Samad v District Court of New South Wales

Issues Before This Court 8 The claimants allege that his Honour's determination was tainted by error of law on the face of the record and/or jurisdictional error in three respects. Three alternative bases for the relief claimed were raised by the claimant's summons. First, it was alleged that his Honour erred in construing the phrase "The Director-General may suspend or cancel a licence" in cl 149 of the Regulations as excluding a discretion if any of the conditions for its exercise had been made out. Secondly, it was alleged that his Honour erred in failing to make his determination having regard to facts existing as at the date of the appeal before him as opposed to the facts as they were at the time of the Director-General's decision. Thirdly, it was contended that his Honour wrongfully admitted hearsay evidence.

The Act 9 The Poisons and Therapeutic Goods Act 1966 (NSW) (the Act) regulates for the state of New South Wales the supply and use of various poisons, restricted substances and drugs of addiction, certain dangerous goods and certain therapeutic goods. Such goods are defined for the purposes of the Act as "regulated goods": s 4. This case is only concerned with the legislation in so far as it relates to drugs of addiction. It is common ground that methadone is a substance specified in sch 8 of the Poisons List and is thus a drug of addiction within the meaning of the Act: see ss 4 and 8. 10 Part 4 of the Act deals with drugs of addiction and contains provisions regulating their possession, manufacture and supply. Division 1 of Pt 4 contains its own Regulation making provision, s 24. Section 24(1) includes a power to make Regulations under the Division. "… for the purpose of preventing the improper use of drugs of addiction … with respect to: … (b) prohibiting the manufacture or supply of any drug except by persons licensed or otherwise authorised under the Regulations and subject to any conditions specified in the licence or authority, … (e) requiring persons engaged in the manufacture or supply of any such drug to keep such books and furnish such information either in writing or otherwise to such persons as may be prescribed, and making provision for the inspection of such books and records by prescribed persons, … (h) providing that any specified breach of the Regulations shall be regarded as 'misconduct in a professional respect' within the meaning of any Act, … (i) generally, regulating and controlling the manufacture, possession and supply of drugs of addiction. …" 11 Significantly, s 24(2) specifies that Regulations " shall be made … making provision for or with respect to: … (d) the issue, grant and renewal of licences or authorities for the purposes of this Division by the Director-General on such terms and subject to such conditions (including in the case of a licence the payment of a fee) as the Director-General thinks proper, and (e) the withdrawal and suspension of any such licence or authority by the Director-General." (emphasis added) 12 Section 24 is expressed to be without limitation to the general provisions of s45C. It is convenient to refer to that section now. Section 45C is contained in Div V of Pt 5 and is the general Regulation making provision in the Act. It provides relevantly: "(1) The Governor may make Regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act." 13 Subsections (1A) and (1B) specify particular matters for which regulatory provisions may be made, including: "(1B) … (c) conferring rights of appeal on persons aggrieved by decisions of the Director-General relating to: (i) the issue, renewal or refusal to issue or renew licences or authorities issued or renewed for the purposes of this Act or the Regulations, or (ii) the suspension, withdrawal or cancellation of licences or authorities issued or renewed for those purposes." 14 Section 25 provides: " 25 Further offences against this Division Any person … (b) who acts in contravention of or fails to comply with the conditions of any licence issued or authority granted under or in pursuance of this Division, or (c) who, for the purpose of obtaining, whether for himself or herself or for any other person, the issue, grant, or renewal of any such licence or authority as aforesaid, makes any declaration or statement which is false in any particular, or knowingly utters, produces, or makes use of any such declaration or statement or a document containing such a declaration or statement, shall be guilty of an offence against this Division." 15 The penalties for offences committed under the Act are specified in s 26. It provides: " 26 Penalties (1) Every person guilty of an offence against this Division shall in respect of each offence be liable to a fine not exceeding 20 penalty units or to imprisonment for a term not exceeding 2 years, or to both such fine and imprisonment, and the court convicting any such person may order that any article in respect of which the offence was committed shall be forfeited to Her Majesty. … (3) No person shall, on conviction for any offence of contravening or failing to comply with the conditions of any licence issued or authority granted under the Regulations made under this Division to supply a drug of addiction or any Regulation relating to the keeping of books or the issuing or dispensing of prescriptions containing a drug of addiction, be sentenced to imprisonment without the option of a fine or to pay a fine exceeding 1 penalty unit, if the court dealing with the case is satisfied that the offence was committed through inadvertence and was not preparatory to or committed in the course of or in connection with the commission or intended commission of any other offence against this Division. …" 16 Division 2 of Pt 4 provides for restrictions on prescribing drugs of addiction. The provisions of Div 2 are not directly relevant here, except that they serve to demonstrate the extent of control which the legislature has deemed necessary in relation to manufacture and supply of drugs of addiction and other goods which fall within the operation of the Act. 17 Part 5 is the 'General' part of the Act. Division 1 deals with offences. Its provisions create offences for certain activities relating to regulated goods: for example, the hawking of regulated goods: s 34(1); and the supplying of regulated goods by automatic machine: s 36(1). Section 36D provides that if a body corporate contravenes any provision of the Act or Regulations: "… each person who is a director, or a person concerned in the management, of the body is taken to have contravened the same provision if the person knowingly authorised or permitted the contravention." 18 Division 2 governs "Analysts and analysis". Division 3 deals with "Evidentiary matters". Div 4 relates to "Enforcement", and includes provision for the appointment of inspectors: s 42 and confers powers of entry and seizure on inspectors so appointed: 43. Section 43 provides that intentional delay or obstruction of an inspector in the exercise of an inspector's powers under the Act or failure to produce a substance, goods or records as required under the Act is an offence under the Act: s 43(7).

