England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
(Mr Justice Tucker)

		Royal Courts of Justice Strand London WC2 Monday, 2nd April 2001

THE MASTER OF THE ROLLS:

Introduction.

1. This is an appeal brought by permission of Simon Brown LJ against a decision of Tucker J dated 14th July 1999. Before Tucker J the appellants, Wickham, sought orders of certiorari and mandamus to quash and remit for reconsideration a decision of 26th February 1998 made by the Veterinary Medicines Directorate ("VMD"), an executive agency of the respondent, the Ministry of Agriculture, Fisheries and Food ("MAFF"), concerning the interpretation of certain provisions in the European Pharmacopoeia, ("the EP"). On 14th July 1999 Tucker J dismissed Wickham's application.
2. Before a producer can market a veterinary medical product in the United Kingdom the producer has to obtain a marketing authorisation from VMD, acting on behalf of MAFF. Regulations that comply with the requirements of European law make provision for the qualities that the constituents of such products are required to demonstrate. This appeal relates to constituents of Avian Live Virus Vaccines ("the Vaccines"). The constituents in question are embryos or tissue cultures derived from chicken eggs. The relevant regulations require that the eggs from which these constituents are derived must be produced by chickens from specific-pathogen-free ("SPF") flocks. The regulations require that such flocks are tested in accordance with a specification in the current edition of the European Pharmacopoeia, the current one being the third edition published in June 1996, ("the EP").
3. Wickham's business included the production and supply of eggs from SPF flocks to manufacturers of avian vaccines. They are in dispute with VMD as to the frequency with which they were required to test hens in their flocks in order to comply with the requirements of the EP. They contend that, by their letter of 26th February 1998, VMD wrongly required them to test all their hens at point of lay ("POL") when they should have recognised that the EP required no more than testing of 5 per cent of the hens in their established flocks every month. They allege that the cost of complying with this requirement would have been prohibitive, so that they have been driven out of business. If their appeal succeeds they propose to seek damages from MAFF.

Background Facts

4. Wickham was founded by Mr. William Cartmell and Mr Pat Gibbings in the early 1960s for the production of SPF eggs, using a novel system which they described as the 'rolling flock' system. Under this system the flock was initially constituted by introducing SPF eggs from another SPF flock to a fully barriered house, incubating the eggs and growing the chicks to maturity and then closing the flock. Thereafter, hens were replaced as they died or were removed by hatching eggs produced by the flock within the same isolated airspace. The flock would thus perpetuate itself within its own closed environment.
5. Wickham was the only producer of SPF eggs to use the rolling flock system. Their competitors, who are established outside this country, use an all in/all out system. Under this system day old chicks from an SPF flock are introduced into an empty house, reared and used for egg production for 18 months, at which point they are all killed. The building is cleansed and the process repeated. When Wickham were building up a flock it was their practice to blood test all chicks between the ages of 6 and 20 weeks, the latter being the POL or age at about which hens begin to lay. Once the flock was established, however, they tested five per cent of the birds every month. Thus, the replacement chicks did not automatically receive a blood test. It is Wickham's contention that this regime satisfied the requirements of the EP. VMD do not agree.

The requirements of the EP.

6. The licensing scheme is regulated by the Marketing Authorisations of Veterinary Medical Products Regulations 1994 ("the 1994 regulations"). The 1994 regulations implement parts of, inter alia, Council Directive 81/851/EEC on the approximation of the laws of the member states relating to veterinary medical products, and Council Directive 81/852/EEC on the approximation of laws of the member states relating to analytical, pharmatoxilogical and clinical standards and protocols in respect of the testing of veterinary medicinal products. Directive 81/852 provides that, for the purposes of specified provisions of Directive 81/851, the monographs of the EP shall be applicable. Thus it was that, if they were to be able to sell eggs to manufacturers of vaccines licensed by VMD, Wickham had to comply with the testing requirements laid down in the EP. The relevant provisions of the EP are to be found in paragraph 5.2.2. For ease of reference, I have numbered the subparagraphs. They are as follows:

"Chicken flocks free from specified pathogens for the production and quality control of vaccines

Introduction.

