[1993] FCA 348; (1993) 30 ALD 349 (extract)[1993] FCA 348; , (1993) 43 FCR 418

Administrative Law - pharmaceutical benefits - retail pharmacy industry restructuring - legislative scheme - Ministerial guidelines - objectives - construction and application - new pharmacy premises - application for approval - role of Pharmacy Restructuring Authority - role of Secretary - requirement for definite unmet public need - need - whether existing or prospective - public - whether limited community - whether need related to pharmacy or pharmaceutical benefits - characterisation of public need.

Word and Phrases - "need", "public", "definite unmet public need".

National Health Act 1953 (Cth)

Administrative Appeals Tribunal Act 1975 (Cth) s.37

Community Services and Health Legislation Amendment Act 1990 (Cth)

Health and Community Services Legislation Amendment Act 1991 (Cth)

Commonwealth of Australia v. Crowe (1992) 111 ALR 193

Re Shortis and Secretary, Department of Community Services and Health (1991) 23 ALD 396

Re Garozzo and Pharmacy Restructuring Authority (1992) 16 AAR 251

Buttery v. Muirhead (1970) SASR 334

Silkman v. Kendall (1982) 1 NSWLR 133

Toohey v. Taylor (1983) 1 NSWLR 743

Latitude Fisheries Pty Ltd v. Minister for Primary Industry and Energy (unreported, 31 March 1993)

Solicitors for the Applicants: Australian Government Solicitor

1. The decision made by the Tribunal be set aside and the following decision substituted:

(a) The recommendation of the Authority be set aside and in

substitution therefor it be recommended by the Authority

that the respondent be approved for the purpose of

supplying pharmaceutical benefits from the proposed

premises at Warnbro.

(b) The decision of the Secretary of the Department of

Community Services not to approve the respondent be set

aside and the Secretary be directed to reconsider the

application in light of the substituted recommendation of

the Authority and to approve the respondent subject to

the Secretary's satisfaction as to incidental matters

such as compliance with s.90(4) of the National Health

Act 1953.

2. The appeal be otherwise dismissed.

3. The applicants to pay the respondent's costs of the appeal.

Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.

DAVIES and LEE JJ This is an appeal from a decision of the Administrative Appeals Tribunal ("the Tribunal") constituted by the President, Justice D.F. O'Connor, Deputy President P.W. Johnston and Dr J.G. Billings. Under s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) the appeal is limited to a question of law. The Tribunal described the decision under review thus:-

"1. The applicant, Kevin Norman Chatfield,

seeks review of a decision of the Secretary,

Department of Health, Housing and Community

Services, not to approve him for the purpose of

supplying pharmaceutical benefits from the

proposed premises at Warnbro, Western Australia.

The decision was made upon the recommendation of

the Pharmacy Restructuring Authority."

"The Tribunal sets aside the decision under

review and decides in substitution therefor to

approve the applicant for the purpose of

supplying pharmaceutical benefits from the

proposed premises at Warnbro, Western

Australia."

2. The respondent, Mr K.N. Chatfield had applied under s.90 of the National Health Act 1953 (Cth) ("the Act") to the Secretary, Department of Health, Housing and Community Services ("the Secretary") for approval for the purpose of supplying pharmaceutical benefits at or from proposed premises at Warnbro, a developing area south of Rockingham in Western Australia. Section 90(3A) of the Act provides that such an application must first be referred to the Pharmacy Restructuring Authority ("the Authority") and s.90(3B) provides that approval may not be granted unless the Authority has recommended the grant of the approval. Section 99K of the Act provides that a function of the Authority is to consider applications made by pharmacists under s.90 of the Act and to make a recommendation as to whether or not the application should be approved under that section.

3. The Authority considered Mr Chatfield's application and recommended that approval not be granted. The Secretary accordingly refused the application. On 27 March 1991, the Authority advised Mr Chatfield in writing that it had recommended that approval not be granted and that the Secretary had agreed with this recommendation.

4. At that time, under s.105AB of the Act, the Administrative Appeals Tribunal had jurisdiction to review a decision of the Secretary rejecting an application of a pharmacist under s.90. However, s.105AB did not in terms confer jurisdiction to consider the recommendation of the Authority. That jurisdiction was later conferred by s.105AD of the Act which was introduced by the Health and Community Services Legislation Amendment Act 1991 (Cth). The new section had a retrospective effect and provided, inter alia:-

"(v) a reviewable recommendation made by the

Authority on or after 18 December 1990 and

before the day on which this section begins is

taken to be a recommendation made on that later day."

Accordingly, the recommendation of the Authority was deemed, for the purpose of s.105AD, to have been made on 24 December 1991, the date of commencement of the Amending Act.

5. Thus, when the application was made to it, the Tribunal had jurisdiction to review on their merits both the recommendation of the Authority and the decision of the Secretary. It is a necessary implication from the retrospective operation of s.105AD that when the Administrative Appeals Tribunal reviewed a recommendation of the Authority made on or after 18 December 1990 and before 24 December 1991, it could also review any decisions of the Secretary which had been taken in accordance with it.

6. As the parties to the Tribunal's proceedings were expressed to be Mr Chatfield as applicant and the Authority as respondent, and the existence of a favourable recommendation by the Authority is a precondition to the grant of approval by the Secretary, it is clear that the Tribunal reviewed both the decision of the Authority and the decision of the Secretary. The application to the Tribunal by Mr Chatfield was not drawn with technical precision but it seems to have comprised a letter written to the Administrative Appeals Tribunal dated 20 February 1992 and copies of his original application for approval, his letter of 23 April 1991 seeking review, which had been incorrectly addressed to the Health Insurance Commission rather than the Administrative Appeals Tribunal, and a letter of 20 January 1992 written by the Authority to Mr Chatfield advising him of the provisions of s.105AD and of the correct address of the Administrative Appeals Tribunal.

7. In Warnbro, a rapidly expanding area, a developer had undertaken the development of a new shopping centre to be known as the Palm Springs Shopping Centre. This was to include a supermarket of 3,500 square metres, which Woolworths was committed to leasing and operating. Associated with the supermarket were to be approximately twenty-five specialty shops. In addition, a sub-division of five commercial lots was to be completed. At the time of the hearing before the Tribunal, three of the lots had been sold for a service station, a tavern/liquor facility and a medical centre/pharmacy operation. The two remaining sites had been earmarked for a fast food outlet and a video hardware operation. All this occurred within what was described by the developer as Stage 1 of the project.

8. Mr Chatfield applied for approval to establish a pharmacy on the site which the developer had set aside for medical/pharmaceutical purposes. A Dr Trevor Ward gave evidence that he proposed to establish a medical practice on the site initially involving two doctors. He anticipated that the practice would expand to require the equivalent of two 3/4 doctors within 6 months and three 1/2 doctors within 12 months. Associated with the medical practice and pharmacy, there was to be a dental surgery.