The Regulations 19 The Regulations make extensive provision for packaging and labelling, storage, prescribing, supply and recording of substances regulated by the Act. Parts 2 and 3 of the Regulations deal with poisons and restricted substances respectively. Part 4 deals with drugs of addiction. In short, the Regulations cover the manner in which goods are handled, used for example in public and private hospitals and pharmacies, by medical practitioners, dentists and veterinarians and by masters of ships. 20 Clause 102 (contained in Pt 4 Div 4 Sub Div 5) provides that it is an offence to manufacture or supply a drug of addiction unless authorised by the Division or pursuant to an authority or licence under Pt 7 of the Regulations. 21 Part 7 Div 2 of the Regulations governs the issue, suspension and cancellation of authorities and licences to manufacture and supply drugs of addiction. In so far as they are relevant to this case the Regulations provide as follows: " 142 Applications for licences (1) Any person may apply to the Director-General for a licence to manufacture drugs of addiction at, or to supply drugs of addiction from, any premises. (2) The application: (a) must be in the form approved by the Director-General, and (b) must be accompanied by the relevant application fee, and (c) must be lodged with the Director-General. … (4) The relevant application fee for a licence to supply drugs of addiction is: (a) $10, in the case of an application by a charitable organisation, or (b) $45, in the case of an application by a public institution (other than a charitable organisation), or (c) $200, in any other case. (5) The Director-General may require an applicant to furnish such further information as is necessary to enable the Director-General to determine the application." 22 Clause 143 empowers the Director-General to issue licences. Save for subcl 2 there are no preconditions specified for the grant of a licence. Nor are there any personal or professional qualifications required of an applicant, except for a discretionary consideration under subcl 1A. The terms of the clause are: " 143 Consideration of applications (1) After considering an application under this Division, the Director-General may issue a licence for which the application is made or may refuse the application. (1A) In particular, the Director-General may refuse an application if of the opinion that the applicant is not a fit and proper person to hold the licence for which the application is made. (2) A licence may not be issued unless the Director-General is satisfied that the premises to which the application relates are appropriate for the manufacture or supply of drugs of addiction." 23 Clause 144 provides for the form and term of a license and specifies that a license is non-transferable: " 144 Licences (1) A licence is to be in the form for the time being approved by the Director-General. … (3) A licence remains in force until suspended, cancelled or surrendered. (4) A licence is not transferable." 24 The Director-General may from time to time impose conditions on a licence and may vary or revoke any condition: cl 145(1) and (2). Clause 145(3) provides: "A licence is ineffective unless its conditions are complied with". 25 Clause 146 provides for annual licence fees: "… (2) The holder of a licence under this Division (being a licence to supply drugs of addiction) must, on or before 30 September in each year following that in which the licence was issued, pay to the Director-General an annual licence fee of: (a) $10, if the holder is a charitable organisation, or (b) $45, if the holder is a public institution (other than a charitable organisation), or (c) $200, in any other case." 26 Clause 149 governs the suspension and cancellation of licences. Its terms, which are central to the issues before this Court, are: "149. The Director-General may suspend or cancel a licence or authority on any one or more of the following grounds: (a) the holder of the licence or authority requests or agrees in writing to the suspension or cancellation of the licence or authority, (b) the holder of the licence or authority contravenes any condition of the licence or authority, (c) the holder of the licence or authority is convicted of an offence against the Act or this Regulation, or of an offence against the Drug Misuse and Trafficking Act 1985 or any Regulation in force under that Act, or an order is made under section 556A(1) of the Crimes Act 1900 in respect of such an offence, (d) the holder of the licence or authority is, in the opinion of the Director-General, no longer a fit and proper person to hold that licence or authority, (e) the annual fee for the licence is not duly paid, (f) in the case of a licence or authority to supply methadone, the supply of methadone is causing disruption to the amenity of the area in which the premises from which it is being supplied are situated." (emphasis added) 27 Clause 150 specifies the procedure which must be followed before the Director-General suspends or cancels a licence, including the requirement to afford the licensee a reasonable opportunity to make representations and the Director-General is required to take those representations into consideration. 28 An appeal to the District Court from a decision of the Director-General to suspend or cancel is provided by cl 152, as follows: "(1) Any person who is aggrieved by a decision of the Director-General relating to: (a) the issue or renewal of, or the refusal to issue or renew, a licence or authority, or (b) the suspension, withdrawal, or cancellation of a licence or authority, may appeal to the District Court against the decision. (2) An appeal is to be made, in accordance with rules of court, within 14 days after written notice of the decision is served on the person. (3) An appeal is to be heard by way of a new hearing, and fresh evidence, or evidence additional to the evidence available to the Director-General when the decision was made, may be admitted in the hearing. (4) Subject to any order made by the District Court, the lodging of an appeal does not operate to stay the decision appealed against. (5) The decision of the District Court on appeal is final and is to be given effect to as if it were the decision of the Director-General."