1. Where specified in a monograph, chickens, embryos or cell cultures used for the production or quality control of vaccines are derived from eggs produced by chicken flocks free from specified pathogens (SPF). The SPF status of a flock is ensured by means of the system described below. The list of micro-organisms given is based on current knowledge and will be updated as necessary.

General principles and procedures.

2. A flock is defined as a group of birds sharing a common environment and having their own caretakers who have no contact with non-SPF flocks. Once a flock is defined, no non-SPF birds are added to it.

3. For SPF flocks established on a rolling basis, all replacements are hatched and reared in the controlled environment house. Subject to the agreement of the competent authorities, SPF embryos derived from a tested SPF flock from another house on the same site may be introduced. From 8 weeks of age, these replacement birds are regarded as a flock and monitored monthly in accordance with the Subsequent Testing requirements. At point of lay, all these replacement birds are tested in accordance with the Initial Testing requirements."

7. I move on to subparagraph 8:

"The flock originates from chickens shown to be free from vertically transmitted agents. In particular, each chicken from which the flock is derived is tested repeatedly to ensure freedom from leucosis viruses and their antibodies. In order to establish the SPF status of a flock, it is kept under SPF conditions for a test period of not less than 4 months. Each bird in the entire flock is shown to be free from evidence of infection with the agents listed below under Initial Testing after 6 weeks and at the end of the test period.

9. For each new generation in an established flock, all of the birds in the flock are tested at not later than 20 weeks of age, using the tests prescribed below under Initial Testing. After the initial test, monthly tests are carried out on a representative 5 per cent sample (but not less than ten and not more than two hundred birds), using the tests prescribed below under Subsequent Testing, with a final test at 4 weeks after the last collection of eggs."

8. At the end of the paragraph are set out two schedules, one headed "Initial Testing" and one headed "Subsequent Testing". These set out the micro-organisms for which the blood sample is to be tested and the type of test to be carried out on the sample. There is no significant difference between the two schedules.

The decision letter.

9. VMD have been at odds with Wickham as to the latter's testing obligations for some ten years. These span a period when earlier editions of the EP were applicable and before that when MAFF's own guidelines in MAL 74, which were introduced in 1990, applied. Their dispute culminated in VMD's decision letter of 26th February 1998, which was in the following terms, so far as material:

"I hope that it is agreed between us that producers of SPF eggs, for use in the manufacture and control of vaccine production in Europe, are required to comply with the Ph.Eur monograph. Over a considerable period of time, the VMD and Wickham Laboratories (SPF Farms) Limited have had frequent discussions in an attempt to resolve the issue of testing requirements for the SPF eggs produced at Torbay Farm. Most recently, the VMD sought the opinion of the European Pharmacopoeia Commission with regard to its interpretation of the European Pharmacopoeia monograph for Vaccines for Veterinary Use which states the requirements for chicken flocks free from specified pathogens (SPF). The opinion of the Commission, following consideration by the Expert Group on Veterinary Vaccines and Sera has been passed to your Solicitor. It is noteworthy that the Commission has confirmed its earlier view that 100% testing of point of lay hens was required.

Whilst we are aware of the history of SPF production at Wickham (SPF Farms) Limited, VMD is obliged to ensure the testing conditions laid down in the European Pharmacopoeia are observed and I can assure you that these conditions are imposed equally on all SPF egg producers. The legal basis for this requirement is contained in Title II Part 60.1 (Production and Control of Starting Materials: Starting materials listed in pharmacopoeias) of EC Directive 81/852. The first paragraph states: 'The monographs of the European Pharmacopoeia shall be applicable to all substances appearing in it.'

I regret the fact that our interpretation of the Ph.Eur monograph, now confirmed by the European Pharmacopoeia Commission, may have an adverse effect on your business for the reasons set out in your letter. However, in the light of the advice we have received, I can only confirm that we shall continue to require 100% testing of point of lay hens."

