JUSTICE MOSES: By this application, the Applicants seek to challenge a decision
of the North East & Devon Health Authority ("NEDHA"), made on 4th June
1997, to instruct the North Devon Health Trust ("the Trust") to close
in-patient services at Lynton Hospital temporarily as from 15th August 1997.
The relevant date reveals the urgency of this application. Accordingly, on
10th July 1997, I gave leave to move, ordering expedition and a substantial
abridgement of time for service of the affidavits.
The hospital was founded in 1874. It has fifteen beds, nine GP medical beds
available for admission by the local GPs, Dr Ferrar (from whom there is an
affidavit) and Dr Frankish, and six consultant beds for rehabilitation. There
are a minor operations theatre and hospice facilities. There are also
out-patient facilities, such as chiropody, physiotherapy and occupational
therapy, the decision to close which is also the subject of challenge. There
are respite facilities, that is facilities to relieve carers. The hospital
also provides 24-hr casualty services. Currently, according to Caroline
Sandford, the Locality Coordinator of the Respondents, there are eight in
patients, although two are expected to be discharged before closure. It is
planned that they should be cared for in other Trust Hospitals such as
Barnstaple, and there are also seven other patients receiving respite care.
I need not detail further the facilities provided or deal with the merits
of providing those services elsewhere. This case is not concerned with the
merits of the decision to order temporary closure. The case is concerned with
the procedure by which the decision to close was reached.
The Applicants are three elderly patients at present in the hospital. No
point has been taken before me as to their
to bring this application. Lynton Hospital commands widespread local support.
It is understandable that the decision to close the hospital, although
temporarily, has caused a dismay and a determination to resist the action of
the Health Authority. I am not concerned as to whether this response is well
founded or not.
I should also mention an application brought by a patient in relation to
another community hospital, Winsford Hospital. This is a small hospital
providing in-patient facilities and is also a branch surgery for the community
around Winsford. The decision temporarily to close that hospital was made on
the same date. Leave to move in relation to that decision has not been granted
yet, but it is agreed that that decision will follow my decision concerning
The Secretary of State is under a duty imposed by the National Service Act
1977 to promote in England and Wales a comprehensive health service. He has
power to provide such services as he thinks appropriate to discharge that duty.
His duties in relation to provision of services have been delegated to health
authorities, such as the Respondent, by virtue of the National Health Service
(Functions of Health Authorities & Administration of Arrangements)
An internal market for the provision and purchase of health services was
created by the National Health Service and Community Care Act 1990. Health
Authorities purchase services from National Health Trusts, who are, in the
main, the service providers.
Funds for such purchases are provided by Central Government annually, based
on formulae designed to take into account local characteristics. Health
Authorities financial years run from 1st April, the amount available being
determined by the National Budget (in this case the budget of 26th November
1996) and by the allocation formula announced in December 1996. Health
Authorities are required, by section 97A of the 1977 Act, to balance their
books, that is to secure that expenditure does not exceed income. Deficits
from previous years must be carried forward and they impose an additional
demand upon annual income.
Under the statutory scheme created by the 1990 Act, health authorities are
not in law responsible for the provision of services such as those provided at
Lynton. They are the responsibility of the Trust. If a Health Authority
decides not to purchase services hitherto provided by a Trust, then the service
will have to cease. In this case, as Julia Neville, Director of Development of
the Respondents, deposes, in the course of negotiations as to the contract
between the Health Authority and the Trust for 1997 to 1988 the Respondent
decided not to purchase the Lynton Hospital in-patient services and the Trust
cannot therefore, at least temporarily, provide them. But it has been agreed
that that process should be regarded as an instruction to close temporarily
those services. The Trust has been served as a person directly affected. Mr
Engelman appears for both the Health Authority and the Trust and both have
agreed that the Health Authority should take responsibility for the decision.
