Consideration
78 As I have said, in my view, the decision was a decision not to make a change to the minimum benefit for the Relevant Subgroup by the next making of Private Health Insurance (Prostheses) Rules under s 333-20 and that decision was of an administrative character. It is to be recalled that s 333-20 refers expressly, so far as relevant, to matters required or permitted by Pt 3-3 to be provided, or necessary or convenient to be provided, in order to carry out or give effect to Pt 3-3.
79 One challenge made by Applied Medical to the decision was that it "was made without any, or any adequate, evidence in two senses: first, arising from a misapprehension as to the nature of the application before it; and secondly, for want of evidence to substantiate findings of fact made".
80 As to the first, Applied Medical submitted the decision-maker made the decision on the basis of an assumption that the application was a request to change departmental policy generally, or the 25% Utilisation Policy in particular, in circumstances in which that assumption was wrong. Applied Medical submitted the no evidence ground in s 5(1)(h) and s 5(3) of the AD(JR) Act required that there must be no evidence or other material to justify the making of the decision, which would include a circumstance in which the decision-maker based the decision on the existence of a particular fact and that fact did not exist. Applied Medical submitted this was such a case. I reject that submission. In my opinion, it is directed to the reasoning process of the decision-maker and involves a misreading of that reasoning process. What the decision-maker is to be taken as recognising, by agreeing to the Minute, was that Applied Medical was only arguing for a change to the minimum benefit for a single sub-group. The decision-maker is to be taken as reasoning that the same methodology needed to be implemented across the entire list in the Private Health Insurance (Prostheses) Rules. This did not involve a misunderstanding of Applied Medical's application. Neither did it involve the decision-maker basing her decision on the existence of a particular fact where that fact did not exist.
81 As to the second, Applied Medical submitted there was no evidence or other material before the decision-maker to justify the making of the findings of fact, that: (a) Applied Medical's sales of laparoscopic clip appliers were less than 25% of the total sales of such products in private hospitals; and (b) there was another party whose sales were greater than 25%. I reject that submission. In my opinion, it was an assumption by Applied Medical that its product or products did not have a market utilisation rate of at least 25%. Otherwise, there would have been no reason to state, at paragraph 24 of the first attachment to its submission dated 21 October 2014, that the current framework significantly impeded the ability of a supplier, such as Applied Medical, to reach a utilisation rate of 25%. Additionally, no attempt was made in evidence to establish that Applied Medical's sales of laparoscopic clip appliers were not less than 25% or that there was not another party whose sales were greater than 25%. As to this last proposition, I am assuming that the methodology or policy involved a single other supplier having such sales.
82 Another challenge to the decision was that it was so unreasonable that no reasonable decision-maker could have so exercised the power conferred by the Public Health Insurance Act. The basis for this submission was as follows:
(a) aside from the Briefing Note, all of the material before the second respondent supported the change requested in the Benefit Amount Application and there was no material to the contrary;
(b) the Briefing Note did not respond meaningfully to any of the material supporting the Benefit Amount Application, or criticise that material in any way;
(c) there was no logical connection between the request contained in the Benefit Amount Application and the considerations taken into account by the second respondent, including that:
i. any change to the benefit setting policy would require extensive, industry-wide consultation and sponsors of other products would need to be given an opportunity to comment on the proposed policy change;
ii. there was no evidence that the proposed change advocated by the applicant would be supported by the vast majority of other product sponsors;
according to statements made in the Medibank Private Sale prospectus, no reforms to private health insurance would be implemented before 1 July 2015; and
iii. there were a number of ongoing reviews undertaken by the Government that might have implications for the Prostheses List arrangements; and
(d) other than the matters alleged in subparagraph (c) above, the only remaining basis for the Rejection Decision was the 25% Utilisation Policy, which was itself arbitrary, beyond the power conferred on the Minister by the PHI Act and devoid of any valid, reasoned basis.
