Vincentia MC Pharmacy Pty Ltd v Australian Community Pharmacy Authority

Federal Court of Australia|2020-04-02|Before: Flick J

Subject to the Appellant prosecuting the appeal with all due expedition, the orders made on 18 March 2020 be stayed until the hearing and resolution of the appeal.
The application by the Second Respondent for security for costs of the appeal be dismissed.
The costs of the present hearing be the Appellant's costs in the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

FLICK J: 1 In March 2017 the Appellant, Vincentia MC Pharmacy Pty Ltd ("Vincentia MC Pharmacy") applied to the Third Respondent, the Secretary of the Department of Health (the "Secretary"), for approval pursuant to the National Health Act 1953 (Cth) to supply pharmaceutical benefits from premises at a Medical Centre in Vincentia. Vincentia is a small town on the south coast of New South Wales. In June 2017, the First Respondent, the Australian Community Pharmacy Authority (the "Authority"), recommended to the Secretary that approval be granted. In December 2017 the Secretary approved the application. 2 Vincentia MC Pharmacy has operated as a pharmacy since late 2017. 3 In March 2018 another competing pharmacy operating in the same vicinity, the Second Respondent to the appeal (Choice Pharmacy Vincentia Pty Ltd ("Choice Pharmacy")), commenced a proceeding in this Court seeking judicial review of the recommendation made by the Authority and the decision of the Secretary. Some - but not all - of the Grounds of Review were the subject of a hearing before a Judge of this Court in April 2019. Judgment was delivered in February 2020: Choice Pharmacy Vincentia Pty Ltd v Australian Community Pharmacy Authority [2020] FCA 93. The primary Judge concluded that the recommendation of the Authority and the approval of the Secretary should be set aside. Orders were made giving effect to that judgment in March 2020: Choice Pharmacy Vincentia Pty Ltd v Australian Community Pharmacy Authority (No 2) [2020] FCA 363. Part of the orders then made was to set aside the recommendation and approval "with effect from 8 April 2020". 4 The Vincentia MC Pharmacy filed a Notice of Appeal in late March 2020. In addition to filing its Notice of Appeal, Vincentia MC Pharmacy also filed an Interlocutory Application seeking a stay of the orders made by the primary Judge. The effect of the stay, it was contended, would allow it to continue operating as a pharmacy dispensing pharmaceutical benefits pending the resolution of its appeal. 5 The Choice Pharmacy opposes the grant of a stay and also seeks security in the sum of $50,000 in respect to its own costs of the appeal. 6 It is concluded that: a stay should be granted of the orders made by the primary Judge pending the resolution of the hearing of the appeal, provided the appeal is prosecuted with all due expedition; and no order should be made for security for the costs of the appeal.