9. Not surprisingly, the Tribunal considered that, having regard to the size and nature of the proposed development, it was essential that a pharmacy be included in it and granted approval to Mr Chatfield to establish the pharmacy which he had proposed.

10. The Authority was established as part of a scheme designed to reduce the number of pharmacies in Australia. One object sought to be achieved, so far as the Commonwealth was concerned, was that the cost of dispensing prescriptions would be reduced if the average output per pharmacy was increased.

11. Counsel for the Authority, Mr S. Bhojani, submitted in this appeal that accordingly there was to be implied from the legislation a policy restricting the grant of approvals. However, s.99L deals specifically with the policy. That section provides:-

"(1) The Minister must determine in writing the guidelines

subject to which the Authority is to make recommendations

under subsection 99K(1).

(2) A determination under subsection (1) is a disallowable

instrument for the purposes of section 46A of the Acts

Interpretation Act 1901."

Thus, Parliament has stipulated that the source of relevant policy is the guidelines issued by the Minister, tabled in Parliament and subject to disallowance by Parliament.

12. It follows from the terms of s.99L that an application for an approval under s.90 must be determined in accordance with the guidelines issued by the Minister, not in accordance with a contrary policy sought to be implied from the Act or drawn from any other source. As was pointed out by Black CJ, Burchett and Lee JJ in Latitude Fisheries Pty Ltd v. Minister for Primary Industry and Energy (unreported, 31 March 1993), a decision will be in accordance with guidelines or policy if there be "a substantial measure of consistency" therewith.

13. Counsel submitted that the Act implied that the Minister's guidelines should be read restrictively so as to limit the number of approvals granted and that the Secretary's discretion should be exercised so as to restrict the grant of approvals. But that is not so. The guidelines should not be read restrictively but should be given their full and proper effect. Decisions taken by the Authority and Secretary should be taken in accordance with the Minister's guidelines and not otherwise.

14. Counsel referred to the fact that the Act contains a sunset clause, for s.90(3C) provides that sub-sections (3A) and (3B) of s.90 shall cease to have effect after 31 March 1995. He submitted that it was therefore to be implied from the Act that the Authority was given only a limited time in which to restructure the industry and that the Authority ought not to impede its task by recommending the grant of further approvals. However, no such implication can be drawn from s.90(3C). Its effect is simply that the restructuring scheme will conclude on 31 March 1995 unless Parliament acts in the meantime to prolong it.

15. The relevant policy is that for which Parliament has provided, namely, the guidelines issued by the Minister under s.99L. The guidelines relevant to Mr Chatfield's application read inter alia:-

"3. For the purposes of paragraph 99K(1)(b) of the Act,

the following are guidelines with which the Authority

must comply in making a recommendation on an

application by a pharmacist under section 90 of the

Act:

(a) approval of a pharmacist shall not be

recommended in respect of premises within 5

kilometres by normal access routes from other

premises in respect of which a pharmacy is

already approved;

(b) approval of a pharmacist in respect of

particular premises shall not be recommended

unless the pharmacist demonstrates to the

Authority that there is a definite unmet public

need for that approval" ..."

16. It was submitted by counsel for the Authority that these guidelines rendered town planning principles and matters such as public convenience and public demand totally irrelevant. Counsel referred to paragraph (a) which prohibits a grant of approval should the proposed premises be located within 5 kilometres, by normal access routes, of other premises operated by an approved pharmacist. Certainly, that paragraph, when it applies, does abrogate town planning principles. Approval may not be given within the 5 kilometre limit whether or not there exists a public need for an additional pharmacy within the area. However outside that limit, and Mr Chatfield's proposed premises were more than 5 km from the nearest pharmacy, the prescribed test is that of "a definite unmet public need". This test evokes principles of town planning, of public convenience and of public demand.

17. In Toohey v. Taylor (1983) 1 NSWLR 743, the New South Wales Court of Appeal considered the phrase "the needs of the public in the neighbourhood of a premises" in s.29(1)(e) of the Liquor Act 1912 (NSW). Moffitt P at 745 and Samuels and Priestley JJA at 749 equated "needs" with "the reasonable demands or expectations of the public".

18. That is not to say that other words should be substituted for those used by the Minister, "a definite unmet public need". Every term in that expression is an ordinary word of the English language and each on its own and in combination with the others is readily understood. The question whether, in any particular case, there is a definite unmet public need is a question of fact for the decision-maker of fact. The legislative context does not give to those words a meaning other than their ordinary signification in the English language.

19. Counsel's attack upon the Tribunal's finding of fact, that there was a definite unmet public need for the pharmacy proposed by Mr Chatfield, was based upon his submission that the Tribunal had failed to take into account the objective of the statutory provisions to rationalise the number of pharmacies. However, there was no error in the Tribunal's approach, which treated the words "a definite unmet public need" as carrying their meaning in ordinary parlance.

20. It would have been surprising had the Tribunal not found in favour of Mr Chatfield. A Mr Timothy Auret, Senior Structure Planner, Department of Planning and Urban Development (WA), gave evidence which was accepted by the Tribunal. Mr Auret said that town planners were agreed that there was a need for a pharmacy, a convenience type store, in most localities of 4-6,000 people. Mr Auret said that the present population of Warnbro was approximately 6,000 persons and was expected to develop to 21,000 persons and that, because of open public space surrounding the Rockingham city area, Warnbro would become a discrete trade area. Mr Auret gave this evidence inter alia:-

"But by and large, you would expect the people living in the

Warnbro area once it is fully developed and the other

shopping centre, the one that is going up, is to open and so

forth, to remain and trade in that area?---Yes, yes.

But because that shopping centre does not

presently exist there is a necessity in the

sense that, due to the lack of that shopping

centre, people are travelling elsewhere?---Yes.

And that is an inconvenience at the present

time?---Yes."

This evidence showed that the shopping centre was being developed to meet an existing need and that, in such an area, there was a need for a pharmacy.

21. Counsel for the Authority submitted that, notwithstanding the proof of a definite unmet public need, the Tribunal ought not to have decided in favour of Mr Chatfield's application, having regard to the overall desirability of reducing the number of pharmacies in Australia. However, the Tribunal was correct in applying the guidelines as stated by the Minister. Having regard to the terms of guideline (b) and to the absence of any guideline propounding a policy such as that suggested by counsel for the Authority, it was proper to imply that, if a definite public need for a pharmacy outside the 5 km area was established, then, unless some special reason to the contrary was shown, approval for a pharmacy ought to be granted so as to meet that public need. That is because the guideline, outside the 5 km limit, specifies "a definite unmet public need" as the relevant criterion.