83 In my opinion, there was nothing legally unreasonable in either the conclusion or in the reasoning of the decision-maker. I have already referred to the breadth of the power conferred by s 333-20. It was open to Applied Medical to request that their prostheses be listed with a lower benefit of $99: it had not done so. Applied Medical wanted the minimum benefit for the Relevant Subgroup set at $99, the price at which it proposed as the minimum price, to apply for all laparoscopic clip appliers. It did not establish that its products had a market utilisation rate of 25%. Its application could not succeed without departing from, or a change in, policy that a minimum benefit price for comparable products performing a similar clinical role be set at the lowest price for a product which had a market utilisation rate of at least 25%. It is for the repository of the power to consider whether or not that same methodology needs to be implemented across the entire list in the Private Health Insurance (Prostheses) Rules. In my opinion, there is nothing legally unreasonable in the decision-maker taking that view and, having taken it, reasoning as she did. In the result, this ground is an attack directed to the merits of the decision. This may be seen in sub-grounds (a), (b) and (c). Insofar as this ground involves the methodology or policy of a market utilisation rate of 25%, sub-ground (d), I shall consider that at [102]-[116] below when addressing the ground of review directed to an unlawful policy or an inflexible application of that policy.
84 A third ground of review brought by Applied Medical was that the decision was an improper exercise of the power conferred by the Public Health Insurance Act on grounds of relevancy. Applied Medical submitted that the decision miscarried on this ground as follows:
(a) the second respondent took into account whether the Benefit Amount Application would be supported by the majority of sponsors, which was an irrelevant consideration because:
i. the group benefit amount for a particular List subgroup is not determined by consensus of the sponsors of products in that subgroup; and
ii. the group benefit amounts for particular List subgroups are not determined by consensus of all the sponsors of products listed on the List;
(b) if there were a policy to this effect, it would be plainly inconsistent with the legislative purpose behind prescribing benefit amounts for items listed on the List;
(c) the second respondent took into account when making the Rejection Decision that the Benefit Amount Application was a request to change departmental policy generally, or the 25% Utilisation Policy in particular, which was an irrelevant consideration because the Benefit Amount Application contained no such request;
(d) the second respondent took into account when making the Rejection Decision that:
i. any change to the benefit setting policy would require extensive, industry-wide consultation and sponsors of other products would need to be given an opportunity to comment on the proposed policy change;
ii. according to statements made in the Medibank Private Sale prospectus, no reforms to private health insurance would be implemented before 1 July 2015; and
iii. there were a number of ongoing reviews undertaken by the Federal Government that might have implications for the Prostheses List arrangements;
which were irrelevant considerations, because the Benefit Amount Application was not an application to change departmental policy;
(e) the second respondent failed to take into account various relevant considerations emerging from implied statutory constraints when making the Rejection Decision, being the:
i. legislative purpose behind the establishment of the Prostheses List;
ii. the legislative purpose behind the insertion of minimum benefit amounts in the Prostheses List;
iii. the objects of Part 3-3 of the PHI Act; and
iv. the objects of the PHI Act as a whole;
(f) having regard to the ex facie disconformity between the benefit Amount Application and the Minute, the second respondent gave no genuine consideration to the Benefit Amount Application; and
(g) the second respondent made the Rejection Decision in accordance with a rule or policy, being the 25% Utilisation Policy, without regard to the merits of the particular case.
