Finance Facilities Pty Ltd v The Commissioner of Taxation

IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No. NG957 of 1996 GENERAL DIVISION ) BETWEEN: W H SOUL PATTINSON & CO LTD Applicant AND THE SECRETARY DEPARTMENT OF HEALTH AND FAMILY SERVICES First respondent THE AUSTRALIAN COMMUNITY PHARMACY AUTHORITY Second respondent EDWARD ROSS BROWN, JOHN KEVIN BRISLAN AND ELENA KRIVOSHEV Third respondents CORAM: BEAUMONT J. WHERE MADE: SYDNEY DATE: 8 APRIL 1997 REASONS FOR JUDGMENT

INTRODUCTION Before the Court is an application for judicial review commenced by an application, filed on 10 December 1996, in which relief is sought under s.7(1) of the Administrative Decisions (Judicial Review) Act 1977. Section 7(1) provides as follows:

" 7(1) Where - (a) a person has a duty to make a decision to which this Act applies; (b) there is no law that prescribes a period within which the person is required to make that decision; and (c) the person has failed to make that decision, a person who is aggrieved by the failure of the first-mentioned person to make the decision may apply to the Court for an order of review in respect of the failure to make the decision on the ground that there has been unreasonable delay in making the decision." There is also before the Court a notice of motion seeking, in effect, the summary dismissal from the proceedings of one of the respondents on the basis that this respondent should not have been joined. This motion will be dealt with later.

The applicant, W H Soul Pattinson & Co Limited, now applies for judicial review of the alleged failure of the first respondent, the Secretary of the Department of Health and Family Services ("the Secretary") to decide pursuant to s.98 of the National Health Act 1953 ("the Act"), whether to cancel an approval to dispense pharmaceutical benefits granted under s.90 of the Act to the third respondents, Edward Ross Brown, John Kevin Brislan and Elena Krivoshev in respect of the premises situated at 15 Strathfield Plaza, Strathfield ("the Brown Approval").

The provisions of s.90(1), (2), (3), (3A), (3AA), (3AB), (3B), (4), (5) and (6) of the Act are as follows: "90. (1) Subject to this section, the Secretary may, upon application by a pharmacist who is willing to supply pharmaceutical benefits on demand at particular premises, approve that pharmacist for the purpose of supplying pharmaceutical benefits at or from those premises. (2) Where a pharmacist desires to supply pharmaceutical benefits at or from several premises (being premises at which he or she carries on, or is about to carry on, business as a pharmacist) a separate application shall be made in respect of each of the premises and, where approval is granted in respect of 2 or more premises, a separate approval shall be granted in respect of each of the premises. (3) Subject to this section, where an approved pharmacist desires to supply pharmaceutical benefits at or from premises (being premises at which the pharmacist carries on, or is about to carry on, business as a pharmacist) other than premises in respect of which approval has been granted, the Secretary may on application by the approved pharmacist, grant approval in respect of those other premises. (3A) Subject to subsection (3AA), an application under this section must be referred to the Authority. (3AA) Subsection (3A) does not apply to an application for an approval arising out of a change in the ownership of a pharmacy situated at particular premises if the change results or resulted from: (a) the sale of the pharmacy; or (b) the death of the owner or one of the owners of the pharmacy; or (c) a change in the constitution of a partnership that owned the pharmacy; if the pharmacy is to continue to operate at the same premises. (3AB) In subsection (3AA): 'pharmacy' means a business in the course of the carrying on of which pharmaceutical benefits are supplied. (3B) An approval may be granted under this section in respect of an application to which subsection (3A) applies only if the Authority has recommended the grant of the approval, but the Secretary may refuse to grant an approval even if the grant has been recommended by the Authority. .... (4) Nothing in this section authorizes the Secretary to grant approval to a pharmacist in respect of premises at which that pharmacist is not permitted, under the law of the State or Territory in which the premises are situated, to carry on business. (5) Where the Secretary makes a decision granting or rejecting an application made by a pharmacist under this section, the Secretary shall cause to be served on the pharmacist, notice in writing of that decision. ..... (6) For the purposes of this section, a reference to a pharmacist is taken to include a reference to a person who owns, or is about to own, a business for the supply of pharmaceutical benefits at or from particular premises." The second respondent is the Australian Community Pharmacy Authority ("the Authority"): s.84(1) of the Act. The functions of the second respondent, inter alia, are (a) to consider applications under s.90; and (b) to make, in respect of an application under s.90 - (i) a recommendation whether or not the applicant should be approved under that section in respect of particular premises; and (ii) if an approval is recommended - recommendations as to the conditions (if any) to which the approval should be subject.

By s.99L(1)(a) the Minister must, by writing, determine the rules subject to which the Authority is to make recommendations under subsection 99K(1).

The Minister's power to suspend or revoke an approval granted under s.90 is provided for by s.95(1)(b):

"95. (1) The Minister may, after investigation and report by the appropriate Committee of Inquiry, by notice in writing:

(b) suspend or revoke the approval of the pharmacist under section 90;

and may, at any time, by notice in writing, remove that suspension or restore that approval."

"(4) If the Secretary considers that it is necessary in the public interest so to do pending investigation and report by the appropriate Committee of Inquiry, the Secretary may suspend an approval referred to in subsection (1) and the Secretary may at any time remove the suspension."

The provisions of s.98(1)(a), (2a), (3) and (5) are as follows:

"98. (1) Whenever: (a) an approved pharmacist requests that his or her approval under section 90 in respect of all or any of the premises in respect of which he or she is approved be cancelled; .... the Secretary shall cancel that approval. 2. Where: (a) an approved pharmacist gives the Secretary notice in writing that the pharmacist has ceased to carry on business as a pharmacist at premises in respect of which the pharmacist is approved; .... the Secretary may cancel the approval. 3. Where the Secretary is satisfied that an approved pharmacist is not carrying on business as a pharmacist at premises in respect of which the pharmacist is approved, the Secretary may, by notice in writing to the pharmacist, cancel the approval of the pharmacist under section 90. .... 5. A reference in this section to an approved pharmacist carrying on business as a pharmacist at premises is a reference, in the case of an approved pharmacist to whom subsection 90(6) applies, to an approved pharmacist carrying on a business for the supply of pharmaceutical benefits at or from the premises."

An approved pharmacist is defined by s.84(1) to mean a person for the time-being approved, or deemed to be approved, under s.90.

In its amended application, the applicant claims that it was aggrieved by the alleged failure of the first respondent to make a decision because:

"1. It has applied pursuant to section 90 of the Act for approval to dispense pharmaceutical benefits from shops 15 and 16 of Strathfield Plaza, Strathfield ("the Application for Approval"). 2. The Application for Approval cannot be granted by the First Respondent until the Brown Approval has been cancelled by the First Respondent or it is relocated by its holders pursuant to an application made under section 90 of the Act. 3. Brown, Brislan and Krivoshev ceased to carry on business as pharmacists at shop 15 Strathfield Plaza, Strathfield on or about 9 October 1996. 4. No application has been made for the relocation of the Brown Approval. 5. The Applicant was entitled to have the Application for Approval considered at a meeting of the Second Respondent on 11 December 1996. 6. A decision was not made by the First Respondent on Wednesday, 11 December 1996, as a result of which the Second Respondent deferred its decision and the Applicant suffered commercial loss. 7. As a result of the First Respondent's continuing failure to make a decision the Applicant continues to suffer loss."

In its amended application, the applicant's stated grounds for judicial review are stated as follows:

"1. The First Respondent has a duty to decide whether or not to cancel the Brown Approval pursuant to section 98 of the Act. 2. No law prescribes the period within which the decision is required to be made. 3. The First Respondent has unreasonably delayed in making the decision."

The background to these proceedings is complicated, partly because of developments which occurred both before and after the institution of the litigation. Some of the background is provided in the evidence of Ann Mihulka, a health industry consultant retained by the applicant.

In her affidavit sworn 10 December 1996 Ms Mihulka said that:

· On 13 August 1996 Jones Lang Wootton, the managing agents of Memo Corporation Australia Pty Limited ("Memo"), which is the owner of the Strathfield Plaza, wrote to the third respondents, who were the lessees of Shop 15 under a lease due to expire on 9 October 1996. Jones Lang Wootton offered the third respondents a lease over Shops 15 and 16.

· By letter dated 26 August 1996 the third respondents, on a letterhead entitled "Strathfield Plaza Amcal Chemist", wrote to Jones Lang Wootton as follows:

"We have considered your offer of a 75% increase in space from 152m2 to 271m2. This offer is accompanied by an increased total occupancy cost of $115,933 from $64,684 p.a. to $180,622 p.a. This proposal would increase our occupancy costs by 180%. We are writing to advise you that: 1. The proposed larger space will be unviable for us. 2. The proposed loss of the newsagency next door to us will be detrimental to our customer traffic. 3. The proposed rent appears to be well above market value rent for our centre. An independent valuation indicates a value of some 30% less than quoted. 4. We would be pleased to retain our current occupancy, even allowing for a 1 metre reduction in shop depth." · By notice to the third respondents, dated 27 August 1996, Memo confirmed that it required vacant possession of Shop 15 upon expiry of the lease on 9 October 1996. · On 9 October 1996 the third respondents vacated Shop 15. · By a letter to the third respondents, dated 28 August 1996, Jones Lang Wootton wrote as follows:

"Thank you for your correspondence dated 26th August, 1996 to which we respond as follows: In our planned tenancy mix for Strathfield Plaza, tying in with the refurbishment, the allocated space for a pharmacy sits in the boundaries of Shops 15 & 16. We feel that in today's retail and Shopping Centre environment that this is an appropriate size. We do not believe that the rental level set is above market as stated in your letter. This has been indicated through our research from current leases held in other Shopping Centres. However we would consider reducing the rental level to $578 per sqm gross which is an annual rental of $156,580.20. This is the lowest rental we are able to offer for this tenancy. Although we are offering the proposed tenancy to the open market, we would like to be able to retain Amcal Chemist in Strathfield Plaza. Please advise us of your intentions by Wednesday September 4th, 1996 so that we may finalise the matter." · On 29 August 1996 Memo and the applicant agreed on the grant of a lease of Shops 15 and 16.

