FEDERAL COURT OF AUSTRALIA Wood v Australian Community Pharmacy Authority [2002] FCA 1592 ADMINISTRATIVE LAW – application by pharmacist under s 90 of National Health Act 1953 (Cth)for approval to supply pharmaceutical benefits – judicial review of decision by Australian Community Pharmacy Authority to recommend approval – whether Authority failed to have regard to a relevant consideration – whether Authority failed to accord procedural fairness in the decision-making process Administrative Decisions (Judicial Review) Act 1977 (Cth) National Health Act 1953 (Cth)ss 90(1), 99K, 99L National Health (Pharmaceutical Benefits) Regulations 1960 regs 27, 28, 33 Smoker v Pharmacy Restructuring Authority (1994) 53 FCR 287 cited Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589 cited Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1 cited Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 applied Kioa v West (1985) 159 CLR 550 applied Cenrin Pty Ltd v Lamb (1993) 42 FCR 167 cited Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 cited Annetts v McCann (1990) 170 CLR 596 applied ROBYN KATHERINE WOOD v AUSTRALIAN COMMUNITY PHARMACY AUTHORITY and SECRETARY OF THE DEPARTMENT OF HEALTH AND AGEING and GREGORY ALAN MACKENZIE W297 OF 2002 LEE J 19 DECEMBER 2002 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W297 OF 2002 BETWEEN: ROBYN KATHERINE WOOD Applicant AND: AUSTRALIAN COMMUNITY PHARMACY AUTHORITY First Respondent SECRETARY OF THE DEPARTMENT OF HEALTH AND AGEING Second Respondent GREGORY ALAN MACKENZIE Third Respondent JUDGE: LEE J DATE OF ORDER: 19 DECEMBER 2002 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The decision of the first respondent made 20 September 2002 to recommend to the second respondent that the third respondent be approved for the purpose of supplying pharmaceutical benefits at or from the premises Shop 33 Karratha Village Shopping Centre, Karratha, be set aside. 2. The matter be returned to the first respondent for determination in accordance with the National Health Act 1953 (Cth). 3. The second respondent pay the applicant's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W297 OF 2002 BETWEEN: ROBYN KATHERINE WOOD Applicant AND: AUSTRALIAN COMMUNITY PHARMACY AUTHORITY First Respondent SECRETARY OF THE DEPARTMENT OF HEALTH AND AGEING Second Respondent GREGORY ALAN MACKENZIE Third Respondent JUDGE: LEE J DATE: 19 DECEMBER 2002 PLACE: PERTH REASONS FOR JUDGMENT LEE J: 1 This is an application for judicial review pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and also pursuant to s 39B of the Judiciary Act 1903 (Cth). The applicant is a pharmacist approved by the second respondent ("the Secretary") pursuant to s 90(1) of the National Health Act 1953 (Cth) ("the Act") "for the purpose of supplying pharmaceutical benefits" at particular premises at Karratha in the Pilbara region of the north-west of Western Australia. The third respondent ("MacKenzie") is a pharmacist whose application under s 90(1) for approval for the purpose of supplying pharmaceutical benefits at other premises situated in Karratha has been recommended by the first respondent ("the Authority") to the Secretary for approval pursuant to s 90(3B) of the Act. 2 So far as is relevant s 90 provides as follows: "(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. (2) Where a pharmacist desires to supply pharmaceutical benefits at or from several premises (being premises at which he or she carries on, or is about to carry on, business as a pharmacist) a separate application shall be made in respect of each of the premises and, where approval is granted in respect of 2 or more premises, a separate approval shall be granted in respect of each of the premises. (3) Subject to this section, where an approved pharmacist desires to supply pharmaceutical benefits at or from premises (being premises at which the pharmacist carries on, or is about to carry on, business as a pharmacist) other than premises in respect of which approval has been granted, the Secretary may on application by the approved pharmacist, grant approval in respect of those other premises. (3A) Subject to subsection (3AA), an application under this section must be referred to the Authority. (3AA) Subsection (3A) does not apply to an application for an approval arising out of a change in the ownership of a pharmacy situated at particular premises if the change results or resulted from: (a) the sale of the pharmacy; or (b) the death of the owner or one of the owners of the pharmacy; or (c) a change in the constitution of a partnership that owned the pharmacy; if the pharmacy is to continue to operate at the same premises. (3AB) In subsection (3AA): pharmacy means a business in the course of the carrying on of which pharmaceutical benefits are supplied. (3B) An approval may be granted under this section in respect of an application to which subsection (3A) applies 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. (3C) Unless sooner repealed, subsections (3A), (3AA), (3AB) and (3B) cease to have effect at the end of 30 June 2005. (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. ... (6) For the purposes of this section, a reference to a pharmacist is taken to include a reference to a person who owns, or is about to own, a business for the supply of pharmaceutical benefits at or from particular premises." 3 The following summary of the history of these provisions was set out by Hill J in Smoker v Pharmacy Restructuring Authority (1994) 53 FCR 287 at 293 - 294: "The background of those provisions of the Act concerned with the making of recommendations to the Authority is to be found in an agreement reached in 1990 between the Government and the Pharmacy Guild of Australia, an organisation of employers registered pursuant to the provisions of the Industrial Relations Act 1988 (Cth), inter alia, on the restructuring of the pharmacy industry in the form of rationalising the number of pharmacies. That agreement relevantly was given effect to by the Community Services and Health Legislation Amendment Act 1990 (Cth) which incorporated into the Act, inter alia, the provisions referring to the Authority. As the Second Reading Speech of the then Minister for Aged, Family and Health Services, the Honourable Mr Staples, records: 'For some time the Government has been concerned that there were too many pharmacies approved to supply pharmaceutical benefits.' In the result the Government ultimately accepted recommendations made to it that pharmacy numbers should be reduced by encouraging pharmacists to either amalgamate or close to reduce the number of inefficient pharmacies and to strengthen the more viable pharmacies that remained. Provision was to be made for closure payments and, where an amalgamation or closure payment was made, no new approval in respect of the premises was to be granted unless certain approval criteria were met." 4 Subsequent to the agreement referred to in Smoker there have been two further agreements between the Government and the Pharmacy Guild of Australia. The most recent agreement is described as the Third Community Pharmacy Agreement ("the Agreement") which "represents a five year collaborative relationship between the parties from 1 July 2000 to 30 June 2005". 