85 In my opinion, since Applied Medical was seeking a reduced minimum benefit in respect of the products of other suppliers in the Relevant Subgroup, it was not a prohibited consideration to take into account whether or not those, or most of those, other product sponsors would support the application. Sub-ground (a)(i) therefore fails. Similarly, since Applied Medical was seeking a departure from the position that the same methodology was implemented across the entire list, the support of those, or most of those, other products sponsors was not a prohibited consideration. Sub-ground (a)(ii) also fails. Indeed, in relation to the entirety of sub-ground (a), in my opinion, the Minute was stating the obvious, which was that sponsors of other products would need to be given an opportunity to comment on the proposed change, absent material showing that they, or most of them, supported the proposed change advocated by Applied Medical. Sub-ground (b) fails for the same reason. Sub-ground (c) fails for the same reason as the first "no evidence" ground which I have considered at [80] above. In my opinion, it involves a misreading of the Minute. Sub-ground (d) similarly fails: although Applied Medical's application was not in terms an application to change policy, the decision-maker must be taken to have considered that to accede to the application either a departure from policy or a change of policy was required. Sub-ground (e) has no specificity and therefore involves an attack on the merits of the decision. Sub-ground (f), claimed the second respondent gave no genuine consideration to the application, having regard to an ex facie disconformity between the application and the Minute. This is not strictly a failure to have regard to a mandatory relevant consideration as generally understood. Be that as it may, the decision-maker plainly took into account the application but, on the view she took, did not need to analyse what Applied Medical submitted were the economic merits of its case. In her view, Applied Medical's application failed before it became necessary for the decision-maker to consider the further detail. Insofar as this ground involves the methodology or policy of a market utilisation rate of 25%, sub-ground (g), I shall consider that at [102]-[116] below when addressing the ground of review directed to unlawful policy or an inflexible application of that policy.
86 The fourth challenge, the challenge at the forefront of Applied Medical's case, was to the lawfulness and application of the methodology or policy which set a minimum benefit price for comparable products performing a similar clinical role at the lowest price for a product which has a market utilisation rate of at least 25%.
87 The challenge to the lawfulness of the methodology or policy was put as follows. Applied Medical submitted there was no reference to the 25% utilisation policy in the Private Health Insurance Act, the Prostheses Rules, the document having non-statutory force entitled Prostheses List - Guide to Listing and Setting Benefits for Prostheses which was last updated in October 2010 and was referred to in Orthotech at [32], or on the Department of Health website, or any other publicly available source of information. It found no statutory warrant. In Orthotech at [32] Collier J said:
It is clear - and, indeed, not in dispute - that the Guide does not in any way mandate the manner in which the Minister or her delegate should reach a decision. It does not have the force of statute or legislative instrument. However it is relevant for the purposes of this proceeding because it provides a "guide" to the Minister and community stakeholders as to processes engaged in, relevant advisory bodies, and factors likely to be taken into consideration by the Minister, prior to the approval of a prosthesis for inclusion on the Prostheses List.
88 In my opinion, none of these matters individually or cumulatively tend to establish that the methodology or policy was itself outside the statute. That a methodology or policy is not referred to in primary legislation, or in a legislative instrument or in a non-statutory guide or on a website provides no basis for concluding that it is unlawful. Further, in my view, to have as a benchmark the lowest benefit per subgroup with reasonable market utilisation and for that market utilisation to be at least 25% has a rational connection to the power to make the Private Health Insurance (Prostheses) Rules under s 333-20.
89 I accept the respondents' submission that the adoption of the methodology or policy:
… is a permissible means of achieving a balance between a number of potentially competing interests, most particularly cost and the promotion of choice for clinicians and consumers, which choice may, in turn, reflect views about relative product safety and efficacy. That involves the weighing of incommensurables and an evaluative exercise that is not susceptible of any particular correct answer. It achieves the balance by selecting:
(a) the lowest price or benefit within the relevant group, reflecting a concern to reduce premium cost;
(b) for a product within that group with at least 25% market utilisation, thereby avoiding the possibility that the setting of an unduly low minimum benefit would result in the "monopoly" position identified at the Consultative Committee meeting held on 6 December 2010 …
(Original emphasis.)
However, in my view, the methodology or policy itself is not unlawful as precluding the person on whom the power is conferred from departing from it or from taking into account circumstances which are relevant to the particular case: NEAT Domestic Trading Pty Ltd v AWB Ltd [2003] HCA 35; 216 CLR 277 at [17] per Gleeson CJ citing R v Secretary of State for the Home Department; Ex parte Venables [1998] AC 407 at 496-497.
