Dunsdon and Australian Community Pharmacy Authority [2011] AATA 82 (11 February 2011)

Last Updated: 11 February 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 82

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/3534

GENERAL ADMINISTRATIVE DIVISION		)
	Re		MARK DUNSDON

Applicant

And

AUSTRALIAN COMMUNITY PHARMACY AUTHORITY

Respondent

DECISION

Tribunal

Deputy President P E Hack SC

Date 11 February 2011

Place Brisbane

Decision

The decision of the respondent is set aside and a decision substituted recommending to the Secretary, Department of Health and Ageing, that the applicant be approved under s 90 of the National Health Act 1955 (Cth) in respect of the premises at South Tenancy 4, 148 Maudsland Road Oxenford.

..................[Sgd]..................
Deputy President

CATCHWORDS

HEALTH AND COMMUNITY SERVICES – Pharmaceutical benefits – Approval for supply of pharmaceutical benefits – Catchment area – Whether proposed catchment area contains the required 3000 persons – Statutory requirements satisfied – Decision under review set aside.

National Health Act 1955 (Cth) ss 90, 99L

National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (Cth) ss 9, 10, Item 113 Sch 1, Item 201 Sch 2

Re Hargraves and Australian Community Pharmacy Authority [1995] AATA 326; (1995) 41 ALD 147

Re Newman & anor and Australian Community Pharmacy Authority [2010] AATA 1055

Re Elkhishin and Australian Community Pharmacy Authority [2008] AATA 1134

REASONS FOR DECISION

11 February 2011

Deputy President P E Hack SC

INTRODUCTION

1. The applicant, Mr Mark Dunsdon, is a pharmacist. He wishes to establish a new pharmacy from premises at 148 Maudsland Road, Oxenford in the Gold Coast hinterland. In order to supply pharmaceutical benefits he must satisfy the respondent, the Australian Community Pharmacy Authority, that the proposed pharmacy satisfies the requirements of the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (the Rules).
2. The Authority was satisfied that the requirements were met except that which required the resident population of the catchment areas for the proposed premises to be at least 3,000. It decided on 30 July 2010 to recommend to the Secretary, Department of Health and Ageing, that Mr Dunsdon’s application not be approved.
3. Mr Dunsdon seeks a review of that decision. He says that the catchment area, properly considered, has a resident population well in excess of 3,000.

THE LEGISLATIVE SCHEME

4. The legislation need only be briefly noticed. Pursuant to s 90 of the National Health Act 1955 (Cth) the Secretary, Department of Health and Ageing may, on application, approve a pharmacist for the purposes of supplying pharmaceutical benefits at nominated premises. Any such application must be referred to the Authority which makes a recommendation to the Secretary whether or not the applicant should be approved in respect of the particular premises. In considering whether or not to make that recommendation the Authority, and the Tribunal on review, must comply with the Rules, they being rules determined by the Minister for Health and Ageing under s 99L of the National Health Act.
5. By virtue of s 9 of the Rules the Authority must recommend that an applicant be approved under s 90 of the National Health Act in respect of the particular premises if the application satisfies the requirements set out in Schedules to the Rules. And, by virtue of s 10 of the Rules, the Authority must recommend that an applicant not be approved if any of the requirements of s 9 are not satisfied.
6. It is common ground that in the circumstances of Mr Dunsden’s application, Item 113 of Schedule 1 and Item 201 of Schedule 2 specify the requirements to be satisfied. Those items provide as follows:

ITEM 113

1. The proposed premises are not in a rural locality.
2. The proposed premises are at least 1.5 km, in a straight line, from the nearest approved premises.
3. The Authority is satisfied that-:
   1. The resident population of the catchment area for the proposed premises is, for most of the year, at least 3 000; and
   2. The number of prescribing medical practitioners practising in the catchment area for the proposed premises is equivalent to at least 1 full-time prescribing medical practitioner.

