Pharmacy Restructuring Authority and Secretary, Department of Health, Housing and Community Services v Kevin Norman Chatfield [1993] FCA 348;

Pharmacy Restructuring Authority and Secretary, Department of Health, Housing and Community Services v Kevin Norman Chatfield [1993] FCA 348; - FCA 1993 case summary — Zoe

[69]

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.

[70]

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.

[74]

"(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."

[112]

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.

At a glance

Court

Decision date

Before

Source

Judgment (126 paragraphs)

Pharmacy Restructuring Authority and Secretary, Department of Health, Housing and Community Services v Kevin Norman Chatfield [1993] FCA 348; (1993) 116 ALR 76 (1993) 18 Aar 34 (1993) 30 ALD 349 (Extr (23 July 1993)

Parties

Legislation Cited (7)

Cases Cited (5)