Hearing Before the District Court 29 The first and second claimants raised five grounds of appeal on their appeal to the District Court: (i) the cancellation was against the merits; (ii) the cancellation did not take into account or did not give proper weight to the need for a methadone clinic in the Fairfield area; (iii) the cancellation took into account irrelevant considerations; (iv) the cancellation did not take into account submissions made to the Director General of the NSW Health Department by Directors of the Barbara Street Clinic Pty Limited; (v) any disruption to the amenity of the area in which the Barbara Street Clinic Pty Limited operates is outweighed by the service that the Barbara Street Clinic Pty Limited provides to the area. 30 The appeal proceeded with both parties adducing evidence by way of statements, affidavits, tendered documents and oral evidence. The makers of statements and affidavits were cross-examined and his Honour had a view of the clinic and the surrounding area. The material which was before the Director-General was admitted as the respondent's 'bundle of documents'. At the outset of the hearing, counsel raised with his Honour the question of the admissibility of certain of the evidence, and in particular, whether the proceeding before his Honour was governed by the provisions of the Evidence Act 1995 (NSW). His Honour did not determine that issue at the time stating: "I am going to admit [the evidence] subject to your objections and I will sort that out myself." 31 It is not clear whether his Honour ultimately determined the question, although, from his early comment that "hearsay is admissible if it is good hearsay", it is likely that he considered that the provisions of the Evidence Act did apply. 32 In his judgment, delivered on 14 April 2000, his Honour defined the question for determination as: "…whether the clinic was causing disruption to the amenity of the area and if so whether I should exercise a discretion in favour of the [claimants], which it was submitted … on behalf of the [claimants], was given to the Director-General by Regulation 149 either to cancel the licence or not, even if I found that in fact, that the 'amenity' of the area was disrupted as alleged." 33 His Honour continued: "once I found the supply of methadone by the clinic was 'causing a disruption to the amenity of the area', I would have to confirm the cancellation. Any discretion given by the Regulation 'must be exercised having regard to the policy and purpose' of the Regulations which confer the authority and duties of the Director-General and therefore, of course, me. 34 His Honour found as a fact that the activities of the clinic "[had] disrupted and are disrupting the amenity of the area". 35 He later stated that once a finding of disruption was made the discretion "could only be exercised one way". 36 His Honour considered that this approach was required by Finance Facilities Pty Limited v Federal Commissioner of Taxation (1971) 127 CLR 106 and was confirmed by the commentary on the issue in Pearce and Geddes: Statutory Interpretation in Australia, 4th Ed at 268. His Honour continued: "From the discussion [in Pearce and Geddes] it can be said that an apparent discretion to act can be rendered obligatory, according to the circumstances of the case, and I think that this is the position with regard to Regulation 149." 37 The claimants submit that his Honour erred in so construing the power conferred by cl 149. They relied on Ward v Williams (1955) 92 CLR 496 as primary support for their contention. They submitted that, having used the language of discretion, the Legislature intended that there be a discretion to cancel a licence, notwithstanding that one of the grounds in cl 149 had been made out. See s 9 of the Interpretation Act 1987 (NSW) which provides that the word "may" used in a statute or instrument indicates that a discretion is conferred on the recipient of the power. 38 Although not the starting point for a consideration of this area of statutory construction, the case most often cited in the authorities is Julius v The Bishop of Oxford (1879-80) 5 App Cas 214. There the Court was concerned with permissive words in a statute but held there may be circumstances which coupled the power with a duty to exercise it. In the course of his judgment Earl Cairns LC stated at 222-223: "The words 'it shall be lawful' are not equivocal. They are plain and unambiguous. They are words merely making that legal and possible which there would otherwise be no right or authority to do. They confer a faculty or power, and they do not of themselves do more than confer a faculty or power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so." 39 He considered that if that principle was kept in mind the cases on the subject were easily understood. 40 Earl Cairns summarised the principles as follows at 225: "… where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the Legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the Court will require it to be exercised." 41 Lord Selborne put the matter more generally at 235: "The question whether a Judge, or a public officer, to whom a power is given by such words, is bound to use it upon any particular occasion, or in any particular manner, must be solved aliunde, and, in general, it is to be solved from the context, from the particular provisions, or from the general scope and objects, of the enactment conferring the power." 42 Lord Blackburn expressed a similar view to Earl Cairns when he said at 244: "The enabling words are construed as compulsory whenever the object of the power is to effectuate a legal right. It is far more easy to shew that there is a right where private interests are concerned, than where the alleged right is in the public only, and, in fact, in every case cited, and in every case that I know of (where the words conferring a power are enabling only, and yet it has been held that a power must be exercised), it has been on the application of those whose private rights required the exercise of the power." 43 He added however: "I do not … question that there may be a right in the public such as to make it the duty of those to whom a power is given to exercise that power." 44 See also In re the Municipal District of Lambton (No 2) (1899) 20 NSWR 378. In R v Tithe Commissioner (1849) 14 QB 159, where Coleridge J stated: "The words undoubtedly are only empowering, but it has been so often decided as to have become an axiom, that in public statutes words only directory, permissory, or enabling, may have a compulsory force where the thing to be done is for the public benefit or in advancement of public justice."

45 Ward v Williams involved the construction of s 66(2) of the Public Health Act 1902 (NSW). That Act provided, relevantly, that a complaint may be made to a magistrate should there be default in complying with a notice given by a local authority to a person who caused a nuisance. Upon complaint being made, a summons could issue. The section provided that on the hearing of a summons, the magistrate "may, if … satisfied that the nuisance exists or that though abated it is likely to recur, by order require the person to comply with all or any of the requisitions of the notice or otherwise abate the nuisance". The New South Wales Court of Appeal held that, notwithstanding the use of the facultative expression, the magistrate was required to make an order if the nuisance was proved. 