Did the Tribunal misinterpret rule 114(b) of the Determination?
54 The issue here is whether the AAT misconstrued rule 114(b) by finding that the date upon which it had to be satisfied of the criterion contained in it was the date of the Horsfalls' application rather than the date of the AAT's decision.
55 The Commonwealth submitted that rule 114(b) was expressed in the present tense and the Tribunal should have determined whether it was met on the date of its decision, consistently with the nature of its function as described by Davies J in Jebb v Repatriation Commission (1988) 80 ALR 329 at 333:
[T]he general approach of the tribunal has been to regard the administrative decision making process as a continuum and to look upon the tribunal's function as part of that continuum so that, within the limits of a reconsideration of the decision under review, the tribunal considers the applicant's entitlement from the date of application, or other proper commencing date, to the date of the tribunal's decision.
56 The Commonwealth acknowledged that in Shi the High Court had recognised exceptions to the general position but submitted that this case was not an exception.
57 Specifically, the Commonwealth submitted that the AAT was wrong to consider that it was "inherent" in the Authority's power to make recommendations under s 99K of the National Health Act that the AAT be confined to the facts as they were at some particular past time. The Commonwealth submitted that the AAT misunderstood the decision in Friendly Society: it referred only and correctly to provisions that contained "an identified time" and it did not support the Senior Member's general proposition about s 99K.
58 The Commonwealth also submitted that there was no legal basis for the AAT's view that the temporal requirement in rule 201(a) 'flavoured' rule 114(b). It argued that the insertion of the words "on the date of the application" into rule 201(a) had the limited purpose of requiring a pharmacist to secure a legal right to occupy proposed premises before lodging an application with the Authority and did not affect the construction of rule 114(b).
59 The submissions of counsel for the Horsfalls focussed on the words of rule 114, arguing, as I understood them, that they imported a time limitation into the consideration of the application as a whole. In their written submissions they argued that:
the words of Item 201…plainly avert to timing. Item 201 is within the General Requirements for all applications, and each of sub regulations (a) - (c) is explicit as to timing.
…
The plain words of Item 201 mandate consideration of the application in relation to a
point in time. The Rules, considered generally, do not suggest otherwise.
60 They specifically challenged the relevance of the fact that rule 114(b) was expressed in the present tense, contending:
[T]he distance requirement at Item 114…does not change the essence of the application, as set out in the General Requirements. Distance is a matter of geographical fact. The fact that the distance requirement is not expressed in the past tense is meaningless.
61 In my opinion, the Commonwealth must succeed on this point. The AAT was wrong to conclude that it should consider whether or not rule 114(b) was satisfied by the Horsfall application at the date it was lodged. The Authority, and the AAT standing in its place, was bound to consider whether there was another approved premises within 10 km of the premises from which the Horsfalls proposed to run their pharmacy under the PBS at the date it came to make its decision.
62 My conclusion follows from the language of rule 114, the terms of s 43(1) of the AAT Act and the High Court's decision in Shi.
63 It is not necessary for me to do more than state the main principles that emerge from Shi. First, however, I should briefly set out the relevant facts.
64 Mr Shi was a migration agent whose registration had been cancelled by the Migration Agents Registration Authority (MARA) in July 2003 because it was satisfied that he had not complied with the Code of Conduct (Code) prescribed under the Migration Act 1958 (Cth) (Migration Act) and he was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance. Later it made some other decisions about his registration including a decision that he not be re-registered. MARA found 98 breaches of the Code. Mr Shi applied to the AAT for review of that decision. The AAT found 51 breaches of the Code, all of which had occurred before MARA made its decision. The AAT concluded that - despite the breaches - it was not satisfied that Mr Shi was not a person of integrity or was not otherwise a fit and proper person to give immigration assistance and, accordingly, set aside the cancellation decision and the other decisions under review. Instead, it administered a caution and made certain other orders. In deciding that it was not satisfied that Mr Shi was not a person of integrity etc. it took into account evidence of Mr Shi's conduct between the time MARA cancelled his registration and the time of its decision. MARA successfully appealed to this Court, and its success was replicated (by majority) in the Full Court. Mr Shi obtained special leave to appeal the Full Court's decision and finally prevailed in the High Court.
65 The primary issue the High Court resolved was whether or not the AAT was confined to the facts as they stood at the time of the original decision. The relevant provision of the Migration Act under consideration in Shi was s 303(1). It provided that MARA may cancel or suspend the registration of a registered migration agent or caution him or her "if it becomes satisfied" that (amongst other things) he or she "is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance".
66 The Court held that generally the AAT's function is to review on the merits the original decision-maker's decision using all the material available to it, not just the material before the original decision-maker, and on the basis of the facts as they stand at the time it makes it decision, not at the time of the original decision: Shi at [34]-[38] per Kirby J, [96]-[101] per Hayne and Heydon JJ. It held that this followed from an analysis of the AAT's empowering legislation, the AAT Act, and the functions that legislation conferred on it.