· The minutes of a meeting of the Pharmacy Board of New South Wales, held on 9 October 1996, record that the Board noted the closure of the premises described as "Strathfield Plaza Amcal Chemist, Shop 15, Strathfield Plaza".

· By letter dated 21 October 1996 the third respondents wrote to Jones Lang Wootton concerning Shop 15 as follows:

"I have been advised to inform you that approval under section 90 of the National Health Act 1953 in respect of Strathfield Plaza was issued to the members of our partnership for the purpose of supplying pharmaceutical benefits on demand at or from specific premises. This approval to supply pharmaceutical benefits is identified by the approval number 10155L and is specific to our partnership. While the approval is currently suspended as the pharmacy is not operating, nevertheless approval relates to the specific site. The relevant aspect of the National Health Act 1953 is administered by the Health Insurance Commission, which administers the pharmaceutical benefits scheme. Thanking you for your attention to this matter". · The third respondents own two other pharmacies both located in The Boulevarde, Strathfield, near Strathfield Plaza.

· On 21 October 1996 Ms Mihulka had a telephone conversation with Dallas Wong, an officer of the Health Insurance Commission ("HIC") to the following effect:

"[Ms Mihulka] said: 'I will be lodging an application for Strathfield Plaza for Soul Pattinson. Do you know what is happening about Ross Brown?' [Dallas Wong] said: 'We know his is closed. We are trying to do what we can about his approval number as he was evicted.' [Ms Mihulka] said: 'I do not think that's right. I have evidence as to the contrary - that he chose not to renew his lease.'" · On 11 November 1996 Ms Mihulka applied on behalf of the applicant to the HIC for approval to relocate an approval to supply pharmaceutical benefits from premises at 17 Hunter Street, Sydney to the Strathfield Plaza premises.

· On 11 November 1996 Ms Mihulka had a conversation with an officer of the HIC in Sydney, whose name she cannot now recall, during which that officer said to Ms Mihulka words to the effect that the applicant's application had been "logged in" and has been given the number NA209.

· On 11 November 1996 Ms Mihulka had a conversation with Dallas Wong of the HIC to the following effect:

"[ Ms Mihulka] said: 'Has Ross Brown made an application to relocate out of Strathfield Plaza?' [Dallas Wong] said: 'No, but the Health Insurance Commission has given them until 28 November to give notice of what their intentions are with the pharmacy.' [Ms Mihulka] said: 'He will not do anything because I am sure that he is determined to block our application.'"

· On 20 November 1996 Ms Mihulka had a conversation with Robyn Candy, the secretary of the second respondent, to the following effect:

"[Ms Mihulka] said: 'If the Health Insurance Commission does not cancel the existing approval number, am I right in saying that the ACPA cannot hear our application?' [Mr Candy] said: 'Yes, it means that the ACPA would have to reject or defer the application because under paragraph 7(a)(i) of PB 17 of 1996, there was already one pharmacy approved at the premises.' [Ms Mihulka] said: 'Does what you're saying apply even though the pharmacy is closed?' [Mr Candy] said: 'Yes.'"

· Shortly before 27 November 1996, Ms Mihulka spoke with Mr John Tucker, an officer of the second respondent. Ms Mihulka said:

"The Pharmacy Board is satisfied that Brown has closed, the HIC is satisfied that he has closed, he has no legal right to occupy the site. Therefore, you must be satisfied for the purposes of section 98(3) of the Act. I can't see any reason why you have not cancelled his number. What are you going to do about it?"

"Put it in writing to me." · By letter dated 27 November 1996, Ms Mihulka wrote to the second respondent as follows:

"An application is made by Washington H Soul Pattinson (Soul Pattinson) to relocate from 17 Hunter St Sydney 2000 to shops 15 & 16 Strathfield Plaza Strathfield 2135. The application is made pursuant to paragraph 7 (a) of PH 17 of 1996 a Determination under subsection 99 L of the National Health Act 1953.

The applicant is already approved under section 90 of the Act at 17 Hunter St Sydney and proposes to cease supplying pharmaceutical benefits immediately prior to the granting of approval at the new site as specified in 7 (aaa). There are 2 pharmacies within 300 metres, Hunter Connection Pharmacy 109 Pitt St and The Rocks Pharmacy 60 Pitt St so that 7 (a)(iv) is satisfied.

Both the section 90 and section 98 are signed by Peter Raymond Robinson the approved person on behalf of the Company. A letter dated 16 August 1994 affixed with the common seal of Washington H Soul Pattinson is evidence of that authority. (appendix 1)

Legal right to occupy shops 15 & 16 is evidenced by the Lease between Memo Corporation Australia Pty Limited and Washington H Soul Pattinson. The lease to commence from 23 October 1996 for a period of 5 years with an option for a further 5 years. (appendix 2)

Strathfield Plaza is a 'large shopping centre' as defined in the Determination. It is a contiguous site under the single management of Jones Lang Wootten's Shopping Centre Division. The gross leasable retail area is 6635 sq metres with Franklins supermarket having just expanded from a Franklins No Frills to a Franklins Fresh at over 3,000 sq metres. There are 47 other shops in the Plaza as seen in the Centre floor plan. (appendix 3)

The Plaza is currently undergoing a major refurbishment and besides the expansion of Franklins there are 32 retail shops leased, 6 where Letters of Intent have been issued by the Managing Agents; 2 where offers have been received but as at today's date no Letter of Intent issued; 1 with first right of refusal and 2 vacant shops. Therefore besides the 5 shops that are not retail shops as defined there are 38 shops that are either leased or have agreed to Lease; 2 awaiting confirmation of their offers; 1 with first right of refusal and only 2 vacant in the Plaza. Thus the Plaza fulfils the requirement of not less than 30 retail shops. A full tenancy list and lease status is found at appendix 4.

As can be seen from the tenancy list the Plaza has not only a full range of specialty shops including food, clothing, leisure, beauty and household needs but also banks, post office travel agents and real estate agents.

Strathfield Plaza is a point of destination for weekly household shopping in the area and the Plaza even prior to its refurbishment had over 90,000 customers through the doors each week. During the disruption of major works there was only a 2% drop in customer traffic. Last year there were over 4.5 million pedestrian movements through the Plaza. There has been a 50 car space increase to bring the number of available car spaces to 508 in a two level car park above the Plaza. Strathfield Plaza is the only enclosed air conditioned shopping centre in Strathfield.

As part of Strathfield Plaza there is a 9 storey office tower with major institutions and numerous medical services including general practitioners and specialists. A college for teaching English as a second language has in excess of 1,000 students each week.

A 4-SITE report prepared by the Commonwealth in 1995 found that within a 3.5 km radius of Strathfield Plaza as at the 1991 Census there were 97,494 people of whom 15% were aged over 65 years. In that radius all age groups from 50-54 onwards were higher than the average for Sydney. (appendix 5)

Strathfield Plaza is directly opposite Strathfield Railway station the third busiest in NSW and adjacent to a major bus interchange. According to Census data 29.6% of people within the 3.5 radius of the Plaza travel to work by public transport. This is 6% higher than the average for Sydney. 21% of households do not [h]ave a car. (appendix 6) The close proximity to public transport and the availability of on site parking further strengthens the Plaza as a point of destination for weekly household shopping.

The Strathfield area is one of the most densely populated areas in Sydney's inner west and the concentration of aged persons would indicate that public transport was an essential element in where they choose to do their weekly shopping. The mix of a Franklins Fresh (noted for its competitive pricing policy) with the range of retail and non retail shops as well as the services of doctors within the office tower of the Plaza would lead the average person to expect that the shopping centre would have a pharmacy.

The above information would indicate that the ACPA should exercise its discretionary power and recommend approval for the application to relocate a pharmacy into Strathfield Plaza.

Under paragraph 7 (a)(i) such an application cannot be approved if another approval under section 90 is in force. On 9 October 1996 a pharmacy operated by Ross Brown and partners closed as they had not agreed within the given time to lease the proposed premises within the refurbished Plaza. The Lease for shop 15 expired on 9 October 1996. On 26 August they had notified the Leasing Manager that the proposed larger site would be unviable for them, the proposed rent was too high and the relocation of the newsagent would be detrimental to them.

They were given notice to quit on 27 August 1996 and to all appearances have made no attempt to sell or relocate the approval number.

Mr Brown and partners notified the Pharmacy Board of NSW that the pharmacy was closed with the Board in turn notifying the HIC. The Secretary should be satisfied that the pharmacist is no longer carrying on the business of a pharmacist at shop 15 Strathfield Plaza and the approval should be cancelled under section 98 (3) of the Act.

