Ground 7
60 Fraud, it has been said, "unravels everything". That observation was notably made by Denning LJ (as his Lordship then was) in Lazarus Estates Ltd v Beasley [1956] 1 QB 702 (Lazarus v Beasley), at 712 - 713:
No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever: see as to deeds, Collins v Blantern; as to judgments, Duchess of Kingston's Case; and as to contracts, Master v Miller.
[Footnotes omitted]
61 Lazarus v Beasley and numerous other cases were analysed by the High Court in SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189 (SZFDE) with particular reference to the presently relevant context of fraud in public law. One of those other cases was Craig v South Australia (1995) 184 CLR 163, at 175 - 176, in which Brennan, Deane, Toohey, Gaudron and McHugh JJ stated in relation to the ambit of certiorari:
Where available, certiorari is a process by which a superior court, in the exercise of original jurisdiction, supervises the acts of an inferior court or other tribunal. It is not an appellate procedure enabling either a general review of the order or decision of the inferior court or tribunal or a substitution of the order or decision which the superior court thinks should have been made. Where the writ runs, it merely enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds, most importantly, jurisdictional error, failure to observe some applicable requirement of procedural fairness, fraud and 'error of law on the face of the record'. Where the writ is sought on the ground of jurisdictional error, breach of procedural fairness or fraud, the superior court entertaining an application for certiorari can, subject to applicable procedural and evidentiary rules, take account of any relevant material placed before it.
[Footnotes omitted]
Thus, in contradistinction to grounds 1 to 5, the Court is not, in relation to ground 7, confined to a consideration of the material which was before the Authority. Much additional evidence, oral and documentary, was tendered in relation to events concerning an opening of the Coles supermarket at Flagstone Village on the early evening of 20 March 2020, to preliminary exchanges by or on behalf of Stonehealth with Coles in relation to the prospect of such an opening and to the events of that evening at the Coles supermarket.
62 A public law case cited, at [24] - [27], with evident approval, in the High Court's analysis in SZFDE was Wati v Minister for Immigration and Ethnic Affairs (1996) 71 FCR 103 (Wati) in which Lindgren J held that the jurisdictional error ground of "fraud" was not confined to that of the decision-maker, a party, or a party's representative, but that the decision in question must be actually induced or affected by the fraud. Here, there is no suggestion (and certainly no evidence) that the members of the Authority and its administrative support staff were anything other than innocent. The fraud alleged is that of Stonehealth and Coles in relation to the opening of the supermarket and in the making of representations concerning that to the Authority. If that were proved, then, unquestionably, the Authority's recommendation decision was induced or affected by any such fraud.
63 In SZFDE, at [29], the High Court stated, "Any application of a principle that 'fraud unravels everything', requires consideration first of that which is to be 'unravelled', and second of what amounts to 'fraud' in the particular context. It then is necessary to identify the available curial remedy to effect the 'unravelling'." The High Court also, at [29], stated that the resolution of an allegation of fraud in a public law case requires close attention to the nature, scope and purpose of the particular system pursuant to which the impugned administrative decision was made and of the place in that system of the alleged perpetrator of the fraud. The High Court refrained, because it was not necessary in the circumstances of SZFDE, from delineating the metes and bounds of fraud in public law.
64 One of the allegations made in ground 7 is that the opening on 20 March 2020 of the supermarket was a sham. I understood that particular allegation to be attended with a dishonest mental element, in keeping with the various falsities allegedly present in the documents submitted on 9 December 2020. Yet a sham may be found without the presence of that element. So much is clear in the judgment of Mustill LJ (as his Lordship then was) in Hadjiloucas v Crean [1988] 1 WLR 1006 (Hadjiloucas v Crean), at 1019, which, subject to one qualification, was referred to with approval by Gleeson CJ, Gummow and Crennan JJ in Raftland Pty Ltd v Commissioner of Taxation (2008) 238 CLR 516, at [35] (Raftland):
... it is necessary to distinguish between three situations in which, aside from any question of rectification, the court may take an agreement otherwise than at its face value. The first exists where the surrounding circumstances show that the arrangement between the parties was never intended to create any legally enforceable obligation. The second is the case of the "sham," in the sense in which that word has been used in numerous cases, including Snook v London and West Riding Investments Ltd. Correctly employed, this term denotes an agreement or series of agreements which are deliberately framed with the object of deceiving third parties as to the true nature and effect of the legal relations between the parties. The third situation is one in which the document does precisely reflect the true agreement between the parties, but where the language of the document (and in particular its title or description) superficially indicates that it falls into one legal category, whereas when properly analysed in the light of the surrounding circumstances it can be seen to fall into another.
[Footnote reference omitted]
65 The qualification made in Raftland, at [35] - [36], was that an absence of any intention to create legal obligations need not necessarily entail fraud. An example of such a case and the lack of efficacy even of an honest charade is offered by Scott v Federal Commissioner of Taxation [No 2] (1966) 40 ALJR 265, at 279 (Windeyer J) (Scott).
66 It may be that, in public law, the jurisdictional error ground of fraud (and the cognate ground of review in s 5 of the ADJR Act) would extend to any sham, even an honest charade. As Raftland and Scott illustrate, this type of sham is fiscally ineffective. That is because a "taxable fact" necessary for a favourable revenue law consequence does not exist. Here, the position is complicated by the presence of a satisfaction based criterion (item 130(b)(ii)) of the Rules of a kind the purpose of which is to prevent litigation about the existence of the subject for satisfaction. But it would be very odd if a conclusion were reached on judicial review that that subject were in fact but a charade, but that the charade provided a reasonable basis for administrative satisfaction as to the existence of that subject. For, in reality, the material put forward as a reasonable foundation for satisfaction would be but camouflage for a subject which did not exist. The supposed reasonable foundation would be a mirage. For these reasons, it is better to proceed on the basis that a sham even in the sense of an honest charade unravels everything, too. An alternative way of formulating that error may be that there was no evidence to justify the making of the administrative decision.
67 I have already set out above the function which is consigned to the Authority by the NHA. As mentioned, it must perform that function in accordance with the Rules. An essential part of discharging that obligation in relation to Stonehealth's application was an assessment by the Authority as to whether, on the whole of the material before it, it was satisfied that, at all relevant times, there is, within 500 m, in a straight line, from the proposed premises a supermarket that has a gross leasable area of at least 2,500 m2 - item 130(b)(ii). If that satisfaction and resultant favourable recommendation, through no fault of the Authority, were procured on the basis of a fraudulent representation that, as at the date of the application for approval, there existed a supermarket which had commenced trading, the intended operation and purposes of the statutory system for approval of premises would be subverted. The intended geographic distribution of approved premises and the related preclusion of approving the site of other premises would have been determined on a false premise. It can hardly be supposed that, if it were exposed that that both the Parliament and the Minister responsible to Parliament for the administration of the NHA would wish other than that the effect of the fraud be remedied.