ITEM 201
The authority is satisfied that:

1. The applicant has a legal right to occupy the proposed premises; and
2. The proposed premises can, under the applicable local government and State or Territory laws relating to land development, be used for the purpose of operating a pharmacy; and

100. Within six months after the date on which the authority makes a recommendation in respect of the application, the applicant will be able to begin operating a pharmacy at the proposed premises; and

4. The proposed premises are not directly accessible by the public from within a supermarket.
   

7. It is also common ground that, at the present time all requirements are satisfied save that in Item 113, 3(a), the requirement that the resident population of the catchment areas for the proposed premises is, for most of the year, at least 3,000.

A CATCHMENT AREA

8. The expression “the catchment area” is not defined but has been the subject of much discussion in cases in the Tribunal. The starting point is generally the decision in Re Hargraves and Australian Community Pharmacy Authority.[1] In that case Deputy President Forgie noted that “the catchment area serviced or to be serviced by a pharmacy is the area populated by those people who may be serviced by the pharmacy.”[2] The Deputy President went on to conclude that the catchment area was “that area from which people may flow or gravitate”.[3] The Deputy President explained the matter thus:

“In determining [the catchment] area, the actual choices which people will make are not relevant. What is relevant in identifying the catchment area are many matters which people consider relevant in making their choice as to the area in which they will available themselves of a particular service. It is all a matter of degree. It seems to me that considerations of price and substitutability of other goods are too peculiar to each individual to be relevant in determining a catchment area which is concerned with people who may use the pharmacy rather than with those who will. Considerations of distances and the existence of other attractions in the area are more broadly based considerations and do not seem to me to be relevant in determining the catchment area. They are features which could either encourage or discourage people from travelling to that pharmacy. Other features which would tend to do the same would include the distribution of the population in the area, people's ease of access to Walloon, geographical features of the area and other services and attractions located in the area. The existence of other pharmacies in the general area is not relevant in itself for that is more associated with the consumer's choice, with competition and with a market than with a catchment area.”[4]

9. The word “gravitate”, as Senior Member McCabe observed recently[5], has become a feature of the jurisprudence in applications of this nature. But, as the Senior Member said in that case, the implication within the word of inexorable forces, akin to gravity,

“may not do enough to focus attention on the choices that are practically open to the residents of a particular area who consume pharmaceutical benefits.”[6]

10. For that reason Senior Member McCabe, in his earlier decision Re Elkhishin and Australian Community Pharmacy Authority[7], considered that the question posed was “whether the ordinary resident of an area would regard a particular pharmacy as a reasonable and practical option in all the circumstances”.[8] In Re Newman, the Senior Member expanded upon the matter, saying:

“If my comments in Elkhishin are thought to require an investigation into the idiosyncratic preferences of individuals, I would say at once that was not my intent. I think the extract I have reproduced in these reasons makes it clear that the decision-maker should have regard to evidence about the area and its occupants that might shed light on whether the residents were likely to regard the proposed pharmacy as a reasonable and practical option, so that they could be expected to gravitate towards it. Evidence about the size and distribution of the population and traffic networks and other physical features of the area may well be relevant. But the decision-maker might also derive some assistance in particular cases from the results of surveys of residents and other information that might also be gathered for the purpose of defining a market.”[9]

11. There is, I suspect, only a semantic difference between the question as posed in Hargraves and the question as posed in Elkhishin. But I consider that, to pose the question by reference to “a reasonable and practical option”, maintains the focus of attention upon the core question – “what is the catchment area?” The enquiry, when posed in that way, excludes idiosyncratic behaviour and poses an objective test. It seems to me, with respect, to be a preferable way of considering what a catchment area of a pharmacy, or a proposed pharmacy, might be. That is so because a catchment area, in the present context, must mean the area from which pharmacy users, either actual or potential, come, or will come, to a pharmacy, and they will come to a pharmacy if doing so is a reasonable and practical option.

