CO/3345/2004 
Neutral Citation Number: [2005] EWHC 2025 (Admin)
IN THE HIGH COURT OF JUSTICE 
QUEEN'S BENCH DIVISION  
ADMINISTRATIVE COURT 
Royal Courts of Justice 
Strand
London WC2 

Friday, 4th March 2005
 
B E F O R E:

MR NICHOLAS BLAKE QC
(sitting as a deputy judge of the High Court) 

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THE QUEEN ON THE APPLICATION OF BOOTS THE CHEMIST
Claimant

-v- 

THE FAMILY HEALTH SERVICES APPEAL AUTHORITY
Defendant 
and

LLOYDS PHARMACY LIMITED
Interested Party 
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(Computer-Aided Transcript of the Palantype Notes of 
Smith Bernal Wordwave Limited
190 Fleet Street  London EC4A 2AG
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MISS B LANG QC (instructed by Boots Group Plc, Legal Services, Nottingham NG90 1BS) appeared on behalf of the Claimant
MR C SHELDON (instructed by Messrs Beachcroft Wansbroughs, Leeds LS1 2LW) appeared on behalf of the Defendant
MR IAN ROGERS (instructed by Messrs Charles Russell, London EC4A 1RS) appeared on behalf of the Interested Party
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J U D G M E N T 

1.	THE DEPUTY JUDGE:  This is an application for judicial review of a decision of the Family Health Services Appeal Authority ("FHSAA") taken on 22nd April 2004.  Permission for judicial review was granted by Ouseley J.  On 23rd September 2004 he concluded the point was just about arguable, having regard to a letter of 12th January 2004, to which I will refer in due course.
2.	The FHSAA is the delegated appeal authority to determine appeals from decisions made by the Primary Care Trust ("PCT") under the National Health Service (Pharmaceutical Services) Regulations (SI 1992/662).  Those regulations were themselves made under the National Health Services Act 1977.
3.	Regulation 4(2) enables the PCT to determine applications from pharmacists to move location.  Regulation 4(2(b)(i) deals with a change of premises from which the pharmacist provides pharmaceutical services to other premises within that locality from which he wishes to provide the same or different pharmaceutical services.  He shall apply to the PCT in the form set out in the Schedule.
4.	Regulation 4(4) says:
"An application ... shall be granted by the health authority or the Primary Care Trust only if it is satisfied that it is necessary or desirable to grant the application in order to secure, in the neighbourhood in which the premises from which the applicant intends to provide the services are located, the adequate provision, by persons included in the list, of the services, or some of the services, specified in the application."
5.	From that rather tortuous regulation, the issues can be reduced to a somewhat simple form.
6.	A new health centre is to be built in Biggleswade, outside the centre of the town.  Two existing providers of pharmaceutical service are anxious to locate to the new health centre in order to provide their services when the health centre is built and up and running.  Both are well-known names: Boots the Chemist Ltd, the claimant, and Lloyds Pharmacy Ltd, who appears before me as an interested party.
7.	When the relevant bodies examined applications made, they found there was nothing to chose between the two in terms of provision of pharmaceutical services and, equally, it is common ground that only one application for transfer to the new health centre was to be approved.  The question for the PCT, at first instance, and the FHSAA, at second instance, was therefore: who's application should be approved?
8.	Where there are competing applications from persons who are otherwise in an equal or similar position, guidance has been provided by the Department of Health in a document issued in March 1992, entitled "Pharmaceutical Services - Revised Arrangements for Considering Applications to Dispense".  There is a rather intimidating annex number that I will not read out unless it is necessary.
9.	Paragraph 76 of that guidance is in the following terms:
"Where several applications are received for the same or similar locations or where there is a substantial measure of overlap in the population which would be served by the several applications, the applications should be considered in the order in which they are received only if there are no other deciding factors.  Care should be taken that procedures do not encourage 'blocking' applications.  The range of services offered should be considered and, for example, if it is clear that one applicant is in possession or control of the relevant premises or likely to gain such control, approval should not normally be granted to one of the other applicants simply because his application was received at an earlier time."
