Wragg and Australian Community Pharmacy Authority & Anor
[2010] AATA 905
•16 November 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 905
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/5294
GENERAL ADMINISTRATIVE DIVISION ) Re Stephen Wragg Applicant
And
Australian Community Pharmacy Authority
Respondent
And
Simon Blacker and Lisa Benton
Parties Joined
DECISION
Tribunal M D Allen, Senior Member Date16 November 2010
PlaceSydney
Decision The decision under review is AFFIRMED.
..................[sgd].......................
M D Allen, Senior Member
CATCHWORDS
HEALTH & COMMUNITY SERVICES. Application for relocation of a pharmacy. Definition of catchment area. Whether more than one pharmacy in the catchment area.
LEGISLATION
National Health Act 1953, Sections 90, 99K
National Health (Australian Community Pharmacy Authority) Determination 2006, Rule 107.
CASES
Maryborough/Hervey Bay Friendly Society Chemists Ltd and Australian Community Pharmacy Authority [2008] AATA 932
Fraser Coast Pharmacy Pty Ltd and Australian Community Pharmacy Authority [2007] AATA 1472
REASONS FOR DECISION
16 November 2010 M D Allen, Senior Member 1. By application made 4 November 2009 the Applicant sought review of a decision by the Respondent to recommend, pursuant to subsection 99K(i) of the National Health Act 1953 (“NHA”), that he not be approved to supply pharmaceutical benefits from proposed premises situated at Tenancy 1, 62 Windsor Parade, Dubbo in the State of New South Wales.
2. Section 90 of the NHA states, inter alia:
“(1) Subject to this section, the Secretary may, upon application by a pharmacist for approval to supply pharmaceutical benefits at particular premises, approve that pharmacist for the purpose of supplying pharmaceutical benefits at those premises.
…
(3A) Subject to subsections (3AA) and (3AE), 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 that has been referred to the Authority under subsection (3A) or (3AF) 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.”
Whereas Section 99K NHA reads:
“(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.”
3. It is common ground between the parties to this review that the proposed pharmacy complied with all requirements of the Respondent save and except sub rule 107(3)(c) of the National Health (Australian Community Pharmacy Authority Rules) Determination 2006, being the rules determined by the Minister administering the NHA (namely currently the Minister for Health and Aging), pursuant to Ss99K(2) of that Act.
4. Rule 107 reads:
“1. The proposed premises are in a rural locality.
2. Either:
(a) the proposed premises are at least 200 m, in a straight line, from the nearest approved premises; or
(b) the proposed premises are within 200 m, in a straight line, of the nearest approved premises, and:(i) the Authority is satisfied that there is a genuine barrier to access between the proposed premises and each approved premises that is within 200 m, in a straight line, of the proposed premises; and
(ii) the proposed premises are at least 200 m, by the shortest lawful access route, from each approved premises that is within 200 m, in a straight line, of the proposed 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) there is the equivalent of at least 4 full‑time prescribing medical practitioners practising in the catchment area for the proposed premises; and
(c) the catchment area for the proposed premises contains 1 approved premises; and(d) the pharmacy operating from the approved premises mentioned in paragraph (c) has not, in the 3 years before the date 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.”
5. In passing I note that the statement regarding this rule in the Australian Community Pharmacy Authority (“ACPA”) Applicant’s Handbook (28 March 2007) is totally misconceived.
6. Sub Rule 107(3)(c) refers to the “catchment area” for the proposed premises. The term “catchment area” is not defined in the 2006 Determination but I agree with the Tribunal in Maryborough/Hervey Bay Friendly Society Chemist Ltd and Australian Community Pharmacy Authority [2008] AATA 932:
“…that the appropriate question to be asked in determining a catchment areas is this: is it likely that a significant number of people from within the area in dispute will naturally and reasonably gravitate or flow to the proposed premises.”
