National Health Legislation - pharmaceutical benefits - approval of pharmacists -description of premises in application for approval - premises in respect of which approval may be granted.

National Health Act 1953, ss 4(1), 90, 92, 98 and 99K

National Health (Pharmaceutical Benefits) Regulations, reg 8

Pharmacy Restructuring Authority v. Chatfield [1993] FCA 348; (1993) 116 ALR 76

Counsel for the applicant: Margaret Wilson QC and

Annabelle Bennett

instructed by Australian

Government Solicitor

Counsel for the respondent: G.M. Egan instructed by

Bolster and Co

1. The decision of the Administrative Appeals Tribunal dated 21

December 1993 is set aside and the following decision is

substituted:

(a) The recommendation of the Pharmacy Restructuring Authority

is set aside and in substitution therefor it is recommended

that the application of the Muzaffer Kaderbhai and Dilshad

Kaderbhai dated 23 September 1991 be approved.

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

Housing, Local Government and Community Services delegate

to reject the said application is set aside and the Secretary

is directed to reconsider the application in the light of

the substituted recommendation.

2. The appeal is otherwise dismissed.

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

FOSTER, COOPER AND WHITLAM JJ This is an appeal by the Secretary, Department of Health, Housing, Local Government and Community Services ("the Secretary") and the Pharmacy Restructuring Authority ("the PRA") from a decision of the Administrative Appeals Tribunal ("the Tribunal"). The proceeding before the Tribunal concerned an application by the respondents, Mr and Mrs Kaderbhai, for approval as pharmacists under Part VII of the National Health Act 1953 ("the Act").

2. The respondents own a pharmacy in Labrador, Queensland. Their application related to a new pharmacy in New South Wales and described the premises as "situated at Tweed Heights Estate Shopping Centre, Ash Drive, Sth Tweed."

3. The application was referred to the PRA who had to consider, in accordance with guidelines determined by the Minister under the Act, whether there was a "definite unmet public need" for approval. The respondents supplemented their application with a copy of a town planner's report on an application for an off-licence under the Liquor Act 1982 (NSW) at a shop in the same shopping centre. (Presumably this was done because of what was thought to be the similar concept of "needs" under that Act.) This report stated that the shopping centre was a block of nine lockup shops and that negotiations were in progress to lease shop 9 to a chemist. A plan of shop 9, showing 792 square feet of lettable space and marked "chemist", was also submitted.

4. The PRA recommended that the application not be approved. The reason given for the recommendation was that an unmet public need had not been demonstrated. The application was then rejected by the Secretary's delegate.

5. The respondents applied to the Tribunal for review of the PRA's recommendation. The statement of issues prepared by both sides for the Tribunal identified the issue in dispute as whether there was an "unmet public need" under the guidelines.

6. However, at the hearing before the Tribunal the respondents adduced evidence that shop 9 had been leased to another person and that it was now proposed to use a discrete part of shop 3, comprising 600 square feet, for their pharmacy. The owner of the shopping centre had made such arrangements with the respondents and with the lessee of shop 3. The new proposal had not been the subject of any application for planning consent or building approval to Tweed Shire Council. Nor had any application for approval been made to the Pharmacy Board of New South Wales in respect of either shop.

7. The Tribunal rejected submissions that the respondents' application did not comply with the Act and that the change of shops meant that the respondents had to make a fresh application. This gives rise to the first question of law raised on the appeal.

8. Having dealt with the substantive issue in dispute between the parties, the Tribunal found that there was "a presently existing definite unmet public need for a pharmacy in the Tweed Heights area." The Tribunal then made the following decision:

"The Tribunal:

(1) sets aside the recommendation of the Pharmacy

Restructuring Authority and substitutes in lieu

thereof a recommendation that the (respondents)

be approved for the purposes of supplying

pharmaceuticals (sic) from Tweed Heights Estate

Shopping Centre, Ash Drive, Tweed Heights; and

(2) further decides that the decision of the

delegate to (sic) the Secretary of the

Department of Health, Housing, Local Government

and Community Services is set aside and the

matter is remitted to the Secretary for his

reconsideration with the direction that the

application be approved subject to the

(respondents) meeting all State and Local

Government requirements."

