Pharmacy Care Systems Ltd v Attorney-General

IN THE COURT OF APPEAL OF NEW ZEALAND

CA198/03

BETWEENPHARMACY CARE SYSTEMS LTD

Appellant

ANDTHE ATTORNEY-GENERAL

Respondent

Hearing:7 and 8 July 2004

Coram:McGrath J
Hammond J
O'Regan J

Appearances:  B O'Callahan and D C E Smith for Appellant

A R Burns for Respondent

Judgment:16 August 2004 

JUDGMENT OF THE COURT DELIVERED BY HAMMOND J

Introduction

[1]        The appellant, Pharmacy Care, entered into a Deed of Settlement with the Northern Regional Health Authority (“North Health”), under which Pharmacy Care agreed to pay North Health $80,000.  North Health is represented by the respondent in this proceeding.

[2]        Subsequently, Pharmacy Care sought to have the Deed set aside on the relatively rare basis of “duress”.  The central allegation is that North Health and its legal advisers distinctly over-reached in pursuing a settlement with the appellant, by improperly threatening a criminal proceeding.  Pharmacy Care sought to recover this sum of $80,000 from North Health, and certain sums for consequential losses.

[3]        The claim was dismissed by Paterson J in a reserved judgment delivered on 19 September 2003 (HC AK CP96/00).

[4]        Pharmacy Care now appeals to this Court.  The case is not without its difficulties, but in the event we have come to the clear conclusion that the appeal should be dismissed.  We agree with Paterson J that duress has not been established.  The burden of this judgment is therefore to explain why we have come to that view.

The Pharmacy Care business concept

[5]        Mr Aitken is an entrepreneurial pharmacist.  He became a Member of the Pharmaceutical Society (MPS) in 1979.  He worked principally in Wellington until 1987.  He then moved to Sydney, but returned to New Zealand in 1991.  Shortly thereafter Mr Aitken formed the appellant company to put into practice a business concept he had developed.

[6]        This concept involved the following elements.  First, there was a medicine management aspect under which individual patients in institutions such as rest homes and hospitals have their prescribed medicines placed in individualised, weekly “blister packs”.  Secondly, the system assisted in the auditing of the storage of medicines.  Thirdly, this system replaced the traditional temporal prescriptions (of say, three months duration) in which a prescription would be filled each month and the medicine would be stored in facilities with medicines belonging to other patients, although it would usually be administered by caregivers.  Fourthly, this concept aimed at reducing the inefficiencies in the traditional system of prescriptions by “recycling” pharmaceuticals.  For instance, a prescription might change in a three-month period and then there would be consequential wastage of medicines which could be reutilised.

[7]        The medicines being supplied by Pharmacy Care to institutions in this manner were almost completely funded by mechanisms established by the New Zealand Government.

[8]        This business approach sharply differentiated Mr Aitken’s business concept from other pharmacies in New Zealand.

[9]        First, his was a “closed door” pharmacy, in the sense that it was not a retail business.  It was aimed solely at supplying a service to organisations that were concerned with…