5 The Agreement made the following statements about "the community pharmacy network": "21.1 Significant reforms to the structure and efficiency of the community pharmacy network have been achieved through the previous two Community Pharmacy Agreements between the Commonwealth and the Guild. The parties recognise the need to build on these benefits by taking into account in this Agreement the intention of the Competition Policy Review of Pharmacy. 21.2 Revision of the criteria related to new pharmacy approvals and pharmacy relocation is also consistent with the desire to achieve simplicity and transparency in the administrative arrangements underpinning this Part of this Agreement. 21.3 The content of the Agreement relating to pharmacy relocations and new pharmacy approvals encompasses the following changes: a) a significant reduction in the number of criteria that have to be satisfied to demonstrate there is a 'definite community need' for new pharmacies to be opened, particularly in growing outer metropolitan areas; b) the creation of a special category of new rural pharmacy approvals, supported by rural pharmacy incentive and maintenance programs, to promote improved access to pharmaceutical services in areas currently under serviced; c) significant relaxation of the rules relating to that special category of new approvals in rural locations by removing the need for applicants to satisfy any community need; d) amendment of the rules relating to pharmacy relocations to enhance competition consistent with the maintenance of a viable and well distributed community pharmacy network; e) clarification of the definition of a large shopping centre to simplify ACPA's administration of pharmacy relocations to shopping centres; f) reduction in the number of exclusions from the retail shop definition to enable applicants to more easily achieve the threshold number of shops required to obtain approval to relocate to a shopping centre; g) simplification of the distance measurement process both for applicants and the ACPA by measuring distance in a straight line from door to door rather than by public access routes (except in the case of pharmacies in rural locations); and h) simplification of the rules for short distance pharmacy relocations by removal of the complex rules relating to pharmacy relocations between 1 km and 2 km from their present site." 6 One of the objectives to which the parties of the Agreement expressed commitment was "continued development of an effective, efficient and well-distributed community pharmacy service in Australia which takes account of the recommendations of the Competition Policy Review of Pharmacy and the objectives of National Competition Policy". 7 It can be seen that there has been a change of emphasis from the first agreement made between the Guild and the Commonwealth where rationalisation and reduction of pharmacies was the object to be achieved, to a managed form of competition that is regulated by controlling the approval of pharmacists to supply pharmaceutical benefits at particular premises. 8 Under the heading "SHORT RELOCATIONS" the Agreement provided as follows: "29.1 The parties are concerned to ensure an efficient distribution of pharmacies is maintained and to avoid, as far as possible, undue concentration of pharmacies. To this end the parties have agreed to simplify the existing rules by removing altogether, from 1 July 2002, the complex arrangements which effectively have excluded pharmacies from relocating between 1 km and 2 km from their present site. 29.2 From that time the 1 km distance rule for short relocations will increase to 1.5 km (measured in a straight line from door to door). This allows pharmacies to move an extra 0.5 km from their present site. 29.3 As a transitional measure from 1 July 2002 to 30 June 2004, when the measure will be reviewed, pharmacies planning short relocations will continue to be able to move up to 1 km without reference to the distance from an existing pharmacy. However, to avoid undue concentration of pharmacies, in those circumstances where a short relocation of more than 1 km and less than 1.5 km is planned, then the minimum distance between the relocating pharmacy and any pharmacy outside the 1 km distance must be 500 metres." 9 In other words, where two pharmacies were within 1 kilometre, relocation of one of those pharmacies would be permitted up to a distance of 1 kilometre irrespective of the resulting degree of proximity to the other pharmacy and without any requirement that other conditions be satisfied. Where the two pharmacies were at a distance greater than 1 kilometre the relocating pharmacy could move up to 1.5 kilometres provided that the distance between the relocated pharmacy and the other pharmacy was not less than 500 metres. In respect of the relocation of a distant pharmacy to a position of proximity to an existing pharmacy, cl 28 of the Agreement provided that the distance between the pharmacies could not be less than 1.5 kilometres. 10 Clause 27.1 of the Agreement stated as follows: "In recognition of the recommendations of the Competition Policy Review of Pharmacy, the parties believe there should be an ongoing process of redefining the rules relating to pharmacy location with the objective of achieving equity of access to viable pharmaceutical services for the Australian public." 11 In cl 31.1 the Agreement further provided that the parties agreed that "in exceptional circumstances", in respect of rural locations with one pharmacy, and where the local pharmacy provision of pharmaceutical benefits is demonstrated by an applicant to be "substantially inadequate", the case for an additional pharmacy to be relocated into the "area" may be addressed by the Authority. 12 Clause 2.4 of the Agreement stated that Part 2 of the Agreement: "concerns provisions for pharmacy approvals and relocations and programs in respect of pharmacies and approved pharmacists and constitutes an arrangement or understanding between the parties in relation to those matters. Whilst Part 2 is not intended to constitute a legally binding Agreement between the parties, they recognise that legislation will need to be enacted, and rules or regulations proclaimed or determined, to enable the relevant terms of Part 2 to be implemented and given effect. The Minister has therefore agreed to act in accordance with clause 64.3." 