By 1996 the Government had resolved to make the National Health Service more
responsive to the needs of its consumers (see Circular EL 90185). To this end
Community Health Councils were established by the Community Health Council
Regulations 1996 pursuant to the Secretary of State's powers to issue
directions under the National Health Service Act 1977. Part IV of those
Regulations identifies the functions of a Community Health Council. I should
read Regulation 17 and Regulation 18: Regulation 17 provides:
Thus, a Health Authority is obliged to consult a Community Health Council
if, in relation to this case, two conditions are satisfied: (a) there is a
proposal to make any substantial variation in the health service; and (b) that
proposal is under consideration by the Health Authority.
The real decision which is impugned is not the decision temporarily to close
but the decision, made on 4th June 1997, to do so without consultation with
the Community Health Council. The essential issue is whether the Health
Authority acted lawfully in issuing instructions to close Lynton Hospital
without consulting the North Devon Community Health Council. The decision not
to consult was made pursuant to Regulation 18(3), and it was notified on 28th
May to the Community Health Council. The letter of notification gives the
reasons for the decision not to consult. It states:
Analysis of the course of discussions between the Trust and the Health
Authority between January and mid-May of this year (1997) is of the greatest
importance. I shall, however, deal with the events leading to those
discussions. They have been the subject matter of some comment, although they
are not vital to the decision I have to make.
In September 1996 the Health Action Plan was published to signal to
providers proposed changes in contracts for the year beginning April 1997.
That plan referred to a deficit of £1 million expected by the end of the
year and a gap in resources of £2 million for the financial year 1997 to
In September 1996 the Trust was considering the temporary closure of Lynton
Hospital, but, as the Health Authority was informed on 18th September 1996, it
decided not to do so for the reason that a long awaited review of health care
needs in the Lynton and Lynmouth areas was considered to be vital before
properly informed decisions in the short or the long-term could be made. A
meeting of the Review Group to initiate the Lynton Review, which was the local
review of those healthcare needs, was held on 5th November 1996. It was
designed to examine existing resources. It was said at that meeting that the
hospital would stay open in the year 1996 to 1997. It was expected that the
Lynton Review would be finalised in time for the financial year 1997 to 1998.
That hope was not realised.
The suggestion has been made that those concerned with closure of the
hospital in September 1996 were entitled to assume that it would be safe until
the review was complete. In my judgment, no contention of irrationality can
properly be founded on the basis that the Health Authority should have waited
until the review was complete. That suggestion has, rightly, in my view, not
On 26th November 1996 the funds available overall to health authorities
were announced in the budget. The allocation formula revealing how much the
Health Authority had its disposal was published in December 1996. North and
East Devon was allocated the smallest pro rata increase. A Health Investment
Strategic Review was initiated. It was separate from the Lynton Review.
In early 1997 the Health Authority was reminded by the NHS Executive, which
acts for Central Government, of the need to produce a scheme which broke even
for 1998 and 1999 and to come within £1 million of break-even point for
the financial year 1997 to 1998.
summary of key objectives was agreed between the Health Authority and the
National Health Executive. It stated at Clause 4.2 under the heading
"PROGRAMME AREA 4" that the action to achieve the objectives would include the
undertaking of review of services at Lynton, Winsford and Great Torrington, and
a timetable referred to June 1997.
At that meeting on 27th February there was a discussion concerning the need
to find £500,000. It was indicated that community hospitals were among
the areas being looked at to achieve that saving. That meeting was recorded in
a letter from the Chief Executive of the Trust to Dr Morgan, the Chief
Executive of the Authority, on 10th March 1997. It is clear from that letter
that the proposals to make savings by closure of Lynton or Winsford had not yet
been crystallised. Indeed, by 27th March 1997 the National Health Service
Executive was under the belief that no significant progress had been made.