WHAT IS THIS CATCHMENT AREA?

12. To determine this issue I had the benefit of the evidence of two experts. Mr Dunsdon called Mr Steve McElroy, a consulting engineer, who, together with Mr Stephen Fletcher, an experienced town planner, prepared a report dated 29 September 2010 (the McElroy report) and a supplementary report dated 17 December 2010. The Authority called Mr James Turnbull, an experienced economist, whose report is dated 8 December 2010. The evidence of Mr McElroy and Mr Turnbull was given concurrently. In addition, I had the opportunity to inspect the site and the surrounding district including the areas in dispute, in company with the representatives of the parties.
13. Mr McElroy, in his report, has identified a catchment based primarily on distance to be travelled. Prima facie, that strikes me as a sensible and logical approach, albeit that in some circumstances other factors well mean that the shortest distance is not the most convenient journey. As I will discuss later, Mr Turnbull has identified occasions where the satisfaction of another need means that a longer option is likely to be chosen. The Authority was critical of Mr McElroy’s evidence, pointing to his earlier report that concluded that the catchment area was a much larger area. Mr McElroy’s explanation for his earlier conclusion was not entirely satisfactory however Mr Dunsdon relied upon the September 2010 report, not the earlier opinion. Mr McElroy’s earlier enthusiasm for a larger catchment area does not lead me to conclude that his essential argument, that proximity is a sound guide to a catchment area, should be rejected.
14. The pharmacy is proposed for an area in the hinterland of the northern Gold Coast, between the Gold Coast and Tamborine Mountains. It was an essentially rural area, now rapidly changing to residential development. The proposed pharmacy would be located in a strip shopping centre called Maudsland Village at the intersection of Killarney Crescent with Maudsland Road. Within the shopping centre, or immediately adjacent to it, is a single doctor medical centre, a rural supplies store, a small (200m2) convenience store, a café, dog grooming business, a community centre, a hotel (with attached bottleshop) and a child care centre.
15. Maudsland Road is an arterial road, running essentially north/south, between the Tamborine-Oxenford Road in the north and the Beaudesert-Nerang Road in the south. The Gaven Arterial Road joins Maudsland Road a short distance to the south of the proposed pharmacy and carries traffic east to the Pacific Motorway and to areas to the east and west of that Motorway.
16. It is relevant to note shopping options available in the area. There are three major shopping centres nearby. To the north, a distance of 6.4 km, is the Oxenford shopping centre, a major retail facility in excess of 5,800 m2 within a broader retail and service precinct at the intersection of the Tamborine-Oxenford Road with the Pacific Motorway. The complex includes a large grocery supermarket and a pharmacy. Within the Oxenford precinct is the Oxenford Medical Centre containing a general practice, x-ray centre, pathology centre, another pharmacy and other health related tenancies. To the east, a distance of 6.3 km, is the Helensvale Town Centre with three grocery supermarkets and 175 specialty shops including two pharmacies. Finally, to the south, a distance of 14.8 km, is the township of Nerang which has a large retail, business and service area including the Nerang Fair shopping centre, with a grocery supermarket and pharmacy.
17. There are, as well, other smaller centres in the vicinity of the proposed pharmacy. To the north, about 2.7 km away, is a small neighbourhood shopping centre at Upper Coomera. This centre has a medium sized supermarket and other tenancies including a medical centre and pharmacy. To the east is the small Studio Village shopping centre with a convenience store, bottle shop, medical centre and pharmacy. Finally, to the south-east, some 6.4 km distant, is the larger Pacific Pines shopping centre containing a supermarket and 15-20 retail tenancies including a pharmacy.
18. As it is common in cases such as the present, the parties have undertaken the analysis of catchment populations by reference to Australian Bureau of Statistics census collection districts (CCD). The parties contentions regarding the CCD’s that are, either wholly or in part, within or without of the catchment area appear from the following table which is based on the population estimates of Mr McElroy and Mr Turnbull:

CCD	Applicant’s Population	Respondent’s Population
3160620	754	792
3160422	1026	759
3160609	307	-
3160414	400	-
3160607	243	255
3160109	372	310[10]
3160104	536	-
3160110	612	-
	4250	2116

19. There are three categories of variations between the parties. In each of CCD 3160620 and CCD 3160607 the Authority’s estimate is slightly higher than that in Mr Dunsdon’s case. The differences come about because Mr Turnbull’s calculations were undertaken in December 2010 leading to slight increases in population from those in Mr McElroy’s September 2010 calculation. I will use Mr Turnbull’s figures for those CCD’s.
20. The next area of disagreement is in CCD 3160109, an area generally to the north west of the proposed pharmacy. Both experts agree that the new housing development (the River Crossing Estate) within this CCD falls within the catchment area; the area of dispute concerns the established neighbourhoods in and around Pinewood Street and Glenview Road.
21. In my view, residents within those neighbourhoods are unlikely to regard the proposed pharmacy as a reasonable and practical option. Pinewood Street and Glenveiw Road run south off the Tamborine-Oxenford Road. Whilst the distance to the proposed pharmacy is not great it involves an added difficult turn into Maudsland Road from the Tamborine-Oxenford Road and more importantly those residents would be driving past the medical centre and pharmacy at Upper Coomera. I do not consider that the proposed pharmacy is a reasonable and practical option for these residents.
22. I accept Mr Turnbull’s opinion that these portions of CCD 3160109 are not within the catchment area for the proposed pharmacy.
23. CCD 3160104 and CCD 3160110 are to the southwest of the proposed pharmacy. They are essentially rural areas with a mixture of rural industries and smaller hobby farms. Realistically, any shopping trip for those residents involves travel to Maudsland Road, along either Birds Road in the north or Guanaba Creek Road in the south, and a further journey along Maudsland Road.
24. Mr McElroy has included those areas within his determination of the catchment, essentially on the basis that the proposed pharmacy would represent the closet pharmacy to those residents. Guanaba Creek Road joins Maudsland Road 3.9 km to the south of the proposed pharmacy. Birds Road joins 3.1 km to the south of the proposed pharmacy. Residents arriving at those intersections are faced with the choice of turning to the north and travelling 3.1 km or 3.9 km, turning to the south and travelling approximately 10 km further to one of the Nerang pharmacies or turning north and then travelling east to say, the pharmacy at Pacific Pines, a journey approximately 3 km longer than that to the proposed pharmacy.
25. Mr Turnbull accepts that the proposed pharmacy is the most proximate for a majority of residents within these CCD’s. But he says of these resident’s:

“For rural or semi-rural areas, for example, residents must travel long distances even for convenience shopping trips. These residents would be more inclined to undertake pharmacy visits for scripts as part of a working day, a medical visit or weekly or fortnightly shopping trip. Once the distance from a pharmacy increases to a certain point, the proximity effect beings to lose significance and the closet pharmacy would no longer be a ‘convenient’ option.”

26. Mr Turnbull suggests that there are four types of trips for the purchase of pharmaceutical goods which he identifies as:

“a. Initial script filling – coupled with doctor’s visit.
b. Convenience purchase – purchase based on proximity (and top-up shop).
c. Convenience purchase – coupled with weekly/higher order shopping trip.
d. Convenience purchase – coupled with daily working trip.”

I accept Mr Turnbull’s classification which accords with common experience. In its applications to CCD 3160104 and CCD 3160110 it is evident that some purchases in its first category will come from within these areas. Those who attend upon the medical practice adjoining the proposed planning will logically attend to filling any prescription at an adjoining pharmacy. And it seems logical to assume that persons from within these CCD’s will find this medical practice convenient as a matter of proximity.