67 As Kirby J observed at [41] the rule of practice is that administrative decision-makers are generally obliged to have regard to the best and most current information available to them when making a decision. Such a rule is "no more than a feature of good public administration". Thus, when the AAT chooses to substitute its own decision for the decision it sets aside, "it would be surprising in the extreme if the substituted decision did not have to conform to such a standard". Further, his Honour noted at [49], it would be "remarkable" if the substituted decision could not take into account evidence of relevant, even critical, supervening events. In the context of the case the Court was considering, they could include factors adverse to the applicant, such as bankruptcy and criminal convictions for offences of dishonesty.
68 However, the Court recognised that the general rule was not of universal application and that the enabling legislation may in fact confine the AAT to the facts, and material that bears on those facts, as they stood at some earlier point in time, such as the date of the original decision. As Hayne and Heydon JJ explained (at [99]):
Once it is accepted that the Tribunal is not confined to the record before the primary decision-maker, it follows that, unless there is some statutory basis for confining that further material to such as would bear upon circumstances as they existed at the time of the initial decision, the material before the Tribunal will include information about conduct and events that occurred after the decision under review. If there is any such statutory limitation, it would be found in the legislation which empowered the primary decision-maker to act; there is nothing in the AAT Act which would provide such a limitation. [Emphasis added.]
69 Kirby J expressed a similar view at [44]-[46]. This was the position Downes J took in his dissent in the Full Court: [2007] FCAFC 59 at [35]-[36].
70 In Shi the High Court held that there was nothing in the Migration Act that fixed a particular time as the point at which a migration agent's fitness to provide assistance was to be assessed and contrasted the provisions of the Act with other legislation, such as certain legislation providing for pension entitlements which contained what it referred to as a "temporal element".
71 Similarly, in the present case, there is no temporal element in rule 114. Thus, there is no textual basis for confining any further material to such as would bear upon circumstances as they existed at the time of the initial decision.
72 Furthermore, like the provision considered in Shi, the statutory test is expressed in the present tense. The question which the Tribunal was to consider on review was "are the proposed premises at least 10 km by the shortest lawful route from the nearest approved premises?" - not were they at the time of the application - and, to use the words of Hayne and Heydon JJ in Shi at [101], this is a question which invites attention to the state of affairs as they exist at the time of the AAT's decision (compare Kirby J at [48], who also relied on the fact that the provision was drafted in the present tense). Just as the circumstances that could affect fitness to practise as a migration agent could be changed by supervening events, so, too, could the status of the proposed premises. The legislation does not permit, let alone require, the Authority to stop recommending applications for approval because one disaffected applicant has put on an application for review. There is no reason why another pharmacist might not seek approval for premises in the same area while the application is pending, which, of course, is what happened in this case.
73 Counsel for the Horsfalls argued that the purpose of rule 114 was to grant approval to rural pharmacies where they satisfy the requirements of the rules and not to meet the Authority's administrative needs. Counsel for the Commonwealth disputed this characterisation. She submitted that the purpose was to reduce the number of pharmacies and control the grant of approvals to supply pharmaceutical benefits from new premises. In my view, the Commonwealth is right. However, the purpose of the rule does not really provide assistance in answering the question posed in this case. Here the language of the relevant statutory provision supports the conclusion that the general principle applies and this is not a case where the review was limited to the particular time in the past when the Authority made its decision or to the state of the evidence at that time.
74 With respect, there is nothing "inherent" in the nature of a decision under s 99K of the National Health Act that would justify a departure from the general rule. The Senior Member's reliance on the remarks of Deputy President Jarvis in Friendly Society was misplaced. That case concerned the operation of rule 201. It had nothing to do with rule 114. The questions in that case related to whether the AAT was satisfied that the relevant premises could be lawfully used to operate a pharmacy at the date of the application. There was an issue in Friendly Society about whether the date of the application was the date the Authority received the application or a later date when information supporting the application was submitted. There is an express temporal element to rule 201. For this reason it is entirely unsurprising that the Authority took a different position in that case. I do not see how the time limit in rule 201 "flavours" the question, so as to import a time limit into rule 114. The omission of the words "at the date of the application" from rule 114 is a significant one. If the rules were intended to work together one would expect to see some connecting words. The Determination was amended in 2007 to insert words of temporal limitation into paragraphs (a) and (b) of rule 201 but not into rule 114.
75 Whilst it is true, as the Senior Member observed, that "geography usually does not change", the distance between proposed premises and approved premises may very well change with new approvals. In any event, the Senior Member's observation seems to me to be irrelevant.
76 I do not find it "bizarre" that there are different time limits in respect of different criteria an application has to fulfil. In fact, this is all entirely understandable. The amendments in 2007 to rule 201 reflect a specific concern that pharmacists secure premises before lodging an application. One can imagine a number of reasons why this would be so, including the administrative problems that might arise if a pharmacist could apply and have the application approved without any certainty she or he had premises from which to carry on business but could nonetheless block an application from another pharmacist who wished to set up business in the same area and who had secured premises to enable her or him to do so.
