Armstrong v Australian Community Pharmacy Authority

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 These proceedings were commenced urgently on 13 December 2011. Following his filing of a notice of discontinuance on 24 April 2012, the applicant, Daniel Armstrong, seeks to be partly relieved of the obligation imposed by r 26.12(7) of the Federal Court Rules 2011 (Cth) to pay the costs of the second respondent, the Secretary of the Department of Health, and the third respondents, Gary McGraw, Matthew James Newman and Cameron Foote.

Background 2 Mr Armstrong and the third respondents each applied for approval under s 90 of the National Health Act 1953 (Cth) for the purpose of supplying pharmaceutical benefits in premises at Scone. New rules had been introduced for the purposes of dealing with such applications and came into force at midnight on 17-18 October 2011. Mr Armstrong submitted applications by email to Medicare Australia that his solicitors recorded as having been transmitted at 12 midnight. A number of other persons, including the third respondents, also submitted applications by email that had a similar time of transmission recorded. The applications were received and processed by officers of Medicare on the morning of 18 October 2011. The usual procedure was that after those officers had processed applications for approval under s 90(1) of the Act, the Secretary provided the applications in the order in which they had been received by Medicare to the first respondent, the Australian Community Pharmacy Authority. The Authority then granted approval to the first application. 3 The originating application, when filed on 13 December 2011, sought relief restraining the Authority from determining to make, or making, any recommendation in relation to an application for the grant of an approval under s 90 for approval of a pharmacist at Scone until further order or 28 days after the Authority or the Secretary gave a statement of reasons that had been requested on 8 and 12 December 2012 by Mr Armstrong's solicitor as to why his application was registered third in time by Medicare. 4 When the first matter came before me in the duty list on 14 December 2011 I directed that the persons who had been identified as having submitted their application for approval first be joined. That was because they had an interest in the proceedings, which sought to enjoin the Authority from making a recommendation on 16 December 2011 to the Secretary for approval of a pharmacist at Scone. That resulted in the joinder of the third respondents. They appeared by their solicitor's Sydney agent and have continued to do so throughout these proceedings. 5 Mr Armstrong chose not to seek injunctive relief. Instead he, in effect, conducted an application for preliminary discovery against the Secretary by examining the records of Medicare for the purposes of determining whether or not his application, arguably, was received before the third respondents' was. That involved an initial exchange of information between the parties and led to substantive affidavits being filed by the relevant officers of Medicare who had processed the applications on the morning of 18 October 2011 when they attended work at around 8.00 a.m. Subsequently, Mr Armstrong applied for an expert, Nigel Carson, nominated originally by him to inspect the computers at Medicare for the purposes of ascertaining whether any data or metadata existed to throw light on the order of receipt of applications for approval of a pharmacist at Scone at midnight on 17-18 October 2011. After some debate on an interlocutory application, on 13 March 2012, I appointed Mr Carson as a Court expert to report and made orders in relation to maintaining confidentiality of material on the Medicare computer system which he might be able to access. 6 The evidence of the Medicare officers indicated that they followed, albeit not necessarily completely strictly, their ordinary procedures when they recorded the third respondents' email application as having arrived first at 12.00 on 18 October 2011, and Mr Armstrong's as having arrived third, albeit at the same stated time. Mr Carson's examination was not able to uncover any evidence that the third respondents' application did not arrive first. Thus, the outcome of what was, in substance, the preliminary discovery phase of the proceedings resulted in the substantial likelihood that any claim by Mr Armstrong that his application should have been recorded as having been received first was foredoomed to fail. That became apparent when Mr Carson's report was provided to the parties at the directions hearing on 13 April 2012. 7 At that time I indicated that the proceedings appeared to be ones that were ripe for summary dismissal under s 31A of the Federal Court of Australia Act 1976 (Cth). I directed that Mr Armstrong put on any evidence on which he sought to rely and written submissions as to why the proceedings should not be dismissed under that provision when the matter came back before me on 20 April 2012. Mr Armstrong did that, but sought that he be allowed to discontinue, and also that the Secretary pay his costs of the interlocutory application for, and the costs of, the Court-appointed expert. He also sought an order that he be liable only for costs of the third respondents and the Secretary for 14 and 15 December 2011, but otherwise the parties pay their own costs. In support of his application Mr Armstrong relied on the decision of Stone J in Primary Health Care Limited v Australian General Practice Network Ltd [2012] FCA 174. 8 On 20 April 2012 I granted Mr Armstrong leave to file a notice of discontinuance under r 26.12(2)(c) of the Federal Court Rules 2011 (Cth). He exercised that leave on 24 April 2012. I reserved the question of costs to today. Relevantly, r 26.12 provides: "26.12 Discontinuance (1) A party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48. (2) The party may file the notice of discontinuance: (a) without the leave of the Court or the other party's consent: (i) at any time before the return date fixed in the originating application; or (ii) if the proceeding is continuing on pleadings - at any time before the pleadings have closed; or (b) with the opposing party's consent - before judgment has been entered in the proceeding; (c) with the leave of the Court - at any time. Note 1 For when pleadings close, see rule 16.12. Note 2 The Court may give leave subject to conditions including costs - see rule 1.33. ... (7) Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued." 9 Significantly, the new rules now provide in r 26.12(7) a default or usual position where a notice of discontinuance is filed in any of the three circumstances contemplated by r 26.12(2). This is different to the scheme of O 22 r 2(1) of the Federal Court Rules 1979 (Cth) which provided in O 22 r 2(1)(d) that where a discontinuance was by leave of the Court, no particular costs consequence was prescribed: see my reasons in Wotton v Queensland (2009) 109 ALD 534 at 545-546 [44] and 547-548 [55]. Prior to the introduction of the current rules, the position as to costs where a discontinuance was effected with leave of the Court, left the award of costs entirely within the discretion that the Court has under s 43(2) of the Federal Court Act: see, eg. Smith v Airservices Australia (2005) 146 FCR 37 per Stone J. 10 Mr Armstrong argued I should follow the approach of Stone J in Primary Health Care [2012] FCA 174 at [5]-[7]. Her Honour observed that the power to award costs was a discretionary power to be exercised judicially, and that subject to that requirement, it was unfettered. She said ([2012] FCA 174 at [5]): "Rule 26.12(7) provides a default position in relation to costs where the notice of discontinuance is filed under subrule (2) thus, by implication, recognising that the Court's discretion to award costs is unfettered. This approach is consistent with s 43(2) of the Federal Court of Australia Act 1976 (Cth) which provides that the award of costs is in the discretion of the Court "except as provided by any other Act"." 11 Her Honour referred to the variety of reasons that might impel a party to seek leave to discontinue, and to her decision in Smith 146 FCR at 47-51 [36]-[49]. There her Honour had expressed the view that there was no settled rule as to the allocation of costs in those circumstances. Her Honour then observed ([2012] FCA 174 at [7]): "Considerations relevant to the exercise of the Court's discretion generally, and in this case, are: whether the proceedings were reasonably commenced; whether, in all the circumstances, the parties' conduct in maintaining and defending the proceedings was reasonable; and the nature of the applicants' reasons for seeking to discontinue the proceedings."