7. In particular, I agree with Deputy President Hack QC in Fraser Coast Pharmacy Pty Ltd and Australian Community Pharmacy Authority [2007] AATA 1472 at paragraph 12 where the learned Deputy President said:
“It is, I think, necessary to give greater content to the concept of a catchment area if it is to be regarded in terms of those who may come to the proposed pharmacy. Entire areas would be sterilised, proper competition would be prevented and community needs would not be met if the test for determining a catchment area was based solely upon the mere possibility of use. And equally, potential use by only a small proportion of persons within a given area could not be regarded as, of itself, creating a catchment area defined by reference to the place from whence those persons came. Something more, beyond the mere possibility of use, is required to give meaning to the term “catchment area” in its present context.”
8. Assessment of the catchment area was assisted by a visit to Dubbo on 25 October 2010 and the evidence of the three experts called by the parties being given conjointly on 26 October 2010.
9. Mr Phillip Brunning, a town planner, prepared a report and gave evidence for the Applicant. For the Respondent a report had been prepared by Mr McKinnon of MacroPlan Australia Pty Ltd, however Mr McKinnon is no longer with that company but his report was adopted by and evidence given for the Respondent by Mr Turnbull an economic consultant. Mr Dimasi of Pitney Bowes Business Insight, who is a consulting economic and retail analyst, prepared a report and gave evidence for the Parties Joined.
10. The proposed premises are situated within the building containing a group of some 16 (actually 13 full time equivalent) General Practitioners trading as Western Plains Medical Centre (“WPMC”). The WPMC is, excluding the Dubbo Base Hospital, the largest aggregation of medical practitioners in the Dubbo area. The consulting hours are Monday to Friday from 6:30am to 10:00pm and on weekends, from 8:00am to 10:00pm.
11. The premises are situated adjacent to the Orana Mall shopping complex. That shopping complex was described in a 2006 report prepared for Dubbo City Council entitled “Review of the Commercial Areas Development Strategy 1996-2015” in the following terms:
“Orana Mall is a freestanding enclosed shopping centre located in Dubbo’s eastern suburbs. It comprises some 51 establishments and approximately 20,000m2 of floor space Gross Floor Area (GFA), or approximately 11% of the City’s retail-commercial floor space. Orana Mall is anchored by a Big W discount department store, a Woolworths supermarket and a Franklins supermarket.
The Mall is a highly successful shopping centre. Advice provided by the Centre Management indicates that it is one of the most effective regional centres in the country in terms of turnover per m2 GLA. The Mall fulfils the following roles:
§It is a regional centre for the City of Dubbo and the Regional Catchment Area (RCA) that extends beyond the City. Recent surveys undertaken in May-June 2005 indicate that Orana Mall has a higher proportionate draw of custom from beyond Dubbo City than is the case for retail establishments in Dubbo’s CBD;
§It serves as a large neighbourhood centre for eastern Dubbo, meeting a comprehensive range of daily and weekly shopping requirements.”
12. The report goes on to discuss four other what it terms “neighbourhood activity centres” being street-based shopping and commercial strips.
13. At the outset all three experts were able to agree that:
i.The subregional Orana Mall attracts custom from the entire urban area of Dubbo;
ii.The WPMC would draw custom from the Dubbo urban area as well;
iii.The Molong Dubbo Coonamble railway line (now no longer used) which runs north-south does not impose any physical impediment to traffic.
14. In his report Mr Brunning restricted the catchment area for the proposed pharmacy to the area east of the Molong Dubbo Coonamble railway line. Although that railway line is not longer operative he regarded it as a major barrier to movement in an east-west direction with few crossing points.
15. In evidence, Mr Brunning resiled from this absolute opinion. He conceded that the railway line did not involve a physical barrier but maintained that the railway line affected the “form” of the local area by separating the east end of Dubbo from central and western Dubbo.
16. The significant point of differentiation between the experts was the influence of the disused north-south railway line. The issues were encapsulated in the evidence of Mr Dimasi who stated:
“a pretty simple question to ask in this case is ‘Would significant numbers of people from west of that rail corridor use this medical centre or Orana Mall or this pharmacy?’”.
17. As stated above Mr Brunning’s opinion was that the railway corridor formed a significant barrier and that the catchment area was restricted to east of the railway line.