On 3rd April an internal memorandum of the Trust referred to a recent
television documentary claiming that certain community hospitals, including
those in North Devon, faced closure. The Director of Operations, Mr Waldic,
wished to emphasise that any such claims were inaccurate. The memorandum stated:
On 9th April 1997 the Board of the Health Authority held a meeting. It is
a date of some significance, since it was by that date that the Applicants
suggest a proposal temporarily to close Lynton and Winsford was sufficiently
cogent to trigger the duty to consult under Regulation 18.
Gillian Morgan, Chief Executive of the Authority and Julia Neville, the
Director of Development of the Trust, provide important evidence of the
position that had been reached by 9th April. At paragraph 11 of her first
affidavit Dr Morgan said:
of the suggestion, to use a neutral word, temporarily to close the hospital was
leaking out by 17th April 1997. There was a meeting with the Trust which
referred to the concern as to the closure on 25th April 1997. Under the rubric
"Community Hospitals", it was said:
The reference to "no new or additional areas" is, I was told by the
Respondents, a reference to areas other than those referred to in the Health
Authority and therefore areas other than community health hospitals. But I
hope I might be forgiven for commenting that that record of the meeting might
have been better expressed.
It shows that a decision as to the matters which had been put forward was
still awaited, but that minute was, I was told, relating in the main to
possible sources of savings other than the hospital.
The position in mid-May is related by Julia Neville in her affidavit at
paragraphs 49 and 50. At a meeting on 13th May it was recorded: "The Health
Authority and the Trust will agree which hospitals will close under emergency
The Chief Executive produced a paper discussing the temporary closure which
was disseminated by 20th May 1997. In that paper he states, under the heading
"Urgent action without prior Consultation ...":
The paper then goes on to deal with the pressures which the Authority faced
and refers at 2.2.1 to "a commitment of £2.2m over the resources
available". In other words, the commitment was higher than had at first been
appreciated. It referred to the statutory requirement to balance the books and
also long-term reviews. At 6.2, under the heading, "Urgent Action: North
Devon" it is stated:
At 6.3.3 there is the recommendation to close as soon as possible the
hospitals on financial grounds and in the interest of the health service. The
paper recorded an occupancy at 77 per cent to Winsford, at 63 per cent to
Lynton, and scheduled the planned savings for North Devon as £500,000.
That paper has led to an assertion by the Applicants that members of the
Health Authority making the decision were misled as to the occupancy of the
hospitals and as to the expected savings. That assertion is partly based upon
a comment on the paper it was proposed to lay before the members, made by the
Trust on 21st May, which pointed out that 77 per cent occupancy at Winsford was
not low occupancy and stated concern that the Authority ran a risk of
significant challenge over this. It said:
The expected saving is now disclosed, at paragraph 63, as (in the affidavit
of Julia Neville) approaching £215,000 by the end of the financial year.
It is therefore said that the paper was inaccurate in its reference to
£500,000. It is possible for cognoscenti to understand that paragraph
6.3.4 of the paper as meaning areas other than the hospitals would be available
for savings to make up that £500,000. I do not think that members were
misled although the amendment should have been made to the paper as suggested
by the Trust, and it would certainly have made matters more readily
As I have said, on 28th May notification of closure without consultation
was given to the Community Health Council. The decision is recorded in the
Board minutes and the meeting of the Board was attended by members of the
public, including protesters such as the Reverend Ringer.
I need not set out the formal decision save to note that it was approved
with only one vote against and an amendment was moved to defer for a short
period the decision to allow some kind of consultation but it did not receive a
seconder. I should also record that at that time other decisions were made as
to sources of savings, some of which have become the subject of consultation
with Community Health Councils.
The Applicants contend that the evidence discloses that by 9th April a
proposal to close Lynton and Winsford hospitals had been formulated such as to
trigger the provisions of Regulation 18(1). The Respondent contends that no
proposal temporarily to close those hospitals of such a nature to require
consultation had been formulated until mid-May. The significance of the
disagreement as to those dates is that, if the Applicants are right, they say
that there would then have been time to consult the Community Health Council.