13 Under cl 64.3 of the Agreement, the Minister for Health and Aged Care (now the Minister for Health and Ageing) ("the Minister") agreed to amend determinations made under s 99L to include changes to the rules proposed in Part 2 of the Agreement. Section 99L of the Act provides that the Minister must, by writing, determine the rules subject to which the Authority is to make recommendations under s 99K(1). Such a determination is a disallowable instrument for the purpose of s 46A of the Acts Interpretation Act 1901 (Cth). Section 99K states that the function of the Authority in respect of an application under s 90 is to make a recommendation whether or not the applicant should be approved under that section in respect of particular premises and, if an approval is recommended, to make recommendations as to the conditions (if any) to which the approval should be subject. Section 99K(2) states that in making a recommendation under s 99K(1), the Authority must comply with the relevant rules determined by the Minister under s 99L. 14 The relevant rules ("the Rules"), made under s 99L(1), which give effect to the Agreement are set out in two determinations made by the Parliamentary Secretary of the Minister on 11 July and 5 September 2000 and in a determination made by the Minister on 10 June 2002. 15 It is necessary to set out the relevant Rules in full. "Approval to Supply Pharmaceutical Benefits - General 3. For the purposes of paragraph 99K(1)(b) of the Act, the rules with which the Authority must comply in making a recommendation on an application by a pharmacist for approval under section 90 of the Act in respect of particular premises are set out in paragraphs 4 to 10. 4. Approval of a pharmacist under section 90 of the Act in respect of particular premises must not be recommended except as provided for in paragraphs 5 to 10. 4A. Where the Authority recommends the approval of a pharmacist under section 90 of the Act in respect of particular premises, it must also make a recommendation that the recommendation for approval will lapse (unless the Authority, on application by the pharmacist, has granted an extension of time), if the pharmacist has not been granted that approval within 6 months after the day on which the pharmacist is notified of the recommendation for approval. 4B. For the purposes of paragraphs 5 to 8, 'premises in respect of which a pharmacist is approved under section 90 of the Act' includes premises in respect of which, while no pharmacist is approved under section 90 of the Act, the Authority has recommended the approval of a pharmacist under section 90 of the Act, unless that recommendation has, pursuant to paragraph 4A, lapsed. Approval to Supply Pharmaceutical Benefits – New Pharmacies 5. Approval of a pharmacist ("the applicant") under section 90 of the Act in respect of particular premises must be recommendedif the applicant has a legal right to occupy those premises for the purpose of operating a pharmacy and: (a) (i) those premises are situated at least 1.5 kilometres, by straight line measurement, from the nearest other premises in respect of which a pharmacist is approved under section 90 of the Act; and (ii) the Authority is satisfied that there is a definite community need for pharmaceutical services in the area in which those premises are situated; or (b) (i) those premises are situated at least 10 kilometres, measured door to door by the shortest lawful access route, from the nearest other premises in respect of which a pharmacist is approved under section 90 of the Act; and (ii) those premises are situated in a location classified as category 2, 3, 4, 5 or 6 in the PhARIA index. Approval to Supply Pharmaceutical Benefits – Relocation of Existing Pharmacies 6. Subject to paragraphs 8 and 9, approval of a pharmacist ('the applicant') under section 90 of the Act in respect of particular premises must be recommended if the applicant has a legal right to occupy those premises for the purpose of operating a pharmacy, and either: (aa) the applicant is approved under section 90 of the Act in respect of other premises and the applicant has agreed that that approval will be cancelled immediately before the approval under consideration, if granted, takes effect; or (ab) another pharmacist: (i) is approved under section 90 of the Act in respect of other premises and that pharmacist has agreed that that approval will be cancelled immediately before the approval under consideration, if granted, takes effect; and (ii) has indicated, in writing, that the cancellation is intended to enable recommendation, under these rules, of approval of the applicant; and in either case if the approved pharmacist has ceased to carry on business as a pharmacist at the other premises, the Secretary: (ac) is aware of the cessation and the reasons for it; and (ad) has decided, under section 98 of the Act, not to cancel the approval concerned; and one of the following circumstances applies: (a) the premises in respect of which approval is sought are situated: (i) not more than 1 kilometre by straight line measurement from the premises from which pharmaceutical benefits are to cease being supplied (the existing premises); or (ii) more than 1 kilometre but not more than 1.5 kilometres by straight line measurement from the existing premises and not less than 500 metres by straight line measurement from the nearest premises in respect of which a pharmacist is approved under section 90 of the Act unless those premises are less than 1 kilometre by straight line measurement from the existing premises; or (b) the proposed premises are situated at least: (i) 1.5 kilometres by straight line measurement from the nearest other premises in respect of which a pharmacist is approved under section 90 of the Act; or (ii) 2 kilometres by the shortest lawful access route measured from the mid point at floor level of the public access door opening of the proposed premises nearest to the mid point at floor level of the nearest public access door opening of the nearest other premises in respect of which a pharmacist is approved under section 90 of the Act. 6A. (a) Subject to paragraphs 8 and 9, approval of a pharmacist ('the applicant') under section 90 of the Act in respect of particular premises may be recommended if the applicant has a legal right to occupy those premises for the purpose of operating a pharmacy, and either: (i) the applicant is approved under section 90 of the Act in respect of other premises and the applicant has agreed that that approval will be cancelled immediately before the approval under consideration, if granted, takes effect or (ii) another pharmacist: (A) is approved under section 90 of the Act in respect of other premises and that pharmacist has agreed that that approval will be cancelled immediately before the approval under consideration, if granted, takes effect; and (B) has indicated, in writing, that the cancellation is intended to enable recommendation, under these rules, of approval of the applicant; and in either case, if the approved pharmacist has ceased to carry on business as a pharmacist at the other premises, the Secretary: (iii) is aware of the cessation and the reasons for