10.	I understand that that guidance is non-statutory, in the sense there is no statutory duty to have regard to it, but it clearly forms relevant guidance which in the normal course of events should be taken into account.  If a radically different approach is to be adopted, one would have expected to know why.
11.	Against that background, I then deal briefly with the factual foundation for the submissions made to me today.
12.	On 13th May 2003 Lloyds, the interested party, sent their application to the health authority for permission to transfer.  That was noted as being received on 16th May.  On 28th May the health authority circulated Lloyds' application for consultation.
13.	On 4th June 2003 Boots completed their application.  Part of that application was in the form of a covering letter that had been dated May, but the substance of the application form that was required to be submitted was signed on the 4th June.  That was received by the health trust on 5th June.  It seems they were asked to resubmit it in the same form, but on a different standard application form on the 6th which was done by fax.  As far as I am aware, the application on 4th June met the statutory requirements and so I will treat that application as effective.  In any event, it makes no difference as between the 4th and the 6th.
14.	On 9th June Boots' application was sent out from consultation.
15.	On 23rd June 2003 Lloyds submitted there were no other deciding factors to indicate that an approach other than that the application first made should be considered first and should be adopted.
16.	On 15th August the claimant, Boots, sent in comments that were received by the health authority on 18th August to the effect that both Boots and Lloyds were in dialogue with the developers and no deal was struck, but the matter will be updated.
17.	On 23rd September 2003 a letter that forms the central part of this application was sent by the developers of the new health centre, who were called Matrix Medical, to Boots.  Copies were sent to the Pharmaceutical Contracts Manager of the PCT.  This letter states in terms that the health centre considered Boots' offer for the premises was:
"... financially more competitive and will significantly assist the financial viability of the project.  We can also confirm our formal acceptance of your offer and re-affirm our wish to proceed with your Company subject to legal agreements and, of course, PCT approval.
Regarding the legal aspects of the new development we can confirm that we will be instructing our solicitors to produce the necessary 'Agreement to Lease' and Lease and will now forward these to your company's solicitors, Messrs Shoosmiths.
...
We trust this letter is sufficient for your requirements and wish you every success at the appeal hearing."
There was an intervening paragraph dealing with services which they were not competent to comment on.
18.	That letter having been received by the PCT, it was decided, for reasons which they sent out in another letter to all the parties, to hold an oral hearing, I understand exceptionally from the normal practice.
19.	That oral hearing was scheduled for 16th January 2004.  There is before the court a detailed note of that hearing.  The determining panel consisted of three people.  There were three other people from the Bedfordshire Heartlands Trust and in attendance two representatives from Lloyds, a Mr Tassi from Boots, and other people whose presence does not materially affect this application.  The note of the hearing indicates that a Mr Dhavliwal, on behalf of Lloyds, made a presentation, stating that:
"... Lloyds Pharmacy had been having discussions with the developers, Matrix Medical, but that these were in the early stages.  Lloyds have also dealt with Matrix Medical in the past."
He goes on to deal with services that will be provided, and I do not think anything else that affects the point.
20.	Boots the Chemist then made their presentation.  The person presenting their case was a Mr Tassi, the NHS Contracts Manager, who presented the services on offer from Boots.  In the course of that presentation, he produced a letter from the developers, confirming that Boots have contractual control of the premises subject to securing PCT permission to relocate to the new site.  He did also point out that he was conducting the presentation at the last minute because his colleague was unable to attend, and he was uncertain of certain issues being discussed.  It is common ground that the letter to which Mr Tassi referred was the letter previously quoted in this judgment of 23rd September 2003.
21.	Having heard those oral presentations, the Pharmacy Panel considered the information gathered from the oral hearing and decided that there was little difference in the services being offered by each applicant.  The application, therefore, should be granted to Lloyds Pharmacy on the grounds that their application was the first to be received.
22.	Boots were aggrieved by that decision and exercised their right of appeal to the defendant, the FHSAA.  The appeal was lodged on 10th February 2004, though there was a typographical error making it look as if it was lodged in January.  The penultimate paragraph of that letter says:
"We appeal on the grounds that the first application is only applicable if the applications are the same.  In this instance they are not as Boots the Chemist will have control of [the] premises and Lloyds will not."