10. It remains VMD's contention that the relevant provision of 5.2.2 of the EP require Wickham to test all birds that are added to their closed flock on the rolling flock basis when they reach the point of lay.

The interpretation of EP 5.2.2.

11. Requirements as to blood tests are contained in subparagraphs (3), (8) and (9) of EP 5.2.2. Within these three subparagraphs are to be found the regulations applicable to both the rolling flock system and the all in/all out system. Subparagraph (8) deals with the establishment of an SPF flock. It seems to me that the provisions of subparagraph (8) apply equally to the establishment of an all in/all out flock and to the establishment of a flock which is to be perpetuated on a rolling flock basis. I do not understand either party to contend to the contrary. The critical subparagraphs are (3) and (9). Mr. Kerr for Wickham accepts that subparagraph (3) is exclusively directed to a flock which is established on a rolling basis. His submission is that the first sentence is a general description of a rolling flock, and that the remainder of the paragraph is directed only to the position if the flock is augmented by embryos derived from another house on the same site. Tucker J rejected this construction. His reading of the subparagraph was as follows:

"The first sentence of the third subparagraph reads: 'for SPF flocks established on a rolling basis, all replacements are hatched and reared in the controlled environment house.' I recognise that that only partly describes the Wickham system and it is not a complete description of it since in that system, the replacements are from eggs laid, hatched and reared in the controlled environment. The second sentence refers to a feature which does not occur in the Wickham system, ie the introduction of embryos derived from a tested SPF flock from another house. The third sentence refers to 'these replacement birds' being regarded as a flock. Herein lies the key to the problem, in my view. It is clear to me that 'these replacement birds' are intended to and do include not only the replacements referred to in the second sentence, but also those referred to in the first sentence. In my judgment, the expression 'these replacement birds' is apt to include the birds produced under the Wickham system. Such birds are certainly 'hatched and reared in the controlled environment' albeit they also come from eggs laid in that environment. If there was any doubt about it, such doubt is removed by the contents of the fourth sentence, which provide that at point of lay, all these replacement birds are tested in accordance with the 'Initial Testing requirements.'

This clearly comprehends the replacement birds referred to in both the first and second sentences of the subparagraph and, as I have said, includes the birds produced under the Wickham system."

12. I agree with the conclusions of Tucker J as to the natural meaning of subparagraph (3). The first sentence is, as Mr. Kerr submits, a general description of how replacement to a rolling flock comes into being. This sentence refers expressly to "all replacements" and applies whatever the source of the eggs from which they hatch. The second sentence provides an option to introduce eggs from a tested SPF flock from another house on the same site for hatching and rearing within the controlled environment house as an alternative to using eggs laid within that house. That was an option first afforded to Wickham under MAL 74. It is an option of which they have never taken advantage. The suggestion that the whole of the rest of the subparagraph was drafted to deal only with replacement birds derived from the exercise of that option is, on the face of it, unlikely. Nor does it produce the most natural meaning when the subparagraph is read as a whole. The reference to "all these replacement birds" in the fourth sentence indicates clearly that the replacements being spoken of are not restricted to replacements deriving from the exercise of the option given in the second sentence. They are the replacements spoken of as "all replacements" in the first sentence. Tucker J went on to consider subparagraph (9):

"Any remaining doubt is removed by the terms of the 9th subparagraph, referring to each new generation in an established flock. Apparently this subparagraph dates from an earlier time than the previous subparagraph to which I have referred. Nevertheless they are both now contained in the same document. The reference to a new generation can only apply to the rolling flock system, since there are no new generations in the all in/all out system. In my judgment, the replacement birds produced under the Wickham system clearly constitute a new generation in an established flock. Accordingly they are subject to the same standards of testing as all other birds in a rolling flock system. In my opinion the words of the first sentence of this subparagraph are clear and unambiguous."