22. It was submitted by counsel that the fact that the shopping centre in Warnbro was under development was irrelevant, as was the fact that Warnbro was a developing community which was anticipated to increase from about 6,000 persons to about 21,000 persons. Counsel submitted that there was no proper evidence of need as there was no indication that the public transport system was inadequate or that transportation was otherwise a problem.

23. However, the Tribunal was correct in treating the development of the Palm Springs Shopping Centre as evidence of the shopping needs of the public in the Warnbro area. The Tribunal was also correct in having regard to the estimated increase in the population, an estimate which must have played a part in the planning for the shopping centre development. These were all matters of fact from which the public need could be inferred. They would, indeed, seem to be of much more significance than evidence from members of the community, if such evidence had been called, that it was inconvenient for a particular mother with young children or for a particular disabled person to attend a pharmacy in Rockingham.

24. Counsel submitted that the Tribunal ought to have had regard only to that aspect of a pharmacy which involved the dispensation of prescriptions attracting benefits under the Commonwealth's health scheme. However, there is nothing in the legislation which limits the ambit of the Tribunal's consideration to such a matter. It is not irrelevant that an approved pharmacist dispenses all prescriptions, whether they attract a Commonwealth benefit or not. Nor is it irrelevant that pharmacies provide other services and sell other goods. The Minister's test is that of a definite unmet public need for an approved pharmacy. It is not necessary to artificially limit consideration of the consequences of granting or refusing approval in a manner which does not reflect the way in which pharmacies carry on business in this country.

25. Counsel for the Authority submitted that the word "is" used in paragraph (b) of the guidelines, carries the present tense. Counsel submitted that Mr Chatfield's application was premature. Indeed, that was an important point in the reasoning of the Authority. The reasons for its decision, which were before the Tribunal, stated inter alia:-

"In addition to this failure to satisfy the guidelines, the

applicant's application was rejected by the PRA on a second

ground. The PRA believed the applicant would be unable to

fulfil its condition that the pharmacy in question must be

able to be operational within 6 months of approval before a

recommendation can be made. The policy of the PRA has been

that recommendations lapse after 6 months.

...

Given the applicant's stated intention of opening the

pharmacy 18 months from the date of the application, the PRA

believed that the pharmacy would not open within 6 months.

It refused to recommend approval for this reason."

However, no such 6 months criterion is stated in the Minister's guidelines. The Tribunal did not apply it and was correct in not doing so, for to adopt a policy of that nature in an inappropriate case would be to fail to apply the guidelines as stated by the Minister.

26. If a pharmacy is regarded as an essential facility in such a shopping development, then the Authority and the Secretary ought to arrange matters so that an application for approval may be made in due time and approved, at least in principle, in time to enable the pharmacist to make proper arrangements to obtain the premises considered most suitable for the carrying on of the pharmacy business. The development of a shopping centre is unlikely to await the grant of formal approval under s.90.

27. Counsel for the Authority was correct in emphasising that the Minister's guidelines require a present existing need. However, whether in any particular case there is such a need, is a question of fact for determination by the decision-maker of fact. The Tribunal concluded as a matter of fact that there was an existing unmet public need. In coming to this conclusion, the Tribunal took into account the fact that the area in the immediate vicinity of the proposed pharmacy contained a population of about 6,300 persons and that, when other areas to the south were included, the relevant population was about 9,000 people. The Tribunal also took into account matters such as the fact that the subject area was weighted towards a segment of the population with a younger family grouping, with a significant need for pharmaceuticals. The Tribunal concluded that residents pursuing normal convenient shopping practices could reasonably expect a pharmacy to be sited in the vicinity of the proposed shopping centre, particularly as the pharmacy was proposed to be associated with a medical centre. The Tribunal expressed the view that Mr Chatfield's application must, in the circumstances of the case, be considered against the background of normal planning principles and time horizons. The Tribunal considered that it was not appropriate to delay the application until the shopping centre had opened and the medical practice had commenced. The Tribunal was of the view that Mr Chatfield's application was not premature.

28. There was no error of law in the Tribunal's approach. The present tense of the verb "is" did not require that the Tribunal wait until the shopping centre and medical practice had opened. The number and nature of the population of the area and the fact that a shopping centre was being constructed was evidence of an existing need which the proposed facilities were being developed to meet.

29. The final matter for comment concerns the form of the Tribunal's decision. There are two aspects in which it was incorrect. In the first instance, two decisions were under review. The first was a decision of the Authority, and it is a necessary precondition of any grant of approval that there be a favourable recommendation from the Authority. Accordingly, the decision of the Tribunal should have included a decision that the recommendation of the Authority be set aside and that there be substituted in lieu thereof, a recommendation that Mr Chatfield be approved for the supply of pharmaceuticals from the proposed premises at Warnbro.

30. Secondly, the Tribunal should not at that stage have decided that approval be granted to Mr Chatfield. There were still matters, such as the formal approval of his premises under State law, which were required to be complied with before the approval could be granted; see, for example, s.90(4) of the Act. Accordingly, the decision, insofar as it reviewed the decision of the Secretary, should have provided that that decision be set aside and the matter be remitted to the Secretary for his reconsideration, with the direction that approval should be granted subject to the Secretary's satisfaction as to incidental matters such as compliance with s.90(4) of the Act.

31. Save as to those alterations to the form of the order, we would dismiss the appeal. We would order that the applicant pay the costs of the appeal.

FRENCH J In July 1990 a dispute over payments for the dispensing of pharmaceutical benefits between the Commonwealth Government and the retail pharmacy industry was settled. The terms of the settlement were reflected in an agreement between the Government and the Pharmacy Guild of Australia. That agreement involved the establishment of a legislative scheme for the restructuring of the retail pharmacy industry in Australia. The restructuring required, inter alia, the imposition of controls on approvals for the establishment of new pharmacies. Legislative changes intended to give effect to the agreement were enacted in December 1990.

2. In January 1991, Kevin Norman Chatfield made application for approval of a new pharmacy at Warnbro, south of Perth. His application was refused on the basis that he had failed to demonstrate the existence of a definite unmet public need for pharmaceutical benefits at the proposed site. He appealed to the Administrative Appeals Tribunal and was successful. The Pharmacy Restructuring Authority and the Secretary of the Department of Health, Housing and Community Services now appeal against the decision of the Tribunal.

3. Kevin Norman Chatfield is a pharmacist and has practised that profession for the past thirty five years. For all but the first three of those years, he has operated his own pharmacies. Since 1971 he has practised in the Rockingham area, south of Perth. For the past eight years he has conducted his pharmacy practice from premises in a small shopping centre at 110 Malibu Road, Safety Bay. His shop is known as the Malibu Pharmacy. The shopping centre is directly opposite a medical centre. For three years before opening in the shopping centre, his premises, under the same name, were located in the medical centre. Those premises are now operated as a pharmacy by Mr Richard Palmer.

