Stonehealth Pty Ltd v ZAA Ventures Pty Ltd as Trustee for ZAA Investment Trust

RANGIAH J: 1 The appellant, Stonehealth Pty Ltd (Stonehealth), has appealed from a judgment in ZAA Ventures Pty Ltd as Trustee for ZAA Investment Trust v Australian Community Pharmacy Authority [2020] FCA 1227 delivered on 25 August 2020. 2 The interlocutory application presently before the Court seeks a stay of one of the orders made by the primary judge and an interlocutory injunction pending the outcome of the appeal. 3 The judgment of the primary judge found in favour of the applicant, ZAA Ventures Pty Ltd as Trustee for ZAA Investment Trust (ZAA) in its application for judicial review of a decision made on 26 June 2020 by the Australian Community Pharmacy Authority (the Authority). The Authority's decision was to recommend that the Secretary to the Department of Health (the Secretary) refuse ZAA's application to supply pharmaceutical benefits at certain premises in Flagstone in Queensland. 4 Stonehealth has made a competing application to supply pharmaceutical benefits in Flagstone. Only one of the two applications can be granted. Stonehealth therefore has an interest in the refusal of ZAA's application. Stonehealth became a respondent to the proceedings before the primary judge, and now appeals because the orders may result in ZAA's application being granted and Stonehealth's application being refused. 5 The primary judge ordered: 1. The decision of the Australian Community Pharmacy Authority of 26 June 2020 recommending that ZAA's application for approval to supply pharmaceutical benefits under s 90 of the NH Act at Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland, 4280 not be approved is quashed and a writ of certiorari be issued quashing the decision; 2. ZAA's application for approval to supply pharmaceutical benefits under s 90 of the NH Act at Shop 3, 8-12 Wild Mint Drive, Flagstone, Queensland, 4280 is remitted to the Australian Community Pharmacy Authority to consider the application and make a recommendation according to law and a writ of mandamus be issued compelling the Australian Community Pharmacy Authority to consider the application and make a recommendation according to law; … 6 In the interlocutory application, Stonehealth seeks the following orders. 1. Pursuant to r36.08 of the Federal Court Rules 2011 orders (1) and (2) of the orders made on 25 August 2020 be stayed until the delivery of judgment by a Full Court in this appeal or until further order. 2. Until the delivery of judgment by a Full Court in this appeal or until further order the second respondent is restrained from considering, determining or making any recommendation in relation to any application with respect to the granting of approval under s90 of the National Health Act 1953 with respect to premises located within a radial distance of 1.5 kilometres of Shop 3, 8-12 Wild Mint Drive, Flagstone in the State of Queensland. … 7 Stonehealth no longer seeks a stay of Order 1, and only seeks a stay of Order 2. 8 The interlocutory application has been listed for an urgent hearing because the next meeting of the Authority is to be held tomorrow, on 4 September 2020. Counsel for the Authority has informed the Court that the Authority intends to consider ZAA's application at that meeting. If the Authority decides to make a recommendation in favour of ZAA's application, that application may be allowed by the Secretary, and, in that event, Stonehealth's application would have to be refused. Accordingly, Stonehealth seeks the grant of a stay and injunction. 9 The application for a stay is opposed by ZAA, but the Authority agrees to the proposed injunction. 10 It is necessary to describe some of the legislative framework and the background to the proceeding. 11 Part VII of the National Health Act 1953 (Cth) (the Act) establishes a scheme for the payment by the Commonwealth of benefits, or subsidies, in respect of certain drugs or medicinal preparations. Those benefits are referred to in the Act as "pharmaceutical benefits". Under s 89 of the Act, a person is not entitled to receive a pharmaceutical benefit unless it is supplied by an approved pharmacist at or from approved premises. A pharmacist may apply to the Secretary for approval: s 90(1). The Secretary then refers the application to the Authority: s 90(3A). The Secretary may grant the approval if the Authority recommends the grant: s 90(3B). 12 The Authority must comply with the rules determined by the Minister: s 99K(2). Those rules have been determined under the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (the Rules). Section 10(2) of the Rules requires that the Authority must recommend that an applicant be approved in relation to particular premises if, relevantly, the requirements of an item in Pt 2 of Sch 1 are met in relation to the application. 13 Item 130 of Pt 2 of Sch 1 of the Rules requires that: (a) the proposed premises are at least 1.5 km, in a straight line, from the nearest approved premises; and (b) the Authority is satisfied that, at all relevant times, there is, within 500 m, in a straight line, from the proposed premises, either: (i) both the equivalent of at least one full-time prescribing medical practitioner and a supermarket that has a gross leasable area of at least 1,000 m2; or (ii) a supermarket that has a gross leasable area of at least 2,500 m2 14 The phrase "at all relevant times" is defined in s 5 of the Rules to mean: (a) the day on which the application was made; and (b) the day on which the application is considered by the Authority. 15 A supermarket is defined to mean, "a retail store the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods". 16 The Authority's recommendation that ZAA's application be refused was based on the Authority's view that the application did not comply with the requirements of Item 130 of Pt 2 of Sch 1 of the Rules. ZAA had made its application on 19 March 2020. The premises from which ZAA intended to operate were in close proximity to a Coles supermarket, which was only due to commence trading on 21 March 2020. 17 The Authority determined that the Rules had not been satisfied because, "The Coles Supermarket was not trading on the day the application was made". It decided, on that basis, to recommend that the application not be approved. 18 Stonehealth made its application on 20 March 2020. The applications cannot both be granted because the premises are within 1.5 kilometres of each other for the purposes of Item 130. 19 Before the primary judge, ZAA contended that the Authority had misconstrued the term "supermarket", or had imposed a requirement that did not exist under the Rules that a supermarket be "trading" on the day the application was made. 20 The primary judge found in favour of ZAA's argument, holding that Item 130 requires no more than that the primary business of any such store can be described as the retail sale of a range of goods. Her Honour held that the definition does not impose any requirement that a supermarket be open and selling goods in order to be a supermarket for the purpose of the Rules. Her Honour held that it is a matter for the Authority to consider any fact or matter put before it that establishes to its satisfaction that, on the relevant day, there is a retail store by reference to the facts or matters which evidence the existence of the store's primary business. Her Honour made orders accordingly. 