68 The onus of proving the fraud alleged in ground 7 is upon Mr Darnell. The present is not a criminal proceeding so the allegations do not have to be proved beyond reasonable doubt, only on the balance of probabilities: s 140(1), Evidence Act 1995 (Cth) (Evidence Act). Nonetheless, to allege fraud on the part of any person is a grave allegation, all the more so in respect of Stonehealth, controlled as it apparently is by pharmaceutical chemists and in respect of what is, apparently, a subsidiary of a major Australian public company. Pharmaceutical chemists are dependent for continued professional registration on being a fit and proper person (see the definition of professional misconduct in s 5 of the Health Practitioner Regulation National Law (Qld), made under the Health Practitioner Regulation National Law Act 2009 (Qld)). In deciding whether the allegations are proved on the balance of probabilities, it is necessary to take account of this feature of the allegations made in ground 7: s 140(2)(c), Evidence Act.
69 A convenient, oft-cited way of highlighting the effect of s 140 of the Evidence Act is to recall two observations made by Sir Owen Dixon in Briginshaw v Briginshaw (1938) 60 CLR 336 (Briginshaw v Briginshaw), at 362. Proof on the balance of probabilities is not achieved by the application of some notional 51% test. Rather, ". . . when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence ... It cannot be found as a result of a mere mechanical comparison of probabilities: Briginshaw v Briginshaw, at 361. And, in relation to cases to which s 140(2) of the Evidence Act is applicable, "In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences": Briginshaw v Briginshaw, at 362. Nothing in s 140 of the Evidence Act renders these observations redundant.
70 I did not understand either of the parties to dispute any of the propositions thus far discussed in relation to ground 7 and its proof. Stonehealth's point was that, on the evidence, the allegations made in ground 7 were not proved.
71 An important feature of Stonehealth's submissions in relation to ground 7 was a reminder of statements made by Jessup J in Yu v Minister for Health (2013) 216 FCR 168 (Yu) as to the permissibility of stratagems to take advantage of the operation of the Rules and, in fairness to Mr Gunson SC and Ms Sawyer, who appeared for Stonehealth, also of the reception in the Full Court in Slopen Main of observations made by Kerr J concerning those statements in the original jurisdiction in that case, Hope v Australian Community Pharmacy Authority (2016) 156 ALD 130 (Hope).
72 Yu was a case where a pharmacist, faced with the prospect, as a result of a forthcoming change in the then applicable rules made by the Minister under the NHA applicable to recommendations for the approval of premises, of a second approval permitting a competitor pharmacy being established in the small country town where he had hitherto enjoyed a monopoly, devised, in conjunction with his solicitor, a blocking strategy. He signified to the Secretary an intention to cancel his existing approval in respect of particular premises in that country town and applied for approval under s 90 in respect of other premises, in effect a relocation application. He then later separately applied under s 90 for the second approval, and cancelled the relocation application. The pharmacist concerned gave evidence before Jessup J and was cross-examined. The effect of that evidence, and a related submission that his conduct did not amount to bad faith, as recited by his Honour, at [49] was as follows:
The applicant was cross-examined about his intentions with respect to the relocation application of 17 October 2011, and he frankly said that it was his attempt, devised with the assistance of his solicitor, to navigate his way through the regulatory issues associated with the introduction of the 2011 Rules. The point to which he was navigating, of course, was the achievement of a second pharmacy approval for himself in Kilmore, and the exclusion, to the extent possible, of other pharmacists from securing that approval. The effect of his evidence was that the 2006 Rules and the 2011 Rules, and the transitional provisions associated with the commencement of the latter, gave him the legal right to act as he did, and he proceeded in what he perceived to be his own best interests. In submissions made on his behalf, his counsel accepted that there was a sense in which the course followed by the applicant might be regarded as a sharp practice, but it would be going too far, he submitted, to describe it as involving bad faith.
In respect of this conduct and that submission, Jessup J stated (Yu, at [51]):
Central to the fourth respondents' bad faith point was the proposition that the applicant never intended to cease carrying on business as a pharmacist at 20 Sydney Street, and that his request for cancellation of the approval with respect to those premises was, therefore, a sham. In the light of the evidence given by the applicant himself, the first part of this proposition must be accepted, but the application for cancellation of the approval at 20 Sydney Street was a valid act done under the 2006 Rules, and in that sense, could not be described as a sham. It was a stratagem and, perhaps, a clever tactic. But it is not at all clear how the notion of "bad faith" imposed upon the applicant an obligation, unstated in the NH Act and the 2006 Rules, to refrain from making such applications as were in his own best interests. It must be remembered that it was not he who was exercising a statutory power or making a decision under an enactment. Neither is it suggested that he had any direct dealings with the fourth respondents in the context of which good faith might have been required. In the circumstances, and although I have considerable sympathy for the position occupied by the fourth respondents, I do not think that the notion of bad faith is apposite to circumstances in which a pharmacist requests a cancellation under s 98 of the NH Act with the unrevealed intention of withdrawing that request at a later, convenient, date.
Although in this passage Jessup J adopts the description, "sham", his Honour did not find it necessary to explore the various types of sham described in Hadjiloucas v Crean.
73 In Hope, at [64] - [66], and with reference to these statements by Jessup J in Yu, Kerr J observed:
64 Given the significance of the Rules in providing not only for the public interest in the availability of pharmaceutical benefits to the public but also for a limited and bounded protection of the commercial interests of existing providers, there must be some point at which the entitlement of an applicant to pursue his or her own interests will pass beyond what was in Yu accepted to be permissible sharp practice.
65 In my opinion that point is reached and the dividing line is crossed if an applicant knowingly provides information in support of their application that is materially false or misleading with respect to any of the criteria mandated by the Rules relevantly required to exist if the Authority is to recommend approval - and the Authority is disabled because of its reliance thereon from fulfilling its function.
66 It is implicit in the Rules that an applicant must provide factually accurate information to the Secretary and the Authority.
Influential in respect of the making of these observations was acceptance by Kerr J that the Authority had limited resources to devote to the investigation of applications and its consequential reliance on the integrity of the information supplied to it.
74 On the subsequent appeal, Slopen Main, at [36], the Full Court stated, in relation to these observations that, "[his Honour's] reasoning … may be accepted, at least for present purposes".
75 There is nothing in the evidence in this case which would suggest that the Authority was, in considering Stonehealth's application, any better endowed with resources than at the time when it made its decision which became the subject of litigious controversy in Hope. The understanding voiced by Kerr J in Hope of the then purposes served by the pharmaceutical benefits scheme is no different to my understanding, expressed in the opening paragraphs of this judgment, of the scheme as applicable in that case. I see no basis for distinguishing the acceptance in Slopen Main of his Honour's observations. Neither did either active party in this case. Their difference was whether, on the evidence, the point of departure from the statements made by Jessup J in Yu had been shown by Mr Darnell to have been reached.
76 In their joint judgment in Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404, at 415 - 416, Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ, having referred to observations in the United States Supreme Court as to tax laws existing as an economic reality in the businessman's world, much like the existence of a competitor, how businessmen plan their affairs around both and how those laws affect the shape of nearly every business transaction, discerned a similar phenomenon in Australia, particularly as a result of stamp duty laws.