The grant of a stay 7 The application for a stay of the orders made by the primary judge was made pursuant to r 36.08 of the Federal Court Rules 2011 (Cth) (the "Federal Court Rules"). 8 Rule 36.08 provides as follows: Stay of execution or proceedings under judgment appealed from (1) An appeal does not: (a) operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or (b) invalidate any proceedings already taken. (2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. (3) An application may be made under subrule (2) even though the court from which the appeal is brought has previously refused an application of a similar kind. … 9 Clearly enough, r 36.08 confers a discretion upon the Court when deciding whether or not to grant a stay. That discretion has been described as a "broad discretion": e.g., Commissioner of Taxation v Donoghue [2015] FCA 337 at [18] per Edmonds J. The principles to be applied when exercising the discretion are not in doubt and have long been established: Philip Morris Limited v Nixon [1999] FCA 1281. Sackville, Hely and Gyles JJ there observed: [17] The general principles governing an application for a stay pending the determination of an appeal or application for leave to appeal are not in doubt. The party seeking a stay must demonstrate a reason, or an appropriate case, to warrant the exercise of a discretion in his or her favour. This requirement is not satisfied by the mere filing of an appeal or an application for leave to appeal: …The Court has a discretion whether or not to grant the stay, and if so, as to the terms that will be fair. In the exercise of the Court's discretion, it weighs consideration such as the balance of convenience and the competing rights of the parties, in particular whether prejudice will be caused by reason of the grant or withholding of a stay: ... Within this framework, the Court exercises a broad discretion, and the party seeking a stay does not have to establish "special" circumstances: … In general, a party which has succeeded at the trial is entitled to the benefit of a judgment and thus to commence with the presumption that the judgment is correct: … (citations omitted) One important factor is whether the grounds of appeal are reasonably arguable but neither that factor nor any other single factor is necessarily determinative: Chief of the Defence Force v Gaynor [2016] FCA 311 at [11] per Gleeson J ("Gaynor"). 10 On the facts of the present case the central issue upon which the primary Judge resolved the case against the Vincentia MC Pharmacy was that it did not operate the pharmacy "for at least 70 hours each week". That phrase was employed in the definition of a "large medical centre" in s 5(1) of the National Health (Australian Community Pharmacy Authority Rules) Determination 2011. 11 The primary Judge set forth the facts of relevance to whether the Vincentia MC Pharmacy operated "for at least 70 hours each week" as follows: [11] At the partial hearing of Choice Pharmacy's application …. counsel for MC Pharmacy conceded that, based on rosters provided to the Authority, the evidence before the Authority was that the Medical Centre was not open on public holidays between 30 January 2017 and the first week of June 2017 … Those public holidays were 14 to 17 April 2017 (inclusive) (Easter) and 25 April 2017 (Anzac Day). Accordingly, in the weeks on which those public holidays fell, fewer than 70 hours were worked at the Medical Centre. [12] Counsel for MC Pharmacy also conceded that, as a matter of fact, the Medical Centre was also not open on any of the public holidays which fell on 25 and 26 December 2016, 1, 2 and 26 January 2017 and the Queen's Birthday on 12 June 2017, but that information was not before the Authority when it made its recommendation. That concession would only have relevance if the Court found that the requirement that a medical centre operate at least 70 hours each week is a jurisdictional fact. Part of the contention being advanced on behalf of the Choice Pharmacy was "that 'each week' goes beyond 'a week' to mean 'each and every week'…": [2020] FCA 93 at [16]. The primary Judge relevantly accepted that the phrase in issue was one "capable of bearing more than one meaning" but ultimately concluded that the phrase should be construed as requiring "a prescribing medical practitioner … be in attendance … at least 70 hours in each consecutive period of seven days". These conclusions were expressed in part as follows: [63] The Court accepts the submissions that the term "operates at least 70 hours each week" used in s 5 (b) of the definition of "large medical centre" is capable of bearing more than one meaning and is, to some extent, evaluative. This is because there is nothing in Item 136 (or the 2011 Rules more broadly) which indicates for what period the medical centre must meet the test and the term "operates" is not defined. … … [67] In the Court's view, the meaning to be derived from "at least 70 hours each week" in ss 5(a) and (b) is a requirement that the ordinary and habitual hours in which the medical centre operates and a prescribing medical practitioner will be in attendance are at least 70 hours in each consecutive period of seven days. This is what the evidence before the Authority should demonstrate, for whatever period the Authority elects to receive evidence. This interpretation serves the purpose of Item 136 by ensuring that in each week, the medical centre operates with the services of a prescribing medical practitioner during extended business hours. The purpose of creating a category for approvals related to "large medical centres" is to meet the demand for dispensing of PBS medicines that such centres generate. That purpose would be undermined if the "at least 70 hours each week" criterion is not strictly interpreted. [68] A stated intention to operate on some "selected" public holidays, when the usual hours are only 70.5 per week, has the result that on up to eight weeks in a year the medical centre will not operate at least 70 hours each week where (as here) there is no intention expressed to make up the lost hours at other times during the relevant weeks and no evidence that those lost hours were in fact made up in the weeks in which public holidays fell during the evidence period. It demonstrates that the Medical Centre's operating hours are not ordinarily or habitually at least 70 hours each week or that its intended operation is to have at least one prescribing medical practitioner at the Medical Centre for that period each week, even though it may often do so. In the Court's view, it would be necessary for there to be express words in the 2011 Rules addressing public holidays to produce the result contended for by MC Pharmacy. [69] The Court does not accept that this interpretation has the effect of reading the words "and every" into ss 5(b) and (c); it gives the words "at least 70 hours each week" their plain meaning in circumstances where there is nothing in the National Health Act or the 2011 Rules which suggests that some other meaning should be adopted. The Court also does not accept that that interpretation operates to frustrate the stated intention of Item 136 in which the definition of "large medical centre" has relevance. The stated intention is that there be a pharmacy available where a medical centre of a particular kind operates outside normal business hours consistent with the 70 hours each week requirement in ss 5(b) and (c) of the 2011 Rules. 12 It is concluded that the contrary construction of the phrase sought to be advanced on appeal is at least reasonably arguable: cf. Gaynor. The conclusion reached by the primary Judge is not, with respect, so unarguably correct that it would not be open to the Full Court to reach a contrary conclusion. And, notwithstanding the fact that the Choice Pharmacy has self-evidently secured a judgment in its favour and would face continued competition in the interim until an appeal is resolved, it is concluded that a stay should be ordered. To grant the stay would only continue the status quo that has operated for the past two years. On balance, it is concluded that a stay is warranted in the interests of the administration of justice as between the parties to the appeal. 13 To the extent that the Choice Pharmacy opposed the granting of the stay upon the basis that the original application for approval made by the Vincentia MC Pharmacy was but "a means to an end", it is considered that little weight can be given to this submission. The grounds upon which judicial review was originally sought included (for example) a ground alleging fraud. But that ground was not one of the grounds relied upon before the primary Judge. It would be inappropriate to rely upon any such submission without affording the Vincentia MC Pharmacy an opportunity to respond. The further submission advanced on behalf of the Choice Pharmacy that the Vincentia MC Pharmacy is now operating at very much reduced hours, namely an estimated 42.5 hours per week, gains greater traction. Although such current facts could not go to any of the grounds of review resolved by the primary Judge, the current trading hours of the pharmacy can go to the manner in which this Court now exercises the discretion to grant or refuse a stay. It is nevertheless concluded that the reduced operating hours do not warrant the refusal of a stay. Whether any action is taken by the Secretary in advance of the hearing of the appeal is a matter for the Secretary to consider. 14 Even if there were power to extend the time set forth in the orders sought to be challenged on appeal from 8 April 2020 to some future date, it is considered that the status of the payments made to the Vincentia MC Pharmacy is a matter which should be resolved by the Full Court and should not be resolved now: cf. Stambe v Minister for Health (No 2) [2019] FCA 479.