4. On 15 January 1991, Mr Chatfield made application to the Secretary of the Department of Community Services and Health for approval to dispense national health scheme prescriptions from proposed new premises to be located at the corner of Palm Springs Boulevard and Warnbro Sound Avenue, Warnbro, Western Australia some eighteen months from the date of the application. The application was referred to the Pharmacy Restructuring Authority. By a letter dated 27 March 1991, Mr Chatfield was advised that the Authority was not prepared to recommend approval of the proposed premises. The Authority had applied statutory guidelines and concluded that the application did not meet the guidelines in that it had failed to demonstrate "a definite unmet public need". The pharmacy, it was said, would be located in an underdeveloped area and while there were no other pharmacies nearby, the population was sparse. The Authority had placed conditions on its recommendations, as a matter of policy, to the effect that if a pharmacy could not be operational within six months of approval, then the recommendation would lapse. The proposed pharmacy would not be established within that time. Mr Chatfield was also advised in the letter that the Secretary to the Department of Community Services and Health had agreed with the recommendation and had not approved his application. At the time there was a right to seek review of the Secretary's decision in the Administrative Appeals Tribunal under s.105AB of the National Health Act 1953 (Cth). There was, however, no right to seek review in the Tribunal of the Authority's decision. On 23 April 1991, Mr Chatfield wrote to the Health Insurance Commission seeking a review of the Secretary's decision. By a letter dated 29 April he was advised to lodge an application with the Administrative Appeals Tribunal. The record does not disclose that any application was lodged in response to that advice. That omission, if omission there was, is immaterial for present purposes. For from 24 December 1991 unsuccessful applicants for approval became entitled to seek review in the Tribunal of the decisions of the Authority. Decisions made by the Authority after 18 December 1990 and before 24 December 1991 were deemed to have been made on 24 December 1991. Mr Chatfield was so advised by letter from the Authority on 20 January 1992.

5. By a letter dated 20 February 1992, Mr Chatfield wrote to the Administrative Appeals Tribunal. His letter did not make clear whether he was seeking review of the Authority's decision not to recommend approval of his application or review of the Secretary's decision. Given that, by virtue of s.90(3B) of the Act, the Secretary may only grant an approval if the Authority has recommended it, it would seem that the only vital challenge from Mr Chatfield's point of view was to the Authority's decision. His application seems to have been treated before the Tribunal initially as a challenge to the Secretary's decision and the Department of Health, Housing and Community Services was named as respondent. However, on 6 July 1992 the Tribunal substituted the Authority as the proper respondent. On 16 April 1992 the Secretary of the Authority provided a statement of reasons under s.37 of the Administrative Appeals Tribunal Act 1975 (Cth) for the refusal to recommend approval. Reference was made in the reasons to the guidelines with which the Authority is required to comply in making its recommendations under s.90 of the National Health Act. The relevant guideline provided that approval shall not be recommended unless the pharmacist demonstrates to the Authority that there is a definite unmet public need for that approval. The Authority's statement of reasons asserted that Mr Chatfield had failed to demonstrate a definite unmet public need although he had shown that there might be a potential future need for a pharmacy in the relevant area. The application was also rejected on the basis that the Authority believed Mr Chatfield would be unable to fulfil its condition that the pharmacy in question must be able to be operational within six months of approval before a recommendation could be made. This was pursuant to a policy that recommendations would lapse after six months. Underlying that policy was a view that the limited availability of approvals meant that they had become valuable economic assets and that it was necessary to discourage speculative applications. There was said to be a statutory policy reflected in s.98(3) of the National Health Act that pharmacy approvals be taken up and used without delay. Section 98(3) of the Act confers a discretionary power upon the Secretary to cancel an approval where the approved pharmacist has, for a period of not less than six months, ceased to carry on business at premises in respect of which the pharmacist is approved.

6. The application for review came on before the Tribunal on 8 and 9 September 1992 and on 20 November 1992 it made the following order:

"The Tribunal sets aside the decision under review and

decides in substitution therefor to approve the

applicant for the purpose of supplying pharmaceutical

benefits from the proposed premises at Warnbro,

Western Australia."

7. In its reasons for decision, the Tribunal set out a number of findings of fact, partly based on agreed facts and partly on evidence which was before it. It is convenient to set out those findings, which were in the following terms:

"(a) There are presently eight operating

pharmacies in the Rockingham area all of

which are located north of Safety Bay

Road.

(b) The area south of Safety Bay Road, though

an integral part of the Rockingham City

urban unit, is a discrete trade area which

is presently unserved by a pharmacy within

its boundaries.

(c) The proposed pharmacy would be located

within that discrete trade area, at a

distance of 5.1 kilometres from the two

nearest existing pharmacies one of which

is the Malibu Pharmacy operated by the

applicant.

(d) The population in the Warnbro area as at

September 1992 is in the vicinity of

6,000-6,380 persons. To this may be added

2,880 persons located in the adjacent

areas of Karnup, Singleton and Golden Bay

further south, giving a present total of

about 9,260 in the relevant vicinity.

(e) Persons travelling from the smaller

locations of Singleton and Golden Bay

presently travel about 10 kilometres in a

round trip to the nearest pharmacies in

Rockingham.

(f) The Rockingham area overall has a growth

rate well in excess of the average for the

Perth metropolitan area and is in fact the

second highest in the state. In the

Warnbro area housing lots are being

developed at the rate of approximately 100

lots per month which indicates a

population increase in the order of 300

persons per month. By August/September

1993, the proposed date of opening the new

medical centre including the proposed

pharmacy, a further 1,000-1,200

residential units will be completed in the

Warnbro area giving a population increase

in the order of 3,000-3,600. The eventual

potential population for the Warnbro area

when fully developed is in the vicinity of

30,000 people.

(g) A further potential for increased use of

the proposed pharmacy will result from the

opening of the Palm Springs Shopping

Centre in March 1994.

(h) Though free delivery services are provided

by a number of pharmacies in the

Rockingham area, including Nightingale's

and that operated by Richard Palmer, there

is on the whole no significant call for

such services on present indications.

(i) Whilst the general population of the

Rockingham area includes a significant

portion of older persons and retirees, the

Warnbro area south of Safety Bay Road

consists mainly of younger families

attracted by lower housing costs.

Disadvantaged persons such as those

receiving social security benefits

constitute a significant portion of those

requiring pharmaceutical services.

(j) The number of prescriptions dispensed by

pharmacists is significantly higher than

those under the NHS.

(k) The applicant's estimate of 30,000 scripts

of all kinds in the first year of

operation is realistic.

(l) The proposed pharmacy is likely to be

viable in the short term.