Mr Brown wrote to Strathfield Plaza on 21 October saying that the approval was 'currently suspended as the pharmacy is not operating nevertheless approval relates to the specific site'. The approval cannot be suspended as there is absolutely no chance of it ever being active at those premises again. The premises have been an empty shell since 9 October 1996.

I have today notified the Secretary's delegate in NSW that the approval should be cancelled as we believe that Mr Brown is merely trying to thwart a pharmacist with legal right to occupy the premises from gaining approval to carry on business from shops 15 & 16 Strathfield Plaza. A copy of the letter sent to Mr Tucker is enclosed as appendix 7. Should the ACPA require it a full copy of all correspondence between Mr Brown and Strathfield Plaza Managing Agents plus all files notes are available. A chronology was sent to Mr Tucker.

The fact that Mr Brown made a conscious business decision that the enlarged premises would not be viable and thus did not wish to take up space allocated in the refurbished Plaza should in no way allow him to deliberately bar Soul Pattinson from their legal right to operate a pharmacy from the enlarged site.

Should the Secretary, in error, not cancel the approval even though it is now 3 months since the pharmacist was aware that vacant possession was required on expiry of the Lease on 9 October then the ACPA should consider that no approval is in force as Mr Brown and partners have acknowledged its closure in their notification to the Pharmacy Board. Under section 90 (4) of the Act Mr Brown and partners cannot satisfy State requirements. The premises are empty and as he has no legal right to the site it is impossible to refit the premises for Board inspection.

The ACPA is requested to approve the application for a relocation into a large shopping centre that satisfied paragraph 7 of the Determination. As the Plaza is a focal point for the community and a major point of destination for the approximately 100,000 people who live in the catchment the discretionary power should be exercised in favour of the applicant.

(I note that in the application form enclosed with the letter dated 27 November 1996, the applicant requested that its existing approval under s.90 to supply pharmaceutical benefits from the Hunter Street premises, be cancelled with a view to relocation at Shops 15 and 16 Strathfield Plaza. I should also note that the form of lease enclosed with the letter was not, in fact, executed.) · On the same day, Ms Mihulka wrote a similar letter to the HIC. · By letter dated 28 November 1996, Jones Lang Wootton wrote to the applicant as follows:

"STRATHFIELD PLAZA: TENANCY 15/16 I confirm our telephone conversation of Friday 22nd November and subsequent correspondence in relation to the above premises and in particular to the agreement to pay a holding rental, and take this opportunity of documenting our understanding of the intent of the agreement. 1. Commencing 1st December 1996 Washington H Soul Pattinson will pay on invoice the monthly sum of $8,500 being an agreed rental amount for the above premises. 2. This rent is to be paid as a 'holding rent' only and does not replace the terms and conditions of lease previously agreed on 29th August 1996. 3. Washington H Soul Pattinson agrees at its cost to make such investigations and prepare applications to achieve a pharmacy licence with all possible urgency. 4. Washington H Soul Pattinson will enter into a lease on the same terms and conditions as the letter of offer within 14 days of receipt of all approvals from the Pharmacy Board and Health Insurance Commission and the Australian Community Pharmacy Authority. 5. The Lessor reserves the right to terminate this agreement on 30 April 1997 if an approval has not been granted to operate a pharmacy in the Tenancy. 6. The Tenancy is at handover stage now and that the 6 week fitout period will commence from the date of written receipt of Pharmacy Board and Health Insurance Commission approvals. 7. Washington H Soul Pattinson agree to the Lessor seeking a tenant to temporarily trade so as to avoid the look of a large vacancy within the Centre. Such temporary accommodation to be terminated with 14 days notice in order to handover to Washington H Soul Pattinson with vacant possession at the appropriate time. I trust that this correctly documents the agreement and would appreciate your confirmation of this by signing below and returning to our Strathfield office no later than Wednesday 4th December." · By letter dated 4 December 1996, Ms Mihulka wrote to Mr Tucker as follows:

"Re: Approval at Strathfield Plaza Strathfield On 27 November 1996 I wrote to you expressing our concerns over the status of the approval number at Shop 15 Strathfield Plaza Strathfield. It is our understanding that the HIC was to address the issue last week. Would you please confirm that the approval number that was held by Mr Ross Brown and Partners at Shop 15 has been cancelled by the Secretary. The application by Soul Pattinson for a relocation to Shops 15 & 16 is due to be heard by the Australian Community Pharmacy Authority next Wednesday. Your urgent attention to this matter is appreciated."

· By letter dated 5 December 1996, Mr Tucker replied as follows:

"I refer to your letter (via facsimile) of 4th December 1996 in which you raise the issue of pharmaceutical services at the Strathfield Plaza, Strathfield. I regret we are unable to discuss with you the approval of a pharmacist for whom you do not have their authority to engage in such a discussion." .

· By letter dated 6 December 1996, Cutler Hughes & Harris, the applicant's solicitors, wrote to Mr Tucker saying, inter alia, this:

" We understand that the Health Insurance Commission ('HIC') was initially to consider the question of whether or not Mr Brown's approval number should be cancelled in the first few days of December 1996. Such a course would have enabled a decision to be made in advance of the consideration by the ACPA of our client's application. We have recently been informed that in fact no decision has been made, but rather that the HIC has decided to defer making a decision until an unspecified later date. Mrs Mihulka wrote to your office on 4 December 1996 inquiring as to the progress of the matter, and on 5 December 1996 you replied, indicating that in your view our client was not entitled to be provided with any details. The decision to defer consideration of the matter places our client in an invidious position. Having regard to the wording of section 98 of the Act it is clear that the Secretary has a duty to consider the matter. It is further clear from the admission contained in the letter dated 8 October from Mr Brown's partnership to the Health Insurance (if nothing else) that the pharmacy has closed and that the Secretary's discretion should be exercised in favour of cancelling the approval number. Mr Brown has long ceased to carry on business as a pharmacist from the premises. He was given notice to quit the premises as early as 27 August 1996. Our client has negotiated with the owner of the premises and had a legitimate expectation that he would be able to move into the premises immediately following a favourable recommendation by the ACPA on 11 December 1996."

The solicitors' letter went on to press the first respondent for a decision.

· In Ms Mihulka's opinion, the application made by the applicant to the second respondent met the criteria of the relevant Rules, determined by the Minister under s.99L of the Act, for these reasons:

"(a) Strathfield Plaza is a point of destination for weekly shopping for those who live in the surrounding district; (b) there are roughly 100,000 people within a two and a half kilometre primary catchment area of Strathfield Plaza; (c) over 90,000 people are being counted through the doors of Strathfield Plaza each week and this is in spite of massive works currently being undertaken in the redevelopment of the Centre; (d) in my opinion, the surrounding pharmacies should not suffer any loss of trade; in fact, I believe their trade should be enhanced by the increased number of customers coming into the Strathfield area to do their standard weekly shopping; (e) the Centre's carpark is to be increased by 200 bays which on a turn of 4 or 5 per day could add anything to another 10,000 car shopping spaces per week at the Centre; (f) the Centre is opposite Strathfield Railway Station, which is the third busiest railway station in New South Wales, and is adjacent to the major bus interchange; (g) generally the Centre is seen as a point of destination." In a further affidavit, sworn 28 February 1997, Ms Mihulka said:

"3. I believe that the First Respondent has not made a decision as to whether or not to cancel the approval number of the Third Respondents ('the Brown Approval') in relation to Shops 15 & 16 Strathfield Plaza, Strathfield ('the Premises'). 4. For the reasons set out below, there is the utmost urgency attached to the Applicant's need for the First Respondent to make a decision concerning the Brown approval. 5. On 27 December 1996, I substituted the application to relocate from 17 Hunter Street, Sydney, to an application to relocate from Shops 4 & 5 Patrick Mall, Patrick Street, Blacktown ('the Blacktown premises'), into the premises. 6. The reason for the substitution arose from a notification which the Applicant had received from the landlord of the Blacktown premises that the Applicant's premises at Blacktown would have to be vacated because of demolition plans such vacation to occur by February 1997..."

