman DCJ QC

COUNSEL:	DF Jackson QC/MM Macrossan (claimant) AC Bennett SC/MG Lynch (opponent)
SOLICITORS:	Hemming & Hart Brisbane (claimant) Harris & Company Sydney (opponent)
CATCHWORDS:	ADMINISTRATIVE LAW - judicial review - certiorari - error of law on the face of the record - appeal to District Court from Pharmacy Board - Judge applied wrong test - summons dismissed because rehearing would be futile - Court asked to reconsider decision - whether management agreements gave pecuniary interest in pharmacy businesses to non-pharmacist
CASES CITED:	Re Harrison's Share [1995] Ch 260 CA Smith v New South Wales Bar Association (1992) 176 CLR 256 Chappuis v Filo (1990) 19 NSWLR 490, 510
DECISION:	Orders made

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40511/98
CA 40515/98
DC 834/96
DC 833/96

HANDLEY JA
BEAZLEY JA
STEIN JA

29 October 1999

RHONDA MARY WHITE v DISTRICT COURT OF NEW SOUTH WALES & ANOR

ADMINISTRATIVE LAW - judicial review - certiorari - error of law on the face of the record - appeal to District Court from Pharmacy Board - Judge applied wrong test - summons dismissed because rehearing would be futile - Court asked to reconsider decision - whether management agreements gave pecuniary interest in pharmacy businesses to non-pharmacist

The claimant and others had sought judicial review of decisions of the District Court dismissing her appeals against decisions of the Pharmacy Board for error of law on the face of the record. The Court held that whilst the primary Judge had applied the wrong test to determine whether management agreements would give a non-pharmacist a pecuniary interest in the claimant’s pharmacy businesses, the decisions should not be quashed because a rehearing of the appeals to the District Court would be futile. Before these orders had been entered, the claimant moved the Court to reconsider its decision in her cases on the ground that the Court could not find that her appeals to the District Court were bound to fail.
HELD : allowing the applications: (1) In these two cases the record did not disclose the size of the fees payable by the claimant after the first year or the basis on which they would be calculated. In these circumstances the Court could not find that her appeals to the District Court were bound to fail. (2) The fact that the management agreements were franchise agreements did not establish as a matter of law that they gave the management company a pecuniary interest in the claimant’s pharmacies. Chappuis v Filo (1990) 19 NSWLR 490, 510 cited.
ORDERS

(1) The orders pronounced by this Court on 3 December 1998 vacated.

(2) In lieu thereof order that the decisions of the District Court in matters 833 and 834 of 1996 be quashed.

(3) The second opponent to pay the costs of the claimant and of the first opponent, in the latter case as a submitting party.

(4) Proceedings remitted to the District Court to be heard and determined according to law.

(5) The costs of the first hearing in the District Court to abide the order of the Judge conducting the further hearing.

(6) The second opponent is to have a certificate under the Suitors Fund Act in respect of the costs in this Court.

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40511/98
CA 40515/98
DC 834/96
DC 833/96

HANDLEY JA
BEAZLEY JA
STEIN JA

29 October 1999

RHONDA MARY WHITE v DISTRICT COURT OF NEW SOUTH WALES & ANOR
JUDGMENT

1 THE COURT: The Court has been asked to reconsider its decision in two summonses for judicial review. The summonses sought the quashing of orders of the District Court dismissing appeals to it from decisions of the Pharmacy Board. Originally there were four such summonses before the Court, two by Mrs Rhonda White, one by Mr Terence White and one by Mr Trevor Coles. They arose from decisions of the Board refusing applications by the claimants for approval to carry on the business of a pharmacist in particular premises. The appeals were heard together and the primary Judge delivered a single judgment. 2 The Court, in a reserved judgment of 3 December 1998, dismissed all summonses with costs. Its decision has since been reported ((1998) 45 NSWLR 313). The orders have not been entered and we can therefore reconsider our decision. See Re Harrison’s Share [1955] Ch 260 CA; Smith v New South Wales Bar Association (1992) 176 CLR 256. 3 Review has been sought of the decision in the summonses brought by Mrs White. It has not been sought in the other cases. The summonses had sought relief in the nature of certiorari to quash the decisions of the District Court for error of law on the face of the record. 4    This Court found that the primary Judge had applied a wrong test in determining whether the proposed management agreements between the appellants and Terry White Management Pty Ltd (Management), which was not a pharmacist, would give it a pecuniary interest, direct or indirect, in the pharmacy businesses of the appellants contrary to s 25(1) of the Act. However relief was refused because the Court held that on the correct test the appeals were bound to fail. The critical conclusion in the principal judgment delivered by Handley JA was (ibid 322):