The Respondent's failure, it is said, to appreciate that the time for
consultation had been reached in April was an error in law and vitiates the
decision on 4th June 1997 to dispense with consultation on the grounds of
As Professor Joad might have said, it all depends what one means by
proposal. The answer, in my judgment, is to be found in the Regulation itself.
The proposal of a substantial variation, which the Regulation contemplates, is
a proposal of such particularity that it can be identified as a substantial
variation. It must also be crystallised to the extent that it is capable of
consideration by the Health Authority. But since it is the trigger for
consultation, it need not, indeed must not, be the subject of any final
resolution. If it was, it would undermine the purpose of Regulation 18(1)
which is to provide for consultation.
Consultation involves the opportunity for representations to be made and
for them to be conscientiously taken into account before the proposals are
finalised. Thus, it must take place while the proposals are still in a
formative stage (see Auld J (as he then was) in
v London Borough of Barnet
 ELR 357 357 at 370H-371A).
Circular EL(90) 185 refers to consultations as an integral part of the
management process. It says that consultation responds to the desire of the
public to have influence in the delivery of health services. Thus the process
envisaged by the Regulation is a process whereby the Community Health Council
and the Health Authority jointly seek to reach a solution to the problem with
which the Health Authority is presented. The Health Authorities are under a
duty, once they are considering a proposal, to consult the Community Health
Council before that proposal has evolved into a definite solution.
In my judgment, a proposal to close Lynton and Winsford's health services
temporarily was of sufficient cogency by 9th April 1997 as to trigger the duty
to consult with the Community Health Council. It is true that at that stage
the proposal included other possibilities for savings, such as the closure of
Torrington, but in my view that does not mean that it was not capable of
forming the subject of the consultation with the Community Health Council.
After all, they might well have wished to debate the merits of those other
possibilities as alternatives to closure of Lynton and Winsford. That the
proposals might have encompassed permanent closure rather than temporary
closure does not, to my mind, alter their essential nature or mean that they
were not ripe for consultation.
The Respondent relies upon the letter of 9th April to the local MP as
showing that no proposal was in existence, and the letter from the Chief
Executive of the Trust to the Mayor dated 14th April. Far from being
misleading, the Respondent asserts they demonstrate that no proposal has yet
been formulated. In my judgment, the evidence of Dr Morgan and Julia Neville
is far more revealing. At paragraph 11 Dr Morgan says that the Trust had
identified the community hospitals as the best option for saving. This was no
accident in drafting as the affidavit of Julia Neville reveals. She refers to
that proposal as the only practical solution, amongst other things. She also
speaks of a discussion as to the proposal on 14th and 29th April.
It is true that the proposal had not been considered by the Board, but that
does not mean that it was not under consideration by the Health Authority. The
trigger to Regulation 18(1) is not confined to decisions as to solutions by the
Board of the Health Authority. The proposal was, after all, sufficiently under
consideration to permit a discussion with the Mayor and concerned GPs on 14th
and 29th April.
In those circumstances, I conclude that a proposal for substantial
variation was under consideration and the duty to consult arose by mid-April
1997. I do not think that on 9th April the Chief Executive, in her letter to
the MP, or on 14th April, Julia Neville, in her letter to the Mayor, had any
intention to mislead, although the letter of 14th April which said that no
discussion was taking place may have been born out of an attempt to dispel or
disquiet or calm the ripples which were referred to at the meeting of 25th
April. Rather, those letters reveal a confusion between a proposal at a
formative stage, such as will trigger the duty to consult, with a final
solution. Hence, Dr Morgan refers to a definitive view and the development of
firm proposals. The Health Authority was clearly under the impression that no
duty to consult arose until a decision had been made by the Health Authority,
in agreement, if possible, with the Trust. Thus, the meeting on 13th May
recorded that the Health Authority and Trust will agree which hospitals will
close under emergency procedures. That wording suggests a decision and not a
proposal at a formative stage. There is no reference before then to the need
to consult or to dispense with consultation.