90 The history of the methodology or policy, in my view, bears this out. The methodology was adopted in implementing recommendations made by the HTA Review. Recommendation 12 was:
That the arrangements for the Prostheses List be changed by 2011, with appropriate consultation, to:
a. accept applications on a continuous basis, but still make the Prostheses List every six months;
b. establish and maintain groups of products with similar clinical effectiveness;
c. abolish the negotiation of benefits for individual listed products, and instead establish and maintain a single (benchmark) benefit for the products included in each group, with sponsors being required to accept this benefit in order to be listed;
d. abolish the negotiation, setting or publication of maximum benefits, to eliminate the potential for gap payments for patients who have PHI (Private Health Insurance); and
e. permit the establishment of new product groups (or sub-groups) where a sponsor establishes clear superiority of their product compared to those in an existing group.
91 In November 2010, it appears that the Minister was briefed on issues "around the implementation of HTA Review recommendation 12 b-e and to seek your endorsement of a draft implementation plan for this recommendation". The Minister signed and approved the November 2010 minute. This minute stated that some key stakeholders had petitioned strongly to modify or delay the implementation which involved, in particular, the abolition of benefit negotiation for individual prostheses and legislated gap payments for patients. In the implementation plan for recommendation 12 b-e, the following was said in relation to "Grouping":
ACTION
Review existing groups and establish benchmark benefits
…
Where the draft groups contain products at different benefits, a unique benchmark benefit will be established. The benchmark benefit would be established in accordance with existing principles, that is, products need to be accurately grouped together in a sufficiently detailed scheme of groups/subgroups/suffixes, and then the lowest benefit per subgroup/suffix with reasonable utilisation is identified and applied as the benchmark benefit.
ACTION
Write to stakeholders and respond to stakeholder comments
Stakeholders will be asked to comment on the draft groupings and benchmark benefits for the products on the basis that all products grouped together would receive the nominated benchmark benefit, with no 'maximum benefit' to be included on the Prostheses List in the future.
If there are concerns to be addressed, further discussions will be held with stakeholders and clinical assessment of these concerns may be required. If a sponsor is unwilling to accept a benchmark benefit, then clinicians would be consulted about whether there is any clinical concern about the removal of that product from the Prostheses List. If there was a clinical concern, for instance, because there were no other listed alternatives, then this would need to be reflected through grouping refinements or changes to benchmark benefits.
Under the HTA recommendations, it would still be possible for a sponsor to seek a lower benefit than the benchmark. If a sponsor requests a lower benefit, this could be included on the list, with the group then monitored by the PLAC. After the committee was able to determine whether the new product was developing utilisation/market share, a review of the benchmark benefit would be triggered to examine whether the benchmark should move to the new lower price. This would provide transparency and promote competition, while protecting sponsors from unfair, unsustainable or premature reductions in benefits.
(Emphasis added.)
92 A HTA Review - Rec 12 b-e consultative committee was established by the Minister. At a meeting on 6 December 2010, chaired by Mr Richard Bartlett, then Acting First Assistant Secretary, Medical Benefits Division, Department of Health and Ageing the committee raised a number of concerns regarding the implementation of recommendation 12 b-e. One issue was that the "meaning of 'reasonable utilisation' for which the single benefit is based on is unclear". The Chair said: "The lowest utilisation used to determine a proposed group benefit to date is approximately 25% utilisation within that group."
93 At a meeting of the PLAC on 14 December 2010, the secretariat provided members with an update on the HTA Review and members were advised, amongst other things, that benefits were set based on the lower benefit with reasonable utilisation and sponsors could choose to list a lower benefit than the group benefit. The HTA Review - Rec 12 b-e consultative committee had a further meeting on 31 July 2012. A paper for "Agenda Item 5 - Prostheses Listing Arrangements - Consultation Framework" described the group benefits review methodology as follows:
…
Prostheses within each group were reviewed taking account of product information contained on files or available on the Internet, with specific attention paid to identifying "outlier" prostheses or prostheses with the benefit which suggested an inappropriate grouping. Clinicians and sponsors were consulted during this process.
Once the correct grouping was agreed, the utilisation of prostheses within the group was reviewed to determine the most appropriate group benefit. This was based on the benefits paid for prostheses with "reasonable utilisation" (being defined as a market share of 25% or more) within the group. If no single prosthesis had a 25% market share, a "'constructivist" approach was used where lower usage rates were added together to reach the 25% threshold (or as close to that mark as possible without being under) and the benefit for these prostheses was averaged to derive a prospective benefit for negotiation with sponsors.