The second question of law raised on the appeal turns on the direction in paragraph (2) of the Tribunal's decision.

9. Part VII of the Act deals with the supply of pharmaceutical benefits in Division 2. Section 90 provides for the approval of pharmacists for the purpose of supplying pharmaceutical benefits. 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.

...

(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.

..."

10. The Authority referred to in s 90(3A) and (3B) is, of course, the PRA. Section 92 provides that the Secretary may also approve a medical practitioner for the purpose of supplying pharmaceutical benefits where "there is no pharmacist approved in respect of premises from which, in the opinion of the Secretary, a convenient and efficient pharmaceutical service may be supplied in a particular area and a medical practitioner is practising in that area." Cancellation of approval by the Secretary is dealt with in s 98, and s 98(4) provides:

"98(4) If a person becomes an approved pharmacist in

respect of premises in an area in respect of which a

medical practitioner is approved under section 92, the

Secretary shall cancel the approval of the medical

practitioner in respect of that area or of that part

of the area in relation to which that section no

longer applies."

11. The PRA is established under Division 4B of Part VII of the Act. Section 99K provides:

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

(a) to consider applications 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; and

...

(2) In making a recommendation under subsection (1),

the Authority must comply with the relevant guidelines

determined by the Minister under section 99L.

(3) All recommendations of the Authority under

subsection (1) are to be made to the Secretary."

12. Reference should also be made to the National Health (Pharmaceutical Benefits) Regulations in force under the Act. Regulation 8 provides that the Secretary may refuse to entertain an application for approval by a pharmacist under Part VII of the Act unless the application is in accordance with Form A in Schedule 6. That form of application merely requires an applicant to specify the subject premises by filling in a blank space after the words "in respect of premises situated at." This is what the respondents did in the present case.

13. This appeal first raises the question: what are the "premises" in respect of which the Secretary may approve an applicant under s 90(1) of the Act. Counsel for the Secretary and the PRA submit that the Secretary is not empowered to grant approval in respect of a whole shopping centre or an unspecified part of it. It is said that the description "particular premises" in s 90(1) imports precision and that the use of the adjective "particular" narrows the subject matter. Further, the meaning of the phrase "shopping centre" is uncertain and, in the case of a complex of shops on one parcel of land, it is necessary to specify a shop or an identifiable area of floor space.

14. In particular, counsel for the applicants rely upon the limitation on the Secretary's power contained in s 90(4). The requirement that an applicant pharmacist must first be permitted under State or Territory law to carry on business at the subject premises before the Secretary may grant approval meant, it was submitted, that it would be absurd to suggest that approval could be granted in respect of a whole shopping centre or an unspecified part of it. The point was illustrated by extensive reference to the current legislation in New South Wales governing approval of premises as suitable for carrying on the business of a pharmacist.

15. In the present case the Tribunal held that the respondents' application was "lodged in respect of particular premises, namely, premises at the Tweed Heights Estate Shopping Centre, Ash Drive, Tweed Heights." As appears from paragraph (1) of its decision set out earlier, the recommendation substituted by the Tribunal was expressed to be made in respect of the whole shopping centre.

16. The Tribunal said that its view was consistent with the reasoning of O'Connor P in Re Garozzo and Pharmacy Restructuring Authority (1992) 16 AAR 251. In that case the applicant pharmacist was held to have entered into a "financial commitment" within the meaning of the guidelines under the Act to take up a lease of 150 square metres in the retail centre of a complex yet to be constructed. Her Honour said (at 258-259):

"A further submission made by Mr Munro was that

approval under s 90 of the National Health Act to

supply pharmaceutical benefits can only be given in

respect of "particular premises". This, he submitted,

requires the premises to be identified with certainty.

The premises in respect of which approval is sought in

these applications do not in fact exist in that they

have not been built. Nor has a particular portion of

the plan for the site been allocated to the applicant.