13. Mr Kerr challenged Tucker LJ's interpretation of subparagraph (9). He argued that the reference to each new generation in an established flock in the first sentence referred not to additions to a rolling flock but to each new batch of day old chicks used to restock a house after slaughter of the old stock under the all in/all out system. In my judgment, this argument is unsustainable. In the first place, it involves treating the first sentence of subparagraph (9) as covering essentially the same ground as subparagraph (8), although not to identical effect. This makes no sense at all. In this context it is pertinent to note that the two subparagraphs co-existed in the first edition of the EP. In the second place the words "each new generation in an established flock" can only sensibly describe the new generations added to a rolling flock. Under the all in-all out system there is no established flock in which there is a new generation. It is impossible to give subparagraph (9) the meaning for which Mr Kerr contends. I agree with Tucker LJ that subparagraph (9) unequivocally requires that all replacement hens under the rolling flock system must be tested when or before they reach 20 weeks of age. Subparagraph (9) pre-dates subparagraph (3). Subparagraph (3) gave express recognition to the rolling flock system, the existence of which had previously been recognized implicitly by subparagraph (9). There is no conflict between the two. They are complementary.
14. Mr Kerr's arguments of construction have been founded very largely on the genesis of the relevant provision of the EP. This can be traced back to the specifications for production and control of avian live virus vaccines laid down by the Central Veterinary Laboratory in what is colloquially known as the White Book, the second edition of which was published in 1977. This made the following provision in relation to testing:

"The continued absence of specific infections in the donor flock is demonstrated by the above tests on faecal samples and eggs and on samples of serum from 5% of the flock with a minimum of 10 samples taken at random from the flock at monthly intervals except in the case of ILT where the test need only be carried out at 3 month intervals."

15. There was no requirement for one hundred per cent testing. Mr. Cartmell had a hand in drafting these provisions. The paragraph that I have just quoted appeared again verbatim in MAL 74 in 1990 and in MAL 74 appears the precursor of subparagraph (3) of EP 5.2.2, in similar though not identical terms. Mr. Kerr argued that it was inconceivable that MAFF would have introduced in 1990 a requirement for one hundred per cent testing without any consultation with Wickham, who were going to be drastically affected by this. There is no evidence of consultation. Plainly, consultation should have taken place before this change. But this consideration cannot justify the court in failing to give to the provisions of the EP the meaning that they quite clearly bear. Mr. Kerr also urged that the interpretation contended for by VMD gave the provisions an impact which was disproportionate. The benefits of one hundred per cent testing, which were problematical, had to be weighed against the fact that this requirement destroyed Wickham's well established business. Like Tucker J, I have difficulty with the concept of proportionality in the context of the issue of construction in this case, even if one assumes that the provisions to be construed are ambiguous. I also have difficulty with the submission that those responsible for the provisions in question should have foreseen that the requirement of one hundred per cent testing might have the effect of ruining Mr. Cartmell's business. They did no more, so far as Wickham was concerned, than place them on a level playing field with their all in/all out competitors. It is not plain why they could not compete on this basis. Mr. Kerr was not able to give a satisfactory explanation for this. He suggested that the explanation might lie in a less than rigorous observation by Wickham's competitors of the requirements to which both are subject. If that is the explanation that does not advance the argument based on proportionality.
16. Finally, as Mr. Forsdick for MAFF observed, scientific knowledge advances. Whatever may have been the position 30 years ago, it would not be correct to assume that there is not now good reason, in the interests of human health, for the one hundred per cent testing requirement. The evidence indicates that that is the opinion of the European committee of experts. I mention these matters out of deference to Mr. Kerr's arguments. But at the end of the day this case starts and finishes with the clear provisions of subparagraphs (3) and (9) of EP 5.2.2. They lead in my judgment inexorably to the dismissal of this appeal.
17. LORD JUSTICE PETER GIBSON: I agree.
18. LORD JUSTICE LATHAM: I also agree.
Order: Appeal dismissed with costs agreed at £16,000.