it; and (iv) has decided, under section 98 of the Act, not to cancel the approval concerned: and the following circumstances apply: (v) (A) those premises are situated in a location classified as category 2, 3, 4, 5 or 6 in the PhARIA index; (B) there is only one premises in that location in respect of which a pharmacist (the existing pharmacist) is approved under section 90 of the Act; and (C) the Authority is satisfied that the provision of pharmaceutical benefits by the existing pharmacist in that location is substantially inadequate. (b) In considering, for the purposes of sub-sub-subparagraph 6A(a)(v)(C), whether the provision of pharmaceutical benefits by the existing pharmacist in that location is substantially inadequate, the Authority shall have regard to: (i) whether at least 10% of the persons residing in that location have a gross income which does not exceed $299 per week; (ii) whether the hours of opening of the existing pharmacist's premises are less than 40 hours per week over less than 5˝ days per week; (iii) whether there is a lack of reasonably available, affordable and frequent public transport such that the population in that location cannot without real difficulty travel to an area outside that location where pharmaceutical benefits from an approved supplier other than the existing pharmacist can reasonably be obtained; and (iv) whether the existing pharmacist has not complied with his or her obligations under the National Health (Pharmaceutical Benefits) Regulations 1960 made under the Act concerning presentation of prescriptions in trading hours (regulation 27), presentation of urgent prescriptions (regulation 28) and proper stocks to be kept (regulation 33). 6B. (a) Subject to paragraphs 8 and 9, approval of pharmacist ('the applicant') under section 90 of the Act in respect of particular premises may be recommended if the applicant has a legal right to occupy those premises for the purpose of operating a pharmacy, and either: (i) the applicant is approved under section 90 of the Act in respect of other premises and the applicant has agreed that that approval will be cancelled immediately before the approval under consideration, if granted, takes effect, or (ii) another pharmacist: (A) is approved under section 90 of the Act in respect of other premises and that pharmacist has agreed that that approval will be cancelled immediately before the approval under consid-eration, if granted, takes effect; and (B) has indicated, in writing, that the cancellation is intended to enable recommendation, under these rules, of approval of the applicant; and in either case, if the approved pharmacist has ceased to carry on business as a pharmacist at the other premises, the Secretary: (iii) is aware of the cessation and the reasons for it; and (iv) has decided, under section 98 of the Act, not to cancel the approval concerned: and the following circumstances apply: (v) (A) those premises are situated in a locationclassified as category 1 in the PhARIA index; (B) there is only one premises in that location in respect of which a pharmacist (the existing pharmacist) is approved under section 90 of the Act; and (C) the Authority is satisfied that: i the population of the statistical local area in which the location is situated exceeds 8,000 residents; ii the average rate of population growth in the statistical local area in which the location is situated exceeded 7% over each of the two calendar years prior to the date of the application; and iii the proposed premises are situated not less than 500 metres by straight line measurement from the nearest other premises in respect of which a pharmacist is approved under section 90 of the Act. (b) In considering whether to recommend approval of the applicant under this paragraph, the Authority may have regard to whether, as a consequence of closure, within 6 months prior to the date of application, of premises in respect of which a pharmacist was approved under section 90 of the Act, or of an amalgamation within that time of two or more such premises, there is a reduced level of pharmaceutical benefits service available in that location. 7. Subject to paragraphs 8 and 9, approval of a pharmacist ('the applicant') under section 90 of the Act in respect of particular premises must be recommended if the applicant has a legal right to occupy those premises for the purpose of operating a pharmacy, and the Authority is satisfied that either: (aa) the applicant is approved under section 90 of the Act in respect of other premises and the applicant has agreed that that approval will be cancelled immediately before the approval under consideration, if granted, takes effect; or (ab) another pharmacist: (i) is approved under section 90 of the Act in respect of other premises and that pharmacist has agreed that that approval will be cancelled immediately before the approval under consideration, if granted, takes effect; and (ii) has indicated, in writing, that the cancellation is intended to enable recommendation, under these rules, of approval of the applicant; and in either case, if the approved pharmacist has ceased to carry on business as a pharmacist at the other premises, the Secretary: (ac) is aware of the cessation and the reasons for it; and (ad) has decided, under section 98 of the Act, not to cancel the approval concerned; and either of the following circumstances applies: (a) the premises in respect of which approval is sought are situated in a large shopping centre, provided that: (i) if the shopping centre contains not more than 99 commercial establishments (including the premises in respect of which approval is sought), there are not already any premises in the shopping centre in respect of which a pharmacist is approved under section 90 of the Act; or (ii) if the shopping centre contains not less than 100, and not more than 199, commercial establishments (including the premises in respect of which approval is sought), there are not already more than 1 premises in the shopping centre in respect of which a pharmacist is approved under section 90 of the Act; or (iii) if the shopping centre contains not less than 200 commercial establishments (including the premises in respect of which approval is sought), there are not already more than 2 premises in the shopping centre in respect of which a pharmacist is approved under section 90 of the Act; or (b) the premises are situated within a private hospital being a private hospital within the meaning of the Health Insurance Act 1973 and being registered or licensed as a private hospital or a private health establishment under State or Territory legislation, provided that: (i) either: (A) the private hospital or private health establishment has not less than 150 beds in respect of which it is registered or licensed under State or Territory legislation to render health services to patients; or (B) the maximum number of patients the private hospital or private health establishment is registered or licensed under that State or Territory legislation to treat or accommodate or lodge at any one time is not less than 150; and (ii) there are not other premises within the private hospital or private health establishment in respect of which an approval under section 90 of the Act is in force; and (iii) the governing body or proprietor of the private hospital or private health establishment is not approved under section 94 of the Act in respect of that private hospital or private health establishment." 