46 The High Court held otherwise, stating at 505-507: "'… it is necessary to bear steadily in mind that it is the real intention of the legislature that must be ascertained and that in ascertaining it you begin with the prima facie presumption that permissive or facultative expressions operate according to their ordinary natural meaning. …The question whether a Judge, or public officer, to whom a power is given by such words, is bound to use it upon any particular occasion, or in any particular manner, must be solved aliunde, and, in general, it is to be solved from the context, from the particular provisions, or from the general scope and objects, of the enactment conferring the power' - per Lord Selborne : Julius v. Bishop of Oxford. One situation in which the conclusion is justified that a duty to exercise the power or authority falls upon the officer on whom it is conferred is described by Lord Cairns in his speech in the same case. His Lordship spoke of certain cases and said of them '[they] appear to decide nothing more than this: that where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the Legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the Court will require it to be exercised'." 47 The Court referred to the provisions of the Interpretation Act 1897 that where an Act used the word "may" the word "shall mean that the power may be exercised or not at discretion". Acknowledging that the Interpretation Act provision was no more than a rule of construction, the Court added: "there must be reasons which satisfy the mind that a statute to be construed does not intend that the power it confers should be exercised or not at discretion before it can be held that the power must be exercised on demand, assuming of course the fulfilment of any conditions precedent the statute may lay down". 48 The Court at 506 drew a distinction between a right to call for the exercise of a power and a duty to exercise it: "In construing a statute conferring a power by permissive or facultative expressions, it is important not to mistake indications or evidence, found in the context or subject matter, of an intention that a right to call for the exercise of the discretion should exist, for indications or evidences of an intention that the officer in whom the power is reposed should be under a duty, upon request and upon fulfilment of the necessary conditions, to do the thing authorized." 49 Their Honours considered there were few indicators in s 66(2) to support an interpretation that the exercise of the power was obligatory. However, one such consideration which the Court said (at 507) is "usually accounted very strong" was that the power was conferred on a judicial tribunal and was to be invoked by a judicial proceeding, as powers are conferred on such basis for the enforcement of rights and the protection of interests. The fact that a penalty could be imposed by the magistrate was another indicator in favour of an obligatory exercise of the power. However, there were countervailing considerations. In particular, the High Court considered that as it was only the public authority who could complain to the magistrate, it was apparent the magistrate was interposed for the protection of the owner or occupier against whom a notice had been issued. It was also relevant that a nuisance might be so minor or trivial as to make it harsh or unreasonable to require it to be abated or removed. Further, disobedience to a notice given under the Public Health Act was not ipso facto an offence. Finally, a proceeding brought pursuant to the section was not for the protection of private rights and thus did not fall into the category of case described by Lord Cairns in Julius v Bishop of Oxford as requiring that a power conferred be exercised. 50 The Court summarised the position at 508: "it is not a power deposited with the magistrate 'for the purpose of being used for the benefit of persons specifically pointed out': the conditions are not defined upon which any such persons are entitled to call for its exercise. The interests which the provisions are designed to safeguard or serve are those enjoyed in the locality by the public at large. There is no reason why the judgment of the magistrate should not extend over all the factors which govern such a question." 51 In Finance Facilities the Court was concerned with the question whether s 46(3) of the Income Tax Assessment Act 1936-1967 (Cth) gave the Commissioner a discretion to allow a rebate or whether, if the statutory preconditions for a rebate were satisfied, the Commissioner was required to grant it. The section provided that "the Commissioner may allow … a … rebate … if the Commissioner is satisfied that" one or other of the specified conditions had been satisfied. The matters specified were separate and alternative. The first two conditions were specific matters which were either satisfied or not on a given set of facts. For example para (a) was in terms that "the shareholder has not paid, and will not pay, a dividend [deeming a specific period] to another private company". Para (c), on the other hand, involved an evaluative determination by the Commissioner. Its terms were "having regard to all the circumstances, it would be reasonable to allow the further rebate". Notwithstanding this difference, the Court determined that the section required the Commissioner to grant the rebate if one of the preconditions had been made out. 52 Windeyer J stated the relevant principle at 134-5: "While Parliament uses the English language the word 'may' in a statute means may. Used of a person having an official position, it is a word of permission, an authority to do something which otherwise he could not lawfully do. If the scope of the permission be not circumscribed by context or circumstances it enables the doing or abstaining from doing, at discretion, of the thing so authorised. But the discretion must be exercised bona fide, having regard to the policy and purpose of the statute conferring the authority and the duties of the officer to whom it was given: it may not be exercised for the promotion of some end foreign to that policy and purpose or those duties. However, that general proposition is irrelevant in this case. Here the scope of the permission or power given is circumscribed. Conditions precedent for its exercise are specified as alternatives. 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 circumstances 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'. … Today it is enough to cite Julius v. Bishop of Oxford; and add in this Court Ward v Williams. But I select one reference out of this multitude: Macdougall v Paterson [(1851) 11 C.B. 755 [138 E.R. 672]]. There Jervis C.J. said in the course of the argument [at 766] "The word 'may' is merely used to confer authority: and the authority must be exercised, if the circumstances are such as to call for its exercise". And, giving judgment, he said [ at 773]: "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 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." 53 Commissioner of State Revenue v Royal Insurance Australia Ltd (1994) 182 CLR 51 was another case dealing with a taxing statute. There the Court held that in the absence of clear words, the word "may" should not involve the use of discretion when the question related to the refund of overpaid tax. Referring to Ward v Williams, Mason CJ noted, at 64, that the Court there pointed out that: "the question whether a public officer, to whom a power is given by facultative words, is bound to exercise that power upon any particular occasion, or in any particular manner, is to be solved from the context, from the particular provisions, or from the general scope and objects of the enactment conferring the power." 54 Mason CJ considered that in the context of the taxation statute under consideration, the foremost consideration was that there was nothing in the statute which entitled the Commissioner to "levy, demand or retain any monies otherwise than in payment of duties and charges imposed by or pursuant to the Act". 