18. Cross examined by Counsel for the Respondent, Mr Brunning stated:
“I would accept that, for the purpose more particularly of the higher-order retailing functions within the Orana Mall shopping centre, that their catchment is wider than that which I’ve shown – definitely so; but for the purposes of the proposed pharmacy I think it sits as a subset within that. I don’t think they’re synonymous or mirror each other. I think for the purposes of the pharmacy the area generally to the east of the railway corridor is what I consider to be a reasonable delineation of the spatial area from which the majority of customers might attend – but not discounting a proportion or some people might come from elsewhere.”
19. Later in his evidence Mr Brunning stated that for the proposed pharmacy vis a vis the Orana Mall, there would be some synergies and some overlap as regards persons attending. He pointed out that the Orana Mall was very successful and may well have a market that is larger than Dubbo itself. Nevertheless he maintained that the proportion of the population that would naturally gravitate to the proposed pharmacy was the population west of the rail corridor.
20. In total contrast to Mr Brunning, Mr Dimasi for the Parties Joined took a very expansive view of the catchment area.
21. Both his report and in evidence Mr Dimasi contended that the catchment area was not only the whole of Dubbo but also extended into the surrounding rural area.
22. I acknowledge that the Orana Mall and the adjacent bulk goods area are attractions that would attract “customers” to the various outlets for specific purposes. I find that Mr Dimasi has impermissibly extended the boundaries of any proposed catchment. Regard must be had to what was stated by Deputy President Hack in Fraser Coast Pharmacy Pty Ltd supra that a catchment area should not be based solely upon the possibility of use. Any person from outside Dubbo would, in my opinion, also consider the Dubbo Central Business District (“CBD”) and its array of retail outlets including pharmacies. Likewise any person in west Dubbo that is to say west of the Macquarie River would be unlikely to bypass the pharmacy in west Dubbo or those in the CBD and venture across to east Dubbo.
23. Cross examined Mr Dimasi was taken to his evidence in Uzuncakmak and Australian Community Pharmacy Authority [2008] AATA 472. It was put that he had stated:
“…that it was relevant that persons might leave a medical clinic and attend a pharmacy to have a prescription filled but said that phenomena would not necessarily determine the catchment area for the proposed pharmacy in issue by these proceedings…
…The location of medical clinics did not therefore determine the catchment area of a pharmacy. In his experience, he attends a pharmacy near his home where he can park his car with ease and because it is open outside normal trading hours.
It was also his experience, having regard to his retailing expertise, that persons are not aligned to one particular pharmacy and tend to use five or six different pharmacies depending on where they are at a particular time or where they are travelling.”
24. To my mind, the above evidence is both logical and unexceptional. I found Mr Dimasi’s attempts in cross examination to rationalise this evidence, as it affects this matter, to be unconvincing. I therefore accept that there is no necessary correlation between persons who attend the WPMC and the catchment area for the proposed pharmacy.
25. The evidence for the Respondent, both in the report prepared by Mr McKinnon and in the evidence of Mr Turnbull, proposed a catchment area far more restricted than that of Mr Dimasi but significantly differing from Mr Brunning, in that it included areas west of the rail corridor.
26. The basis of Mr McKinnon’s report was the Australian Bureau of Statistics (“ABS”) Mesh Block data. The report explains Mesh Block Data in the following terms:
“…Mesh Blocks were developed by the ABS as a new micro-level geographical unit for statistics and introduced for the 2006 Census of Population and Housing.
…There are 314,369 spatial Mesh Blocks covering Australia with most residential Mesh Blocks containing approximately 30 to 60 dwellings. For the 2006 Census, Mesh block data can be accumulated to CCD level.
Mesh Blocks are intended to become a new building block of statistical geography, allowing more accurate catchment analysis, reducing the need to ‘divide’ collection districts and apportion population on an estimated basis.”
27. Where the McKinnon report differs from Mr Brunning is in the inclusion of what the report terms Precincts 3 and 4. They are described as follows:
“Precinct 3
Precinct 3 includes the area west of the rail (Molong – Dubbo), north of the Mitchell Highway (Cobra Street), east of Fitzroy Street and south of Wingewarra Street. This area is not included in catchment submitted by the Applicant.