16 The terms of the Act put beyond doubt that the Authority was bound by mandatory rules in the performance of its function under s 99K of the Act. (See: Smoker per Burchett J at 291, per Hill J at 300-301; Pharmacy Restructuring Authority v Martin (1994) 53 FCR 589 at 593 (Full Court)). 17 The requirements of the Rules may be summarised as follows. Pursuant to r 5 the approval of a pharmacist in respect of particular premises must be recommended if the Authority is satisfied that there is "a definite community need" for "pharmaceutical services" in the area in which the proposed pharmacy will be situated and the pharmacy is not less than 1.5 kilometres from the nearest premises in respect of which a pharmacist is approved for the supply of pharmaceutical benefits. Alternatively, approval must be recommended if the proposed pharmacy is in a "location" classified as category 2, 3, 4, 5 or 6 in the "PhARIA index" (i.e. a location other than "highly accessible") and is situated not less than 10 kilometres from premises where a pharmacist is approved for the supply of pharmaceutical benefits. 18 Under r 6 the "relocation" of a pharmacy by approval of a pharmacist in respect of particular premises must be recommended if, relevantly for present purposes, the relocated pharmacy is not less than 1.5 kilometres from an existing pharmacy. 19 Rule 7 states that approval must be recommended if the pharmacist seeking approval proposes to relocate the supply of pharmaceutical benefits to, inter alia, a "large shopping centre" which contains up to 99 commercial establishments and no premises from which pharmaceutical benefits are supplied by an approved pharmacist. Also under r 7, approval of a pharmacist in respect of relocation of a pharmacy must be recommended where the proposed premises are within a private hospital of specified size, there being no other premises within that hospital from which pharmaceutical benefits are supplied by an approved pharmacist. In neither of the foregoing cases would proximity to an existing pharmacy be a relevant consideration. 20 Rule 6B provides that the "relocation" of a pharmacy may be recommended where the proposed pharmacy is in a location classified as category 1 in the PhARIA index, (i.e. "highly accessible"); there is only one existing pharmacist within that location; there is a specified population residing within the "statistical local area"; there has been a specified rate of population growth in the "statistical local area" in each of the two preceding calendar years; and the proposed premises will be not less than 500 metres from an existing pharmacy. 21 In respect of Karratha, which as discussed below is a location classified in category 6 in the PhARIA index, the applicant is the sole approved pharmacist at that location. The approval of a pharmacist in respect of a "new", as opposed to a "relocated" pharmacy, at Karratha must be recommended by the Authority where the proposed pharmacy is not less than 10 kilometres from the existing pharmacy, or where the proposed pharmacy is not less than 1.5 kilometres from the existing pharmacy and the applicant for approval has satisfied the Authority that there is a definite community need for "pharmaceutical services" in the "area" in which the proposed pharmacy would be situated. Neither of those circumstances applies here where MacKenzie seeks approval to supply pharmaceutical benefits from premises less than 200 metres from the applicant's pharmacy. It also follows that in respect of a "relocated" pharmacy, the application by MacKenzie could not satisfy the requirements of r 6 and nor was the proposed relocation of the pharmacy to premises in a "large shopping centre" pursuant to r 7. 22 The application by MacKenzie sought exercise of the Authority's discretion under r 6A. It is necessary now to consider the requirements of r 6A. 23 Rule 6A(a) provides that approval of a pharmacist in respect of relocated premises may be recommended where the proposed premises will be in a "location" classified as category 2, 3, 4, 5 or 6 in the PhARIA index; an existing pharmacist supplies pharmaceutical benefits in that "location"; and the Authority is satisfied that the provision of pharmaceutical benefits by that pharmacist "in that location is substantially inadequate". 24 Rule 6A(b) provides that in considering whether the provision of pharmaceutical benefits by the existing pharmacist in that location is substantially inadequate, the Authority must have regard to: "(i) whether at least 10% of the persons residing in that location have a gross income which does not exceed $299 per week; (ii) whether the hours of opening of the existing pharmacist's premises are less than 40 hours per week over less than 5 ˝ days per week; (iii) whether there is a lack of reasonably available, affordable and frequent public transport such that the population in that location cannot without real difficulty travel to an area outside that location where pharmaceutical benefits from an approved supplier other than the existing pharmacist can reasonably be obtained; and (iv) whether the existing pharmacist has not complied with his or her obligations under the National Health (Pharmaceutical Benefits) Regulations 1960 made under the Act concerning presentation of prescriptions in trading hours (regulation 27), presentation of urgent prescriptions (regulation 28) and proper stocks to be kept (regulation 33)." 25 First, the premises proposed to be used by MacKenzie had to be situated in a "location" classified as category 2, 3, 4, 5 or 6 in the PhARIA index. The application attached an extract from the PhARIA index which described "Karratha 6714 WA" as a category 6 location. Material submitted to the Court which explained the construction and operation of the "PhARIA index" showed that the index was concerned with defining the degree of remoteness of a location in respect of the availability of goods and services. Having regard to distances by road and the availability of public transport to gain access to such goods and services, the index allocated to a location a level of remoteness accordingly. Category 6 was the highest category of remoteness. "Karratha 6714 WA", therefore, satisfied that requirement of r 6A. 26 The next requirement was that there be only one pharmacy in the Karratha location. That requirement also was satisfied. 