“The proposed management agreements are in substance franchise agreements. The fees chargeable by Management are considerable, and include annual fees payable during the term of the agreements. There was no finding by the Judge based on ‘the realities’ of these high fees (see Hunt v Pascoe ) and this Court cannot make such a finding of fact itself. However the agreements provided for annual fees approaching 2.75 percent of turnover capped at that level”.

5    Handley JA held that the management agreements which provided for annual fees calculated by reference to the turnover of the business gave Management a pecuniary interest in the business. The proposed management agreements with Mr Terry White and Mr Trevor Coles provided for “annual fees approaching 2.75 percent of turnover capped at that level”. However it was not clear that the proposed agreements with Mrs White were in the same or similar terms. The initial fees payable by her were $125,000 and $75,000, and the fees for the first year $75,000 and $35,000. The Court noted that these were subject to adjustment (ibid 320), but the relevant clauses were not set out in the reasons of the District Court Judge (ibid 321) and were not otherwise disclosed by the record. 6    In these circumstances Mr Jackson QC for Mrs White submitted that it had not been open to this Court to determine that her appeals were bound to fail, and that it would be futile to remit them to the District Court to be heard and determined according to law. 7    The initial fees payable by Mrs White are substantial but they are payable before the commencement of each business, and therefore do not give Management a pecuniary interest “in the business of a pharmacist” within s 25(1) of the Act. The fees for the first year are also substantial, but it does not appear that they were calculated by reference to the profit or turnover of the business. The Court does not know what the fees were for the later years or how they were to be calculated. 8    The fixed fees for the first year may be so high in relation to the expected profit or turnover of the business that it would be open to the District Court to find on “the realities” that they gave Management a pecuniary interest in each business. However there is no such finding and in proceedings of this nature the Court cannot make findings based on inferences from the record. 9    The Court does not have before it the evidence which might establish what “the realities” are in relation to these fees and it has not formed, and does not express, any view as to what the proper finding should be. 10    Mrs Bennett SC submitted that the critical conclusion in the earlier judgment was that these management agreements were “franchise agreements”. In her submission this supported the decision to refuse relief to Mrs White independently of any conclusion based on the relationship between the annual fees and the turnover of the businesses. We do not accept this submission. A franchise agreement, like a lease of real or personal property, may give the grantor a pecuniary interest in the business of the franchisee, but, as Priestley and Handley JJA said in Chappuis v Filo (1990) 19 NSWLR 490, 510, s 25(1) does not strike at “normal contractual arrangements” of this nature. Accordingly the conclusion that the agreements were franchise agreements does not establish that the Management had a pecuniary interest, direct or indirect, in the business of the franchisee within s 25(1). It follows that it was not open to the Court to find that those appeals to the District Court were bound to fail, and it would be futile to remit them for rehearing. 11 In our judgment therefore the applications for review succeed and the Court should grant appropriate relief in favour of Mrs White. 12 We therefore make the following orders in matters 40511 and 40515 of 1998:

(1) The orders pronounced by this Court on 3 December 1998 vacated.

(2) In lieu thereof order that the decisions of the District Court in matters 833 and 834 of 1996 be quashed.

(3) The second opponent to pay the costs of the claimant and of the first opponent, in the latter case as a submitting party.

(4) Proceedings remitted to the District Court to be heard and determined according to law.

(5) The costs of the first hearing in the District Court to abide the order of the Judge conducting the further hearing.

(6) The second opponent is to have a certificate under the Suitors Fund Act in respect of the costs in this Court.

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