Ms Mihulka also referred in this affidavit to her letter, dated 2 January 1997, to the HIC as follows:

"Re: NA209 Application to Relocate to Strathfield Plaza The above application will be dealt with by the ACPA at their January meeting. As there has been a delay in hearing this application it is now necessary to substitute the section 98 Request for Cancellation of Approval. The new section 98 is for the relocation of the pharmacy currently situated at premises at shop 4/5 Patrick Mall Patrick St Blacktown 2148. In order to satisfy paragraph 7(a)(iv) of PB22 of 1996 there are 2 pharmacies located within 200 metres at the Westpoint Marketown Shopping Centre one of which is Nightingales AMCAL Chemist. Within 200 metres in the opposite direction there is Everyday and Night Pharmacy. A map is enclosed detailing the location of the pharmacies. Would you please alter your records to show the substituted section 98. I am sending a copy of this letter to the ACPA." In the affidavit sworn 28 February 1997 Ms Mihulka went on to say: "11. Annexed hereto and marked 'C' is a copy of a letter dated 7 January 1997 from Messrs Cutler Hughes & Harris to J Tucker Esq, the Manager for Government Programmes for the First Respondent. I was aware from the terms of that letter that there was an agreement as between the Applicant and the holders of the Brown Approval to the effect that the holders of the Brown Approval would apply to relocate their approval number from the Premises to another location in time for the 21 January 1997 meeting of the ACPA. 12. I expected that an application would be made by the holders of the Brown Approval to relocate in accordance with the letter which is annexed in my previous paragraph. On or about 21 January 1997, I had a conversation with Ms Merelyn Woodward, the secretary of the Second Respondent, in words to the following effect: I said: 'Did Soul's application receive a positive recommendation?' She said: 'No. It has been deferred.' I said: 'Why?' She said: 'There was a problem with the Brown Application concerning the place that they were relocating to.' 13. In a later conversation, I believe several days after this one, Ms Woodward and I had a further conversation in words to the following effect: I said: 'Can you tell me something more about why the decision was deferred.' She said: 'I believe that there was a problem with the legal right to occupy the premises to where the approval number was to move.' 14. On or about 30 January 1997, I had a conversation with Ms Dallas Wong of the First Respondent in words to the following effect: I said: 'Can you tell me where the Brown Application is being relocated to?' She said: 'I can't because of confidentiality reasons.' I said: 'Yes you can, because surrounding pharmacies would have been notified of that address and the information would have become public knowledge.' She said: 'Our records indicate that the relocation is to Raw Place, Strathfield. It relates to a development being done by Meriton, which has not yet commenced. The building has not been built.' 15. I subsequently made some enquiries concerning the Raw Place address. On 30 January 1997, I telephoned the Town Planning Department of Strathfield Council. I spoke to a person whose name I do not recall and we had a conversation in words to the following effect: I said: 'Can you tell me what the status of the Development Application is for Raw Place, a development which I understand is being conducted by Meriton.' She said: 'The Development Application was approved on 10 December 1996. The Building Application has not yet been granted.' I said: 'When do you think it will be granted?' She said: 'There is no guarantee that it will [be] granted at all. The earliest it will be granted would be June 1997.' 16. If the Applicant's Application to relocate from Blacktown to the Premises is not approved then the Blacktown premises will be demolished and the Applicant will no longer satisfy the requirements of Section 90 of the National Health Act, 1953. As a result, the Applicant's approval number, which is currently valued at $80,000, is liable to be revoked by the First Respondent. 17. I believe that unless an approval is given for the relocation from the Blacktown premises to the Premises, the Applicant runs the same risk that the Brown Approval faces, namely that its approval number will be cancelled by the First Respondent because the approval number is no longer attached to suitable premises..."

The applicant also relies on evidence from its solicitor, Martin John Deutsch. In his affidavit, sworn 27 February 1997, Mr Deutsch referred to a facsimile written by him to the HIC, dated 31 January 1997, as follows:

"SHOPS 15 AND 16 STRATHFIELD PLAZA, STRATHFIELD We refer to the proposal contained in our letter to you of 7 January 1997, as endorsed by the solicitor for the Brown Partnership. Such proposal was predicated upon a representation by the Brown Partnership to our client, W H Soul Pattinson & Company Limited, that the Brown Partnership had secured premises at 12-34 Albert Road, Strathfield, to which it could relocate its approval number from Shop 15, Strathfield Plaza, Strathfield. It has subsequently come to our client's attention that in fact the Brown Partnership does not have a right to occupy such premises and that, indeed, the application by the Brown Partnership to relocate its approval number was not approved for this reason. If our client had been made aware that the Brown Partnership did not in fact have a right to occupy the premises to which it intended to relocate its approval number, our client would not have entered into the proposal contained in the letter of 7 January 1997, which proposal included a request to you not to make a decision on 9 January 1997 with regard to the cancellation of the Brown Partnership's approval number. As we understand it, the ACPA declined the Brown Partnership's application based on the abovementioned deficiency and was therefore not able to consider our client's application to relocate into Shops 15 and 16 Strathfield Plaza, Strathfield at it[s] meeting on 23 January 1997. It is and has been our client's intention to relocate its approval number from premises at Blacktown into Shops 15 and 16 at Strathfield Plaza. Our client's lease of its Blacktown premises is due to expire in mid-February and our client now faces a situation where in the event it will be required to vacate those premises, it will not have premises to which it can relocate. Accordingly, as the proposal contained in the letter to you of 7 January 1997 cannot be implemented for reasons outlined above, our client requests that you proceed to make a decision with respect to cancellation of the Brown Partnership's approval number. Would you kindly advise us by return facsimile of the date upon which you would intend making such decision. Obviously, if our client is unable to relocate to the Strathfield premises once it has been required to vacate the Blacktown premises, our client will suffer substantial damages as a result of the loss of its business, in addition to the loss of profit suffered to date as a result of having been unable to relocate into the premises at Strathfield. For this reason, it may be necessary for our client to continue to pursue proceedings already on foot in the Federal Court (NG957 of 1996) in order to seek appropriate relief. We await hearing from you." Mr Deutsch went on in his affidavit to say: "10. On 24 February 1997, I was informed by Mr Greg Peek of the Australian Government Solicitor's office, the solicitor for the First and Second Respondents, and verily believe that: (i) on or about 20 February 1997, the Second Respondent recommended relocation of the Third Respondent's approval from the Premises; and (ii) on or about 20 February 1997, the Second Respondent conditionally recommended relocation of the Applicant's approval to the Premises, the condition being that the Applicant could not relocate until the Third Respondents had physically relocated from the premises. 11. It is my understanding, based upon certain matters discussed with Mr Peek of the Australian Government Solicitor's office, that the First Respondent would not make a decision as to whether to relocate or revoke the Third Respondents' approval until such time as the Third Respondents had requested it to do so and that the Third Respondents are not required to in fact make any such request for a period of six months after the recommendation of the Second Respondent." Further evidence of the complicated background to the litigation is provided by the affidavit of John Doidge Tucker. Mr Tucker is the Manager, ­Pharmaceutical Benefits Branch, HIC, a position delegated to exercise the powers of the Minister under s.98(3) of the Act.

In his affidavit sworn 20 March 1997, Mr Tucker, in addition to referring to some of the background described by Ms Mihulka, said:

"3. On 23 September 1996, Mr Brown contacted my office by telephone on behalf of the third respondents. He advised that he would be unable to carry on business as a pharmacy from 9 October 1997 [sic] at premises at Shop 15, Strathfield Plaza (the premises), in relation to which the third respondents hold an approval under section 90 of the National Health Act, as the lease of the premises would not be renewed. Mr Brown was requested to advise the HIC in writing."

· On 8 October 1996 he received a letter from Mrs Krivoshev as follows:

"This is to advise you that our business will close on 9th October 1996. We would like to hold onto our approval number while we look for alternate premises. Approval number 10155L."

In his affidavit, Mr Tucker said that he interpreted this letter to include, amongst other things, a request that approval be "suspended" pending steps which the third respondents claimed to be taking to obtain alternative premises.

· On 9 October 1996 ­an officer of the Pharmaceutical Benefits Branch responded to Mrs Krivoshev's letter as follows: "Thank you for your advice dated 8 October 1996 concerning today's closure of Strathfield Plaza Amcal Chemist situated at Shop 15 Strathfield Plaza, Strathfield, 2135. You request that the pharmacy's approval to supply pharmaceutical benefits, identified by the approval number 10155L, be held in abeyance until you obtain alternate premises for the pharmacy. As you are aware the approval under section 90 of the National Health Act 1953 in respect of Strathfield Plaza Amcal Chemist was issued to yourself, Esmond Ross Brown, and John Brislan for the purposes of supplying pharmaceutical benefits on demand at or from specific premises. Given the pharmacy's closure the approval may now be in jeopardy unless I receive more information than what you have provided. I understand that your partner, Ross Brown, spoke with our Approvals Officer, Ms Dallas Wong, on 23 September 1996 about the probability of the pharmacy's closure and the fact that the circumstances involved were beyond the partnership's control. I request details of that conversation to be confirmed in writing by Mr Brown, as well as any further information that would justify the pharmacy's closure, to enable me to fully consider your request to suspend the pharmacy's approval. Your urgent attention to this matter is appreciated." · On 15 October 1996 the HIC received an unsigned letter, apparently from the third respondents on their letterhead "Strathfield Plaza Amcal Chemist", but with a stamp placed upon it as follows: "NEW ADDRESS 14 The Boulevarde Strathfield NSW 2135". . This letter dated 15 October 1996 is lengthy but important and is annexed to these reasons.

· By letter dated 28 October 1996 Mr Tucker wrote to the third respondents as follows:

"Thank you for your letter dated 15 October 1996 in which you fully detailed the circumstances that led to the closure of Strathfield Plaza Amcal Chemist. Given your unique situation I will allow the suspension of the pharmacy's section 90 approval, identified by the approval number 10155L. However, as such suspensions are essentially a temporary facility, your advice concerning your plans for the eventual direction for the approval would be appreciated as soon as conveniently possible. This suspension is effective for a period of 30 days from 28 October 1996. Attached for your completion are the forms necessary to facilitate either your relocation, or a change in ownership and the proposed purchaser's immediate relocation, or the outright cancellation of your approval due to a closure. Please do not hesitate to contact me for further assistance with this matter." In making his decision to "suspend" the approval, Mr Tucker said that he had had regard to a number of HIC statements of policy. The statements of policy are dated 27 April 1995, 4 May 1995 and 7 July 1995 respectively. Given their length and importance, the statements of policy are annexed to these reasons.