Security for costs 15 Section 56(1) of the Federal Court of Australia Act 1976 (Cth) (the "Federal Court Act") and r 36.09 of the Federal Court Rules confer a discretionary power on the Court to order that an appellant provide security for the costs of an appeal. 16 Section 56(1) and (2) of the Federal Court Act provide as follows: Security (1) The Court or a Judge may order an applicant in a proceeding in the Court, or an appellant in an appeal under Division 2 of Part III, to give security for the payment of costs that may be awarded against him or her. (2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs. Rule 36.09 of the Federal Court Rules provides as follows: Security for costs of appeal (1) A party may apply to the Court for an order that: (a) the appellant give security for the costs of the appeal, and for the manner, time and terms for giving the security; and (b) the appeal be stayed until security is given; and (c) if the appellant fails to comply with the order to provide security within the time specified in the order--the appeal be stayed or dismissed. (2) An application under subrule (1) must be accompanied by an affidavit stating the facts in support of the application. … 17 Again, the general principles which guide the exercise of the discretion are well-settled. In Fard v Secretary, Department of Immigration and Border Protection [2016] FCA 1224, for example, Collier J summarised some of the principles as follows: [49] Appellate courts have, however, taken a more stringent view against ordering security for costs in circumstances where substantive questions of law are in contention …, where points of law raised in appeal may affect matters of public importance …, and where the appeal had penal consequences … [50] Otherwise, relevant factors for consideration in applications for security for costs include the prospects of success, the risk that a costs order would not be satisfied, whether the order would stifle a reasonably arguable claim, whether any impecuniosity of the appellant arises out of conduct that is the subject of the complaint, and whether there are particular discretionary matters peculiar to the circumstances of the case: … (citations omitted) As explained, however, by Spender J in Tait v Bindal People [2002] FCA 322, there nevertheless remains an important difference in principle when entertaining an application for security for costs in respect to an appeal - as opposed to an application made in respect to an initial hearing - being the fact that the appellant has already had the benefit of a hearing at first instance. His Honour there explained this difference as follows: [3] … there is a difference in principle in relation to the ordering of security for costs in a first instance matter and the ordering, or the consideration of the ordering, of security for costs where one is at the appellate level. The difference is that, at the appellant level, there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent to the application for leave to appeal, or to an appeal, will be deprived of his costs, such an outcome would clearly be unjust. 18 On the facts of the present case it is concluded that no order should be made requiring the Vincentia MC Pharmacy to provide security for the costs to be incurred by the Second Respondent in respect to the appeal. A stay has been granted upon the basis that there is at least a reasonably available argument to be resolved on appeal. But the Vincentia MC Pharmacy should not be put in the position of having to pay as the cost of pursuing its appeal the provision of security. 19 In reaching this conclusion, consideration has been given to (inter alia): the fact that Choice Pharmacy has failed to establish that the Vincentia MC Pharmacy would be unable to pay its costs in the event that the appeal is unsuccessful; the fact that the quantum of the security sought, namely $50,000, is a comparatively modest sum compared to the quantum of the sales by the Vincentia MC Pharmacy for the financial year to-date - that sales figure being comparatively well in excess of the sales for the previous year; the potential disruption to customers seeking pharmaceutical products in the interim; and the potential disruption to the employment of those presently retained by the Vincentia MC Pharmacy - an inability to continue to supply pharmaceutical benefits would most likely lead to the retrenchment of the pharmacist presently employed and any loss of employment in the current environment of job insecurity caused by the COVID-19 pandemic being a matter of particular concern. But, it is the very fact that the correct construction of the phrase in issue is one: which is susceptible of "bearing more than one meaning" and involves an "evaluative" judgment; and potentially one which has consequences ranging beyond the commercial interests of the pharmacies involved in the present dispute, that sways the balance in favour of refusing the order sought by the Choice Pharmacy.

CONCLUSIONS 20 A stay should be granted, subject to a condition that the Vincentia MC Pharmacy prosecutes the appeal with all due expedition. 21 The appropriate order to be made in respect to the costs of the present interlocutory applications is that the costs be the Vincentia MC Pharmacy's costs in the appeal.

THE ORDERS OF THE COURT ARE:

Subject to the Appellant prosecuting the appeal with all due expedition, the orders made on 18 March 2020 be stayed until the hearing and resolution of the appeal.
The application by the Second Respondent for security for costs of the appeal be dismissed.
The costs of the present hearing be the Appellant's costs in the appeal. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.

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