Kippa-Ring Pharmacy Pty Ltd v Pharmaceutical Services Federal Committee of Inquiry

This page is based on the Federal Court's published reasons in Kippa-Ring Pharmacy Pty Ltd v Pharmaceutical Services Federal Committee of Inquiry [2026] FCA 656. The available text clearly shows the parties, the referral chronology, the seven grounds of review, the Court's reasoning on the first three grounds, and the final orders dismissing both proceedings with costs.

The available text then cuts off during the Court's discussion of procedural fairness. That means the later reasoning is not fully visible here. Where this page discusses the fourth to seventh grounds, it does so cautiously and only to the extent supported by the visible parts of the judgment, including the catchwords, issue list and orders.

This dispute arose in the Pharmaceutical Benefits Scheme compliance setting. Several Queensland pharmacy companies were approved pharmacists under the National Health Act 1953 (Cth). John Tawadrous was the sole director of the original applicant companies. A PBS compliance report was prepared within the Department alleging breaches and recommending that Mr Tawadrous be considered for referral to a Pharmaceutical Services Federal Committee of Inquiry.

On 22 August 2024, the Secretary made the first referral under s 114. It was framed broadly. The Committee was asked to inquire into and report on the services or conduct of the approved pharmacist, or its directors, employees or agents including Mr Tawadrous, at the Kippa Ring and Clontarf premises and any other premises with which Mr Tawadrous was associated. The matters referred included alleged claims where there was no supply, alleged supply beyond authorised repeats, alleged supply of maximum repeats on one occasion without prescriber direction, and alleged supply or purported supply more times than specified in a prescription.

After that first referral, the approved pharmacist arrangements for the Kippa Ring and Clontarf premises changed. From 15 September 2024, each approval became a joint arrangement involving Koolman Pharmacy Pty Ltd. Dylan Koolman was its sole director. A further recommendation was then made in December 2024, and on 15 January 2025 a delegate of the Secretary made a second referral in similar terms, now expressly including both Mr Tawadrous and Mr Koolman.

The Committee secretariat later notified the approved pharmacists that it intended to list the inquiries for hearing in August 2025. The pharmacy businesses responded by commencing two Federal Court proceedings. They sought judicial review, declarations and interlocutory injunctions to stop further steps being taken on the referrals. The interim dispute was resolved by undertakings. The applicants undertook to retain relevant materials, and the respondents undertook not to exercise powers under ss 126 and 127 pending the Court's decision.

The applicants raised seven grounds of review. The first three were mainly about the legal scope of the Secretary's referral power under s 114 of the National Health Act. The remaining grounds were about process, including procedural fairness, alleged improper purpose, and whether the Committee had complied with statutory notice requirements.

The visible reasons show the Court organised the case in a structured way. First, it set out the facts and legislative scheme. It then dealt with each ground in turn. The judgment also records that several other decisions were delivered after the hearing, including NTMA Pharmaceuticals Pty Ltd v Beardmore at first instance and on appeal, Pharmacy O2342 Pty Ltd v Secretary, Department of Health, Disability and Ageing, and Ho v Pharmaceutical Services Federal Committee of Inquiry. Those authorities affected some of the applicants' arguments.

On the first ground, the Court rejected the argument that the Secretary had no power to make a referral in respect of a person or entity that had ceased to be an approved pharmacist by the time of referral. The immediate factual answer was simple. Kippa Ring Pharmacy Pty Ltd and Clontarf Bridge Pharmacy Pty Ltd were still approved pharmacists when the first referral was made on 22 August 2024. The Court also noted that, to the extent the applicants were making a broader argument that s 114 could not reach past services or conduct once a pharmacist was no longer approved, that argument had already been rejected in NTMA (Full Court) and in Ho.

On the second ground, the Court rejected the challenge to a referral involving multiple parties. Rangiah J said the construction arguments had been firmly rejected in NTMA (Full Court). The Court also relied on the Full Court's reasoning that a bare possibility of prejudice from a joint inquiry is not enough. Without identifying an actual or pending breach of the hearing rule, or apprehended bias, there was no basis for the declaratory or injunctive relief sought.

On the third ground, the Court rejected the challenge to the inclusion of so-called associated parties. The applicants argued that s 114 only permits referral of matters concerning the services or conduct of approved pharmacists themselves, not directors, employees or agents. The Court disagreed. It pointed out that an approved pharmacist may be a corporation and that s 134F(2) deems conduct engaged in on behalf of a body corporate by a director, employee or agent within actual or apparent authority to be conduct of the body corporate for the purposes of the Act. Because a corporation acts through human actors, the phrase 'services or conduct of approved pharmacists' can encompass conduct carried out through those people.