77 In a similar way, the pharmaceutical benefits scheme for which the NHA provides and the Ministerial determinations made from time to time under that Act, presently manifested by the Rules, have long formed part of the economic reality in which pharmaceutical chemists practise their profession in Australia. Of course there are other influential parts of the legal order in which a pharmaceutical chemist must practise his or her profession - professional registration, including mutual recognition, industrial, competition and revenue laws come readily to mind. But it is only to be expected that pharmaceutical chemists, and others who would derive advantage from a particular location of approved premises, will shape the way in which to order their affairs to gain maximum advantage from the operation of the Act and the Rules.
78 Holzberger v Secretary, Department of Health and Ageing (2007) 158 FCR 586 offers a stark example of this shaping of affairs. The pharmacist in that case wished to and did commence to operate a pharmacy business at what she considered was a commercially attractive inner-city markets location in Brisbane but was unable at the time to secure approval of those premises under s 90 of the NHA under the prevailing rules. She was able to secure such approval in respect of premises 375 metres away from that location. There she operated a fully stocked dispensary. She and her staff dealt with customers at the markets location but she supplied the pharmaceutical benefits from the dispensary from where they were returned to the markets location to hand to customers (or they were delivered to customers). Allowing an appeal from the Tribunal, which had found to the contrary in relation to the dispensary, the Full Court held that the pharmacist was carrying on business as a pharmacist not only at the markets location but also at the dispensary. Hence the cancellation of her approval by the Secretary was unlawful. This scheme was every bit as contrived as that in Yu but that did not render it unlawful. It was in no sense a sham; indeed its effectiveness was wholly dependent upon its not being one. It was just a shaping of affairs responsive to the then provisions of the NHA and related Ministerial determination.
79 In respect of this type of behaviour, I respectfully prefer the descriptions "stratagem" or "clever tactic" adopted by Jessup J in Yu to the description "sharp practice" adopted by Kerr J in Hope. That is because the latter description might be thought to carry with it a pejorative quality. That in no way detracts from the force of his Honour's reasoning in Hope as to the existence of a tipping point. I respectfully consider that the Full Court's acceptance of that reasoning in Slopen Main is entirely consistent with the discussion of fraud in public law in SZFDE and Wati to which I have referred above.
80 Taken in conjunction with what was said in Stonehealth v ZAA of the definition in the Rules of "supermarket", it is therefore necessary and sufficient for Mr Darnell to prove that:
(a) Stonehealth itself or in conjunction with Coles or Ann Mihulka & Associates knowingly furnished to the Authority false or misleading information as alleged in ground 7; and
(b) the information furnished was material in the sense that it induced or affected the Authority's recommendation decision.
Further or alternatively, for reasons discussed above, it would also be a sufficient basis for quashing each decision if in any sense the existence of a supermarket which had commenced trading on 20 March 2020 was a sham. This latter basis would overlap with but not be exhaustive of the circumstances which occasioned the former basis.
81 Has Mr Darnell done this?
82 Stonehealth's application dated 20 March 2020 for approval of the Flagstone premises specified two registered pharmacists, Ms Mona Bakshi (Ms Bakshi) and Mr Tam Minh Nguyen (Mr Nguyen). Mr Nguyen gave affidavit and oral evidence, Ms Bakshi did not. Mr Nguyen holds 2 of the 10 issued ordinary shares in Stonehealth and is a director of that company. Stonehealth's other director and the holder of the other 8 ordinary shares is Ms Bakshi, who is resident at Rochedale, Brisbane. A company search annexed to its s 90 application discloses that Stonehealth was incorporated on 30 August 2019. Its obvious purpose on the evidence is and has been to act as the legal entity conducting all aspects of the proposed and now operating pharmacy business at the Flagstone premises, including the securing of the requisite approval of those premises under s 90 of the NHA.
83 Ms Bakshi shares a surname and residential location with and, inferentially on the whole of the evidence, is an associate of another pharmaceutical chemist, Mr Navin Bakshi, who was the principal conduit between Stonehealth and Ann Mihulka & Associates, its agent for the purpose of dealing with the Authority in relation to its s 90 approval application.
84 By an email of 18 September 2019 to Mr Morgan of Coles and its letting agent for Flagstone Village, Colliers, Mr Bakshi introduced himself and stated, "I will be in charge of the Pharmacy approval process at your new complex at Flagstone". He further stated, "It would be great if we could discuss certain matters around the PBS approval strategy". Mr Bakshi also disclosed in this email that he lived at Rochedale.
85 Within Ann Mihulka & Associates, the principal relevant actor was Mr Stuart Mihulka (Mr Mihulka). Mr Mihulka gave affidavit and oral evidence; Mr Bakshi did not.
86 Mr Bakshi's absence from the witness box unsurprisingly elicited a submission on behalf of Mr Darnell that, having regard to Jones v Dunkel (1959) 101 CLR 298, an inference should be drawn that his evidence would not have assisted Stonehealth's case. Of course that absence is a factor to take into account but it is not, in my view, one of any great moment in the circumstances of this case. The material before the Authority is in evidence. The contemporaneous documentary material obtained from Coles and Ann Mihulka & Associates in relation to the s 90 application and to the opening of Coles supermarket on 20 March 2020, have been tendered in evidence as a sequel to production pursuant to subpoenas issued at the behest of Mr Darnell. This does not just expose the extent of Mr Bakshi's involvement. It demonstrates that, although extensive, it was "intramural". On the whole of this evidence, it is plain that the persons who relevantly dealt with the Authority were Mr Morgan on behalf of Coles and, as Stonehealth's agent, Mr Mihulka of Ann Mihulka & Associates. Each of them did give evidence, including being subject to cross-examination (in the course of Mr Morgan's oral evidence in chief by leave, as he was called by Mr Darnell). When this body of documentary evidence is taken in conjunction with their oral evidence, it is likewise plain that neither Mr Morgan nor Mr Mihulka was an uncritical cypher for Mr Bakshi. Each of them, I thought gave frank, candid and certainly honest oral evidence, consistent with contemporaneous documents.
87 Well before the s 90 application was made, Mr Bakshi had a plan. This is outlined by him in an email he sent to Mr Morgan on 19 September 2019 in preparation for their forthcoming discussion:
Hi John.
We will discuss more in person but below is a basic run down.
1. We will Apply under rule 130 for a new approval number.
What is the basic principles of this rule?
- No PBS approved Pharmacy for 1.5km - Which we have.
- Supermarket with Gross leasable area of 2500m2 ( which means we dont need a doctor) We will need floor plans from Coles - showing docks etc - but we should easily have 2500m2 for the Coles Supermarket.
- The Supermarket is within 500m of the Pharmacy site. This is the tricky part - there is a non pbs Pharmacy across the road - who is also waiting for Coles to be built and is aiming to apply under the same rule - as they also within 500m of the Coles. Who get the approval in first..gets in. Many applications are lodged at 12.01am !!
How do we overcome this hurdle?