That contention was the essential issue in the appeal.
23.	What then happened was that on 11th February the appeal body administrator wrote to Boots (I presume there may be another letter of a similar form to Lloyds) saying:
"... I shall obtain the appropriate information from the Primary Care Trust to enable your appeal to be circulated in accordance with the Regulations; after which I will contact you again.  This assumes, of course, that your appeal is not summarily dismissed.
You will be aware that an oral hearing may be needed before an appeal is determined.  In considering whether to hold a hearing, the Pharmacy Committee will take into account any request received."
A second letter was submitted on the same day, but I do not think that adds to the picture.
24.	On 2nd March 2004 the Appeal Administrator wrote to Boots.  The second paragraph of that letter says:
"The Authority is now circulating a copy of your appeal in accordance with Regulation 8 of the NHS (Pharmaceutical Services) Regulations 1992.  If you have any further comments or evidence in support of your appeal, these should be submitted to the Authority within 30 days of the date of this letter, (i.e. by 1st April 2004).  You may wish to comment on why you believe your application should be granted over that of Lloyds Pharmacy."
25.	It seems in response to that letter Boots replied on 16th March 2004.  The last paragraph of that letter says:
"You do request that we make comments as to why we believe our application should be granted over that of Lloyds Pharmacy's application and this is purely down to the fact that Boots the Chemists are finalising the Agreement for Lease and [the new Lease] with the developers for the pharmacy unit at the proposed Health Centre and therefore will have control of premises."
26.	That proposition was contested by Lloyds, who responded to the Appeal Administrator on 29th March 2004 and makes specific comments upon the 23rd September 2003 letter that was presented by Boots to the PCT at the oral hearing, and strongly contended against the proposition that Boots will have control of the premises and Lloyds will not.  They said:
"In reality, therefore, we do not believe that Boots are any closer to securing the property that is the subject of these applications than Lloyds Pharmacy are.  Although Matrix Medical state that they have formally accepted Boots' offer this is subject to approval by the relevant body (now the Appeal Authority) of their relocation application.  If the Appeal Authority uphold the PCT's decision then Matrix Medical will deal with Lloyds Pharmacy.  In this respect we contend that negotiations by either contractor have not reached a position whereby one applicant has secured a confirmed position over the other."
27.	Those comments were circulated to Boots on 5th April 2004.  It was pointed out that the appeals would be considered by the FHSAA no earlier than ten days from the date of that letter and inviting any comments about whether they wanted an oral hearing or matters of that sort.
28.	It is common ground that Boots did not request an oral hearing, did not put any further material before the appeal body and did not respond to Lloyds' contention that Matrix Medical would deal with them if the appeal were dismissed.  Whether Lloyds' contention was correct as a matter of fact of course is not an issue before this court today.  It was simply a matter for the appeal body to determine in the light of the material before them and representations made.  In the event, there was no oral hearing, so the matter was dealt with entirely on the papers and on those representations.
29.	The decision, as indicated at the outset of this judgment, was given on 22nd April.  Very full reasons are set out in that decision.  That is signed by the appeals administrator on behalf of the appellate committee.  I believe the appellate committee consists of three persons.  The chair of that committee was Mr Burns.
30.	It is not necessary to recite at length that 9-page document.  It sets out the history of the applications.  It sets out the decision of the PCT.  It sets out Boots' basis of appeal, as previously I have read.  It sets out representations made subsequently from Boots at paragraph 4.2 and from Lloyds at paragraph 4.3.  At paragraph 5.16:
"The Committee noted that the only reason advanced for preferring the second applicant was in relation to the control of the proposed premises.  Boots The Chemists stated that it has been finalising lease arrangements, and the Committee carefully considered the letter sent to Boots The Chemists by Matrix Medical.  However, the Committee was of the view that any agreement disclosed in that letter for Boots the Chemists to obtain control of the premises was on the condition that Boots the Chemists is granted the necessary permission from the PCT (a responsibility now transferred to the Appeal Authority in this case).  However, the Committee did not feel that this agreement in itself is evidence that Boots the Chemists has reached a position whereby it has secured a confirmed position over Lloyds Pharmacy."
They therefore dismissed the appeal.