For residents in precinct 3, the proposed premises are as equally convenient, if not more accessible than those approved pharmacies in the central business district. Residents exiting this precinct can either turn right into Wingewarra Street or left onto Cobra Street and cross the no longer operating Molong – Dubbo Rail.
MacroPlan does not consider the rail to be an obstacle for residents in this area. The railway was officially closed in 1993, and both Wingewarra and Cobra Streets provide uninhibited traffic flows in the direction of the proposed premises.
Given easy uninhibited access (<2km), significant car parking at the destination and co-location with a sub-regional and major medical centre, it is reasonable to assume that a significant number of residents from this area would naturally gravitate to the proposed premises.
There are 5 Mesh Blocks completely included in Precinct 3 (Appendix 5).
Precinct 4
Precinct 4 includes the area west of the rail (Molong – Dubbo), south of the Mitchell Highway (Cobra Street) and east of Fitzroy Street. This area is not included in catchment submitted by the Applicant.
There are two (2) existing pharmacies located on the western edge of Precinct 4. Both pharmacies are located in small local/neighbourhood centres, with a limited convenience retailing offer.
Whilst both these pharmacies would undoubtedly play a strong role in meeting local resident demand, the higher order goods and services on offer in both the CBD and the Orana Mall sub-regional centre do attract a significant amount of residents.
In this regard for residents in precinct 4 the proposed premises are as equally convenient, if not more accessible than those approved pharmacies in the central business district. Residents exiting this precinct can either turn right onto Cobra Street (via Palmer Street slip lane) or cross the no longer operating Molong – Dubbo Rail via Boundary Road in the south of the precinct. Both options provide easy access to the proposed premises.
As in Precinct 3, MacroPlan does not consider the rail to be an obstacle for residents in this area. The railway was officially closed in 1993, and both Cobra Streets and Boundary Street provide uninhibited traffic flows in the direction of the proposed premises.
Given easy uninhibited access (<2kms), significant car parking at the destination and co-location with a sub-regional attractor and major medical centre, it is reasonable to assume that a significant number of residents from this area would naturally gravitate to the proposed premises.
There are 47 Mesh Blocks completely included in Precinct 4 (Appendix 5).”
28. In evidence Mr Turnbull stated that the pharmacy did not have the same catchment as the Orana Mall complex.
29. Mr Brunning disputed the suggestion that persons in Precinct 4 would gravitate towards the proposed pharmacy. He pointed out that to do so would involve travel along local streets past existing pharmacies, negotiating several intersections with traffic lights, then proceeding along a major arterial road and through an industrial commercial area.
30. Notwithstanding these reservations Mr Brunning conceded residents of Precinct 4 would be minded to travel to the proposed pharmacy at times when other medical practices or pharmacies were closed, for example on Saturday afternoons and Sundays.
31. Questioned further by the Respondent’s Counsel, Mr Brunning conceded a proportion of the population of Precinct 4 would gravitate towards the Orana Mall.
32. Whereas I am not prepared to accept Mr Dimasi’s conclusions for the reasons I have stated, given the concessions by Mr Brunning and using the view which I had in order to understand the evidence given, I find that opinion of Messrs McKinnon and Turnbull more accurately represents the reality. I find that for the residents of what has been described as Precincts 3 and 4 they are just as likely to gravitate towards the subject premises as towards the Dubbo CBD.
33. I find therefore that the catchment for the proposed pharmacy includes the areas designated as Precincts 3 and 4 as described in Exhibit R2 and that the catchment does include more than one (namely three) existing pharmacies.
34. For the reasons above, the decision under review is affirmed.
I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.
Signed: ...................[sgd]....................................
K. Lynch, Associate
Dates of Hearing 26 & 27 October 2010
Date of Decision 16 November 2010
Solicitor for the Applicant Mr S Holzberger,
Maunsel Pennington Solicitors
Solicitor for the Respondent Mr D Lukic,
Australian Government Solicitors
Representative for the Parties Joined Ms A Mihulka,
Ann Mihulka & Associates.
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