1. We need a "soft highly confidential opening" a few days before the real opening.
2. We need access into the Coles - a few days before the opening - to show stock on the shelves and counter photos etc.
3. We need a docket..eg just chewing gum invoice ..showing the store was trading.
4. A Stat dec from the Coles Manager stating the Coles was open on "this" date would also greatly help.
5. Details Plans of the Coles - showing Leasable area and council plans etc. see below.
We have hired a specialist to undertake this approval as it is a complicated one. The specialist has over 20 years experience and her sole role is Pharmacy Approvals.
You must be reading this and thinking - are these crazy Pharmacists for real???
Sadly yes - this is what we do each day to get our approvals!.
See you shortly.
[Sic]
88 Mr Morgan replied to this email later that same day. It is necessary to set out the terms of that reply but, before doing so, it is convenient at this point to make some observations in relation to the pleading of ground 7.
89 The Court's Rules (r 16.42, Federal Court Rules 2011 (Cth)) require that a party pleading an allegation of fraud "must state in the pleading particulars of the facts on which the party relies". This Rule has been observed in ground 7 but, for a legal practitioner, there is more than just that observance in relation to the pleading of fraud.
90 Mr Darnell and his legal advisers were not in possession of Mr Bakshi's email of 19 September 2019 at the time when these proceedings were instituted and the grounds of review were initially pleaded. Ground 7, with its allegation of fraud, was added much later and only after they came into possession of a copy of this email and of other documents produced under the subpoenas mentioned.
91 For any barrister, professional conduct obligations attend the pleading of an allegation such as found in ground 7. For example, r 64 of the 2011 Barristers' Rule (Qld), made under the Legal Profession Act 2007 (Qld), provides that a barrister:
… must not allege any matter of fact amounting to criminality, fraud or other serious misconduct against any person unless the barrister believes on reasonable grounds that:
(a) available material by which the allegation could be supported provides a proper basis for it; and
(b) the client wishes the allegation to be made, after having been advised of the seriousness of the allegation and of the possible consequences for the client and the case if it is not made out.
92 This Queensland Rule reflects a uniform, national position: see, relevantly, given Mr Flaherty's membership of the New South Wales Bar, r 65 of the Legal Profession Uniform Conduct (Barristers) Rules 2015 (NSW). Similar conduct rules are applicable to solicitors in such circumstances. All of these professional conduct rules are declaratory of an understanding of the pre-existing position in law, as notably voiced by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169 by reference to pertinent authority.
93 The making of a baseless allegation of fraud can amount to grave professional misconduct, amply warranting being struck off a roll of practitioners: Clyne v Bar Association (NSW) (1960) 104 CLR 186 (Clyne). It is important, however, to recall that, in Clyne, at 200, although a unanimous High Court deprecated in the strongest possible terms a breach of this professional obligation, it did not do so in an unqualified way:
Cases will constantly arise in which it is not merely the right but the duty of counsel to speak out fearlessly, to denounce some person or the conduct of some person, and to use such strong terms as seem to him in his discretion to be appropriate to the occasion. From the point of view of the common law, it is right that the person attacked should have no remedy in the courts. But, from the point of view of a profession which seeks to maintain standards of decency and fairness, it is essential that the privilege, and the power of doing harm which it confers, should not be abused.
The qualification is important and, taking up a sentiment I voiced in the course of the trial of this proceeding, presently relevant. I can well see how, possessed as they came to be with Mr Bakshi's email of 19 September 2019 and other material produced on subpoena and given an advertised opening date of 21 March 2020 for the Flagstone Village Shopping Centre where the Coles supermarket was situated, Mr Flaherty and his instructing solicitor, Mr Stoddart might responsibly have sought and obtained instructions to plead ground 7 and to put allegations of falsehood to Messrs Morgan, Mihulka and Nguyen in the course of their oral evidence. It is important also that the propriety of such conduct by legal representatives and their client be assessed as the position stood in prospect, not after all of the evidence, especially the explanatory oral evidence, has been received at trial and a judgment delivered. The finality of a judgment can, in hindsight, give the appearance of clarity to events and related material which, in prospect, reasonably admit of different interpretations. Sometimes, of course, even viewed in prospect, no reasonable basis for the making of an allegation of fraud will exist. There will be other cases, and I consider the present to be one, where there was in prospect such a basis, although that was not the only view one might take of contemporary documents. Especially taking into account the apparently limited resources of the Authority to conduct investigations in respect of applications, there is a public interest served by the exposure to judicial scrutiny of cases where there may be reason to think that a favourable recommendation decision has been obtained by a fraud. I consider it desirable, and only fair to Mr Flaherty and Mr Stoddart, to make these observations.
94 If Mr Bakshi's plan as originally formulated had ever been implemented and then represented to the Authority as indicating that a supermarket had commenced trading at the shopping centre on 20 March 2020, the case might have 'reached the point and crossed the line' mentioned by Kerr J in Hope. But I am quite unpersuaded that this plan was ever implemented. Further, in fairness to Mr Bakshi, his email of 19 September 2019 had the quality of a stream of consciousness, made without the benefit of informed advice.
95 The hired "specialist" to which Mr Bakshi refers in his email of 19 September 2019 is Ann Mihulka & Associates.
96 Mr Morgan replied to Mr Bakshi on 19 September 2020 in these terms:
Navin, no you are not crazy and the pharmacy in the Coles centre does benefit from having a pharmacy possibly as much as you want to be in a centre with a supermarket. We can run through your list today, these are all what we were expecting and firm up the strategy further.
Coles plan attached as a start.
This email nicely illustrates an understanding on the part of Coles and Mr Morgan in particular of the synergistic benefit of colocation to which I have referred above. The "plan" is a shopping centre plan, not any plan about s 90 approval.
97 On 20 January 2020, Mr Bakshi sent an email to Mr Morgan (copied to, amongst others, Mr Nguyen) in which he stated:
Across the road is pushing ahead with doctors aggressively.
Is there anyway we can get the Coles to open much sooner then expected?
It seems to be mostly completed.?
[sic]
This "across the road" site, the Wild Mint Drive premises was, as already mentioned, also within 500 metres of the planned Coles supermarket in the Flagstone Village Shopping Centre, the latter then apparently in an advanced stage of construction. Mr Bakshi's anxiousness about the prospect of Stonehealth's still then prospective s 90 application in respect of the Flagstone premises being overtaken by that of a competitor is patent.
98 The following day, Mr Morgan replied to Mr Bakshi (copied to, amongst others, Mr Nguyen):
Navin, as per your wishes we are trying to pull the opening forward a week, if you can work towards the night before the 21st March to have your tenancy ready. We will confirm the date in the near future.
There is no doubt that an opening of the Coles supermarket on the evening of 20 March 2020 was then under active contemplation by Mr Morgan. Mr Bakshi replied that day that, "[w]e [Stonehealth] are working hard to get all our end sorted". Stonehealth, too, then as at 21 January 2020, had knowledge of this contemplated opening. It was working to the end of its own pharmacy business being ready for trading by then.