A Community Health Council in a paper dated 16th July 1997 suggested that
six weeks would be sufficient time for appropriate consultation. The
Applicants' contend that since there was time for consultation with the
Community Health Council once the duty arose in mid-April 1997, the decision to
proceed without consultation by reason of the urgent need to make savings is
unlawful and cannot stand.
There can be little doubt that by June 1997 the need to make savings
required to attempt to comply with the obligations to balance the books, under
section 97A of the 1977 Act, was urgent. Earlier estimates of deficit had been
too optimistic. By 7th May the deficit was expected to be £2.2 million.
Whatever the reason for the passage of time between February and June, the
Respondent says matters had become so urgent by June that it cannot be said
that the decision to dispense with consultation under Regulation 18(3) was
irrational. For it is that ground alone, which, it is said, could justify a
review of a decision under Regulation 18(3), absent any suggestion of bad
faith. The Respondent relies upon
v Tunbridge Wells Health Authority, ex parte Goodridge
The Times, 21st May 1988. In that case there was no evidence to suggest that
there had been a decision to close without consultation or that the closure was
Mr Engelman, on behalf of the Respondent, suggests that once it is clear
that the need to make savings by temporary closure was urgent, it follows that
the decision to dispense with consultation cannot be impugned as irrational and
cannot, therefore, be reviewed. He relied upon
v Richmond, Twickenham & Roehampton Health Authority, ex parte London
Borough of Richmond
(unreported) 20th February 1994, a decision by Mann J. In that case no formal
decision had been made under Regulation 18(3), but the need for closure was
described as urgent. No argument appears to have been advanced suggesting
that it was the Health Authority's own fault for allowing matters to become
urgent. Nevertheless, Mr Engelman suggests that it could have been advanced,
and contends that absent bad faith, if the need is urgent, the decision cannot
be challenged even if the Health Authority might have acted earlier at a time
when consultation would have been possible.
Mr Richard Gordon QC, on the other hand, relies on
v North West Regional Health Authority, ex parte Daniels
COD 44, of which I also have an unreported transcript. In that case, Kennedy LJ
said of the failure to consult:
In that case, however, no relief was given because the hospital had already
closed. In this case, the Respondent did not merely allow the matter to drift
in the sense of doing nothing. The negotiations, in order to reach a final
solution, as I have found, continued.
I do not think that the authorities assist. Greater help is to be found in
the scheme of the Regulation. Regulation 18, read as a whole, is designed to
ensure that consultation does take place with a Community Health Council once a
proposal of the nature it describes is under consideration. It then derogates
from that provision, where a decision has to be taken without allowing time for
consultation. Regulation 18, in certain cases, permits the Secretary of State
to require further time for consultation; it is clearly aimed at achieving
sufficient time for proper consultation. It would seriously undermine the
purpose of the Regulation if a Health Authority could allow time to pass to the
point where matters were so urgent that there was no time left for
consultation. It would permit a Health Authority, taking the view that there
was only one practicable solution, to pre-empt the result of proper consultation.
It may not be fair to characterised those statements as explanations for
the failure to consult, but if the Respondent was correct, a belief that
consultation was pointless or would merely provoke anxiety might lead a Health
Authority to delay announcing a decision until it was too late to consult.
Regulation 18 would thus be rendered ineffective.
In my judgment, the Health Authority erred in law in failing to appreciate
the proposal temporarily to close Lynton and Winsford Hospitals was a proposal
within the meaning of Regulation 18(1) such as to trigger the duty to consult
in April 1997. That error taints its decision of 4th June 1997 to dispense
with consultation and, subject to the issue of discretion, cannot stand.
In the light of that conclusion, it is unnecessary to consider the question
raised in relation to the decision to alter out-patients services which
followed the decision in relation to in-patient services.