(I specifically mention here paragraphs 13 to 17 of the policy document which is dated 27 April 1995 as follows:

"Policy Proposal 13. There are two practical issues that need to be dealt with: · quarantining this from other pharmacies whose proprietors may seek to temporarily close for reasons of convenience (for example, to take a holiday); and · ensuring that the temporary closure does not extend to an unconscionably long period. 14. The first can be dealt with on a differential policy based upon the fundamental difference between the sale/relocation process and the would-be temporary closure of an otherwise stable pharmacy. The sale/relocation is a legitimate transaction which may, for practical and unavoidable reasons, result in an interval of no trading. As you have pointed out, the relocation means that the area from which the pharmacy is being relocated is going to be deprived of the pharmacy's services in any case; whether sooner or later is of relatively little import. None of these considerations apply to the holiday closure. 15. The second point above is more difficult. We do not want to be in a position of agreeing to a, say, three month closure and then for various reasons having this extended, piecemeal to eighteen or more months. On the other hand, having allowed time (and thereby implicitly recognising that the community can do without the services of the pharmacy for some time), it would be difficult to refuse to allow further time if some unforeseen delay (for example, in the construction of the new premises) occurs. 16. I think we can reduce these problems by: · granting a delay only upon receipt of both: · evidence provided by the applicant that the new premises will be available for occupation within six months of the approval being granted for the sale of the old premises; and · an undertaking by the applicant that he or she will be conducting the business of a pharmacy from those premises within that same period of six months; and · granting an extension of up to a further six months only upon the production of compelling evidence that the delays were due to factors outside the applicant's control. 17. The evidence in both cases would need to be letters from the developers of the premises. A delay outside the applicant's control would not include financial matters such as being unable to obtain finance, dispose of old premises or whatever. They would be limited to such matters as delays in the building of a shopping mall or medical centre where the pharmacist is not an owner of the development, or a part owner with significant control. Any further extensions would only be granted in Central Office by the Manager, Pharmaceutical Program Branch, upon being convinced that the extension was appropriate in the circumstances."

It will be recalled also, that the statute appears to permit a suspension of an approval only in the circumstances specified in s.95, to which reference has already been made.)

· On 26 November 1996 Mr Tucker received a letter from Mr Brown indicating that he was still negotiating a return to the premises. That letter was in these terms: "Thank you for your letter of 28 October 1996 in which you advised us of suspension of the pharmacy's section 90 approval for a period of 30 days. Our partnership is actively involved in attempting to locate or re-locate the approval site. Our preferred position is to return to our original site and as recently as last Friday afternoon, Mr Bob Atkins, the Director Shopping Centres for Strathfield Plaza leasing agents Jones Lang Wootton, confirmed that the premises was not leased and that we could well be in the running for the lease. He said he will advise us shortly. It should be noted that it is now over two months since our partnerships submitted a letter of intention to lease the premises. This letter was accepted by the managing agents on 18th September 1996 but we are still awaiting a final outcome. Meanwhile the approved premises remains in a dormant stage of demolition and reconstruction, without ceiling, lighting and shopfront. In the meantime we are exploring possible options. There are no appropriate shops available in Strathfield. The 'one kilometer rule' excludes all adjoining suburbs. The most optimistic proposal is a significant development just commencing in Strathfield. This is a 250 home unit tower development with 12 shops on the ground floor situated between Strathfield Plaza and Strathfield Railway Station. The development is being undertaken by Meriton Apartments Pty Ltd., the marketing manager of which says he would be pleased to include a pharmacy in their plans. The completion of this project is said to be just over 12 months in early 1998. In view of the above considerations we request that our Approval Number suspension be extended for a further 12 months. Thanking you for your attention to this matter."

· Mr Tucker then referred to the application made on behalf of the applicant on 27 November 1996 to relocate the existing approval from the Hunter Street premises to the Strathfield Plaza. Mr Tucker said that, in addition to the material in support of the application referred to by Ms Mihulka in her affidavit of 10 December 1996, there was also forwarded to the HIC a copy of a letter from Jones Lang Wootton dated 25 November 1996 addressed to Ms Mihulka concerning Strathfield Plaza. A copy of that letter is annexed to these reasons.

· On 2 December 1996 Mr Tucker wrote a letter to the third respondents as follows: "Thank you for your letter of 26th November in which you sought an extension to the suspension of your approval to supply pharmaceutical benefits at Shop 15 Strathfield Plaza, Strathfield, NSW. In the HIC's letter of 28th October you were advised that suspensions are a temporary facility and your approval was suspended for 30 days from 28th October & you were requested to notify the HIC of your plans for its eventual direction. You have advised the HIC in your letters that the pharmacy, Approval No. 10155L is closed. It is also noted that you state you do not have a lease or any other tenancy agreement for the premises named in Approval No. 10155L nor have you submitted an application for relocation to any site at which you have a legal right to operate a pharmacy. According to section 98(3) of the National Health Act 1953 the Secretary, of whom I am delegate, may now cancel your approval. Section 98(3) states 'Where the Secretary is satisfied that an approved pharmacist is not carrying on business as a pharmacist at premises in respect of which the pharmacist is approved, the Secretary may, by notice in writing to the pharmacist, cancel the approval of the pharmacist under section 90.' I have extended your approval until December 14th 1996. Please show cause by that date why your approval should not be cancelled pursuant to section 98(3) of the National Health Act 1953." · On 13 December, 1996, Mr Tucker received a letter from Mr Brown dated 11 December 1996 as follows: "Thank you for your letter of 2 December 1996 in which you sought further information regarding proposed use of our approval to supply pharmaceutical benefits at shop 15 Strathfield Plaza. Our approval should remain suspended as: a. The managing agents of Strathfield Plaza have stated that the premises is not yet leased and that our application is well in the running to be accepted. b. The premises is still in a state of reconstruction. It is still impossible to establish a pharmacy in this location as there is no ceiling, lighting, shopfront or security for pharmaceuticals. Little or no work appears to have been done to the premises for over one month, during which time Strathfield Plaza building effort has been concentrated on getting Franklins enlarged, refurbished and re-launched as Franklins Fresh.

c. The best opportunity for us to relocate is in a new development being conducted by Meriton Apartments Pty Ltd. This 250 home unit tower block is situated between Strathfield Plaza and Strathfield Railway Station, the ground floor of which will include 12 shops. We have to-day been advised by the developer that these shops will not be leased but will be made available for purchase off the plan. We were also told that we could not be advised of final details including prices, until these are established by the end of January 1997. Indicative prices and details were discussed. This opportunity is both real and realistic and concrete negotiations will commence as soon as possible. For these reasons and bearing in mind the likely construction industry slow down during the festive season and in January, we request your favourable consideration of an extension of our approval suspension. Thanking you for your valued consideration of this matter and wishing you the compliments of the season." · On 16 December 1996, Mr Tucker replied to the third respondents by letter in these terms: "I refer to your letter dated 11 December 1996, a copy of which you relayed to me via facsimile on 13 December 1996. Before I am able to make a decision, I require additional information. You state that the premises in Strathfield Plaza has not been leased, and that the managing agents have advised you that your application is being considered and has the possibility of being accepted. I would be grateful if you could provide me with written verification from the managing agents that you have in fact made an application in respect of the premises, the nature of that application, whether that application is being considered favourably, and when a decision in respect of the tenancy of the premises will be made. You have further advised that you are considering the purchase of premises in a new development being conducted by Meriton Apartments Pty Ltd. Could you please provide a letter from the developer verifying the availability of shops in the new development, and an anticipated date for the completion of the new premises. I would ask that the above information be provided to me as soon as possible, and in any event, no later than 23 December 1996. I look forward to hearing from you." (Mr Tucker said in his affidavit that, based on the information available to him at that time, he was uncertain about whether the third respondents had a legal right to occupy the premises, and that he was concerned to give the third respondents every reasonable opportunity to establish that right before proceeding to cancel the approval.)

· On 17 December 1996, Mr Tucker received from Ebsworth & Ebsworth, the solicitors for the third respondents, a facsimile bearing that date together with certain annexures which I have annexed to these reasons.

· By letter dated 23 December 1996, Mr Tucker wrote to the third respondents as follows: "I refer to your facsimile correspondence of 19 December 1996 concerning Messrs Brown & Brislan and Mrs Krivoshev. I note that you have instructions to act in this matter which relates to the Strathfield Plaza Amcal Chemist, PBS approval number 10155L. I advised Messrs Brown & Brislan and Mrs Krivoshev on 16 December 1996 that I required additional information before considering the matter of their approval and whether I, as delegate of the Secretary, should cancel their approval. Your facsimile has provided additional information concerning the Meriton Apartment development which I will take into account when considering this matter. In my correspondence of 16 December 1996 I requested clarification concerning your client's relationship with the Strathfield Plaza and the status of any application to lease premises in that complex. I have received no information in response to this request to date, and would be grateful if you provide the information sought as soon as possible. It is my intention to review this matter on 9 January 1997 with a view to determining whether I should cancel your client's approval under the provisions of s.98(3) of the National Health Act. I will take into account all relevant information available to me at that time. Accordingly, if there is any additional information which may be relevant to my consideration, I would ask that it be made available to me prior to 9 January 1997."

· On 3 January 1997, the HIC received an application from the applicant to relocate to the Strathfield Plaza premises, as has been previously described in the affidavit of Ms Mihulka sworn on 10 December 1996.