77 By contrast, the concern which underlies rule 114 is different. This condition, in combination with the expanded definition of "approved premises" in s 6(2) of the Determination, is aimed at preventing the Authority from making two recommendations to the Secretary that relate to premises within 10 km of each other, one of which the Secretary must reject. Take the following situation. Two pharmacists lodge applications (A and B) a few days apart in respect of two sets of premises in the same country town. On the dates the applications are made both sets of premises are at least 10 km by the shortest lawful access route from the nearest approved premises. The Authority considers the applications in the order in which they were lodged. It is satisfied that the first application (A) meets the statutory criteria and recommends it be approved. The Authority then comes to consider the second application (B). The Authority would have no option but to recommend that it not be approved as it does not meet the requirement in rule 114(b) because the first application has already been recommended for approval and its premises are therefore deemed to be approved premises under section 8 of the Determination. On the reasoning of the Horsfalls, if the unsuccessful applicant appealed to the AAT, the AAT would have to disregard the fact that the first application had been recommended for approval because the proper point in time for it to consider compliance with the rule was the date the second application was lodged (when neither application had been recommended for approval). It cannot have been the intention of the legislation that the AAT should consider whether the second application complied with rule 114(b) as at the date it was lodged and disregard the later approval given to the first application.
78 Here, of course, the Horsfalls were first in time, having lodged their application before Ms Carter did. Intuitively it may seem unfair that they miss out when the Authority has since conceded they had a legal right to occupy the premises. But this intuitive reaction cannot dictate the outcome. Moreover, the ACPA Application Handbook sets our the practicalities of making applications and points out that:
[a] valid application must include… evidence that the applicant has a legal right to occupy the proposed premises
It is important to ensure that any information that is provided in relation to an application is accurate and up-to-date….
In providing evidence, it is the applicant's responsibility to summarise the material, draw conclusions from the material and clearly identify how the relevant requirements of the pharmacy location rules are met by the evidence….
79 The Determination itself offers guidance to applicants about the sort of evidence that would satisfy the Authority of their legal right to occupy premises. The examples given are a signed lease and a rates notice. The Horsfalls provided neither to the Authority before the primary decision was made.
80 I well understand that the Horsfalls would feel aggrieved that the Authority did not follow up the letter from Trivett Keating to see whether they had accepted the offer of a lease before it considered the Carter application. It is true, as counsel for the Horsfalls pointed out, that the ACPA Application Handbook provides that:
[i]n considering an application, the ACPA might find that certain information needs to be clarified, or that additional information is necessary. In this case, the ACPA will defer its consideration until a subsequent meeting and request, in writing, that the applicant or another party provide the requested information by a specified date.
81 However, this provision does not assist the Horsfalls' case in this appeal. Even if the Authority could generally be said to be obliged to follow its own guidelines, this provision could not give rise to an expectation that the Authority would follow up information submitted by an applicant where the Authority did not first find that there was a need for clarification or additional information (of which there is no evidence here). It might be argued that an applicant in these circumstances would have a legitimate expectation that the Authority would defer considering her or his application, but there is no basis in this passage for concluding there is a legitimate expectation that it would defer considering another application that might be submitted in the meantime.
82 Counsel for the Horsfalls also argued that the distance requirement was not an issue before the original decision-maker (the Authority) because the Carter application had not then been recommended and therefore it could not be an issue in the AAT. They relied a passage in the judgment of Kiefel J in Shi at [142] (also cited by the Senior Member) in which her Honour said that, in considering what is the right decision, the AAT has to address the same question the original decision-maker was required to address.
83 The problem with this argument is that the proceeding before the AAT is not an appeal in the strict sense or even a rehearing.
84 Section 43(1) provides:
For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision ….
85 This means that an application for review to the AAT is a new hearing. The Tribunal stands in the shoes of the original decision-maker. The general principle is well-established. As Bowen CJ and Deane J said in Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 419:
The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal. [Emphasis added.]
86 As Smithers J said in the same decision at 429-430, the AAT is not performing a supervisory role; it is the actual decision it is authorised to review for the purpose of making the correct or preferable decision, not the reasons for it. Regardless of whether the AAT was limited to determining the dispute on the facts presented to it or the facts as they were at the time of the original decision, the question the AAT was required to address was whether the Horsfalls met the statutory criteria for approval. They included rule 114. That is also clear from the Authority's s 37 statement.
87 The Commonwealth was right to contend that the effect of rule 114 is that the Authority's approval of the Carter application spelled doom for the Horsfall application. The Horsfalls' counsel described this situation as "Kafkaesque". I disagree. The reason the Horsfalls have found themselves in this position is, at least in part, of their own making. Had they submitted the necessary documentation in the first place to prove their legal right to occupy the premises, they would have trumped Ms Carter. To protect the status quo it was open to them to seek an injunction to restrain the Secretary from considering the Carter application before their appeal was finalised. They acknowledged their right to do so in correspondence with the Secretary. As counsel for the Commonwealth pointed out in her submissions, Kafka did not write about citizens who decide not to pursue available remedies.
88 In the result, therefore, the text and underlying purpose of rule 114(b) point decisively to the conclusion that the Tribunal must consider whether or not it is satisfied the criterion in the rule is made out as at the date of its own decision and not at the time the application was lodged.