The agreement between the parties was that 150 square

metres of space would be allocated within the main

retail centre for use as a pharmacy. In my view the

premises have been sufficiently defined for the

purposes of the legislation. It is not to the point

that the premises are yet to be constructed. To

require that that be so would penalise pharmacists in

the position of Mr Garozzo. In the course of business

negotiations must take place with respect to events

which are to occur in the future. The designation of

a specified area, that is, 150 square metres, within

the retail centre is sufficiently specific to bring

the proposed pharmacy within the meaning of

"particular premises"."

17. The word "premises" seems to us perfectly apt to embrace a shopping centre. Nor does the use of the adjective "particular" compel the conclusion that, in the case of such a centre, the "premises" are to be divided into parts so that only a part of such premises may be the subject of an application under s 90(1) of the Act. The word "particular" means in the context no more than what the prescribed Form A assumes, namely, that the situation of the premises that are the subject of the application should be specified. After all, the location of approved pharmacists and approved medical practitioners will be known to the Secretary. There is certainly nothing about the geographical notion of an "area" under ss 92(1) and 98(4) of the Act that suggests a shopping centre might not be "premises" for the purposes of those provisions.

18. There is no doubt that a shopping centre, such as the one in the present case, could not be approved premises under the current provisions of the Pharmacy Act 1964 (NSW). However, the requirements of such statutes cannot control and vary from time to time the meaning of "premises" under s 90 of the Act, even though the power of the Secretary may be affected by the operation of s 90(4).

19. It follows that we consider the Tribunal correctly held in the present case that the application was made in respect of premises, which were in fact described as (and did not need to be described with any greater particularity than) simply being "at Tweed Heights Estate Shopping Centre." That was the application referred to the PRA, and it was on that basis that the PRA made its recommendation that the respondents not be approved. The recommendation did not relate specifically to shop 9. That recommendation was the subject of the review before the Tribunal. (See s 105AD(2)(a) of the Act.) The nature of the underlying application under s 90 of the Act cannot change in the light of evidence before the Tribunal that the respondents propose to lease a discrete part of shop 3. Since the application under s 90 was not made in respect of shop 9 (whatever the supporting documentation showed about lease negotiations), but in respect of the whole shopping centre, the Tribunal correctly rejected the submission that the respondents had to lodge a fresh application with the Secretary.

20. It is, of course, conceivable under the guidelines, as varied from time to time by the Minister under the Act, that the location of a specific shop within a shopping centre may be relevant in another case to the PRA's consideration. That would become obvious when the matter was referred to the PRA.

21. However, what we have noted about the provisions of the Pharmacy Act 1964 (NSW) leads to the submission that the premises approved under s 90(1) of the Act must be, consistently with s 90(4), the very premises at which the pharmacist is permitted under the State law to carry on business. Further, the "particular premises", which are the subject of the application under s 90(1), must correspond exactly with

. the "particular premises" referred to in s 99K (1)(b),

. the "premises" referred to in s 90(4), and

. "those premises" in respect of which approval

is granted under s 90(1).

Approval cannot, it is submitted, be granted in respect of part only of the premises the subject of the application.

22. These submissions require consideration of s 90(4), which is a curiously worded provision. It does not say that the Secretary shall not approve a pharmacist whose premises are not approved and who is not registered as the owner of the relevant business under State or Territory law relating to control of pharmacies. At first glance it may seem to amount to no more than an expression of intention that the Act should not displace any such State of Territory law in accordance with s 109 of the Constitution. The Secretary, however, evidently takes the view that s 90(4) operates as a limitation on power and that an applicant must show that he is permitted under a law, such as the Pharmacy Act 1964 (NSW), to carry on business at the premises in respect of which approval is to be granted.

23. The Secretary is plainly correct. The expression "Nothing in this section authorizes" signals a limitation on power. This expression is similar to the language limiting the legislative power of the Parliament employed in s 51 (xxiiiA) of the Constitution. The permission contemplated by s 90(4) must be specific to "that pharmacist" in respect of the premises for which approval is to be granted. The permission required is not of a town planning or land use type, which would relate only to the premises.