It is clear that the earlier the savings can be made the greater those
savings. Nearly half the financial year has passed. Unless the hospitals are
closed, it was said, the necessary savings cannot be achieved. I was told,
although I could find no evidence of this, that if I grant relief it will not
be possible to use the temporary closure of the hospitals as a means of making
savings at all. I accept that to grant relief now will make the task of the
finding the necessary savings far more difficult. But I do not accept that the
evidence shows that it would be impossible. I appreciate that such savings may
have to be made out of other valuable services. It has been suggested that
waiting lists will be increased. Even though the task is harder, in my view
the importance of the duty to consult is such that I do not think the greater
burden of the task facing the Health Authority, caused by its own error in
law, justifies the refusal of relief. After all, a conscientious process of
consultation with an informed Community Health Council, and, not with the
public at large, and which should not be confined to mere protestations of
opposition, may produce alternative means of saving the £215,000 which it
was hoped to achieve by the end of the financial year.
Secondly, it is contended that since it was known in September 1996 that
the hospital might be closed, there has been ample opportunity for those who
oppose the decision to make their views known. This they have done. Those
views been taken into account. It is said that nothing further has been said
or could be said which could cause a fresh decision to be taken.
There are cases, of which Mr Engelman has helpfully provided me with
examples, where proposals have been well known in advance and where it can be
said that, despite the absence of a formal consultation process, all possible
suggestions have already been advanced or that the decision is so obvious that
there is no reason to think further opportunity of a consultation would make
In this case the opposition has been vociferous and forthright. Its
substance has, in a number of respects, been set out in the evidence of the
Reverend Ringer and Dr Ferrar. But the mere fact that the grounds of
opposition are already known or that it is well understood that the opposition
is widespread and deeply felt does not mean that there is no room for a
process of consultation whereby not just opposition but also the offer of
alternative solutions is advanced. Julia Neville thinks that consultation
provides no fruitful solution. That is undoubtedly correct, if that
consultation merely consists of rejection of an existing proposal. But proper
consultation should be far more positive and, as contemplated by the
Regulation, may provide alternative solutions.
I reject the suggestion that opportunity has already properly been given to
advance alternative solutions to a Health Authority prepared to listen, as I am
sure this Health Authority will. I decline to follow the path down which the
Respondent beckons me. I prefer the warning of Megarry J. I shall not, in the
exercise of my discretion, refuse relief. I shall discuss the form of that
relief with counsel.
I well understand the frustration that the Respondent must feel, faced, as
it is, with its duty to make savings which are bound to disappoint and cause
grave dissatisfaction amongst some section or other of its patients. A period
of consultation of six weeks may only confirm the Authority in its original
view, although it may reveal the opportunity for savings from other sources.
Although the Authority's only satisfaction may be that it has reached a
decision after consultation in accordance with the Regulation, at least such a
process will have inspired the confidence in its decision which that Regulation
is designed to produce.
GORDON QC: In terms of relief that it is strictly those, the answer is probably
no, but declaration (2) does provide in concise form what your Lordship has
said. It is obviously, therefore, potentially useful.
GORDON QC: My Lord, it does obtain declarations, provided that the case is
sufficiently convoluted in principles established as to justify. It is a
question whether your Lordship thinks that that declaration meets the substance
JUSTICE MOSES: I agree with you at the moment about 1(2). Do you say they need
anything more? The position is that, subject to appeals and so on, nothing
will happen until the consultation takes place, and that is really all that you
need. I mean, there could be no disobedience.
JUSTICE MOSES: I will give leave to move in relation to Winsford for reasons
that I have already given in my judgment, because one follows the other. You
have an application for leave to appeal?
JUSTICE MOSES: It would be madness -- it would have to go to the Court of
Appeal as a matter of urgency and ask for leave. I am going to give leave
unless you want to strongly persuade me otherwise.