99 Later that month (24 January 2020) and with reference to the Authority's future meeting schedule, Mr Bakshi inquired of Mr Morgan (with copies to Ann Mihulka & Associates and Mr Nguyen) as to whether a yet earlier opening was possible. It is patent in this communication he is concerned about potential loss of custom. He ends his inquiry, "We really wish to action this PBS approval aggressively and leave nothing to chance." "PBS" is an obvious reference to the Pharmaceutical Benefits Scheme established under the NHA.
100 Mr Morgan's reply later that day was pessimistic as to this possibility but indicates ongoing and by then corporate approved planning towards an opening on 21 March 2020 with what he termed a "soft opening" the night beforehand:
Navin, are you saying the opening would need to be night of the 9th March? I can discuss internally with Coles but I don't believe we could get to that date, the change to the 21st March (soft opening the night prior) has just been approved and recruitment, marketing etc has started.
101 Also on 24 January 2020, Mr Bakshi extemporised in another email to Mr Morgan the notion of sales being put through the supermarket as soon as IT systems were in place at the supermarket and it was stocked, which he envisaged might be a week or two before the then contemplated openings on 20/21 March. His anxiety to meet as early as possible a meeting date of the Authority is palpable. Mr Morgan investigated this internally (email of 24 January 2020, directed both to Mr Bakshi and, inferentially, another officer within Coles), "Kenneth, at Flagstone we are trying to help the pharmacy in our centre get a pharmacy licence before the pharmacy across the road. This is triggered by the supermarket trading. How early could we put a sale through the registers?" Nothing came of this.
102 Various email exchanges in February 2020 to which Mr Bakshi was a party disclose active work being undertaken towards the progression of the Flagstone premises for opening the following month. A site meeting in early March at the Flagstone Village Shopping Centre, attended by Messrs Bakshi and Morgan, to include also if possible the manager of the Coles supermarket, was planned for early March 2020. On 1 March 2020, Mr Morgan stated to Mr Bakshi in an email:
Navin, I can introduce you to the store manager if he is out there and we can try to speak with him if he does not have other meetings. He is aware of what is required and will work with us on the requirements on the Friday.
Inferentially, Mr Morgan had by then briefed the supermarket store manager as to the prospect of an opening of the Coles supermarket on the evening of 20 March 2020.
103 Mr Bakshi also had input (but inferentially not editorial control over), in early March 2020 (email of 5 March 2020 refers), into the contents of a Facebook page promoting the new shopping centre. The principal them of that promotion was:
Flagstone Village Shopping Centre
Opening Celebration Weekend
Sat 21st & Sun 22nd March 2020
Given that he was the representative of a tenant at the shopping centre (Stonehealth), I did not find that input surprising. Further, the wording of the principal theme was not his. That wording was not inconsistent with the supermarket commencing to trade on the evening beforehand. It was just that the celebration of the shopping centre opening would occur on the initial weekend.
104 As to this input and in an email directed by him to Ann Mihulka of Ann Mihulka & Associates on 6 March 2020, Mr Morgan observed in relation to Mr Bakshi:
Ann, thanks, he is all over the place but we will get there. For info all on track to open the doors on the Friday night 6pm to 9pm.
Ms Mihulka had responded to Mr Bakshi on 5 March 2020 with respect to his email to Coles about the Facebook page:
Hi Navin
I believe Coles know what they are doing.
I found this exchange revealing for a number of reasons. The first was for Mr Morgan's perception of Mr Bakshi, "all over the place". This exactly accorded with an impression I formed of Mr Bakshi from an examination of the whole of the email exchanges in evidence to which he was a party. He was, with respect, an enthusiastic extemporiser. The commercial imperative of securing an approval lends a discernible, urgent quality to this in many of his emails. Mr Bakshi's extemporising was one thing but the emails also disclose that Mr Morgan was a moderating force. More importantly, Mr Morgan's email of 6 March 2020 discloses, and I find, that his, and thus Coles', plan for "the Friday", inferentially, 20 March 2020, was not a "cosmetic" opening of the supermarket. The closing time which Mr Morgan specified in his email of 6 March 2020, 9.00 pm, was a standard supermarket closing time for Coles (email of 13 February 2020, Mr Morgan to Mr Bakshi, "same as Mt Gravatt").
105 Their email exchanges reveal, and I find, that, on 18 March 2020, there was a site meeting at the Flagstone Village Shopping Centre between Messrs Morgan and Bakshi to discuss aspects of the planned opening on 20 March 2020 of the supermarket and the s 90 application. Separate email exchanges between Messrs Morgan and Mihulka occurred in relation to the contents of a letter which, as a result of a transmission error on Mr Mihulka's part on 17 March 2020, came to be signed on behalf of Coles by Mr Morgan the following day, although it remained dated 17 March 2020. That dating appears to be just the result of copying and pasting onto Coles letterhead of a draft bearing the date 17 March 2020. I see nothing sinister in that occurrence. The signed letter became an annexure to Stonehealth's s 90 application. The letter was drafted by Mr Mihulka but the information which it contained did not emanate from him. Mr Mihulka had no firsthand knowledge of the supermarket or shopping centre information in the letter. His source was Mr Morgan (and, as to leasing and sub-leasing, perhaps also Mr Bakshi but it is not necessary to determine this). Unsurprisingly, Mr Morgan found the draft satisfactory. He copied it onto Coles letterhead and signed it. The letter was in these terms:
Coles Group Property Developments Ltd (CGPD) is currently constructing a new shopping centre in Flagstone Qld, known as Flagstone Village Shopping Centre, which includes a Coles supermarket and approximately 10 other specialty tenancies. Works are almost complete.
The Coles supermarket will commence trade on Friday 20 March 2020. This Coles supermarket has a GLA of approximately 3,600m2 excluding loading docks and car parks. The Flagstone Village Shopping Centre will have an opening celebration for the entire shopping centre on Saturday 21 March 2020.
CGPD (Lessor) has leased Shop 6 & 7 to Stonehealth Pty Ltd atf Stonehealth Pharmacy Trust (Lessee). Coles has also consented to a sublease from the Stonehealth Pty Ltd atf Stonehealth Pharmacy Trust (Lessee) to Stonehealth Pty Ltd atf Stonehealth Pharmacy Trust and Andystone Pharmacy Trust (Sublessee).
Development Approval for the Flagstone Village Shopping Centre indicates the street address of the shopping centre as "New Beith Road and Homestead Drive Undullah". The street address of the shopping centre is now "6-24 Gates Road, Flagstone QLD 4280".
An alternative draft was prepared by Mr Mihulka and signed by Mr Morgan to take account of a contingency as to the uncompleted finalisation of leasing and subleasing arrangements by 17 March 2020. In the result, it was not used.
106 The information supplied in this letter was accurate as at the time it was signed by Mr Morgan. As to the supermarket opening, it accorded with the plan he, and thus Coles, had in mind in his email of 6 March 2020 to Ann Mihulka. It is obvious from the letter he signed that this plan remained in place as at 17 March 2020, even on 18 March 2020. One feature of his and thus Coles plan was that on 21 March 2020 there would be a "grand opening" of the entire shopping centre. It needs to be remembered that Coles owned the whole shopping centre at Flagstone Village. It was not just a tenant operating a supermarket within a shopping centre owned by another. The plan was consistent with the Facebook promotional page wording. Another feature of that plan was that the supermarket would commence trading on 20 March 2020. As already noted, Mr Morgan and thus Coles then contemplated a 6:00 pm to 9:00 pm trading period that evening. This plan was very different to the idea Mr Bakshi had floated in his email of 19 September 2019.