24. French J explained s 90(4) in Pharmacy Restructuring Authority v. Chatfield [1993] FCA 348; (1993) 116 ALR 76 at 93:

"In truth, the subsection 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 subsection 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."

25. This brings us back to the submission that the premises, which are the subject of the State or Territory permission under s 90(4), must be identical with the premises the subject of the application under s 90(1). Such a concept of spatial symmetry has little attraction, and we can perceive no good reason why it would be thought necessary to achieve any of the objects of the Act. In addition, "premises" is defined by s 4(1) of the Act to include a part of the premises. Approval under s 90(1) may be granted, therefore, in respect of part only of the premises that were the subject of the application. Such part would then be the "premises" in respect of which approval had been granted and in respect of which any relocation would require approval.

26. The second question raised on this appeal is the direction to the Secretary in paragraph (2) of the Tribunal's decision. Counsel for the Secretary submit that he retains a discretion to reject an application, notwithstanding that the PRA has recommended the grant of approval, and that the guidelines determined by the Minister under the Act are not an exhaustive statement of the matters which he may take into account in the exercise of that discretion. The Tribunal had held that any decision made by the Secretary should be within the constraints of the guidelines and not otherwise.

27. The statement of the Tribunal is equivocal. The Secretary plainly has a discretion under s 90(3B) of the Act. However, the proceeding before the Tribunal was conducted as if the Secretary's decision rejecting the respondent's application was also being reviewed. The review of that decision and the recommendation of the PRA turned on the issue of "definite unmet public need" under the guidelines. So far as can be gathered from the appeal papers, counsel then appearing for the Secretary before the Tribunal did submit that, even if a favourable recommendation were substituted, the Tribunal should affirm the delegate's decision to reject the application on the basis of the "likely non-viability" of the proposed new pharmacy. There do not appear to have been any submissions before the Tribunal about the effect of s 90 (4) of the Act.

28. The limitation on power contained in s 90(4) is no mere formality and, in the absence of evidence before the Tribunal that its requirements were met, the Secretary ought not to have been directed to grant approval. The Secretary will need to be satisfied that the respondents have been permitted to carry on business by the State authority at a part of the shopping centre before approval can be granted in respect of such premises. This point was not raised before the Tribunal and, although the appeal must be allowed in part, there should be no order as to the costs of the appeal. In remitting the matter to the Secretary, it is appropriate to make no order as to how he should exercise any discretion under s 90(3B) save to observe that he may not simply disagree with the recommendation. This would be a course open to him in the case of a recommendation by the PRA, but not where the recommendation is that of the Tribunal.

29. The applicants also raised, as a third question of law in their notice of appeal, the guidelines applied by the Tribunal. It was said that the Tribunal erred in failing to have regard to certain provisions of the guidelines, "from which the Legislature's intention that different shops within a shopping complex constitute different premises is apparent." These provisions were contained in the guidelines in force at the time either of the hearing before the Tribunal or of its decision. They were not the subject of debate before the Tribunal. The substantive issue in dispute there was "definite unmet public need." When the Tribunal set out this requirement of the guidelines in the reasons for its decision, it extracted the text from an instrument which had been revoked. Counsel for the applicants concede that this textual discrepancy "makes no difference to the result of this case."

30. However, no matter what subsequent versions of the guidelines provide, this ground of attack is bound to fail. In Webster v. McIntosh [1980] FCA 128; (1980) 49 FLR 317 Brennan J observed (at 321) that "the intention of Parliament in enacting an Act is not to be ascertained by reference to the terms in which a delegated power to legislate has been exercised." The guidelines determined by the Minister under the Act cannot govern the meaning of the Act's provisions.

31. It follows from what we have said about s 90(4) of the Act that the decision of the Tribunal must be set aside. However, the challenge to the recommendation substituted by the Tribunal has not succeeded, and the Secretary will be directed to reconsider the application in the light of such recommendation. We make no order as to the costs of this appeal, which is otherwise dismissed.