27 The third requirement was that the Authority be satisfied that the provision of pharmaceutical benefits by the existing pharmacist in that location is substantially inadequate. Rule 6A(b) stipulated that before the Authority could be so satisfied it had to have regard to four matters. The first of those matters was a requirement that there be at least 10 percent of the persons residing in that location with a gross income that did not exceed $299 per week. The material submitted in support of the application relied on data prepared for a "Census Collection District" described as Roebourne. Whether that census district corresponded with the location described in the PhARIA index as "Karratha 6714 WA", is unknown. If it did not, the Authority would have been obliged to have regard to data other than that supplied by MacKenzie before it could satisfy itself as to the weekly earnings of persons residing in the Karratha location and determine whether not less than 10 percent of those persons had a gross income that did not exceed $299 per week. Accordingly, the reasons for decision provided by the Authority stated that the Authority could not be satisfied that at least 10 percent of persons residing in the Karratha location had a gross income not exceeding $299 per week. 28 The second of the four criteria specified in r 6A(b) as those to which the Authority must have regard, was whether the hours of trade of the existing pharmacy were less than 40 hours per week over less than 5˝ days a week. The Authority stated that it accepted that the existing pharmacy did not open for less than 40 hours per week over less than 5˝ days per week. However, the Authority added that it "noted" that material lodged with the application included comments "in relation to the adequacy of the existing pharmacy's operating hours". The significance of that comment is dealt with later in these reasons. 29 The third criteria under r 6A(b) to which the Authority was required to have regard was whether there was a lack of reasonably available, affordable and frequent public transport permitting travel to an area outside the Karratha location where pharmaceutical benefits from an approved supplier could reasonably be obtained. By reason of the inclusion of "Karratha 6714 WA" in category 6 of the PhARIA index, it was likely that this requirement would be satisfied and the Authority determined that there was such a lack of public transport according to the material before it. 30 Counsel for the applicant submitted that there was an approved supplier of pharmaceutical benefits, a medical practitioner, situated at Wickham approximately 30 kilometres from Karratha and that the Authority had failed to have regard to that circumstance as required by subr 6A(b)(iii). An approved supplier is defined in s 84(1) of the Act as an approved pharmacist, approved medical practitioner, or an approved hospital authority. Rule 6A did not confine the Authority's consideration of the possible supply of pharmaceutical benefits outside the Karratha location to supply by an approved pharmacist. The reasons of the Authority reveal that it considered access to the supply of pharmaceutical benefits by an approved pharmacist to be the relevant criterion to be considered. It may have been the case that the Authority would have reached the same conclusion in respect of this requirement had it considered the question whether pharmaceutical benefits could reasonably be obtained from an approved medical practitioner at Wickham, but the Authority's reasons made it plain that, contrary to the requirements of the rule, the Authority did not have regard to that question. It was submitted that it should be inferred that the Authority did have regard to that circumstance notwithstanding that it made no finding thereon in its reasons for decision but I am satisfied that the failure to refer to a finding on such a material consideration identified a failure to consider and determine as required by the Act. (See: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1 per Gleeson CJ at [5], [10].) 31 The final requirement of r 6A(b) to be considered by the Authority in conjunction with the preceding requirements, was whether the existing pharmacist has not complied with obligations imposed by the National Health (Pharmaceutical Benefits) Regulations 1960 ("the Regulations") "concerning presentation of prescriptions in trading hours (regulation 27), presentation of urgent prescriptions (regulation 28) and proper stocks to be kept (regulation 33)." The Authority found that there was no evidence that the applicant had not complied with any of the obligations imposed by regs 27, 28 and 33. 32 Under r 6A the Authority only became authorised to recommend the approval of a pharmacist pursuant to that rule if the "exceptional circumstances" referred to in the Agreement and defined in the rule were shown to exist. The underlying requirement is that the Authority be satisfied that "the provision of pharmaceutical benefits by the existing pharmacist" in the Karratha location is "substantially inadequate". The four criteria described by r 6A(b) are those to which the Authority must have regard in determining whether it is satisfied that the provision of pharmaceutical benefits by the existing pharmacist is substantially inadequate. Those criteria may be seen to be inter-related in some degree. The principal requirement of the four criteria is that it be shown that the existing pharmacist has not complied with obligations under the Regulations that the pharmacist be available for the presentation of prescriptions in normal trading hours and the presentation of urgent prescriptions, and maintain proper stocks having regard to the requirements of the location. 33 Section 84(1) of the Act defines a pharmaceutical benefit as a drug or medicinal preparation in relation to which Part 7 of the Act, dealing with pharmaceutical benefits, applies. Section 88 provides that a medical practitioner is authorised to write a prescription for the supply of a pharmaceutical benefit and s 89 states that a person is not entitled to receive a pharmaceutical benefit unless it is supplied by an approved pharmacist from the premises in respect of which the pharmacist is approved, on presentation of a prescription written by a medical practitioner. Other provisions in Part 7 allow for the supply of pharmaceutical benefits by medical practitioners, prescribed institutions and hospital authorities. 34 The obligation imposed on an approved pharmacist by reg 27 is that the pharmacist keep prominently displayed at the premises a notice setting out the normal trading hours during which services for the supply of pharmaceutical benefits are available. In other words, customers entering the pharmacy are to be informed of the times within which a prescription written by a medical practitioner may be presented to the approved pharmacist for the supply of the pharmaceutical benefit pursuant to the prescription. 