27. It might also be thought that there will be purchasers in the second category from these CCD’s. Those attending the adjacent hotel, child care centre, small grocery or other shop may well find it convenient to couple a visit for that purpose with a visit to the proposed pharmacy. Those who are undertaking the higher order shopping trip would not find a visit to the proposed pharmacy convenient. Those shoppers, one would think, would combine their pharmacy purchasing with the periodical grocery shopping at one of the larger supermarkets at Oxenford, Helensvale or Nerang.
28. For those in Mr Turnbull’s final category, the daily working trip, an attendance at the proposed pharmacy would be a reasonable and practical option for those travelling north to work. Those shoppers would travel past the proposed pharmacy on the trips to and from work. Those travelling to the east or the south for work would not have the same convenience.
29. I accept Mr Turnbull’s view that residents in rural or semi-rural areas such as CCD 3160104 and CCD 3160110 would be more inclined to combine a pharmacy visit with a journey for another purpose; however, I do not accept his proposition that the proximity effect begins to lose significance with such residents. To the residents within those areas a visit to the proposed pharmacy is a convenient option for those attending the medical practice, for those who are attending one or other of the other destinations in or adjacent to the Maudsland Village shopping centre or for those travelling to or from employment to the north. For people in this area, and for these purposes, the proposed pharmacy is a logical choice. And it is not a logical choice for them to attend upon a more distant pharmacy.
30. I am then satisfied that CCD 3160104 and CCD 3160110 ought be considered to be within the catchment area for the proposed pharmacy. It represents a reasonable and practical option for those residents.
31. I reach the same conclusion in relation to CCD 3160422 which is in a similar position to CCD 3160104 except that it is on the earlier side of Maudsland Road. Mr Turnbull considers that that part of this district which is to the south of Guanaba Creek Road is not within the catchment area for the proposed pharmacy. He considers that for those residents the Beaudesert-Nerang Road, and thus a trip to Nerang, would be the most likely route. That may be true for those going to employment or on other shopping ventures to Nerang however I consider, as with CCD 3160104 and CCD 3160110, that the proposed pharmacy is a reasonable and practical option for residents within CCD 3160422. It is a considerably shorter distance than the trip to Nerang.
32. I am then satisfied that CCD 3160607 (255 residents), CCD 3160620 (792 residents), CCD 3160422 (1026 residents), CCD 3160109 (excluding the areas around Pinewood Street and Glenview Road) (310 residents), CCD 3160104 (536 residents) and CCD 3160110 (612 residents) comprise the catchment areas for the proposed pharmacy. On that basis the resident population is well in excess of 3,000 and I am satisfied that each of the criteria in the Rules is satisfied.
33. I will then set aside the Authority’s decision and substitute a decision recommending to the Secretary, Department of Health and Ageing that the applicant be approved under s 90 of the National Health Act in respect of the premises at South Tenancy 4, 148 Maudsland Road Oxenford.
34. I should say for the sake of completeness, that I have not found it necessary to consider the position of the areas to the east of Maudsland Road around Saltwater Boulevard/Terence Drive in CCD 3160609 and around Felling Drive in CCD 160414 which Mr McElroy considered to be part of the catchment.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed: ..............................[Sgd]....................................

Alex Seagar, Associate

Dates of Hearing 21 – 22 December 2010

Date of Decision 11 February 2011

Solicitors for the Applicant Maunsell Pennington

Counsel for the respondent Ms MM Brennan

Solicitors for the Respondent Australian Government Solicitor

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[1] [1995] AATA 326; (1995) 41 ALD 147

[2] Ibid at [101]

[3] Ibid

[4] Ibid at [103]

[5] See Re Newman & anor and Australian Community Pharmacy Authority [2010] AATA 1055 at [8].
[6] Ibid at [7]

[7] [2008] AATA 1134

[8] Ibid at [22]

[9] Above n 5 at [12]

[10] Figure 5 of Mr Turnbull’s report (Exhibit 7) shows this figure as 313 however the text of the report makes it clear the figure ought be 310.