94 It is I think fair to say that this limb of the argument did not form a major part of the oral submissions on behalf of Applied Medical. The thrust of Applied Medical's case related to the application of the methodology or policy. To this I now turn.
95 Applied Medical also submitted that the application of the purported methodology involved in the 25% Utilisation Policy was: (a) contrary to the legislative purposes underpinning the establishment of the Prostheses List, being to make private hospital treatment more attractive and affordable to contributors by controlling the costs payable in respect of prostheses; (b) contrary to the legislative purposes of the insertion of minimum benefit amounts in the Prostheses List, being to reduce the pressure on the level of private health insurance premiums by limiting the growth in benefits for prostheses; reduce the administrative burden on industry; and provide contributors with more choice in the provision of prostheses; (c) inconsistent with the objects of Pt 3-3, being to require private health insurers who make private health insurance available to do so in a non-discriminatory way; to offer products that comply with the Private Health Insurance Act; and to meet certain other obligations imposed by the Private Health Insurance Act in relation to those products; and (d) inconsistent with the objects of the Private Health Insurance Act as a whole, being to provide incentives to encourage people to have private health insurance; set out the rules governing private health insurance products; and impose requirements about how insurers conduct health insurance businesses. Applied Medical submitted that the decision was ex facie defective. The Minute did not identify: (a) why a Utilisation Policy existed at all; (b) what the Utilisation Policy was designed to (or did in fact) achieve; or (c) why a 25% utilisation rate applied, as opposed to any other utilisation rate. Further, neither the author(s) of the Minute nor the second respondent had evidenced any knowledge as to these matters.
96 The starting point must be a consideration of the purpose of fixing a minimum benefit. I accept the respondents' submission that having regard to the matters that appear from the scope and object of the relevant provisions, it cannot be the case that the Minister or the delegate was bound to adopt the lowest existing benefit within the group, or the lowest price at which a particular group member was willing to sell their product. Broader matters such as consumer choice and safety and efficacy are matters to which the Minister may have regard, and therefore the decision ceases to be one necessarily dictated solely by cost or by price. But that submission, as it was put, goes more to the lawfulness of the methodology or policy, which I have accepted.
97 The respondents also submitted that in making a single instrument of a legislative character, it can hardly be a ground for invalidity that the decision-maker seeks to achieve a measure of consistency across that instrument by applying a consistent methodology. Again, this goes to the point of whether or not a policy may be adopted and not directly to the present question.
98 Another of the respondents' submission on this point was that all that would be required is that the delegate not "shut their ears" to those "applications": British Oxygen Co Ltd v Minister of Technology [1971] AC 610 at 624-625 (per Lord Reid); NEAT Domestic Trading at [26] per Gleeson CJ. The respondents submitted that the delegate did not do so. Her attention was specifically drawn to them.
99 It is necessary again to consider what the reasoning of the delegate was, bearing in mind that the Minute does not constitute a formal statement of reasons (see [19] - [20] above). The essence of the reasoning was that while Applied Medical was arguing for a change to the minimum benefit for the Relevant Subgroup, a single subgroup, such that the minimum benefit reflected the net prices paid for those prostheses, that was not how minimum prices were set and therefore the submission called for a change in policy (for the setting of minimum benefits for laparoscopic clip appliers). How minimum prices were set had been earlier described in the Minute by reference to the methodology being to set a minimum benefit price for comparable products performing a similar clinical role at the lowest price for a product having a market utilisation rate of at least 25%. The next step in the reasoning was that the same methodology (whatever it was) needed to be implemented across the entire list. Implicitly, the reasoning was that whatever the worth of setting the minimum benefit for the Relevant Subgroup to reflect the net prices paid for those prostheses, that could not be done except across the entire list. Therefore, as the Minute said, any change in the methodology to calculate minimum benefits would need to be applied to the more than 10,000 items that were then listed. To do this would require extensive industry wide consultation and sponsors of other products would need to be given an opportunity to comment on the proposed change to policy. (I assume that it is implicit in this reasoning that the sponsors of other products within the Relevant Subgroup would also need to be given an opportunity to comment on the proposed change.) There was no evidence that the proposed change would be supported by the vast majority of other product sponsors, and if reforms were supported, implementation would not occur before 1 July 2015. It is to be recalled that what the delegate agreed to was not to make the change submitted by Applied Medical in the February 2015 Prostheses List.