55 Brennan J expressed the principle in traditional terms at 84-5: "The question whether the repository of a discretionary power is under a duty to exercise the power depends upon the intention of the legislature as revealed in the language of the statute and, in ascertaining that intention, there is a prima facie presumption 'that permissive or facultative expressions operate according to their ordinary natural meaning'. Therefore, if the facultative term 'may' is used in the creation of a power, it does not in itself impose a duty to exercise the power but such a duty may be found in the statutory context in which the power is created. Thus, where a power is conditioned upon the existence of an event or upon the formation of a particular opinion by the repository of the power, the condition may sometimes be taken to specify the circumstances in which the power must be exercised." 56 A similar view to that expressed by Mason CJ was taken in The Commonwealth v SCI Operations (1998) 192 CLR 285. There McHugh and Gummow JJ said at 312: "Legislation should not readily be construed as conferring upon the executive branch of government a discretion to retain, rather than an obligation to refund, moneys received under a statutory entitlement …" 57 Senior counsel for the claimants submitted that the deliberate use of the word "may" indicated that the word should be given its ordinary, that is a facultative, meaning. He submitted that the subject matter and importance of the cl 149 and its relationship with the general object of the Act and Regulations supported the view that cancellation was not imperative even if a ground for cancellation was made out. In particular, he submitted that the Regulation was "not intended to be for the benefit of persons who comply with its preconditions ie the Director-General. Rather it is a provision designed to avoid injustice". He added that it was apparent from other of the Regulations, particularly within Part 7 itself, that the drafter was cognisant of the distinction between facultative and mandatory provisions. I will return to that shortly. He submitted that the use of the facultative expression, having regard to the purpose of the legislative regime, indicated that the Director-General (or the District Court) was invested with a discretion to cancel or suspend a licence or not. Senior counsel summarised the claimants' position: "There are some half dozen factors referred to by the High Court in Ward v Williams for the conclusion that when one is dealing with suspension or cancellation of privileges that the ordinary approach, particularly where the word 'may' is used, is that it confers a discretion." 58 He also submitted that there is an unbroken line of authority in this Court dealing with cancellation of licences to the effect that the use of the word "may" conferred a discretion. Reference was made to Derisi v Vaughan [1983] 3 NSWLR 17 and Said v District Court (1996) 39 NSWLR 47. 59 In Derisi v Vaughan the Court was concerned with the provisions of the Commercial Agents and Private Inquiry Agents Act 1963 (NSW) and in particular the cancellation and disqualification provisions in s 11. Section 11(1) provided that the holder of a licence could be summonsed before a magistrate to show cause why a licence should not be cancelled and the person disqualified from holding a licence on three specified grounds, including "on any of the grounds on which objection may be taken to the grant of a licence under [s 10(6)]". Section 10 was the section which governed the grant and renewal of licences. Licences were only issued for a twelve month period. Pursuant to s 10(6) a licence could not be granted or renewed if an applicant had been convicted of an indictable offence. The section was mandatory in its operation. The licensee Mr Derisi had been convicted of such an offence. 60 Section 11(2) provided: "Upon being satisfied of the truth of any such ground, the court may order that such commercial agent's license, private inquiry agent's license, or subagent's license, as the case may be, be delivered up in accordance with the provisions of this section and cancelled, and that such commercial agent, private inquiry agent, or subagent, as the case may be, be disqualified either permanently or for such period as the court specifies from holding a license under this Act, whether as a commercial agent, private inquiry agent, or subagent." 61 On the hearing of the summons the stipendiary magistrate Mr Vaughan considered he was compelled by s 11(2) to cancel the licence once the ground for cancellation was made out. The New South Wales Court of Appeal held, however, that the section conferred a discretion. The Court acknowledged that there was dissymmetry between s 10(6) if s 11(2) was construed as conferring a discretionary power. If it was construed as a mandatory provision, there would then be consistency between related provisions, an argument which the Court thought "might well be persuasive if there were not an indication within s 11(2) itself militating against its acceptance". 62 In looking at s 11(2) itself, the Court noted that it conferred two independent powers - one of cancellation and one of disqualification. It found that the disqualification power was, in substance, a discretionary power. Having found that the disqualification power was discretionary, it considered that the internal structure of the subsection, where "the same 'may' … governs both powers", was such to require that the cancellation power be given the same construction as the disqualification power. The Court therefore held that the cancellation power in s 11(2) was discretionary in nature. The Court noted that Hoban v Davey [1972] 1 NSWLR 59 was authority to the same effect, on the same section, and, in any event, as a matter of precedent, governed the situation. 63 Commissioner of Police v Payne (1998) 47 NSWLR 245 was a first instance application of Hoban v Davey and Derisi v Vaughan. 64 I do not consider that Hoban v Davey and Derisi v Vaughan have anything to say about this case. As with all authorities in this area, they are cases dependent upon the construction of the particular provision under consideration. There was a grammatical feature particular to that subsection which caused the Court to construe the power conferred as being discretionary. 65 The same may be said of the other authorities to which the Court's attention was drawn or which research has revealed: see for example NJ & JW Caldwell v Brennan (1995) 120 FLR 24 - dealing with s 45 of the Workers Compensation Act 1987 (NSW); DPP v West (2000) 48 NSWLR 647; and Said v District Court in respect of s 60 of the Business Franchise Licenses (Tobacco) Act 1987 (NSW). 66 In Said's, case s 60 of the Act conferred a power upon a Court to declare that tobacco seized by the authority under the Act to be forfeit to the Crown. It was thus a penal provision. Gleeson CJ, after examining the section by itself, in the context of the statute as a whole, and its history, held the provision was discretionary. He summarised his conclusion at 55: "There is no reason, in principle or policy, to deny this degree of flexibility in the practical application of s 60. It does no violence to the language of the statute. It is consistent with the scheme of the statute in relation to the protection of the interests of third parties. It recognises a wider, rather than a narrower, judicial discretion, which in matters of punishment is generally to be preferred. Finally, it resolves an ambiguity in a penal statute in favour of the subject." 67 The considerations which led his Honour to that conclusion do not apply here. 68 It is useful at this point to return to the principles which emerge from the authorities to which I have referred, interposing first the indicative rule of statutory construction in s 9 of the Interpretation Act that the word "may" indicates a discretion is conferred on the recipient of the power. Given that starting point, the question to be determined is whether the context of the particular terms of the provision in question or the general scope and object of the legislation indicates that the provision requires the power to be exercised. 