(m) The establishment of the proposed pharmacy

will have a short-term adverse impact on

existing pharmacies in the Rockingham area

but this will be more than off-set by

growth in other areas."

8. The Tribunal then turned to consider whether Mr Chatfield had demonstrated a definite unmet public need. It construed that term as used in cl. 3(b) of the Minister's guidelines. The "need", it held, must be reasonably capable of being ascertained. That means something more than mere convenience but is not to be read so strictly as to require proof of necessity. The relevant public need can be ascertained with regard to the needs of a particular group. The guidelines, it was noted, impose a minimum distance criterion of 5 kilometres between approved pharmacies. They therefore operate by reference to distinct geographic areas. In that context, in the Tribunal's view, factors such as inconvenience were not to be excluded in assessing unmet public need.

9. The Tribunal identified the relevant public as that in the Warnbro/Port Kennedy area extended by sub-communities at Singleton and Golden Bay. It found Warnbro and the associated areas to constitute a distinct trade area. The Tribunal accepted that the area in the immediate vicinity of the proposed pharmacy presently contains a population of about 6,300 persons which is increased to 9,000 when other areas to the south are included:

"That in itself in our view constitutes a significantly

large segment of the public which upon the existing

numbers, provides a basis for concluding that there is

an existing definite unmet public need."

The Tribunal went on to say that the Authority could take into account projected changes in population. If the pharmacy were to open around August or September 1993, the relevant population would be in excess of 10,000. The Act and guidelines, it was said, should be read against the background of sound planning principles and time horizons. The Tribunal regarded the rapid growth of population in the Rockingham area overall as an important and perhaps dominant factor. It accepted that the introduction of a new pharmacy might lead to a drop of 8 to 10% in the number of people resorting to the existing facilities. In the event, and taking into account all the factors it had mentioned, the Tribunal concluded that Mr Chatfield had demonstrated a definite unmet public need for a new pharmacy at the proposed site. Accordingly, the Tribunal set aside the decision under review and substituted for it a decision to approve Mr Chatfield for the purpose of supplying pharmaceutical benefits at or from the proposed premises at Warnbro in Western Australia.

10. The relevant provisions of the National Health Act 1953 are to be found in Part VII headed "Pharmaceutical Benefits". Part VII was amended by the Community Services and Health Legislation Amendment Act 1990 (No. 106 of 1990) in ways relevant to the present case. These amendments implemented aspects of an agreement made between the Minister of State for Aged, Family and Health Services and the Pharmacy Guild of Australia in July 1990. The agreement in its written form, dated 6 December 1990, recited that the Minister and the Guild had reached agreement in relation to the implementation of "a restructure package for approved pharmacists in Australia". It also recited that a statutory body, to be called the Pharmacy Restructuring Authority, was to be established under the National Health Act 1953 to make recommendations to the Secretary of the Department of Community Services and Health, based on guidelines determined by the Minister, for closure and amalgamation packages, for payment of essential pharmacy allowances and for approval of pharmacists. Clauses 8.1 to 8.6 inclusive of the agreement set out what were described as "Guidelines Relating to the Granting of an Approval pursuant to Section 90 of the Act". In the relevant parts, these clauses provided:

"8.1 To assist in the restructuring process,

restrictions will apply from 9 August 1990 to 31 March

1995 on the issue of new approvals.

8.2 Persons who applied for an approval before 9

August 1990 will have their applications dealt with in

accordance with procedures in place at the time of

application.

8.3 Pharmacists who have entered into financial

commitments with the expectation of being granted an

approval will have their applications dealt with on a

case by case basis.

8.4 New approvals will only be issued where there is

a demonstrated community need.

8.5 Subject to the guidelines issued under the Act

not being disallowed by the Federal Parliament, the

Authority will consider applications for approval

based on the following guidelines:

(a) a new approval will not be granted where

there is an existing approved pharmacy

operating within 5 kilometres by normal

access routes from the proposed site;

(b) a new approval will require the

demonstration of a definite unmet public

need.

..."

The balance of the guidelines set out in the agreement are not relevant for present purposes. The agreement was part of an overall settlement of a dispute between the Government and the Pharmacy Guild, representing the retail pharmacy industry, in relation to payment of pharmaceutical benefits and the structuring of the pharmacy industry in Australia. It was to be read with another agreement made 6 December 1990 pursuant to s.98BAA of the National Health Act 1953 which is not material for present purposes. Some aspects of the latter agreement and litigation flowing from it are discussed in Commonwealth of Australia v. Crowe (1992) 111 ALR 193 (Full Court).

11. The amendments to Part VII of the National Health Act 1953 effected by the Community Services and Health Legislation Amendment Act 1990 introduced two new Divisions, 4B and 4C, into Part VII, the former division providing for the establishment of the Pharmacy Restructuring Authority. Section 99L of that Division makes provision for Ministerial determination of guidelines under which the Authority is to make recommendations on the exercise of various statutory functions including the approval by the Secretary of a pharmacist in respect of particular premises.

12. Part VII, as it now stands, comprises ss.83 to 105AD inclusive. Section 84 defines various terms including the following:

""approved pharmacist" means a pharmacist for the time

being approved, or deemed to be approved, under

section 90;

"Authority" means the Pharmacy Restructuring Authority

established under section 99J;

"pharmaceutical benefit" means a drug or medicinal

preparation in relation to which, by virtue of section

85, this Part applies;"

Section 85 provides that benefits shall be provided by the Commonwealth in accordance with Part VII in respect of the drugs and medicinal preparations in relation to which that Part applies. Procedures for ascertaining, by ministerial declaration, the drugs to which Part VII applies are set out in the balance of s.85. Section 89 provides, inter alia, that a person is not entitled to receive a pharmaceutical benefit unless it is supplied by an approved pharmacist at or from premises in respect of which the pharmacist is for the time being approved. Section 90 sets up the mechanism for the approval of pharmacists in respect of particular premises. The relevant parts of that section are in the following terms:

"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.

.

.

.

(3A) An application under this section must be

referred to the Authority.

(3B) An approval may be granted under this section

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.

(3C) Unless sooner repealed, subsections (3A) and

(3B) cease to have effect at the end of 31 March 1995.

(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."

Section 92A specifies various conditions to which any approval of a pharmacist for the purposes of Part VII shall be subject. Under s.95 an approval may be suspended or revoked by the Minister after investigation and report by the appropriate Committee of Inquiry. Section 98 empowers the Secretary to cancel approvals and provides in sub-s.(3):

"98(3) Where the Secretary is satisfied that an

approved pharmacist has, for a period of not less than

6 months, ceased to carry 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."