107 At the times when this contemporary sequence of emails as described above were authored and received, none of the authors, or recipients, had any reason to believe that the documents would later be exposed in a judicial proceeding. That lends them particular persuasive force as to occurrences and motivations.
108 It will be necessary to consider the evidence concerning and make findings as to what occurred on 20 March 2020 but that is best done, in my view, after completing a chronology of events which occurred after that date.
109 On any view, the shopping centre and the Coles supermarket in particular were open for trading on Saturday, 21 March 2020. In evidence are photos showing a large throng of people waiting to enter the shopping centre on that Saturday morning. A media report of 23 March 2020 entitled "Coles Flagstone opens to queueing crowds" and related photos was sent to the Authority by Mr Stoddart on 30 November 2020 in support of the submission dated 11 November which he had sent to it earlier that month. That refers to an opening, "ahead of schedule" on 21 March 2020. More significantly, in light of the allegations made in ground 7 and oral evidence given by Mr Morgan, the report also contains this statement as to the incidence of the COVID-19 pandemic and its effect:
While the COVID pandemic postponed Coles planned fanfare opening festivities, shoppers were not deterred, being up from daybreak to experience their new local store.
[Emphasis added]
110 In April 2020, Mr Mihulka received, and shared with an obviously pleased Mr Bakshi (judging by his email response), advice that a submission made by Stonehealth had been taken into account in a decision by the Minister for Health not to exercise a discretion conferred by s 90A of the NHA to approve the Wild Mint Drive premises.
111 On 18 June 2020, Mr Morgan signed and returned to Mr Mihulka a letter addressed to Ann Mihulka & Associates in these terms:
Coles Group Property Developments (CGPD) is the developer and owner of the Flagstone Village Shopping Centre ("the Centre") at 6-24 Gates Road Flagstone 4280. The Centre has a Coles supermarket and a number of other retail tenants including Watsons Chemist Flagstone.
The opening date for the Centre was originally intended to be Saturday 21 March 2020.
In the lead up to the opening of the Centre there was nationwide "panic buying" in supermarkets which led to restrictions on purchasing of certain products and limits on opening hours of Coles stores. Social distancing requirements were also coming into effect. The executive decision was taken to open the Coles supermarket a day earlier than originally intended, on Friday 20 March 2020, in order to alleviate any potential issues that may have arisen with the expected influx of customers at the grand opening of the Centre.
Due to availabilities of managers and a full complement of staff at short notice, the supermarket began trade during Friday 20 March 2020. It has continued to trade its regular hours since the doors first opened on that Friday.
The distinction between "shopping centre" and supermarket in this letter will be noted.
112 This letter was not spontaneous. It was preceded by an email exchange the previous day between Messes Morgan and Mihulka and a related telephone discussions also the previous day between Messrs Bakshi and Morgan. Mr Mihulka provided Mr Morgan suggested contents for the letter and reviewed a draft sent back to him by Mr Morgan. As to that draft, the wording "during" in the penultimate line was suggested to Mr Morgan by Mr Mihulka as a substitute for "on the evening of", which had appeared in the draft. That suggestion was taken up by Mr Morgan in the final version. The occasion for the preparation and signing of the letter was to alleviate an apparent concern of Mr Bakshi, the precise nature of which is not revealed in the various related email exchanges. Inferentially, however, the concern related to a need perceived by him to have a formal confirmation by Coles as to the opening of the supermarket on 20 March 2020. At the time, the proceeding which culminated in Stonehealth v ZAA in the Full Court was pending in the Court's original jurisdiction. That proceeding was heard on 21 August 2020 and determined on 25 August 2020: ZAA Ventures Pty Ltd as Trustee for ZAA Investments Trust v Australian Community Pharmacy Authority [2020] FCA 1227. In the original jurisdiction, it was adverse to Stonehealth. The appeal, successful as it proved, against the orders made in the original jurisdiction was heard on 9 October 2020 (with the last supplementary submissions filed on 16 October 2020) and determined on 9 November 2020.
113 I have already related above the communications and events of November and December 2020, culminating in the decisions of the Authority and the Secretary in December respectively to recommend the approval of and approve the Flagstone premises under s 90 of the NHA.
114 Mr Morgan candidly admitted in his oral evidence that he was trying to help Stonehealth in relation to its s 90 application. He readily admitted he was aware that there was a subsisting application for approval in respect of premises outside the shopping centre. Later in his evidence he admitted, frankly I thought, that there was a commercial benefit to Coles in having a pharmacy situated within the shopping centre.
115 Mr Morgan readily acknowledged the involvement of Mr Mihulka in the drawing of the wording of the various letters he signed concerning the opening of the supermarket. When taken to his letter of 17 March 2020, he made the observation that, after this letter, COVID-19 had happened. He agreed that everything had been on track anyway at that time for an opening on the evening of Friday, 20 March 2020. However, he stated this this had always been subject to confirmation or change. He was adamant that the managerial impact of COVID-19, or at least his understanding, and that of others in the management structure of Coles as communicated to him, of the threat presented by COVID-19 and its ramifications for the operation of the supermarket and the shopping centre had changed what had been planned for the evening of 20 March 2020. He related, quite spontaneously I thought, how no-one at the time understood what was entailed in dealing with the COVID-19 pandemic. He stated that the opening on 20 March 2020 was ultimately dictated by a desire to check out procedures to deal with the impact of COVID-19. He stated that much had evolved since then.
116 Mr Morgan was present at the Flagstone shopping centre on 20 March 2020 and consulted with the store manager of the Coles supermarket about the opening that evening and preparations for the following day. He described the few days leading up to and on 20 and 21 March 2020 as one of rapidly changing advice from (I understood) higher management in Coles as to how to deal with the phenomenon of the COVID-19 pandemic. He mentioned that transactional limits (citing toilet paper) had already been introduced.
117 Mr Morgan observed the supermarket to open at about 6:00 pm and to close about 8:00 pm (to prepare for the next day's trading) on 20 March 2020. He said that the doors (shutters, as I understood it and photographic evidence confirmed) to the supermarket were up and the doors to the shopping centre were open. He observed the supermarket was stocked with a full range of goods. He was not present throughout the opening period that evening as he had other duties to undertake around the shopping centre in preparation for trading the following day.
118 Mr Morgan stated that goods were sold on the evening of 20 March 2020 and that there had been neither any "reversing transactions" that evening nor any plan with Mr Mihulka for there to be any such transactions. By this I understood him to mean that there had been no transactions which purported to record a sale but which were later cancelled. The accuracy of this evidence is not contradicted by the supermarket sales transactional records of Coles for the supermarket for the evening of 20 March 2020, which were in evidence.