69 Generally, if the power is not circumscribed by context or circumstances, it will be permissive or discretionary: see Finance Facilities per Windeyer J at 134. By contrast, the power is likely to be required to be exercised if the provision specifies those who have the right to call for the exercise of the power and the circumstances or preconditions for its exercise. Put another way, if a provision is for the protection of a private right in specified circumstances, it is likely that the power must be exercised if the conditions for its exercise are made out. However, the fact that there is no private right to be protected is not determinative: see R v Tithe Commissioner per Coleridge J. 70 It is always to be borne in mind however, that these matters are but considerations which might point in one direction rather than the other. They do not diminish or qualify the dual starting point that regard must be had to the context in which the particular provision is found and the general scope and objects of the provision: Ward v Williams. This is demonstrated in both Finance Facilities and Royal Insurance Australia. Admittedly, in both cases, the legislature did specify the persons for whose benefit the provision was directed. However, that factor did not feature in the approach of the Court to the determination of the question whether the power conferred was or was not discretionary. Rather, the focus was on the scope and objects of the provision in question. Underlying each case was a recognition that as a matter of public policy, a taxing authority has no right to monies (including retained monies) other than as specifically commanded by the statute. 71 What then, is the nature of the power under cl 149, which uses the facultative expression "may"? 72 The Poisons and Therapeutic Goods Act is "[a]n Act relating to the Regulation, control and prohibition of the supply and use of poisons, restricted substances, drugs of addiction, certain dangerous drugs and certain therapeutic goods …". The Act contains a Poisons List (s 8) involving the classification of eight different type of poisonous, dangerous, therapeutic and addictive substances. The manufacture and supply of goods specified in the Poisons List and relevantly of addictive substances is strictly controlled. The extent of the control is demonstrated by the Regulation of the packaging, labelling, storage, prescribing and recording of such goods as well as the Regulation of their supply (and in the case of addictive substances, their manufacture and supply). In so far as is relevant here, the Regulation of the supply of addictive drugs is facilitated by the system of licensing. The licensing Regulations make lawful what would otherwise be unlawful. This is underscored by cl 145(3) which provides that a licence is ineffective unless its conditions are complied with. 73 A most curious feature of the licensing provisions, given the otherwise strict control of addictive substances, is the almost complete absence of pre-conditions to the grant of a licence. Only two matters are prescribed, and the first is clearly discretionary - that the Director-General "may refuse an application if of the opinion that the applicant is not a fit and proper person to hold the licence": cl 143(1A). The second is, in my opinion, mandatory. "A licence may not be issued unless the Director-General is satisfied that the premises to which the application relates are appropriate for the … supply of drugs of addiction": cl 143(2). There is also a curious disjunction between cl 143(1A) and cl 149 relating to the cancellation or suspension of a licence, para (d) providing that the power of suspension or cancellation is available where a person "is no longer a fit and proper person to hold the licence..". Notwithstanding this disjunction, two things emerge from cl 149: (i) the cancellation/suspension power is directed at ensuring compliance with the regulatory regime - see for example, paras (b) and (e), itself a matter of public importance - and (ii) it ensures that the public interest is protected- see for example paras (c), (d) and (f). 74 The extensive regulatory regime, including the features to which I have just referred, makes it unarguable that the Act and Regulations are directed to public health issues and facilitates a highly important public policy matter - that there should be the controlled supply of methadone, itself a drug of addiction, to registered addicts. The specific provisions of cl 149 (paras (c), (d) and, in particular (f)) within that context, are directed to the protection of the general public and the public interest. Clause 149 does not, therefore, fall into Lord Cairns' category of being a power to be used for the benefit of specified persons - a factor pointing towards there being a discretion in the Director-General. 75 The claimants also relied upon the difference in language used in Pt 7 itself. For example, cl 142, which relates to applications for licences uses the clearly mandatory expression "must" - the application must be in the approved form; must be accompanied by the application fee and must be lodged with the Director-General. By contrast, cl 145 which empowers the Director-General to impose, vary and revoke conditions of a licence uses the facultative "may" and is clearly discretionary. 76 However, both the context of cl 142 as well the provisions of other clauses of the Regulations point to the opposite conclusion. Clause 142 is, in effect, an administrative provision. It prescribes how and to whom an application for a license must be lodged. The underlying purpose of the prescriptive nature of the clause is simply administrative efficiency. Save that the language used in cl 142 may indicate that the drafters of the Regulations knew what language to use for a strictly prescriptive provision, I do not consider it assists in the construction of cl 149. Of much greater relevance is cl 143(1). It provides that the Director-General "may issue" or "may refuse" an application for the issue of a licence. It clearly imports a discretion. If the argument of the appellants is accepted, the drafters of the Regulation understood the difference between obligatory and discretionary language, it was unnecessary to provide alternatively that the Director-General "may refuse" an application. The clause would have been clear and operated effectively had its language been that the "Director-General may issue an applicant a licence". However, the legislature has, in cl 143 used specific and alternative language to denote the existence of a discretionary power. This is to be contrasted with cl 149 where no such distinction is drawn 77 The final matter relied upon by the claimants is the context of cl 149 itself. It was submitted that if the power to cancel or suspend must be exercised if a precondition for its exercise is made out, it means that a minor infraction of, for example, a condition of a licence, would result in a cancellation or suspension of a licence. There is merit in this argument, but it is one which can be argued both ways. Although an infraction of a condition may be minor, the fact is, a licence permits what would otherwise be unlawful. That is a significant matter in itself and reinforces the strictures of the regulatory regime. The Regulation also makes provision for minor infractions in the case of, for example, breach of condition or a late payment of a licence fee by providing for suspension as an alternative to cancellation. The other matters specified in cl 149 of their nature, tend not to involve minor or trivial matters. However, the provision allows flexibility in dealing with such matters by permitting suspension as an alternative to cancellation. 