35 Regulation 28 provides that a prescription marked "urgent" by a medical practitioner may be presented at any time to an approved pharmacist at the pharmacy premises and the approved pharmacist must supply the pharmaceutical benefit as soon as practicable. To fail to do so is an offence and the regulation states that strict liability applies in the prosecution of such an offence. 36 Regulation 33 provides that an approved pharmacist must, as far as is practicable, keep in stock an adequate supply of all drugs and medicinal preparations that he or she may reasonably be expected to be called upon to supply as pharmaceutical benefits, or to use as ingredients of pharmaceutical benefits. Again, failure to do so is an offence and strict liability applies in the event of prosecution of the pharmacist for contravention of the regulation. 37 The purpose of the four criteria set out in r 6A(b) to which the Authority must have regard is not to identify how competition between pharmacists may be introduced and promoted. Rule 6A(b) has been inserted as an "exceptional" provision to allow for the approval of a pharmacist in respect of a "relocated" pharmacy where it has been demonstrated that the provision of pharmaceutical benefits by the existing pharmacist in a less than "highly accessible" location is "substantially inadequate". It is only in that circumstance that a pharmacist may be approved to commence supply of pharmaceutical benefits from pharmacy premises without regard to the proximity of those premises to the existing pharmacy. The Rules give effect to a clear object of the Agreement that concentration of pharmacies be avoided. Except for the circumstances described in r 6A, a pharmacy, whether new or relocated, could not be situated within 1.5 kilometres of the existing pharmacy at Karratha, and if it were a new pharmacy and a "definite community need" could not be demonstrated, it could not be situated within 10 kilometres of that pharmacy. 38 Therefore, the requirements set out in r 6A are significant and allow no latitude to the Authority for consideration of matters that may otherwise come under the rubric of need. 39 The Authority purported to have regard to a "number of claims" made in the material lodged in support of the application lodged by MacKenzie. Insofar as any of those matters tended to demonstrate that the existing pharmacist did not comply with obligations prescribed by regulations 27, 28 and 33 they were germane considerations, but upon the Authority determining that the existing pharmacist did comply with such obligations it became impossible for the Authority to determine that the provision of pharmaceutical benefits by the existing pharmacist was substantially inadequate. The other requirements set out in subrr 6A(b)(i)-(iii) interlocked with the principal requirement in subr 6A(b)(iv) that it be shown that the existing pharmacist failed to comply with the obligations imposed by the specified regulations. In combination, the prescribed requirements dealt with the incapacity of residents of a "location" that was other than a "highly accessible" location, to take steps to overcome the substantial inadequacy in the provision of pharmaceutical benefits by the existing pharmacist where that pharmacist failed to offer to supply pharmaceutical benefits during appropriate and advertised trading hours, failed to supply pharmaceutical benefits as soon as practicable on prescriptions for the supply of such benefits that were marked urgent, and failed to keep in stock an adequate supply of all drugs and medicinal preparations that a pharmacist in that location may reasonably be expected to supply as pharmaceutical benefits. If none of those elements of inadequacy in the provision of pharmaceutical benefits could be demonstrated then an application for "relocation" of a pharmacy to that location on the ground of "exceptional circumstances" as defined by r 6A had to fail, and the introduction of a second pharmacy to the Karratha location would depend upon satisfaction of the requirements of r 5 or r 6. 40 The "number of claims" to which the Authority referred included assertions by three medical practitioners who conducted a medical practice in premises that were adjacent to the shop in which the proposed pharmacy was to be situated. One of those medical practitioners was the sole director and shareholder of the corporation which sold the strata title premises to MacKenzie and others, for occupation by MacKenzie as an approved pharmacist. The practitioners commented adversely on some aspects of the pharmacy practice conducted by the applicant. In many instances those assertions were not supported by particulars. As indicated above, insofar as any of the claims went to the matters to which the Authority had to have regard pursuant to subr 6A(b)(iv), the Authority was not satisfied that the applicant failed to comply with the regulations specified in that subparagraph. The Authority stated, however, that it accepted the claims "in relation to the fact that there is only one pharmacist" and concluded that the claims demonstrated that the provision of pharmaceutical benefits by "the only pharmacist at the existing pharmacy is substantially inadequate". The Authority apparently applied criteria of its own selection to determine what constituted "substantially inadequate" for the purpose of r 6A. 41 None of the claims or assertions made in respect of the provision of services by the existing pharmacist was presented by the Authority to the applicant for comment. Counsel for the applicant submitted that the failure of the Authority to provide the applicant with an opportunity to be heard in respect of those matters caused the Authority to engage in a process of decision-making that was procedurally unfair. 42 At the outset it may said that the scope of the obligation to accord procedural fairness and the nature of the steps to be taken, depend upon construction of the relevant statutory provisions which provide the Authority with authority to act under the Act. As Mason J explained in Kioa v West (1985) 159 CLR 550 at 584-585: "The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations subject only to the clear manifestation of a contrary statutory intention. It seems that as early as 1911 Lord Loreburn L.C. understood that this was the law when he spoke of the obligation to 'fairly listen to both sides' being 'a duty lying upon every one who decides anything': Board of Education v Rice [[1911] AC 179 at 182]. But the duty does not attach to every decision of an administrative character. Many such decisions do not affect the rights, interests and expectations of the individual citizen in a direct and immediate way. Thus a decision to impose a rate or a decision to impose a general charge for services rendered to ratepayers, each of which indirectly affects the rights, interests or expectations of citizens generally does not