· On 6 January 1997, the third respondents lodged a formal application with the HIC to relocate its approval from the Strathfield Plaza premises to the Meriton premises. This was referred to the second respondent for recommendation, as required by s.90 of the Act. · Following a directions hearing in these proceedings on 6 January 1997, Mr Tucker was advised by his solicitor that the proceedings had been adjourned at the request of the applicant, on the basis of an agreement reached between it and the third respondents. This was confirmed by letter received on 7 January 1997 from the applicant's solicitors, with the endorsement of the solicitors for the third respondents, requesting that Mr Tucker not proceed to make a decision on 9 January 1997.

· Accordingly, on 8 January 1997, Mr Tucker wrote to Messrs Ebsworth & Ebsworth to confirm the advice he had received from his solicitor. At this stage, Mr Tucker said he did not proceed to consider further the cancellation of the approval as he had been requested by both interested parties not to do so. He said that he also regarded it as inappropriate to proceed to cancel an approval when a separate application to relocate the approval was being considered by the second respondent.

"24. Following the January meeting of the second respondent I was advised that the second respondent had deferred consideration of the section 90 applications made by both the applicant and the third respondents until its February meeting. I also understood these proceedings to have been deferred on the basis of the agreement reached between the applicant and third respondents, and the failure of the applicant to appear at a directions hearing on 13 January 1997. 25. In these circumstances, I understood the request by the interested parties that I not proceed to make a decision to be still operative, and did not proceed to consider the matter further."

Reference should also be made, again by way of background, to the relevant Rules determined by the Minister under s.99L of the Act under Determination No.PB18 of 1995.

The Determination was to commence on 1 January 1996. Determination No.PB6 of 1995 made in May 1995 was revoked.

The grant of approval to supply pharmaceutical benefits is dealt with by Rules 3 to 9.

A copy of those Rules and Rule 2, the interpretation provision, are annexed to these reasons.

It will be noted by Rule 7(aaa) and (a)(i), it is provided, inter alia, that approval:

"7. Subject to paragraph 8, approval of a pharmacist ('the applicant') under section 90 of the Act in respect of particular premises may be recommended if the applicant has a legal right to occupy those premises, and either: (aaa) the applicant is already approved under section 90 of the Act in respect of other premises from which the applicant proposes to cease supplying pharmaceutical benefits immediately before the granting of the approval; or .... and either of the following circumstances applies: (a) the premises in respect of which approval is sought are situated in a large shopping centre; provided that (i) if the shopping centre contains not more than 99 retail shops (including the premises in respect of which approval is sought), there are not already any premises in the shopping centre in respect of which an approval under section 90 of the Act is in force; or ...." THE NOTICE OF MOTION

The notice of motion mentioned earlier in these reasons, filed by the second respondent on 18 February 1997, seeks an order that:

"It ceased to be a party to the proceedings on the basis that it has been improperly and/or unnecessarily joined pursuant to Order 6 Rule 9 of the Federal Court Rules."

"9 Where a party - (a) has been improperly or unnecessarily joined; or (b) has ceased to be a proper or necessary party; the Court, on application by any party or of its own motion, may order that he cease to be a party and make orders for the further conduct of the proceeding."

On behalf of the second respondent, it is submitted that it has no decision-making power under s.98(3) of the Act and that while the second respondent has the function of making recommendations in respect of an application under s.90 (see s.99K(1)(b) of the Act), this application now before the Court does not seek review of any failure to make a recommendation. Further, it is submitted that the second respondent has, in any event, no power to make any recommendation in respect of a cancellation of approval under s.98(3).

Reference is made on behalf of the second respondent to the affidavit of Mr Peek, its solicitor, sworn 24 February 1997. Annexed to Mr Peek's affidavit is a copy of an instrument of delegation approved by the Secretary of the Department of Human Services and Health, as it was then called, on 30 June 1995, by which the Secretary delegated various powers under the National Health Act 1953. Mr Peek said that he had been instructed, and verily believed, that no other delegation of the Secretary's powers had been made under s.98 of the Act. The point, apparently, is that the Secretary has not delegated any relevant power to the Authority.

It has already been said that the application is made under Order 6 Rule 9 and the question is now whether it is appropriate that an order be made that the second respondent cease to be a party.

The principles in this area are well-settled. Where the question raised on the propriety of a joinder of a party is, in some respects at least, related to a substantive issue, which is itself an arguable issue, then the application for dismissal of the parties should not be dealt with as an independent or preliminary issue unless the defect as to parties is plainly demonstrable; see Uniting Church in Australia Property Trust (NSW) v Monsen [1978] 1 NSWLR 575 at 585. So far as the removal of a party is concerned such removal is, in effect, equivalent to a summary dismissal and it is appropriate in that situation to apply "the obviously untenable" test enunciated in the General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 line of authority.

As has been noted, the second respondent does have some role to play in the overall statutory scheme. At the same time, there is some force in the second respondent's submission that the Secretary is the real respondent. But, in my opinion, this is to view this aspect in a substantive light and the present point, one of joinder only, should be seen more broadly in the adjectival sense. With some hesitation, I have come to the conclusion that, in the light of the factual and legal complexities revealed in the principal proceedings, it cannot be said that the joinder of the Authority was without justification (cf. Rogers v Australian Community Pharmacy Authority (1996) 42 ALD 1).

I therefore dismiss the notice of motion and order that the second respondent pay the costs incurred by the applicant in respect of the motion, if any.

In his oral submissions, counsel for the applicant, first referred, as a starting point to his submissions, to the original letter from one of the third respondents which foreshadowed that the business would close on 9 October 1996. Counsel said that the nub of his client's case is that the failure of the first respondent to make a decision cancelling the approval number of the third respondents has meant that the applicant cannot commence to trade as a pharmacist supplying benefits under the Act because, whilst there is an approval number held by another person in respect of the same premises, no approval can be granted to the applicant. Counsel referred to that part of Rule 7 of No.PB18 of 1995 which provided that:

"Subject to paragraph 8, approval of a pharmacist ('the applicant') under section 90 of the Act in respect of particular premises may be recommended if the applicant has a legal right to occupy those premises and ... the premises in respect of which approval is sought are situated in a large shopping centre provided that:

(i) if the shopping centre contains not more than 99 retail shops (including the premises in respect of which approval is sought), there are not already any premises in the shopping centre in respect of which an approval under section 90 of the Act is in force."

Counsel then made the point that this state of affairs leads to the dilemma which the applicant faces. Counsel submits that, in essence, the present position is that the HIC has decided to defer making a decision until an unspecified later date or until certain other things may, or may not, happen. Counsel argues that, although there appears to be a discretion given to the Secretary in s.98(3) of the Act, the circumstances of the present case require that discretion to be exercised.

It is further submitted that, on the true construction of s.90 of the Act, it is clear that approval numbers are only to be granted in relation to specific premises. In this connection it is argued that the importance of particular premises has been emphasised in a number of cases. Reference was made to Secretary, Department of Health, Housing, Local Government and Community Services v Kaderbhai (1994) 51 FCR 416 where the Full Federal Court said (at 421):

"However, what we have noted about the provisions of the Pharmacy Act leads to the submission that the premises approved under s 90(1) of the Act must be, consistently with s 90(4), the very premises at which the pharmacist is permitted under the State law to carry on business. Further, the 'particular premises', which are the subject of the application under s 90(1), must correspond exactly with · the 'particular premises' referred to in s 99k(1)(b), · the 'premises' referred to in s90(4), and · 'those premises' in respect of which approval is granted under s90(1). Approval cannot, it is submitted, be granted in respect of part only of the premises the subject of the application."

"These submissions require consideration of s 90(4), which is a curiously worded provision. It does not say that the Secretary shall not approve a pharmacist whose premises are not approved and who is not registered as the owner of the relevant business under State or Territory law relating to control of pharmacies. At first glance it may seem to amount to no more than an expression of intention that the Act should not displace any such State or Territory law in accordance with s 109 of the Constitution. The Secretary, however, evidently takes the view that s 90(4) operates as a limitation on power and that an applicant must show that he is permitted under a law, such as the Pharmacy Act, to carry on business at the premises in respect of which approval is to be granted.. The Secretary is plainly correct. The expression 'Nothing in this section authorizes' signals a limitation on power. This expression is similar to the language limiting the legislative power of the Parliament employed in s 51 (xxiiia ) of the Constitution. The permission contemplated by s 90(4) must be specific to 'that pharmacist' in respect of the premises for which approval is to be granted. The permission required is not of a town planning or land use type, which would relate only to the premises." In essence, the argument for the applicant was centred on the notion that the circumstances of the present case required that the discretion be exercised, and reference was made to the observations of Windeyer J. in Finance Facilities Pty Ltd v The Commissioner of Taxation (1971) 127 CLR 106 (at 134-5) as follows: "The question then is, must the permitted power be exercised if one of those conditions be fulfilled? This does not depend on the abstract meaning of the word 'may' but of whether the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the 'may' becomes a 'must'. Illustrative cases go back to 1663: R. v. Barlow. Today it is enough to cite Julius v. Bishop of Oxford; and add in this Court Ward v. Williams. But I select one other reference out of a multitude: Macdougall v. Paterson. There Jervis C.J. said in the course of the argument 'The word 'may' is merely used to confer the authority: and the authority must be exercised, if the circumstances are such as to call for its exercise'. And, giving judgment, he said: 'We are of opinion that the word 'may' is not used to give a discretion, but to confer a power upon the court and judges; and that the exercise of such power depends, not upon the discretion of the court or judge, but upon the proof of the particular case out of which such power arises.' I consider that to be directly applicable to the present case. If the Commissioner, having considered the matter, is satisfied of facts out of which the power to allow a rebate arises, he cannot nevertheless refuse to allow it."