78 This leads directly to the next consideration. The most significant factor which points to the power in cl 149 being one which must be exercised, is the very fact that the circumstances of its exercise are clearly and unambiguously circumscribed by the provision itself. The catalogue of circumstances in which the licence may be suspended or cancelled both indicates the degree of control over the lawful supply of drugs of addiction and recognises, in para (f) in particular, that the impingement on the rights of the public must, in a relative sense, be minimised. The fact that para (d) involves the Director-General having formed an opinion about the continuing fitness of a person to hold a licence does not detract from the basic premise that the circumstances calling for the exercise of the power are specifically circumscribed by the terms of the provision: see Finance Facilities. 79 A further indicator pointing towards a construction that the power must be exercised, if the conditions for its exercise are met, is the nature and extent of the Regulation making provisions of the Act. The Act is unusual in having two Regulation making provisions. Section 45C is in typical form conferring, in subs (1), a general power to "make Regulations not inconsistent with the Act". Section 24, by contrast, specifically empowers the making of Regulations "for the purpose of preventing the improper use of drugs of addiction". Section 24(2) provides that Regulations shall be made under the Division (which relates to drugs of addiction) relating to the matters specified therein, including the issue, grant and renewal of licences for the manufacture and supply of such drugs. 80 The significance of s 24(2) is that it reflects the legislature's intention that the implementation of measures controlling the supply of drugs of addiction not be left to executive discretion. In this way, it reinforces the nature, scope and purpose of the legislation. The legislature has recognised that certain drugs of addiction should, as a public health issue, be available. The requirement that Regulations must be made in respect of the licensing of their manufacture and supply creates, by way of mandatory legislative direction, a means of ensuring that there is, in fact, in place the means of providing addictive drugs to the community under strictly controlled circumstances. 81 In my opinion, upon its proper construction, cl 149 confers on the Director General a power which must be exercised if one or more of the matters in the clause are established. 82 The licensing system created by the Regulations is to permit and control the circumstances in which addictive drugs may be supplied to the community. It reflects and implements important public policy considerations in relation to drugs of addiction. The matters specified in cl 149 in relation to cancellation are a reflection of those same public policy considerations; the strict control of the supply of drugs of addiction with the community requires that conditions of a licence be complied with and that the regulatory regime, including the payment of licence fees, be respected; that persons who are not fit or proper persons to hold a licence should not hold a licence; that persons who commit drug related offences or offences against the Act or Regulations should not hold a licence. Likewise, if the amenity of the area is disrupted by the supply of methadone, then the public interest is adversely affected. 83 The word "may" is directed, not to a discretionary exercise of the power as such but to its manner of exercise. It empowers the Director-General to engage one of two alternative sanctions: suspension or cancellation. 84 It follows that the first basis for relief has not been made out.

The Second Issue 85 The claimants assert that his Honour erred in failing to determine the matter on the facts existing at the time of the hearing before him, contrary to cl 149(f). Alternatively, it was alleged that his Honour erred in taking into account facts not existing at the time of hearing of the appeal, contrary to that clause. In developing this submission in oral argument, senior counsel for the claimant recognised that his Honour did refer to evidence of the current circumstances, but submitted that his 'focus' was clearly on the past. 86 I do not consider this submission has been made out. His Honour dealt with the history of complaints which neighbours articulated and their evidence of the present situation, including that there had been some improvement in the months before the hearing, but nonetheless that problem remained. Dr Zagarella, a specialist doctor who had consulting rooms near the clinic said in July 1999: "Although there have been some improvements in the last year, the situation remains intolerable as some of my patients refuse to come to 26 Barbara Street, Fairfield. Others choose to visit other Dermatologists in other suburbs."

and in his oral evidence he said: "My own observations are that when I look out, you know, on the street or walk out on the footpath there are groups of people congregating on my side of the street and the other side of the street, and up to the corner where the shops are. I don't know if you want me to describe the type of peoples but they are groups of people congregating there and, you know, it is not a pleasant area to walk down Barbara Street, and it is not just my observation but other people tell me that. I certainly wouldn't go down there with my wife and children. [His Honour] Is there any particular time of the day when the situation might be worse than at other times? … A. I couldn't identify a particular time of the day, no." 87 Mrs Asbridge, the manger of Centrelink which is opposite the clinic said in her June 1999 statement: "My office is on the first floor of the Centrelink building and looks in a westerly direction and immediately at the front of the Barbara Street Clinic. I have a clear view up and down the western side of Barbara Street from my office. I have witnessed drug deals going on outside and within twenty yards of the Barbara Street Clinic." 88 In her oral evidence she said she had made her observation of the clinic over the periods February 1998 to November 1999 and then once a fortnight thereafter. 89 Mr Mendoza a local real estate agent said in his oral evidence: "Q … Has there been anything happen between then and now which changed the position in any way, either for the better or for the worse, which you need to tell us about to bring this statement up to date? A Yes, it change (sic) for a little while, I think around maybe about September that year to late December. Before that it was the same and now it has to come back to the same problem. But I must say some of the days in the last week or so has been less problem for one reason or another." 90 Mr Frassetto, an architectural design and building and development consultant, with an office around the corner from the clinic, said in his statement made in May 1999: "I have often seen transactions where a small bottle of methadone has been exchanged for money, usually $50.00 a bottle. I have also seen on other occasions activity consistent with drug deals in the area." 91 He also said he had observed an improvement in 1997 with a reduction in the number of persons attending the clinic. 92 His Honour set out all the above evidence and concluded: "It seems to me that although there is no question that this clinic is performing a valuable need, its activities have disrupted and are disrupting the amenity of the area and in those circumstances I would affirm the Director-General's decision and dismiss the appeal." (emphasis added)