100 Essentially, in my view, the reasoning had two elements. Whatever the worth of setting the minimum benefit for the Relevant Subgroup to reflect the net prices paid for those prostheses (as contended for by Applied Medical), this could not be done as a matter of good administration ("from a policy perspective") because, first, the same methodology needed to be implemented across the entire list and, secondly and consequently, there would need to be extensive consultations, including providing procedural fairness to sponsors of other products. The delegate concluded, therefore that the change should not be made to the Private Health Insurance (Prostheses) Rules 2015 (No 1).
101 In my opinion, this does not constitute a refusal or failure to consider the exercise of the discretion conferred by s 333-20 of the Private Health Insurance Act according to its terms.
102 Applied Medical submitted that what was being sought was not a change to the methodology or policy but its non-application on the facts of the instant case. That, it was submitted, would leave the methodology/policy otherwise intact. Further, to say that the same methodology/policy needed to be implemented across the entire list was tantamount to saying that it could never be departed from. This was illegitimate rigidity. I do not accept this submission.
103 The first point, in my opinion, in the present circumstances is a distinction without a difference. Applied Medical was asking for a departure from the policy or methodology so far as it applied to the Relevant Subgroup: it does not matter whether the departure is called a "non-application" or not. Applied Medical submitted that there was a crucial distinction between arguments as to why a policy should not have application in any given case and the type of arguments contemplated in British Oxygen which were arguments attacking the policy. In my opinion, this is not always so. In some cases, of which this is one, an individual application is not required to be considered in isolation. While the HTA Review contemplated, at page 94, that a sponsor requesting a lower benefit would trigger a review of the group benefit by the then Prostheses and Devices Committee, this said nothing about differential methodology or policy in setting minimum benefits across the groups or subgroups of prostheses.
104 As to the second point, I do not accept Applied Medical's submission that the delegate's reasoning, that the same methodology/policy had to be implemented across the entire list, is the same as saying that the methodology/policy can never be departed from. What the delegate was saying was that the same policy needed to be applied, and the present methodology/policy could not be changed without consultation and procedural fairness. This is made clear in the submission which the delegate is to be taken to have accepted that: "[a]ny changes to the listing arrangements should be considered together, to ensure that the evaluation, assessment and listing of medical devices uses a solid evidence-based policy platform which is not considered detrimental to any stakeholders and ensures that high-quality cost-effective prostheses devices which provide good patient outcomes are available for patients in the private healthcare sector." The temporal element ("never") central to this point is not made out and the claim "illegitimate rigidity" fails.
105 As explained in Plaintiff M64/2015 at [58] per French CJ, Bell, Keane and Gordon JJ, while the policy could not lawfully be applied rigidly so as to preclude the consideration by the delegate of the circumstances of the applicant, Applied Medical, the reasoning does not demonstrate that the policy was applied rigidly without regard to the particular circumstances of the case. The reasoning recognised what it was that Applied Medical wanted and the effect of the reasoning was that, whatever the merits of the approach for which Applied Medical contended, the merits of its application could not adequately be considered by reference to the circumstances of Applied Medical alone: see Plaintiff M64/2015 at [68] per Gageler J. The reasoning was that the circumstances of Applied Medical did not warrant departure from the application of the policy or methodology.
106 In my opinion, the relevant law has at its centre a failure, actual or constructive, to exercise a discretion. Here the discretion is to make the Rules. The relevant part of the Rules is to give effect to Pt 3-3 and specify as one of the requirements that an insurance policy that covers hospital treatment must meet, being the minimum benefit for the provision of a prosthesis: item 4 of s 72-1.