Counsel then pointed to the apparent policy which underlies s.90 - to some extent, it was reflected in the policy papers already referred to in the evidence. It was submitted on behalf of the applicant that s.90 relates specifically to premises, to ensure that the regulations which underly the Act, and which are set out in the Determination, are adhered to and that particular premises which are approved, do supply pharmaceutical benefits. As counsel put it:

"...where those benefits are no longer being distributed the requirement is that the authority to distribute those pharmaceutical benefits should be cancelled."

It was submitted that the evidence of Mr Tucker, which purported to deal with reasons for not making a decision, should not be accepted. That evidence, the argument ran, discloses a course of correspondence which, in the submission of the applicant, clearly indicates that the third respondents had no basis whatsoever to assert that they were entitled to remain in occupation of the premises.

It is said that the approach taken by the Department ignored the facts as they were presented to it, and at worse, involved the Department "closing its eyes" to the true facts. It is said that it could not have been made much clearer in the excuse provided by the third respondents to justify an extension of time, that there was a complete absence of any proper basis for the excuse proffered.

It is the applicant's submission that the decision, which the first respondent was bound to make, at the very least, should have been made within a reasonable time of being notified that the premises had been - if not abandoned - no longer occupied by the third respondents, so that there were no pharmaceutical benefits being dispensed from those premises.

On behalf of the applicant it is submitted that there is an implication that the decision to cancel an approval under s.98(3) of the Act should be made within a reasonable time and further, that this implication should be made as a matter of the ordinary process of statutory construction in the present context. Reliance is placed in this connection on observations made by the Full Federal Court, in speaking of another provision of the National Health Act, in The Hospital Benefit Fund of Western Australia v the Minister for Health, Housing and Community Services (1992) 39 FCR 225 (at 229) as follows:

"Although s 78 does not contemplate the removal, from the constitution, articles or rules of an organisation, of a provision which has had some period of operation, the question remains whether the veto upon the coming into effect of a change, for which it does provide, may be the subject of indefinite delay. That would be a highly inconvenient view. It would mean that the organisation, having notified the Minister in accordance with the Act, would thereafter always have to conduct its affairs under the sword of Damocles of the possible formation of an adverse ministerial opinion. In the case of some rule changes, this might be very destabilising. If the Minister is not bound to form his opinion within a reasonable time, the organisation could do nothing about it. But upon a long delayed opinion being formed, the disallowance ab initio which would be involved might lead to the necessity to reassess numerous claims spanning a period of, perhaps, years." (b) (i) The first respondent's written submissions Counsel for the first and second respondents handed up a chronology of events which is a convenient summary. It is annexed to these reasons. Again, it provides a perspective on the evolution of the dispute and of its complications, hopefully a rare occurrence in these matters. Counsel then outlined his client's submissions as follows: "Preliminary issue 1. The application is misconceived and fails at the threshold. Section 98(3) of the National Health Act 1953 ('the Act') confers a discretion or a power, but not a duty. Whether an Act confers a duty which must be exercised if the circumstances call for its exercise, or conversely confers a discretion, is to be determined by reference to the language, structure and purpose of the Act: Wamba Wamba Aboriginal Land Council v Minister Administering the Aboriginal and Torres Strait Islander Heritage Protection Act (1989) 23 FCR 239 at 246.8, per Lockhart J. 2. Section 98(3) manifestly confers a discretion. It uses the term 'may', which is a strong prima facie indication of a discretion, rather than a duty: see Finance Facilities Pty Limited v Commissioner of Taxation (1971) 127 CLR 106 at 134, per Windeyer J. 3. The use of the term 'may' in s 98(3) is in sharp contrast to the use of the mandatory 'shall' in 98(1) and 98(4). Those two sub-sections require the exercise of the power which each confers. The intervening sub-sections, s98(2), (3) and (3A), by contrast use the discretionary 'may'. 4. This careful scheme of distinction between mandatory duties and discretionary powers is used consistently elsewhere within the Act: see, for example, the discretionary power conferred by s 95(1) and compare the mandatory duty conferred by s 95(5). A similar distinction is apparent in the different subsections of s90 of the Act. 5. Unless the person has a duty to make a decision to which the ADJR Act applies, there is no basis for an application under s 7 of that Act: see s 7(1)(a) and s7(2)(a) and Brownsville Nominees Pty Limited v FC of T (1989) 19 FCR 169 at 173.9, per Northrop J. Unreasonable Delay 6. There is no evidence to justify a finding that there has been unreasonable delay in making the decision. The first respondent has obligations not only to the applicant under the Act, but also to the third respondents, who presently hold an approval in respect of the premises. A decision to cancel a pharmacist's approval under s98(3) is subject to a right of merits review to the Administrative Appeals Tribunal: see s105AB(8A). 7. The question whether to cancel has in fact received diligent attention. Any delay in reaching a final decision as to whether to cancel the approval has been occasioned by the need to afford procedural fairness to the third respondents, and by the action of the applicant itself. There can be nothing unreasonable in a decision-maker deferring a decision in order to give those whose legal rights are affected by it the opportunity to be heard. 8. The test of 'unreasonable delay' is a high one: see Thornton v Repatriation Commission (1981) 35 ALR 485 at 490, per Fisher J. See also Raw v Pharmacy Restructuring Authority (1993) 30 ALD 376; Rogers v Australian Community Pharmacy Authority (1996) 42 ALD 1; Kelly v Watson (1985) 64 ALR 113)." (ii) The first and second respondents' initial oral submissions

On behalf of the first and second respondent, counsel submitted that, in essence, his clients found themselves in the middle of a commercial dispute in which both the applicant and the third respondents were asserting strong claims to commercially valuable approvals under the Act. Those parties were acting in a position, the argument ran, in which it was imperative that the first and second respondents afford a proper hearing to each of the parties.

It was further submitted on behalf of the first and second respondents that the language of s.98(2) and (3) of the Act is plainly directory and not mandatory. It is said that if it were otherwise, difficult administrative consequences could follow.

Counsel then went to the history of the matter and submitted that the extension or suspension of the cancellation for a period of 30 days, given in late October 1996, was not an unreasonable period. Indeed, anything less might have been said to be unreasonable, given the nature of the commercial rights involved. In any event, counsel pointed out that, from the perspective of a public authority administering legislation such as this, concerning valuable commercial rights, to defer the matter until the February 1997 meeting was hardly unreasonable.

Approximately a month ago, on 20 February, as the evidence disclosed, the second respondent made a recommendation for the relocation of the third respondents' approval. (I should interpolate at this stage that the hearing in this matter took place on 21 March 1997.) It was contended that it could not be correct to say of a course of cautious consideration such as this, that it was so unreasonable that no reasonable decision-maker could have engaged in it.

Counsel for the applicant later outlined his further submissions in writing as follows:

"Timing 1. The affidavit of Mihulka sworn on 28 February 1997 indicates that on 12 April 1997 the applicant will be required to vacate its premises at Blacktown (paragraph 10). The second respondent did at its meeting on 23 February 1997 recommend the approval by the first respondent of the applicant's application to relocate its approval to dispense pharmaceutical benefits under the National Health Act ('the Act') from the Blacktown premises to the premises at Strathfield Plaza ('the Premises') conditional upon the removal (either by revocation or relocation) of the third respondent's approval number from the Premises. 2. No decision is now required to be made by the second respondent in order for the first respondent to approve the relocation of the applicant under section 90 of the Act. Upon the condition being satisfied, the approval will become unconditional. 3. The result is that the deadline of 25 March 1997 is not now critical. Rather, from the applicant's point of view, it is essential that a decision be made by the first respondent prior to 12 April 1997. Application under section 7 of the Administrative Decisions (Judicial Review) Act 4. The policy underlying the scheme for the dispensation of pharmaceutical benefits under the Act is the maintenance of an effective, efficient and well distributed community pharmacy service in Australia (The Pharmacy Guild of Australia v Australian Community Pharmacy Authority, unreported, Branson J, 20 November 1996 at 7.8 and 21.8 - 22.2). 5. It is inconsistent with this policy to permit approval numbers granted under section 90 of the Act to remain unused or to allow the existence of an unused approval number to prevent the use of particular premises which are suitable for the dispensation of the benefits. 6. Section 90 of the Act expressly requires that approval numbers relate to 'particular premises' (ss 90(1), (2), (3), (3AA) and (4)). It has been recognised that the requirement that the applicant for approval operate from particular premises is significant requirement to the scheme of the Act. 7. The words of section 98(2)(a) and 98(3) of the Act confer a power and a duty upon the first respondent to make a decision in accordance with the principles set out in Julius v Lord Bishop of Oxford (1880) 5 AC 214 at 222-223). 8. They should be taken in the context of the grant of approvals themselves. Section 90 and the Determination made under section 99L of the Act (which is exhibit 1) emphasise the strong relationship between premises and the grant of approvals - see Secretary, Department of Health, Housing, Local Government and Community Services and Anor v Kaderbhai (1994) 51 FCR 416 at 419G, 422A-E. 9. It could not have been intended by parliament that upon the satisfaction of the criteria set out in sections 98(2)(a) and 98(3) (that is, the notification to the first respondent that the pharmacist has ceased to carry on business as a pharmacist at the premises) the Secretary could decline to cancel the approval number. 10. In the circumstances, it is submitted that the word 'may' must confer upon the first respondent a duty to make a decision - Windeyer J in Finance Facilities Pty Limited v Federal Commissioner of Taxation (1970) 127 CLR 106 at 134-135. 11. It is further submitted that in the circumstances of this case, the first respondent has unreasonably failed to make a decision. Where a statute is silent on the question of time in which an act is to be performed, it is usually inferred that the decision should be made within a reasonable time - BTR v Westinghouse Brake and Signal Company (1992) 34 FCR 246 at 253.3 & 272.9 - 273.1 per Lockhart, Hill and Beaumont JJ; Neal v Commissioner for Superannuation (1987) 76 ALR 281 at 290 - 291). 12. It is submitted that upon receipt of clear evidence that the third respondents had no possibility of returning to the premises at Strathfield Plaza ('the Premises'), the first respondent ought to have made its decision. 13. The requirements of both section 98(2)(a) and section 98(3) of the Act were satisfied by provision of the information contained in the third respondent's facsimile of 9 October 1996 (annex A to Tucker). 14. To the extent that it was reasonable for the first respondent to obtain confirmation that the third respondent had no entitlement and would obtain no entitlement to reoccupy the Premises, that confirmation was provided in the third respondent's lengthy letter of 15 October 1996 (annexure C to Tucker at paragraphs 6, 10, 16, 24 and 27). That letter stated that the landlord had refused them a further lease; a later letter from the third respondents (Annexure F to Tucker dated 26 November 1996) indicated that their 'preferred position' was to keep the approval number at the Premises, a position which was clearly untenable and which the first respondent should have realised was untenable. 15. The alternative suggested in the letter of 26 November was a relocation to premises which were then yet to be built. A request was made for a suspension of the approval number for 12 months. 16. The Act provides no facility for the 'suspension' of approval numbers. On 27 November the applicant notified the first respondent of its interest in the Premises and the reason why it was concerned that the third respondent's approval number not be permitted to remain (Annexure I to Mihulka's affidavit of 10 December 1996). 17. Notwithstanding the singular failure of the third respondent to provide any documentation to support its contentions as to entitlement to remain at the Premises or move to elsewhere (annexure I to Tucker dated 10 December 1996) the third respondent continued to defer making a decision under the Act. 18. It is submitted that the proposal contained in the agreement between the applicant and the third respondents (annexure C to Deutsch's affidavit) provides no justification for the continued failure of the first respondent to make a decision (paragraphs 24 and 25 of Tucker affidavit). The letter from the solicitors for the first applicant to the first respondent dated 31 January 1997 (annexure E to Deutsch) sets out the position." (d) The first and second respondents' supplementary written arguments The first and second respondents made the following further written submissions:

"1. As to paragraph 2 of the applicant's submissions the second respondent has no determinative powers in relation to relocations, but merely recommendatory powers. The first respondent has a discretion whether to accept the recommendation, and may refuse to grant the approval even if recommended: s90(3B). 2. The judgment of Windeyer J in Finance Facilities Pty Limited v Federal Commissioner of Taxation (1970) 127 CLR 106 at 134-135 does not support the proposition for which it is cited in paragraph 10. Finance Facilities, and the cases which it cites, establish that in some statutes the word 'may' means 'must' if the statutory preconditions are satisfied. In the context of s 98(3), that would mean 'must cancel', not 'must decide whether to cancel'. Subsection 98(3) is not, in any event, a provision of the kind referred to in the passages cited in Finance Facilities. 3. The construction for which the applicant contends in paragraphs 9 and 10 is inconsistent both with the careful distinction drawn in the use of 'may' and 'shall' in the various sub-sections of s 98, and also with the obvious need for the cancellation power to be discretionary. If it were non-discretionary, temporary cessations, for example, would lead to the mandatory cancellation of the approval. 4. As to paragraph 11, BTR v Westinghouse Brake concerned the time within which an undoubted statutory duty was to be performed. The respondents submit there is no duty here. The passage relied upon from Neal v Commissioner for Superannuation is a minority view in that case, with respect. 5. As to the suggestion that it was clear from 9 October 1996 that the third respondents had no possibility of returning to the premises, that contention was contrary to the third respondents' assertions to the first respondent. The lease which the applicant claimed to have to the premises in the 27 November 1996 letter (annexure K, p 25, to affidavit of Mihulka sworn 10 December 1996) was unexecuted: see p 32 to those annexures. It was reasonable, indeed necessary, that the third respondents be given the opportunity to make good those assertions prior to a decision being reached to cancel a commercially valuable approval. 6. The actual relocation upon which the applicant relies in the case was not sent until 2 January 1997 (see annexure B to the affidavit of Mihulka sworn 28 February 1997, and the following page). By 8 January both the applicants and the third respondents had asked the first respondent to defer consideration of the matter. 7. By the time the applicant wrote on 31 January seeking to cast doubt upon the basis upon which its agreement to that course had been obtained, the second respondent had decided to consider the relocation applications at its 20 February meeting, and did so (affidavit of Deutsch, paragraph 10). It is entirely reasonable that the first respondent should defer consideration of whether to cancel the approval when an application for relocation is pending before the second respondent, to be decided within three weeks. 8. Given the factual material and legal complexity of the applications for relocation made on behalf of the applicant and the third respondents, there has been no failure to decide within a reasonable time whether to cancel the approval, even if there be a duty to do so."

The legal representative of the third respondents appeared at the hearing to submit to any order that the Court might make, save as to costs.

CONCLUSIONS ON THE CLAIM FOR FINAL RELIEF By its amended application the applicant seeks the following final relief: (1) An order directing the first respondent to make a decision by, in effect, such time as the Court thinks fit, whether to cancel the Brown Approval pursuant to s.98(3) of the Act.

(2) An order declaring the rights of the parties in relation to the making of the decision.

(3) An order directing the respondents to do such acts or things which the Court considers necessary to do justice.

It will be recalled that s.7(1) of the Administrative Decisions (Judicial Review) Act requires, in effect, that four conditions be satisfied in order that judicial review might be granted. There must be:

2. No prescription of the period within which the person is required to make that decision;

It appears that if, in the events which happened here, and contrary to the contentions of the first and second respondents, conditions 1 and 4 were established in the present case, there would be no room for dispute about conditions 2 and 3.

The first real question then is, whether there was a duty in the first respondent to act under s.98(3) in the circumstances of this case. It will be remembered that by s.98(3) of the Act it is provided:

"3. Where the Secretary is satisfied that an approved pharmacist is not carrying on business as a pharmacist at premises in respect of which the pharmacist is approved, the Secretary may, by notice in writing to the pharmacist, cancel the approval of the pharmacist under section 90." It is true, as the first and second respondents submitted, that before acting under s.98(3), the first respondent was bound by the application of the rules of natural justice to afford the third respondents a reasonable opportunity to be heard. However, by any measure, the third respondents had been given that opportunity in 1996. It is also true that s.98(3) uses the words "may cancel" (emphasis added), in contrast to the phrase "shall cancel" (emphasis added). Nevertheless, as the settled course of authority previously mentioned demonstrates, it does not follow that the use of the word "may" is a conclusive indicator of the existence of a discretion rather than a duty to act, at least where the statutory conditions for the exercise of power are fulfilled.

In my view, the observations of Windeyer J. In Finance Facilities, supra, are in point here. That is, I would construe s.98(3) of the Act to mean that once the first respondent was satisfied that the third respondents were not carrying on business at the premises specified, the first respondent came under a duty to cancel that approval.

In the present case, at least by the time of the hearing in this Court on 21 March 1997, the first respondent must have been so satisfied. The evidence recited above at such tedious length could admit of no other conclusion.

It follows in my view that condition 1 was satisfied.

I turn next to condition 4. Whether the delay in making a decision was unreasonable is, of course, a question of fact. Again, I accept in the first and second respondents' favour that they were obliged to provide the third respondents with an adequate opportunity to argue against cancellation.

I further take into account in explaining the lapse of time that has occurred, the apparent complexities arising out of the several attempts, all ultimately unsuccessful, of the third respondents to resurrect their previous leasehold arrangements at Strathfield Plaza, together with the intervening role of the applicant in this connection.

I further take into account in explaining in part the lapse of time, the changes of direction that occurred in December 1996 and January 1997, when it appeared that the applicant and the third respondents might make a joint application and that sense might prevail.

Nonetheless, by the time of the hearing on 21 March 1997, the position had been reached where, for considerably more than a month, the first respondent must have known that no accommodation between the applicant and the third respondents were possible and that no joint application would be forthcoming. Moreover, as has been said, it was plain by January 1997 that the third respondents had absolutely no prospect of retrieving their location in the Strathfield Plaza.

In those circumstances, in my opinion, there was a delay in acting to cancel under s.98(3) of the Act that should be described as unreasonable. Condition 4 is thus satisfied.

I certify that this and the preceding fifty (50) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont. Associate: Dated: 8 April 1997 Counsel and Solicitors for the S C G Burley Applicant: instructed by Cutler Hughes & Harris Counsel and Solicitors for the N Williams with T Reilly first and second respondents: instructed by Australian Government Solicitor Counsel and Solicitors for the M J Steele third respondents: instructed by Ebsworth & Ebsworth Date of hearing: 21 March 1997 Date judgment delivered: 8 April 1997