119 Mr Morgan denied that any of the letters which he had signed was false. He said that he had read each draft before signing and was satisfied that they were correct.
120 At one stage in the course of his evidence and based on a preliminary perusal of the contents of the court book tendered containing emails on and from 19 September 2019 (as related above), I considered that I ought to draw Mr Morgan's attention to his right to claim privilege against self-incrimination. I also explained to him the operation of s 128 of the Evidence Act. Later yet, I gave Mr Flaherty limited leave to cross-examine Mr Morgan. Through all of this Mr Morgan continued to respond to questions in what I thought was a considered, matter of fact way.
121 I accept all of Mr Morgan's evidence. It is consistent with contemporaneous documents. Further, the news report of 23 March 2020 in evidence confirms an awareness of the existence of COVID-19 as a phenomenon in the community at Flagstone on or about 20-21 March 2020. All of Mr Morgan's evidence made perfect sense to me. His description of a rapidly evolving situation provoked by a reaction to the then novel phenomenon of the pandemic had the ring of truth about it. His admissions as to the benefits to Coles of a pharmacy in the shopping centre were not just those one might expect an honest manager in a senior position such as his to make but were readily given. His related acknowledgement of being willing to assist Stonehealth was no less ready.
122 Mr Morgan's letter of 17 March 2020 contained none of the falsities alleged. Neither did his subsequent letters, nor his statutory declaration verifying them. By 20 March 2020, a perceived managerial need, in light of the recent pandemic phenomenon, to prepare for the following day had occasioned a need to open the supermarket at the shopping centre on the evening of 20 March 2020. That opening was not advertised but then events were rapidly evolving and, as Mr Morgan stated, Coles did not want a lot of people about that evening. Given that they were preparing for an expected large influx the following day, that, too, had the ring of truth about it. I find that, by the time of the opening of the supermarket on the early evening of 20 March 2020, events associated with the recent onset of the COVID-19 pandemic had overtaken an earlier plan to open the supermarket that evening. The opening conducted by Coles at its supermarket on that evening had preparatory dimensions in terms of the morrow to come and was not inconsistent with still fulfilling the earlier plan but that plan was no longer Coles reason for opening the supermarket that evening. Based on Mr Morgan's evidence, it seems inherently likely that, in light of the pandemic and the need to prepare for the following day, Coles would have opened the supermarket in any event for early evening trading and preparation, even in the absence of any application by Stonehealth for s 90 approval in respect of the Flagstone premises.
123 I also accept Mr Morgan's evidence because it is, in important respects, consistent with the evidence of the other witnesses who gave evidence.
124 An important witness in that regard was Mr Rohan Howard. He was then undertaking work as a construction site manager at the Flagstone Village Shopping Centre. He became aware about 2 to 3 days before 20 March 2020 that the supermarket would be opening that evening. His recollection was that Mr Morgan told him this. Mr Howard did not know any of the pharmacists at the Flagstone premises. On the early evening of 20 March 2020 and without any prior request by anyone so to do, he noticed that the supermarket was open and purchased goods with cash there after work. His evidence was not challenged. I accept it unreservedly.
125 Mr Howard's presence that evening as a purchaser was in no sense staged. He was at arm's length both from Coles and from Stonehealth. In a sense, he had inside knowledge that the supermarket was open that evening, because he was working on site at the shopping centre. That is consistent with the absence of advertising for the supermarket being open for evening trading. It is utterly inconsistent with that opening for trading being a sham or even an invitation only event.
126 Another purchaser that evening at the supermarket was Ms Sarah Devlin. She is a pharmacy group manager. Her evidence also was not challenged. I accept it. In the early evening of 20 March 2020 she was working back late at the Flagstone Village Shopping Centre. I understood this to be because, at the time, she was undertaking duties in relation to the opening of the pharmacy at the Flagstone premises (which trades as "Watson's pharmacy"). She knows Mr Bakshi. It seems inherently likely, given this and her decision to be photographed within, and take a photo of the inside of, the Coles supermarket and retain her shopping debit entry that he was the source of her knowledge that the supermarket would be open that evening. She deposed, and I accept, that she was able freely to enter the Coles supermarket through the front doors. She there observed other customers shopping at the supermarket. She made a purchase of groceries herself. These purchase totalled $87.05 and was made at about 6:45 pm on 20 March 2020. Her access and that purchase were in no sense a sham.
127 Another cash purchase of groceries at the Coles supermarket that evening was made by Mr Nguyen and his wife. Mr Nguyen is one of Stonehealth's directors and a qualified pharmacist. He was one of the signatories to Stonehealth's s 90 application in respect of the Flagstone premises. He was not unaware of a need for Stonehealth to be able to provide evidence to the Authority that the Coles supermarket was open and trading on 20 March 2020. On 20 March 2020, he was engaged at the shopping centre in preparing to open the pharmacy at the Flagstone premises to the public the following day. I understood that Ms Devlin was one of those assisting him in this task. In the course of 20 March 2020 (by which I understood him to mean earlier in the day, before the supermarket opened in the early evening) he observed activity at the supermarket which he described as activity preparatory to its opening. At about 6:00 pm that day, in conjunction with his wife, his mother and a child, he entered the supermarket. He observed it to be open for trading. He observed other customers there. He made the grocery items purchase in conjunction with his wife. Unsurprisingly, he retained a receipt. Equally unsurprisingly, he took photos of the interior of the supermarket at the time and observed another (Mr Bakshi) doing this. Yet further, it was unsurprising that his wife, child and mother appeared in the photos. Mr Nguyen knew a record of their shopping there that evening was desirable. Using them as subjects was doubtless convenient and avoided any possible need for permission from third party subjects. All of these actions are indicative of some awareness of the criteria in the Rules and of some advance knowledge that the supermarket would be open for trading that evening. But that does not mean that the groceries purchase which he and his wife made was in any sense a sham. It was not. As he related in his oral evidence, he could buy whatever he liked at the supermarket. And he and his wife demonstrably did that.
128 I thought that Mr Nguyen was an honest, candid witness. Although a director of Stonehealth, his primary role was in the setting up and operation of the pharmacy at the Flagstone premises. He admitted that there had been discussions before 20 March 2020 about the opening of the supermarket that day but only became aware on 20 March 2020 of the precise time that day for which the supermarket would be open. I thought that was consistent with Mr Morgan's evidence about pandemic occasioned, rapidly evolving events.
129 Mr Nguyen's oral evidence confirmed to me an impression created by the contemporary email exchanges between 19 September 2019 and 20 March 2020. That impression was, and I find, that, although Mr Nguyen was an information addressee in many emails, it was Mr Bakshi who took the lead on behalf of Stonehealth in dealing with Coles and Ann Mihulka & Associates. Mr Nguyen's attitude in relation to the s 90 application, as he related in his oral evidence, was that Stonehealth had engaged expert assistance, from Ann Mihulka & Associates, and he was content to leave the progression of the application and related dealing with the Authority in that firm's hands.