The Pharmacy Restructuring Authority is established under Division 4B of Part VII and specifically by s.99J. Its functions include the consideration of applications made by pharmacists under s.90 and the making of recommendations as to whether or not an application under that section should be approved. Section 99K(1) provides, inter alia:

"99K(1) The functions of the Authority are:

(a) to consider applications made by

pharmacists under section 90, 99ZA, 99ZC

or 99ZD; and

(b) to make, in the case of an application

under section 90, a recommendation whether

or not the applicant should be approved

under that section in respect of

particular premises;

..."

The Authority is constrained in the exercise of its functions in this respect by the guidelines. Section 99K(2) provides:

"In making a recommendation under subsection (1), the

Authority must comply with the relevant guidelines

determined by the Minister under section 99L."

The determination of guidelines is provided for in s.99L in the following terms:

"99L(1) The Minister must determine in writing the

guidelines subject to which the Authority is to make

recommendations under subsection 99K(1).

(2) A determination under subsection (1) is a

disallowable instrument for the purposes of section

46A of the Acts Interpretation Act 1901."

13. Provision is made for application for review by the Administrative Appeals Tribunal of various classes of decision under the National Health Act 1953. Section 105AB(7) provides:

"(7) An application may be made to the Tribunal for

review of a decision of the Secretary under section 90

rejecting an application of a pharmacist under that

section."

14. By the Health and Community Services Legislation Amendment Act 1991, provision was made for review by the Tribunal of decisions of the Pharmacy Restructuring Authority. The amending Act introduced a new s.105AD which provided, inter alia: "105AD.(1) In this section:

Authority means the Pharmacy Restructuring

Authority;

reviewable recommendation means a recommendation of

the Authority referred to in any of paragraphs (2)(a)

to (2)(e).

(2) An application may be made to the Tribunal

for review of the following recommendations of the

Authority:

(a) a recommendation made

under paragraph 99K(1)(b)

that an applicant under

section 90 not be

approved under that

section in respect of

particular premises;

.

.

.

(5) A reviewable recommendation made by the

Authority on or after 18 December 1990 and before the

day on which this section begins is taken to be a

recommendation made on that later day."

By virtue of section 2(1) of the Health and Community Services Legislation Amendment Act 1991, s.105AD commenced on the day on which the amending Act received the Royal assent, namely 24 December 1991. The amendment introducing s.105AD followed upon a decision of O'Connor J sitting as the Tribunal in Re Shortis and Secretary, Department of Community Services and Health (1991) 23 ALD 396. There it was held that when the Secretary received a recommendation of the Authority that no approval be granted, the only power available to the Secretary was to refuse the approval. And review of the Secretary's decision was the only power available to the Tribunal. As the learned President said at 400:

"Review by the Tribunal in these circumstances would

thus become a sterile exercise and its only option

would be to affirm the decision under review."

15. The guidelines which were in force at the time that the Authority decided not to recommend approval of the application were contained in a Determination of the Minister of State for Aged, Family and Health Services pursuant to s.99L of the National Health Act 1953 made on 9 January 1991 with effect from 23 January 1991 when they were gazetted. That Determination and the guidelines published thereunder were revoked by a further determination made on 16 May 1991 and published in the Commonwealth Gazette on 29 May 1991. It was contended for the applicant, and not disputed, that the later guidelines were deemed to apply to the Authority's recommendation by virtue of s.105AD(5) of the National Health Act 1953, as introduced by the Health and Community Services Legislation Amendment Act 1991. Paragraph 3 of the guidelines, as promulgated on 29 May 1991, was in the following terms, inter alia:

"Applications for Approval to Supply Pharmaceutical

Benefits

3. For the purposes of paragraph 99K(1)(b) of the

Act, the following are guidelines with which the

Authority must comply in making a recommendation on an

application by a pharmacist under section 90 of the

Act:

(a) approval of a pharmacist shall not be

recommended in respect of premises within

5 kilometres by normal access routes from

other premises in respect of which a

pharmacist is already approved;

(b) approval of a pharmacist in respect of

particular premises shall not be

recommended unless the pharmacist

demonstrates to the Authority that there

is a definite unmet public need for that

approval;

(c) approval of a pharmacist in respect of

particular premises shall not be

recommended (except in the circumstances

provided for in subparagraph (d)) if those

premises are situated within 5 kilometres

by normal access routes of other premises

in respect of which there has been granted

financial assistance under section 99ZC or

99ZD of the Act;

.

.

.

(h) notwithstanding anything contained in

subparagraphs (a) to (g), approval of a

pharmacist in respect of particular

premises shall be recommended where the

application for approval of the pharmacist

in respect of those premises was made

prior to 9 August 1990 (being the date on

which the granting by the Secretary of

approvals to pharmacists under section 90

of the Act was restricted pending the

passage of legislation for pharmacy

restructuring)."

16. The legislative scheme established by the 1990 amendments to the National Health Act 1953 reflected the terms of an agreement between the Minister and the Pharmacy Guild of Australia which was reduced to writing on 6 December 1990. The agreement has been referred to in the Statutory Framework set out earlier in these reasons. The background to the agreement is described in the Report of the Senate Standing Committee on Community Affairs published in May 1992 under the title "Implementation of Commonwealth Pharmaceutical Restructuring Measures". The agreement resolved a dispute between the Commonwealth Government and the Pharmacy Guild in 1989 and 1990 over remuneration for pharmacists dispensing prescriptions under the Pharmaceutical Benefits Scheme. According to the Senate Committee Report, the dispute arose from the long standing conflict of interest between the Guild and the Government over the costs of running the Scheme. The agreement was reached on 24 July 1990 and announced publicly that day by Ministerial media release. It contemplated the restructuring of the retail pharmacy industry by rationalisation of the number of pharmacies. A further and more detailed media release was made on 8 August 1990. The objectives of the restructuring, according to the Senate Committee, were:

". to rationalise the number and distribution of

pharmacies throughout Australia through the offer of

financial incentives to voluntarily close or

amalgamate existing pharmacies, the payment of an

essential pharmacy allowance to pharmacists operating

in remote areas and the imposition of strict criteria

for new approvals to dispense pharmaceutical

benefits."

17. In the Second Reading Speech to the Community Services and Health Legislation Amendment Bill 1990, which contained a number of measures in addition to those related to pharmaceutical benefits, the Minister said:

"A further purpose of this Bill is to give effect to

the Government's structural reform of the

pharmaceutical benefits scheme. This Bill introduces

one of the key elements of the agreement between the

Government and the Pharmacy Guild of Australia as it

relates to restructure of the retail pharmacy

industry. The Bill establishes the Pharmacy

Restructuring Authority, which is to be empowered to

make recommendations to the Secretary to the

Department of Community Services and Health for the

payment of essential pharmacy allowances and on

payments in respect of pharmacies that amalgamate with

one or more other pharmacies, or close.