31.	The reference to confirmed position in that paragraph of the decision letter was a reference to Lloyds' submission that Boots had not achieved such a position because Matrix Medical will deal with Lloyds Pharmacy. "Ms. lang for the Claimant challenges this decision on the basis of a failure to have regard to the guidance properly construed/or reaching an irrational decision in the light of that guidance" 
32.	In my judgment, if it was open to the appellate committee to reach the conclusion that they were not satisfied that Boots will have control of the premises (the proposition advanced by Boots), then they have dealt fairly with the rival contentions and have considered and applied the guidance that I quoted earlier in this judgment for determining how cases should be dealt with when there are rival submissions. "I very much doubt that Boot's prospects would have been improved if they had based their appeal on the precise words of the guidance "likely to gain such control". 
33.	In my judgment, the authority is not required to make hypothetical assessments of submissions which are not advanced to them.  They are required to deal with the substance of the submissions, and on the evidence they were perfectly entitled to conclude that Lloyds' contention that it had not been excluded from the opportunity of negotiation with Matrix was made out.  If the committee were entitled to conclude that Matrix Medical would deal with Lloyds in the event of the appeal being dismissed, then the strong position contended for by Boots that they will have control of the premises could not be made out.  It would have been perfectly open to Boots, at any time from September 2003 until the determination of this appeal in April 2004, to have put in further material demonstrating that Matrix Medical would not deal with Lloyds and there was now only one person with whom they would be prepared to deal and that was Boots.  That, of course, was never done.  It was entirely a matter for Boots what evidence they wish to put in this appeal.
34.	But no such evidence having been presented, in my judgment the committee did not err in their conclusion of fact, and neither did they err in failing to have regard or properly apply the guidance note.  It is plain that Boots were not in possession of the premises.  Their best case was that they were the preferred bidder and therefore, perhaps, were more likely to be in possession of the premises.  But unless Lloyds could realistically be excluded as a rival candidate, it was open to the committee to reject Boots' submission that they will have control of the premises and there is nothing contrary to the guidance in that conclusion of fact.
35.	That conclusion on the principal ground that was canvassed in the application for judicial review, lodged on 12th July 2004, would normally be sufficient to dispose of the whole application.  But matters have taken a turn since the application was issued and the acknowledgement of service was served on 2nd August 2004.
36.	In that acknowledgement of service, the FHSAA put in a witness statement from the chairman of the committee, Mr Burns, and giving, or purporting to give, reasons for the committee's decision.  In the light of the very full reasons that the committee had given the wisdom of so doing might perhaps be open to doubt.  But Miss Lang, seizes upon some paragraphs of that witness statement and some comment upon it in the acknowledgement of service to suggest that an essential reason for rejection of Boots' submission was that the September 2003 letter was rather old.
37.	In the judicial review application lodged in July, another letter from Matrix Medical appeared.  This is a letter dated 12th January 2004.  That letter is addressed to the PCT with copies to Boots.  It is a brief letter referring back to the 23rd September 2003 letter, and it refers to an understanding of an oral hearing scheduled on Friday 16th January, and simply says:
"We can accordingly confirm that the contents of our previous letter still apply and that Boots retain contractual control of the premises."
In fact, as is obvious, that letter does not do much more than to say that the status quo as in September remains in place. 
38.	Since I do not think anybody was contending at the oral hearing that it did not, in my judgment it would and should have added nothing to the factual position that was before the PCT and, equally, the factual position that was before the appellate authority. 
39.	However, Mr Burns' witness statement goes on to make reference to that letter, notes that it was not before the appellate authority, and if it had been it would have given due consideration and states:
"It would have added greater weight to the Claimant's application but I do not believe that it would have ensured their success."
He goes on to explain why.
40.	Again, the claimant seizes upon that to suggest that there has been some unfairness, in that a relevant consideration to the committee's decision was based upon a misunderstanding of what evidence was available and that misunderstanding is such that there has been unfairness, the fault of no one so the claimant contends, and the decision should be quashed on that basis.
41.	When the application was outlined this morning, the factual position was examined in some detail.  It appears that Boots put in the judicial review bundle its copy of the January letter from Matrix.  A file copy indicates that there is a receipt stamp on 15th January.  Equally, there was no information in the original bundle as to whether the PCT ever received that letter, and if so when.