107 Gleeson CJ said in NEAT Domestic Trading at [24]:
There is nothing inherently wrong in an administrative decision-maker pursuing a policy, provided the policy is consistent with the statute under which the relevant power is conferred, and provided also that the policy is not, either in its nature or in its application, such as to preclude the decision-maker from taking into account relevant considerations, or such as to involve the decision-maker in taking into account irrelevant considerations. The policy, and its application, must be measured against those requirements, having regard to the matter presented for decision, and the information and arguments, if any, advanced for or against a particular outcome.
At first instance, NEAT Domestic Trading Pty Ltd v Wheat Export Authority [2000] FCA 1866; 64 ALD 29, Mathews J reviewed the authorities, including British Oxygen; R v Port of London Authority, Ex parte Kynoch Ltd [1919] 1 KB 176; Ex parte Venables; Chumbairux v Minister for Immigration and Ethnic Affairs (1986) 74 ALR 480; and Howells v Nagrad Nominees Pty Ltd (1982) 66 FLR 169, and said at [50]:
It is clear from these authorities that adherence to policy is permissible, and in some cases desirable, provided the policy is not too inflexibly applied. What is too inflexible will depend on the circumstances of each case, including the nature of the decision, the nature of the policy, the rationale for the policy, and the extent to which a consideration of individual circumstances might justify a departure from the policy.
108 In Howells, Fox and Franki JJ said, at 194-195:
The interface between policy and discretion in the exercise of statutory powers is a difficult one. Leading statements on the subject are found in R. v Port of London Authority; Ex parte Kynoch Ltd. [1919] 1 KB 176, at p. 184 per Bankes L.J.; British Oxygen Co. Ltd. v. Minister of Technology [1971] AC 610; R. v. Anderson; Ex parte Ipec-Air Pty. Ltd. (1965) 113 CLR 177, at pp. 188-190; Ansett Transport Industries (Operations) Pty. Ltd. v. Commonwealth (1977) 139 CLR 54, at pp. 82-83; Bread Manufacturers of New South Wales v. Evans (1981) 56 ALJR 89 and in the setting of administrative review, see Drake v. Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409. No one test can be articulated for all cases.
Where the power given relates to the consideration of individual cases, it is not to be denied that the predominant aspect must be the consideration of the particular case. The merits of that case must be considered genuinely and realistically; there must always be a readiness to depart from policy. The policy does a disservice to those who have to measure it against the individual situation if it is expressed in dogmatic or mandatory terms.
109 In Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 (appeal dismissed (1996) 41 ALD 481), Davies J said, at 696:
… It should no longer be necessary for a decision-maker to indicate at any length the considerations which support the application of policy. Rules and standards are important, both as a means of giving effect to lawful policy which a government or an authority has determined and wishes to be implemented and as a means of ensuring that decisions, because they have been taken by reference to rules or settled standards, are fair, consistent and not arbitrary.
Policy does not constitute a binding rule, unless a statute so provides, as does s 17(1) of the [Fisheries Management Act 1991 (Cth)]. Absent a statutory provision requiring compliance with policy, a decision-maker may depart from policy and, in an appropriate case, should do so. It is impossible to define or delineate the circumstances in which departure from policy is justified. Much depends upon the nature and context of the decision to be made, the nature of the policy to which regard is to be had and the nature of the individual circumstances to which attention is directed. …
110 Here, the nature and context of the decision to be made was whether, in light of the matters put by Applied Medical, there should be a differential treatment for the minimum benefit for the Relevant Subgroup (involving either/or non-application of the methodology/policy or a departure from that methodology/policy) in the making of a Rule covering all of the prostheses in the list. The nature of the policy was that it applied uniformly and applied to setting the minimum benefit for each group or subgroup assessed against a market utilisation rate. The nature of the individual circumstances was that Applied Medical submitted that it was willing to supply prostheses listed in the Relevant Subgroup at a much lower price ($99) than the prescribed minimum benefit and that the Rule for that subgroup should be set so that the suppliers of the other prostheses in the Relevant Subgroup should also be subject to the same much lower minimum benefit.