The Authority will also make recommendations on where

new approvals to operate a pharmacy under the

pharmaceutical benefits scheme (PBS) will be granted.

The Authority will cease its activities on or before

31 March 1995. For some time the Government has been

concerned that there were too many pharmacies approved

to supply pharmaceutical benefits. In 1972 the

Pharmacy Guild of Australia suggested to a House of

Representatives Select Committee the establishment of

a committee to regulate approvals under the PBS.

Several of the inquiries which have been conducted

involving the PBS, for example the Ralph Inquiry into

the Pharmaceutical Manufacturing Industry, the Bureau

of Industry Economics (BIE) and the Industries

Assistance Commission (IAC), have drawn attention to

the high pharmacy to population ratio."

And after referring to the Pharmaceutical Benefits Remuneration Tribunal and an expert advisory panel on pharmacy change, the Minister said:

"The Government has accepted recommendations from

these bodies that it is clearly in the best interests

of all Australians, both as taxpayers and patients,

that pharmacy numbers be reduced by encouraging

pharmacists to either amalgamate or close to reduce

the numbers of inefficient pharmacies which are a

drain on the Government, and to strengthen those more

viable pharmacies that remain. Where an amalgamation

or closure payment has been made with respect to

particular premises, no new approval for the use of

these premises as a pharmacy under the PBS will be

granted without the approval criteria being met.

Clearly such proposals will be limited to those

pharmacists where there is another approved pharmacy

within a reasonable distance. (sic)"

It may be concluded from the Minister's speech that the objects of the legislative scheme established by the 1990 amendments included the reduction of the number of existing pharmacies and the regulation of the approval of new pharmacies. The guidelines determined by the Minister and the terms of cl.8.3 of the agreement with the Pharmacy Guild indicate that new approvals would have to be justified by reference to community needs.

18. Counsel for the applicants submitted at the outset that the Tribunal did not have power to make the decision that it did in this case. The Tribunal's decision was expressed thus:

"The Tribunal sets aside the decision under review and

decides in substitution therefor to approve the

applicant for the purpose of supplying pharmaceutical

benefits from the proposed premises at Warnbro,

Western Australia."

It was submitted that the decision under review was the refusal of the Authority to recommend approval of Mr Chatfield's application. The Administrative Appeals Tribunal's role on review, it was said, was limited to making a recommendation to the Secretary. And it does seem that the Tribunal may have misapprehended the precise nature of the proceedings before it. Its reasons for decision commenced by asserting that Mr Chatfield sought review of "a decision of the Secretary, Department of Health, Housing and Community Services" not to approve him for the purpose of supplying pharmaceutical benefits from the proposed premises. The Secretary was not empowered to approve the application without a recommendation in favour of approval on the part of the Authority. The proceedings instituted before the Tribunal should strictly have been treated as a review of the decision of the Authority and that was reflected in the direction of July 1992 that the Authority be substituted as respondent in place of the Secretary. In the event, and to avoid a multiplicity of proceedings, it was common ground before this Court that if the appeal were generally unsuccessful, the form of the Tribunal's decision should be altered to substitute a recommendation for approval in lieu of the Authority's decision together with a direction to the Secretary to grant approval subject to compliance with State law as required by s.90(4). Such a disposition would be within the powers conferred on the Tribunal under s.43 of the Administrative Appeals Tribunal Act albeit it would proceed upon the assumption that for all practical purposes the decisions both of the Authority and the Secretary were under review. Apart from matters which would necessarily fall to be considered under s.90(4) of the National Health Act there was no suggestion of any intervening consideration that might cause the Secretary not to accept the Authority's recommendation had that recommendation been for approval of Mr Chatfield's application. However that is not to say that there might not be other considerations of a minor or incidental nature in respect of which the Secretary would need to be satisfied before granting approval and it is appropriate that any direction take that into account. To this end, I agree with the orders proposed by Davies and Lee JJ.

19. The disposition proposed in the event of the appeal being otherwise unsuccessful, also meets a contention advanced by counsel for the applicants that the Tribunal was not empowered to make the order which it did because the Secretary could not approve an application unless first satisfied that the requirements of sub-s.90(4) had been met. It was said that the proposed premises did not yet exist. In this respect, counsel for Chatfield had contended in written submission, that the non-existence of the premises would not prevent the Authority from making a recommendation providing they were sufficiently defined. A decision of O'Connor J sitting as the Tribunal in Re Garozzo and Pharmacy Restructuring Authority (1992) 16 AAR 251 at 258-259 was referred to in that connection. And so far as it goes, that proposition seems correct. Section 90(4) is concerned with the powers of the Secretary. That is not to say that the Authority is not entitled to take into account the operation of State laws in making its recommendations. Whether it is entitled to do so is not a question that needs to be resolved here.

20. Counsel for Mr Chatfield argued in his written submissions that s.90(4) ensures that the Secretary's approval could not be taken to override State legislation so as to enable a pharmacist to dispense drugs contrary to State law. In truth, the sub-section provides that the Secretary has no power to make an approval where State law would not permit the pharmacist to carry on business at the subject premises. Because of this disempowering effect, the sub-section requires the Secretary to at least consider whether a proposed approval would be nugatory where by reason of State law the pharmacist would not be permitted to carry on business at the proposed premises. It may be that applicants will require some degree of confidence that an approval from the Secretary will be forthcoming before embarking on financial or other commitments necessary to secure relevant approvals under State law. This is a problem that can be dealt with administratively, perhaps by provisional or in principle approvals which, of themselves, would have no statutory significance. In any event, the proposed disposition, if the appeal is otherwise unsuccessful, will meet the point to the satisfaction of all parties.

21. Counsel for the applicants submitted that Divisions 4B and 4C of Part VII of the National Health Act 1953 and the ancillary amendments form part of a scheme limited in time, the objective of which is the rationalisation of the retail pharmacy industry. This objective indicates, it was submitted, a strict construction of the guidelines. In particular, guideline 3(b) was said to require an applicant for approval to show an existing definite unmet public need for the approval. Further, it was said, the need is to relate to pharmaceutical benefits as distinct from a need for a pharmacy. The statutory purpose requires a construction of the guidelines which would have regard to the needs of the whole community or a significant proportion of it as distinct from "individual groups". The Tribunal, it was submitted, had failed to construe the guidelines in context and its approach rendered nugatory the scope and purpose of the legislative scheme. A particular complaint was that the Tribunal had erroneously taken into account normal planning principles and time horizons (ground 4(b)). It was also said that it should not have taken into account the existence of future population, future commercial developments and future medical services in the area to be served by the proposed pharmacy (ground 4(e)). Nor should it have taken into account the existence of a discrete trade area, expectations (as opposed to needs) of certain residents and inconvenience as relevant factors (ground 4(f)). The Tribunal, it was said, failed to discriminate between the expectations of residents in respect of pharmaceutical benefits as distinct from other items supplied through pharmacies. In considering these submissions it is necessary to turn to the construction of the relevant guidelines.