The Third Issue: Wrongful Admission of Evidence 93 His Honour, over objection, admitted hearsay evidence of complaints about the amenity of the area to various witnesses, who also gave evidence of their own observations of similar conduct. In dealing with one such objection in his judgment, his Honour said: "May I say at the outset, objections were made to this and other material which I have considered. I take into account that in so far as hearsay might be involved, I have to proceed very carefully, but nevertheless I think it is relevant … … I emphasize that this hearsay has to be treated very carefully and I do so. … [The witness] has seen the activity herself, she has been told about it herself. Again I make the observation as to how careful I have to be in relation to hearsay evidence, but getting back to the question of amenity, I think all these matters are of importance." 94 His Honour did not specifically rule as to the basis upon which he admitted the hearsay evidence nor whether he was proceeding on the basis he was bound by the provisions of the Evidence Act. I have already referred to the earlier comment by his Honour at the commencement of proceedings to the effect he would admit such evidence subject to objection. 95 The claimants submitted that he was bound to apply the rules of evidence, the appeal before him being by way of a hearing de novo. They drew attention to the fact that there were many examples of legislation where it was specifically provided that the District Court, on an appeal, was not bound by the rules of evidence: see for example, s 32 Nurses Act 1991 (NSW); s 33B Chiropractors and Osteopaths Act 1991 (NSW); s 19 Farm Produce Act 1983 (NSW) (repealed). 96 It was submitted that the absence of such a provision here reinforced the fact that the legislature had specified that the appeal was to be by way of a new hearing in the District Court and that carried with it all the incidents of a civil proceeding in the court. Further, s 4 of the Evidence Act by its terms applied to such an appeal. That section provides that the "Act applies in relation to all proceedings in a New South Wales court". 97 In Eastman v R (2000) 172 ALR 39 at 65, McHugh J said: "In a variety of legal contexts, courts still recognise that 'appeal' has at least four different meanings. It may mean an appeal in the true sense, an appeal by way of rehearing on the evidence before the trial court, an appeal by way of rehearing on the evidence before the trial court and such further evidence as the appellate court admits pursuant to a statutory power to do so, and an appeal by way of a hearing de novo. Which of these meanings the term 'appeal' has depends on the context of the term, the history of the legislation, the surrounding circumstances, and sometimes an express direction as to what the nature of the appeal is to be." 98 In Builders Licensing Board v Sperway Constructions (Sydney) Pty Limited (1976) 135 CLR 616, Mason J said at 621 and 622: "Where a right of appeal is given to a court from a decision of an administrative authority, a provision that the appeal is to be by way of rehearing generally means that the court will undertake a hearing de novo, although there is no absolute rule to this effect. … The nature of the proceeding before the administrative authority may be of such a character as to lead to the conclusion that it was not intended that the court was to be confined to the materials before the authority. There may be no provision for a hearing at first instance or for a record to be made of what takes place there. The authority may not be bound to apply the rules of evidence or the issues which arise may be non-justiciable. Again, the authority may not be required to furnish reasons for its decision. In all these cases there may be ground for saying that an appeal calls for an exercise of original jurisdiction or for a hearing de novo . On the other hand the character of the function undertaken by the administrative authority in arriving at its decision may differ markedly from the instances already supposed. … In such a case a direction that the appeal is to be by way of rehearing may well assume a different significance. But in the end the answer will depend on an examination of the legislative provisions … Primarily it is a question of elucidating the legislative intent, a question which in the circumstances of this case is not greatly illuminated by the Delphic utterance that the appeal is by way of rehearing." (emphasis added) 99 Sperway Constructions involved a consideration of whether an appeal to the District Court by way of rehearing from a decision of the Builders Licensing Board involved a hearing de novo. Determinative of this approach was the fact that the Board's determination was to be made without the benefit of a hearing and without any appearance for and on behalf of the defendant. Nor was there an obligation to give reasons. Mason J (Barwick and Stephen JJ agreeing) concluded: "… I am of the opinion that the majority in the Court of Appeal were correct in holding that the District Court is bound to receive the evidence of the witnesses and that there is an onus on the appellant to present its case in that Court." 100 Senior counsel for the Director-General submitted that this case (by virtue of the operation of cl 152) fell into the third category of appeal identified by McHugh J in Eastman and that it was a new hearing on the original evidence plus any new evidence, which the District Court has a statutory power to admit. 101 I do not agree. It is clear from the terms of cl 152 that it is a hearing de novo as explained in Sperway Constructions and thus falls into the fourth category identified by McHugh J in Eastman. It follows that a party who appeals to the District Court under cl 152 is required to re-present its case and in doing so the Court is constrained by the rules of evidence and its rules of practice and procedure. As I have already pointed out, his Honour did not, in express terms, state that he was bound by the rules of evidence. However, I think it is implicit in his statement in the judgment, that the appeal was by way of a hearing de novo, that he considered he was so bound. Likewise, his Honour's reference at the beginning of the hearing to "good hearsay" being admissible indicates that he had in mind the provisions of the Evidence Act. 102 But even if his Honour did not have the Evidence Act in mind, I do not think the admission of the evidence was wrong. His Honour had defined 'amenity' broadly, relying on Broad v Brisbane City Council & The Baptist Union of Queensland (1986) 2 Qd R 317 at 326 and Humby v Woollahra Municipal Council (1964) 10 LGRA 56. 103 In Broad v Baptist Union, de Jersey J said at 326: "In my view it may in a particular case embrace not only the effect of a place on the senses but also the resident's subjective perception of his locality. Knowing the use to which a particular site is or may be put, may affect one's perception of amenity." 104 Else-Mitchell J took a similar view in Humby at 65: "In so far as perceptions of amenity are concerned, the feeling of agreeability experienced by persons in an area can, in my opinion, be disrupted by an awareness that there are premises in the area which are used for a purpose which has the potential to disrupt amenity, whether or not the disruption is actually occurring at the time a person is in the vicinity of the premises in question." 105 The expert evidence in the case was to the same effect. 106 In my opinion, the fact that complaints had been made to the occupiers and users of the premises in the vicinity could affect those persons' perceptions of the amenity of the area. Evidence of such complaint would therefore be admissible. Once admissible for that purpose the evidence would be admissible for all purposes: s 60 Evidence Act 1995 (NSW). His Honour could then give to the evidence such weight as he considered it warranted, as he clearly did. 107 Accordingly, no error has been demonstrated by the admission of this evidence. 108 I would dismiss the appeal with costs. However, because his Honour's orders included an order that the clinic be closed by a date which has now passed, that order will have to be amended. I propose the following orders:

(ii) Order the licence granted in favour of Barbara Street Clinic Pty Ltd to be cancelled with effect from four months from Tuesday 28 November 2000.

(iii) The appellant to pay the costs of the appeal. 109 STEIN JA: I agree with Beazley JA. 110 HEYDON JA: I agree with Beazley JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.