attract this duty to act fairly. This is because the act or decision which attracts the duty is an act or decision: '...which directly affects the person (or corporation) individually and not simply as a member of the public or a class of the public. An executive or administrative decision of the latter kind is truly a 'policy' or 'political' decision and is not subject to judicial review.' (Salemi [v MacKellar [No. 2] (1977) 137 CLR 396 per Jacobs J at 452]) Where the decision in question is one for which provision is made by statute, the application and content of the doctrine of natural justice or the duty to act fairly depends to a large extent on the construction of the statute. In Mobil Oil Australia Pty. Ltd v Federal Commissioner of Taxation [(1963) 113 CLR 475 at 503-504] Kitto J. pointed out that the obligation to give a fair opportunity to parties in controversy to correct or contradict statements prejudicial to their view depends on 'the particular statutory framework'. What is appropriate in terms of natural justice depends on the circumstances of the case and they will include, inter alia, the nature of the inquiry, the subject-matter, and the rules under which the decision-maker is acting: Reg. v. Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group [(1969) 122 CLR 546 at 552-553]; National Companies and Securities Commission v. News Corporation Ltd [(1984) 156 CLR 296 at 311, 319-321]. In this respect the expression 'procedural fairness' more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, i.e., in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations: cf. Salemi [No 2], per Jacobs J [at 451]. When the doctrine of natural justice or the duty to act fairly in its application to administrative decision-making is so understood, the need for a strong manifestation of contrary statutory intention in order for it to be excluded becomes apparent. The critical question in most cases is not whether the principles of natural justice apply. It is: what does the duty to act fairly require in the circumstances of the particular case? It will be convenient to consider at the outset whether the statute displaces the duty when the statute contains a specific provision to that effect, for then it will be pointless to inquire what the duty requires in the circumstances of the case, unless there are circumstances not contemplated by the statutory provision that may give rise to a legitimate expectation. However, in general, it will be a matter of determining what the duty to act fairly requires in the way of procedural fairness in the circumstances of the case. A resolution of that question calls for an examination of the statutory provisions and the interests which I have already mentioned." 43 There is nothing in the provisions of the Act or the Rules which suggest that it was the intention of Parliament to permit the Authority to act in a manner that was procedurally unfair. The provisions of r 6A expressly direct the Authority to examine the provision of pharmaceutical benefits by a pharmacist by having regard to the criteria specified in the rule, and determining whether the pharmacist has met obligations under the regulations and whether, as a result, the provision of pharmaceutical benefits by that pharmacist is "substantially inadequate". A fair procedure for a determination by the Authority in those circumstances required the Authority to put to a pharmacist whose professional conduct is thereby impugned, any material presented by an applicant that reflected adversely on the adequacy of the provision of pharmaceutical benefits by the existing pharmacist and offer the existing pharmacist the opportunity to comment thereon. The content of the legislation clearly implied such an obligation. (See: Pharmacy Restructuring Authority v Martin at 597; Cenrin Pty Ltd v Lamb (1993) 42 FCR 167 per Spender J at 178.) 44 In this case the interest of the existing pharmacist was a personal interest; not a general interest of a member of the public or an interest held as a member of a class of pharmacists. The obligation to inform the applicant was not restricted to a possibility that the personal, professional or commercial reputation of the applicant may be affected, although in the circumstances of this case, the likelihood of such an occurrence could be established. (See: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 per Mason CJ, Dawson, Toohey and Gaudron JJ at 578.) The terms of r 6A make it apparent that a fair procedure required the pharmacist, whose conduct the Authority was directed to examine, to be given the opportunity to respond to allegations that the provision of pharmaceutical benefits by the pharmacist was "substantially inadequate". As noted above, the matters to be considered under subr 6A(b)(iv) may lead to findings which could suggest that the pharmacist had committed offences by breach of the specified regulations and, plainly, it was apprehended in the rule that adverse material which may, as in this case, be based on hearsay, would be put to the pharmacist for response. There would need to be very clear words to show that was the intention of Parliament to exclude the common law right of a pharmacist, whose interests could be so affected, to be heard upon material adversely affecting those interests. Those words do not appear in the Rules or the Act. (See: Annetts v McCann (1990) 170 CLR 596 per Mason CJ, Deane and McHugh JJ at 599.) Rule 6A instructed the Authority to examine the conduct of an existing pharmacist as to the provision of pharmaceutical benefits and, if necessary, to make adverse findings in that regard. It may be thought that the best evidence on which the Authority could make such a determination would include comments or explanations by the pharmacist whose professional conduct was impugned and made the subject of examination by the Authority pursuant to the Rules. 45 The failure of the Authority so to act vitiated the determination of the Authority, the Act not having provided the Authority with jurisdiction or authority to proceed to make a determination in the absence of procedural fairness. (See: Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 perGleeson CJ at [2]-[4].) 46 It follows that the Secretary has no authority to proceed to make any determination upon the recommendation received from the Authority and the matter must be returned to the Authority for performance of its function under s 99K(1) of the Act. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee. Associate: Dated: 19 December 2002 Counsel for the Applicant: L A Stein, P A Sheiner Solicitors for the Applicant: Tottle Christensen Counsel for the 1st and 2nd Respondents: L A Tsaknis Solicitor for the 1st and 2nd Respondents: Australian Government Solicitor Counsel for the 3rd Respondent: J D Allanson Solicitors for the 3rd Respondent: Jackson McDonald Date of Hearing: 19 November 2002 Date of Judgment: 19 December 2002