130 Mr Stuart Mihulka gave affidavit and oral evidence. Circumstances dictated that his oral evidence had to be received via audio-visual means using Microsoft Teams. Invariably, that medium lends a quality of detachment to the reception of oral evidence, as it does to oral submissions for that matter. It is better than resorting to telephone conference but not a means one would choose over in person attendance other than when restrictions associated with the prevailing COVID-19 pandemic so dictate. Even allowing for these limitations, I formed a favourable impression of Mr Mihulka with respect to his oral evidence. It was certainly honest but also candid and frank. That impression was particularly underscored by a statement Mr Mihulka made in the course of his oral evidence. He stated, in relation to Mr Bakshi, that he had had to temper his expectations. That gelled with the emails in evidence and the impression based on these I had formed in relation to Mr Bakshi. Mr Mihulka struck me as a consummate professional in relation to applications under s 90 of the NHA. He was well aware of the requirements of the Rules in relation to the approval of the Flagstone premises. His view about Mr Bakshi's initial, September 2019 proposal was that a highly confidential supermarket opening would not satisfy the requirements of the Rules. He related that he would not have been comfortable with a "soft opening" two days before the shopping centre itself opened. He made it quite clear in his oral evidence, and I unreservedly accept, that he did not just uncritically follow Mr Bakshi's instructions. He regarded the terms of his retainer from Stonehealth as enabling him to liaise with the Authority as he thought necessary and without always seeking prior direct approval from Stonehealth on every occasion.
131 Mr Mihulka acknowledged that he had drafted various letters signed by, and the statutory declaration made by, Mr Morgan. There was nothing either sinister or unusual in this. He had not been to the supermarket himself. It was clear enough he undertook the drafting after prior discussion so as to understand the factual position. A like task is performed by solicitors on myriad occasions all around Australia every day. Some undertake the task well, others not so by drafting affidavits and statements in good faith and on instructions but employing language that could not possibly be within the ordinary vocabulary of the deponent to whom the draft is submitted for approval. Mr Mihulka's drafting did not, I thought, exhibit that vice.
132 Mr Mihulka put together Stonehealth's s 90 application, including its annexures. He also drafted the submission made to the Authority in December 2020, following the Authority's request for further information. It was always his view that compliance with the Rules required the supermarket to be open to the public. Never was he told or even suspect this had not happened on 20 March 2020. Indeed, had he been so told, that would have been inaccurate. The supermarket was open to the public that evening. That was when, in fact, it commenced trading. Coles did not advertise this but by the early evening of 20 March 2020 it had every reason not to. Those reasons were associated with the rapidly evolving demands of preparing to deal in the recently prevailing circumstances of the COVID-19 pandemic with the advertised opening of the whole shopping centre on 21 March 2021.
133 The sales records for the Coles supermarket that evening are in evidence. There were not many sales but then, for the reason just given, Coles was not expecting that there would be. None of the sales have been proved to be shams in any sense. As it happened, that reason also served to fulfil a prior plan (or "stratagem" or "clever tactic") which Coles had to be open for trading to the public in any event that evening but not to advertise that. However, by the evening of 20 March 2020, that plan had been overtaken by events.
134 Neither Coles nor Stonehealth was under any duty either under the Rules, the NHA itself or otherwise to notify Mr Darnell, or ZAA for that matter, that it would open its supermarket for trading to the general public on the evening of 20 March 2020. Their only duty was not to make a knowingly false or misleading statement to the Authority.
135 For the reasons given, Mr Darnell, on whom the onus lies, has not proved that the opening of the Coles supermarket at Flagstone Village on 20 March 2020 was "staged for the sole reason of providing evidence of the existence of a 'supermarket' … as defined under the Rules, in support of Stonehealth's premature application to the Authority". He has not proved what "fully staffed" meant in relation to the supermarket but, even if he had, there is nothing in item 130(b) as construed by the Full Court in Stonehealth v ZAA which requires that the supermarket be other than one which has commenced trading.
136 Determining whether a supermarket has commenced trading is but a conclusion to be reached on an overall assessment of prevailing circumstances and but a subject specific example of a well-charted path of inquiry on the analogous subject of whether a person is or is not carrying on a business. In my view, the observations made by Bowen CJ and Franki J in Ferguson v Federal Commissioner of Taxation (1979) 37 FLR 310, at 314, on the subject of whether a business is being carried on, are of general assistance:
There are many elements to be considered. The nature of the activities, particularly whether they have the purpose of profit-making, may be important. However, an immediate purpose of profit-making in a particular income year does not appear to be essential. Certainly it may be held a person is carrying on business notwithstanding his profit is small or even where he is making a loss. Repetition and regularity of the activities is also important. However, every business has to begin, and even isolated activities may in the circumstances he held to be the commencement of carrying on business. Again, organization of activities in a business-like manner, the keeping of books, records and the use of system may all serve to indicate that a business is being carried on. The fact that, concurrently with the activities in question, the taxpayer carries on the practice of a profession or another business, does not preclude a finding that his additional activities constitute the carrying on of a business. The volume of his operations and the amount of capital employed by him may be significant. However, if what he is doing is more properly described as the pursuit of a hobby or recreation or an addiction to a sport, he will not be held to be carrying on a business even though his operations are fairly substantial.
137 The specific subject dictates that, to be a "supermarket", the business at least offer a diverse range of food and other grocery items for sale by retail and that it has commenced the business of selling such items. The photographic evidence shows the presence that evening of persons who are apparently Coles staff, including a checkout person. An external security person is also apparent. The supermarket, which looks to have a large floor area, is apparently fully stocked with a wide range of produce. Its lights are on and its doors are open. Sales which were not shams were made that evening, including to a person who had no connection whatsoever with Stonehealth. All of this confirms the oral and affidavit evidence related above. On the evidence, the shopping centre itself, not just the supermarket, was open to public access on the evening of 20 March 2020. The Coles' business records and related receipts in evidence show a sophisticated, transactional recording system was in place and operating for the supermarket on the evening of 20 March 2020. The supermarket opened at 6:00 pm and closed at 8:00 pm. That hour-early closure was, as Mr Morgan related, for good reason associated with preparation for the advertised opening of the whole shopping centre the following day in circumstances of a pandemic then in its early stages.
138 On the whole of the evidence, I find that the Coles supermarket was, for the purposes of the Rules, a supermarket. It commenced trading on 20 March 2020. The supermarket was open to and accessible by the public. Mr Morgan's letter to the Authority of 11 November 2020 and his earlier letter of 17 June 2020, each verified by his subsequent statutory declaration, have not been proved to be false in any of the particulars alleged under ground 7. In the events which transpired after 17 March 2020, none was even misleading. They just recorded the factual position as it had by 20 March 2020 come to be. No fraud of any kind has been proved. It is neither necessary nor desirable to reach any conclusion as to what the position may have been had the earlier formulated plan about an opening not been overtaken by pandemic related events. In fairness to Mr Darnell and his legal representatives, all it is necessary to record is that there was an interrogative note sounded by some of the material produced on subpoena but that has been well and truly answered on the whole of the evidence received at trial.
139 It follows that the application must be dismissed, with costs.
I certify that the preceding one hundred and thirty-nine (139) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.