21 In the notice of appeal, Stonehealth alleges, inter alia, that the primary judge erred by failing to construe the definition of "supermarket" as imposing a requirement that a supermarket must actually be open and selling goods. 22 There is no dispute between the parties as to the principles relevant to an application for a stay pending appeal. The principles were summarised by Derrington J in Stefanovski v Digital Central Australia (Assets) Pty Ltd [2017] FCA 1121 at [4]: (a) A court should not be easily disposed to delaying the enforcement of a judgment obtained after a trial. Prima facie, the successful party at trial is entitled to the fruits of their judgment. In particular, judgments of the trial division should not be treated merely as provisional and, following a trial the successful party should generally have an unfettered entitlement to enforce their judgment; (b) However, the provisions permitting the Court to grant a stay pending the determination of an appeal exist to prevent possible injustice arising from the enforcement of a judgment which might subsequently be overturned; (c) It is not necessary for a party seeking a stay to show "special" or "exceptional" circumstances. All that needs to be shown is that the applicant has demonstrated that the case is an appropriate one for the exercise of the discretion in their favour; (d) The applicant for a stay must necessarily provide sound reasons to justify a suspension of the successful party's right to recover judgment; (e) Necessarily, the applicant will need to establish that their appeal has some merit to it. They are not obliged to demonstrate that the appeal will be successful, or that success is more probable than not. The degree of confidence which a court needs to have in the appeal's prospects will most likely vary with all of the circumstances of the case including the potential prejudice which might be suffered by the parties as the result of the granting or refusal of the stay. That said, where an appellant can demonstrate that they have substantial prospects on appeal, that will be a significant factor in favour of granting a stay. (f) Although the applicant for a stay must necessarily establish the grounds of their application by admissible evidence, it must be kept steadily in mind that much of the evidence will relate to events which may occur in the future. Necessarily, the evidence produced must provide an appropriately sound foundation on which a court may assess the risk of those future events occurring. In that respect, for the purposes of establishing that the circumstances warrant the granting of a stay, the applicant must not leave the situation in a state of mere "speculation" or "argument". (g) A significant factor in any discretionary consideration is whether there is a real risk or probability that a successful appellant would be deprived of the fruits of their appeal if a stay is not granted. That consideration extends to the circumstances where there is a real risk that it will not be possible for the successful appellant to be substantially restored to its former position if judgment is executed against it; (h) Conversely, there is a strong reason for refusing a stay where it is established that there is a real risk that the granting of a stay may prevent the successful party at trial from obtaining the full benefits of their judgment if the appeal is unsuccessful. (Citations omitted.) 23 It is common ground that the appeal would lack practical utility if the Authority makes a decision to recommend its approval of ZAA's application at its meeting tomorrow, and the Secretary then grants the application. ZAA also accepts that the appeal is at least arguable. These are powerful considerations in favour of a grant of the stay of the relevant order of the primary judge. 24 However, ZAA argues that a stay should not be granted for three reasons. First, if a stay is granted, it will not be able to earn the income that it would otherwise earn upon being approved. Second, Stonehealth has not offered an undertaking as to damages in respect of the loss of such income. ZAA has doubts about Stonehealth's ability to meet any undertaking as to damages in any event. Third, the local community will be unable to access pharmaceutical benefits in circumstances where an appeal could take many months to finalise. 25 It is the case that, in the absence of a stay, ZAA could have its application approved by the Secretary within a week or so. It therefore may stand to lose income if a stay is granted. However, there is presently no evidence before the Court as to the extent of ZAA's potential losses. Further, there is no evidence as to whether ZAA's application satisfies the other criteria for its grant. 26 Stonehealth submits that an undertaking as to damages is not required for the grant of a stay, relying upon the judgment of the Victorian Court of Appeal in Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd [2007] VSCA 118. In that case, Maxwell P at [10]-[11] noted that there is an unwavering line of authority in Victoria which indicates that an undertaking as to damages is not required for a stay to be granted pending appeal. The Chief Justice at [20] distinguished New South Wales Court of Appeal decisions where undertakings as to damages were required in respect of the grant of injunctions to preserve the status quo, pending an appeal. I was informed that there are no cases in this Court dealing with the issue. I will follow Break Fast Investments. 27 While it is true that the local community will be unable to access pharmaceutical benefits if a stay is granted, that is the case at present in any event, so that the status quo will not be altered. 28 Stonehealth has offered an undertaking that it will withdraw its application or applications made pursuant to s 90A of the Act for Ministerial approval to supply pharmaceutical benefits at Flagstone. That will ensure that Stonehealth does not obtain approval through that avenue pending the outcome of the appeal. 29 The potential for prejudice to ZAA can be ameliorated to some extent by making a recommendation for expedition of the appeal. I consider that it is appropriate to make such a recommendation. 30 The Authority does not oppose the making of an injunction restraining it from dealing with any application for approval under s 90 of the Act with respect to premises within 1.5 kilometres of the premises of ZAA. That will also assist to preserve the status quo. 31 It may be noted that Stonehealth has agreed to pay $40,000 into Court by way of security for ZAA's costs of the appeal. 32 I will grant a stay of Order 2 of the orders made by the primary judge and an injunction until the determination of the appeal. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rangiah.