111 Applied Medical submitted that s 5(2)(f) of the AD(JR) Act, making improper an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case, was not a surrogate for British Oxygen; it was the language of the statute that was to be applied. Applied Medical emphasised the statutory language requiring attention to be paid to the merits of the particular case and submitted that this required a consideration as to whether a departure from the policy was justified in the particular circumstances of the case. I accept that the words of the statute are to be applied, although I am not convinced that those words mean anything different from what Lord Reid said in British Oxygen at 624-625. More importantly, the application of the expression "without regard to the merits of the particular case" is to be read in the context of it being an improper exercise of the power to exercise a discretionary power in accordance with a rule or policy without regard to the merits of the particular case. It is the inflexibility of the application of the rule or policy which has the result that the discretion has either not been exercised at all or the width of the discretion has been misunderstood by the decision-maker. But this does not mean that there needs to be a detailed analysis of the particular circumstances of the application either in a formal statement of reasons or, as here, in a less formally expressed Minute. As I have explained, at [99]-[100] above, the decision-maker is to be taken to have reasoned that the change in the amount of the minimum benefit for the Relevant Subgroup should not be made for the February 2015 Private Health Insurance (Prostheses) Rules because the Relevant Subgroup could not be considered by itself and wide consultation and procedural fairness would be required. The delegate was aware of what it was that Applied Medical wanted and why, but concluded that it could not be achieved, whatever its worth.
112 In my opinion, this does not constitute the exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case. Applied Medical knew what the methodology/policy was. It contended that the methodology/policy should not apply to the Relevant Subgroup. The decision-maker did not refuse to consider the application or "shut her ears" to the application but, as I have said, decided that the methodology/policy should not be departed from for a single subgroup out of the many dozens to which the Rules would apply. Once the repository of a discretionary power has considered an application for the non-application of the policy or a change in policy and has given a reason, other than the bare restatement of the policy, for rejecting that application, it is difficult to conclude that the discretionary power has been exercised inflexibly in the relevant sense.
113 At the risk of repetition, I find that the decision-maker, the delegate, did consider the submission made by Applied Medical. The letter dated 30 March 2015 said so. More importantly, the delegate was requested to note the submission attached to the (misdated) 20 February 2015 Minute. I do not conclude otherwise: there is no basis for doing so. See Plaintiff M64/2015 at [55] per French CJ, Bell, Keane and Gordon JJ. It is trite to observe that the fact that the submission was not accepted does not mean that it was not considered on its terms. I reject the submission made on behalf of Applied Medical that the Minute, and therefore I assume the delegate, gave "no consideration, let alone genuine consideration, of the arguments advanced in favour of the application".
114 To the extent that Applied Medical submitted that the Minister may not permissibly adopt a policy, I reject that submission. Whether or not the Minister needs to have a policy to assist in the exercise of a statutory power is not to the point. And there is no basis for concluding that a policy may only be adopted where there are competing applications or where the decision-maker proposed to discriminate between applicants, as was in fact the case in Plaintiff M64/2015. To the extent that a policy promotes equality of treatment between or among those affected, the nature of the power does not matter, it seems to me, unless the statutory duty were to be construed as not permitting a policy: Re Findlay [1985] AC 318 at 335.
115 In the present case, the terms of the policy or methodology did not preclude the delegate from departing from it, nor prevent the delegate from taking into account particular circumstances. Neither, in my view, was it inconsistent with the Private Health Insurance Act or with its purpose. I do not construe that Act as requiring that the minimum benefit for the Relevant Subgroup must be the lowest price at which a supplier in the Relevant Subgroup is willing to supply the prostheses such that a policy which did not have that result was impermissible.
116 If, contrary to my opinion at [103] above, there is a relevant distinction between an application that the policy not be applied in a particular case and an application that the policy should be changed, and if the present case involved the former, an application that the policy not be applied, I reject Applied Medical's submission that the delegate failed or refused to consider it.