The Court also rejected the uncertainty argument about 'other premises' associated with Mr Tawadrous and Mr Koolman. In context, the Court considered the meaning sufficiently discernible. The referrals identified the approved premises and, read with the surrounding circumstances, the reference to other associated premises could be understood as any other premises from which an approved pharmacist connected with those individuals was authorised to supply pharmaceutical benefits.

The available reasons do not show the full detail of the Court's analysis on the fourth to seventh grounds because the text cuts off during the procedural fairness discussion. However, the catchwords and final orders make clear that the applications were dismissed in full, which means those remaining grounds were also unsuccessful.

This is a pharmacy case, but the commercial reading is broader. It is about how courts approach statutory inquiry powers in regulated industries. If your business depends on a government approval, registration, licence or subsidy arrangement, the court will usually start with the wording, structure and purpose of the legislation. General complaints that the process feels unfair may not be enough if the statute and existing authority support the regulator's power.

The case also shows that changing business structure after concerns arise may not solve the legal problem. Here, the approved pharmacist arrangements changed after the first referral, but that did not produce the result the applicants wanted. The Court's reasoning on the first ground, together with the authorities it cited, indicates that past conduct can remain open to inquiry even if the current approval position has changed.

Another practical point is that a company does not act in the abstract. In regulated schemes, the company's conduct is often examined through the acts of directors, employees and agents. If the legislation attributes those acts to the company, a court may accept that an inquiry into the company's conduct naturally includes the people through whom it acted. For owner-managed businesses, that means personal involvement in operations, claims handling, supervision and recordkeeping can become central to the inquiry even where the approved entity is a corporation.

The decision also illustrates the limits of trying to stop an inquiry before it runs its course. The applicants sought declarations and injunctions, but the Court was not persuaded by broad assertions of possible prejudice from a joint inquiry. The visible reasons suggest that if a business wants to challenge a process on fairness grounds, it usually needs to identify a concrete legal defect rather than a general concern that the process may become difficult or awkward.

The allegations referred in this case were document-heavy and transaction-heavy. They concerned claims for supply where there was allegedly no supply, supply beyond authorised repeats, and supply patterns said to be inconsistent with prescriptions. In a regulated payment or subsidy environment, those issues usually turn on records rather than recollection. That is why businesses in similar settings should think carefully about what documents prove each step of a transaction.

For pharmacy businesses, that may include prescriptions, repeat authorities, dispensing records, claim records, internal approvals, audit trails and staff instructions. For businesses in other regulated sectors, the equivalent documents may be customer eligibility records, invoices, consents, licence condition logs, training records, service notes or system access logs. The key point is to be able to show what happened, who did it, under what authority, and which entity was legally responsible at the time.

This case also highlights the importance of mapping people to entities. If a company is the approved or licensed entity, regulators and courts may still focus closely on the directors, employees and agents through whom the company acted. Businesses with multiple related entities should be able to identify which company held the relevant approval at each date, who controlled operations, and whether any later restructure changed the legal position or only the commercial arrangement.

The chronology matters. The first Evaluation Report was provided on 21 June 2024. The first referral was made on 22 August 2024. The approved pharmacist arrangements for the Kippa Ring and Clontarf premises changed on 15 September 2024. A further recommendation followed on 4 December 2024, and a second referral was made on 15 January 2025. The Committee secretariat then notified the approved pharmacists in March and April 2025 that it intended to list the inquiries for August 2025. The applicants commenced proceedings on 21 May 2025. The substantive hearing took place on 23 and 24 July 2025, with supplementary submissions filed later. Rangiah J delivered judgment on 29 May 2026.

The judgment also records that other relevant Federal Court decisions were delivered after the hearing and before judgment, including the Full Court decision in NTMA on 19 March 2026. That matters because the Court relied on those authorities in rejecting several of the applicants' arguments. For businesses considering litigation in a fast-moving regulatory area, this is a reminder that appellate developments can significantly affect the strength of a challenge before judgment is delivered.

Business owners often want to know whether a case like this means the regulator will always win. It does not. What it does show is that the success of a judicial review challenge depends heavily on the exact statutory language, the procedural stage, and whether there is already binding authority on the point. Here, the applicants faced existing decisions that had already rejected several of the same or similar arguments.

Another common question is whether a referral itself is the same as a finding of wrongdoing. It is not. A referral starts or supports an inquiry process. But that process can still be commercially serious because it may involve compulsory powers, private hearings, witness examination and later consequences under the statutory scheme. That is why businesses should treat the referral stage seriously even if it is not the final merits decision.

Finally, if your business is in a regulated sector and receives notice of an inquiry or proposed hearing, the immediate priorities are usually to preserve documents, identify the relevant entities and people, understand the statutory process, and obtain advice on both compliance and public law issues. This case shows that waiting to rely on a later restructure or a broad fairness objection may be a weak strategy.