22. The guidelines determined by the Minister are not mere statements of Ministerial policy. They are rules with which the Authority must comply in making a recommendation under s.99K(1)(b) relating to the approval under s.90 of an application in respect of particular premises. Furthermore, they are rules which, consistently with the overall purposes of the legislative scheme, are designed, inter alia, to ensure that an approval for a new pharmacy is recommended only where the applicant demonstrates to the Authority a definite unmet public need. But to say that the guidelines serve a restrictive regulatory purpose is not to say that they are to be given an artificially narrow and restrictive construction. The very use of the word "need" in guideline 3(b) suggests acceptance of an evaluative process in the determination of an application for approval. "Need" used as a noun includes: "a case or instance in which some necessity or want exists; a requirement; an urgent want, as of something requisite; necessity arising from the circumstances of a case; a situation or time of difficulty; a condition marked by the lack of something requisite". - Macquarie Dictionary. The concept of "want" or "demand" is an element of need and particularly so in the present context. It is not essential to the health of members of the public generally that there be a pharmacy within 5 kilometres of where they live. The very purpose of a pharmaceutical benefits scheme through retail pharmacy outlets, however, involves a recognition of a public demand for those services. That demand is not met by placing pharmacies at distances apart which impose significant inconvenience upon those who wish to use them. The concept of need is necessarily related to that of public expectation connected with the continuance of a pharmaceutical benefit scheme as established under the National Health Act 1953.

23. Some cases concerned with the concept of public need in the context of liquor licensing statutes were mentioned. They are to be approached with caution because they turn to a greater or lesser degree on the particular legislation under consideration. Nevertheless, there is an obvious similarity to be noted between aspects of the objectives of liquor licensing laws and the rationalisation function of the legislative scheme under consideration here. A concept of need limited to a restrictive notion of absolute necessity is difficult to formulate in principle and virtually impossible to apply in practice. In the Full Court of the Supreme Court of South Australia in Buttery v. Muirhead (1970) SASR 334 at 337, Bray CJ said of the phrase "needs of the public" in the Licensing Act 1967 (SA):

""Needs of the public" must mean "need" in the sense of

"demand", meaning by that a reasonable demand by

contemporary standards. It cannot mean "need" in the

sense of necessity judged by some ethical or

sociological test. If this last were the real test it

might be difficult to show need for any commodity over

the minimum requirements of food, clothing and

shelter. In the abstract it might be hard to prove

that anyone has a real necessity for alcohol or, for

that matter, motor cars or television sets."

In Silkman v. Kendall (1982) 1 NSWLR 133, Cross J was concerned with the words "needs of the public" in s.29(1)(e) of the Liquor Act 1912 (NSW). As a general proposition his Honour observed that "...we frequently use the word "needs" as indicating something less than necessity". He rejected a construction which would require the demonstration of absolute necessity noting that "such an interpretation would put paid to any or almost any fresh applications under the Act". In Toohey v. Taylor (1983) 1 NSWLR 743, Samuels and Priestley JJA, in the Court of Appeal, were in general agreement with the line of reasoning applied by Cross J but expressed their conclusions somewhat differently. They took the view that in the overall context of the Liquor Act 1912, "needs" meant "the reasonable demands or expectations of the public". It may be said that in relation to the dispensing of pharmaceutical benefits there is a clearer argument for a stricter test of necessity than could rationally apply to the sale of alcoholic beverages. Nevertheless there is nothing in the policy of the legislative scheme or the background to its enactment which, in relation to approvals for new pharmacies, would exclude consideration of public expectation and demand under the general rubric of public need.

24. What must be addressed next is the constraint imposed by the word "public" in the phrase "definite unmet public need". The word "public" is here used as an adjective; it describes the kind of need which must be demonstrated. That is to say, the need to be considered is of a public rather than a private nature. So construed, it is not necessary to attach the need to an extended group. It is sufficient that the community which is under consideration is large enough that its need is not able to be characterised as merely private. The threshold size and geographic spread of a group of people necessary to qualify their need for pharmaceutical benefits as a public need is a matter of evaluation. It does not affect this case. So far as the Tribunal was dealing with the needs of persons resident in the Warnbro area, it was clearly dealing with a public need. It is perhaps important to say in this connection that demonstration of an unmet public need does not, in terms of the guidelines, require that the Authority recommend approval. It might legitimately reject an application because the degree of public need demonstrated did not, having regard to other factors, warrant the grant of the approval sought. It follows, however, from this approach to the concept of public need that the Tribunal did not err in focussing on the community in the discrete trade area around Warnbro nor in characterising the expectations and demands of people in that area as a "public need".

25. The Tribunal was criticised for taking into account potential growth in the area. The "definite unmet public need" was said to be limited to existing needs. The Tribunal, however, found as a matter of fact that the population of the area under consideration was a large enough segment of the public to provide a basis for concluding that there was an existing definite unmet public need. Given that it had not been shown to have erred in construing the guidelines, the Tribunal's conclusion is a finding of fact which is not open to challenge in these proceedings.

26. The Tribunal went on to say that the guidelines did not restrict the consideration of unmet public need to a need based on existing community numbers. It said:

"42.... Establishment of medical centres and shopping

precincts requires development approvals and

commercial decisions in advance of opening. The Act

and Guidelines should be read against the background

of normal planning principles and time horizons. It

is therefore illogical to say that an application for

approval for a pharmacy cannot be decided in advance

of when the associated planning decisions will come

into effect...

43... So long as the time frame in which the approach

to establish a pharmacy is given is in the reasonably

proximate future and the state of affairs then

existing can be understood and estimated with

reasonable certainty, the Tribunal regards itself as

free to operate with some flexibility within that

framework."

There is nothing in that approach which is inconsistent with the guidelines or the philosophy underlying the Act. A need is public if it is a need of a public character. A present need of a public character may be demonstrated by showing the proposed pharmacy will meet projected expectations and demands within a reasonable time frame.

27. The Tribunal did not expressly state that it was limiting its consideration of unmet public need to a need for pharmaceutical benefits as distinct from a need for a pharmacy where products and services other than pharmaceutical benefits would be available. Although the conflict that gave rise to the agreement of July 1990 related to the cost of pharmaceutical benefits, the concept of unmet public need is not so narrow as to ignore the commercial reality that pharmacy businesses are carried on in a way that integrates the provision of pharmaceutical and other products and services. No error is demonstrated in this respect.

28. The Tribunal did not err in its approach to the guidelines and the legislation in any of the respects of which complaint has been made. The appeal therefore should fail subject to the need adverted to earlier to adjust the orders made.