42.	Subsequent information has come to light in the form of a supplementary witness statement (that all sides refer me to without objection) from Mr Burns dated 2nd March, which deposes to a conversation he had had with the PCT to the effect that the letter was received after 16th January, and therefore was not taken into consideration in the oral hearing and deliberations following on that date.
43.	Accordingly, although the PCT did send to the FHSAA a number of documents which are dealt with in a schedule which the defendant's solicitors have provided, they did not send, it seems, the September 2003 letter or, indeed, the letter of 12th January 2004.  The September letter, however, was expressly sought, asked for and communicated in the preparations for the appeal by the defendant.
44.	In the judicial review application no point was taken that Boots were relying upon the 12th January letter, either before the PCT in the 16th January hearing or in the written submissions to the appeal body.  The extracts already cited in this judgment shows that there was scrupulous care given to ensure that all relevant information could be provided to the appeal committee by either body.  Ample opportunity was given to Boots to present its case and to comment upon Lloyds' case, or to ask for an oral hearing, and it made no further written submissions on Lloyds' contentions and did not give any weight or stress to a letter of 12th January 2004.
45.	It seems indeed that Mr Tassi, Boots' representative on the day, was himself unaware of the letter from Matrix Medical, although it had been received by Boots on the 15th.  It had not been passed on to him by administrative oversight, the court was informed, and when he referred to a letter from Matrix Medical it was the September and not the June letter to which he referred.
46.	In my judgment, there is simply no foundation that Boots have been the victims of unfairness by reason of the fact that neither the PCT had the letter before them when they made their decision on 16th January or that the FHSAA did not have the letter before them when they decided the case in April.  There is some reference in the correspondence after lodgment of these proceedings to an understanding that the PCT would pass all documents that it had received on to the appeal body, the defendant, but there is no statutory duty to do so.  In my judgment, there is no evidence before the court that could found an expectation that they could do so that would have made it reasonable for Boots to have relied upon that supposed transfer.  Boots had every opportunity to put the letter in themselves, if they thought it significant.  They were either, I infer, unaware of it or they did not consider it to be of particular significance to the application.
47.	For reasons I have already given, I would tend to agree that the letter on its face is not particularly significant.  It simply confirms the status quo.  On any view, it does not form the basis of a distinct claim for judicial review based upon unfairness.  The learning in this area has now been summarised in the case of E v Secretary of State for the Home Department [2004] QB 1044.  In the judgment of Carnwath LJ, between paragraphs 63 and 66, the principles are summarised.  One of those principles is that:
"... the appellant (or his advisers) must not been have been responsible for the mistake.  Fourthly, the mistake must have played a material (not necessarily decisive) part in the tribunal's reasoning."
Those were propositions 3 and 4 cited at paragraph 66 of the E case.
48.	In my judgment, the omission of the January letter could not have formed a material part of the reasons given by the appeal body for its decision in April, and there was some responsibility on Boots to have placed the letter before the appeal body if Boots considered it significant.
49.	Therefore, it cannot be said that Boots have not had a fair opportunity to present their case, deal with Lloyds' case and seek to establish a reason within the meaning of paragraph 76 of the guidance as to why the other normal course where applications are equally, namely that the first received will be approved, should not apply.
50.	In my judgment, for reasons cited in the authorities that deal with this area, this is a matter of fact for the relevant statutory authorities using their experience of these issues.  They have used their experience and applied their minds fairly to the material and the rival contentions before them, and there can be no ground of error of law or unfairness sustained against the appeal committee's decision.
51.	I therefore dismiss this application. 
52.	MR SHELDON:  My Lord, thank you.  May I make an application for costs on behalf of the defendant.  I think schedules for summary assessment have been provided, I hope they have been provided to the court.  They have been provided to the claimant.  I can hand one up if it has not come before the court.
53.	THE DEPUTY JUDGE:  If I have to do anything about it, I have not seen it yet. 
54.	MISS LANG:  I do not oppose the application or the amount in the schedule.
55.	THE DEPUTY JUDGE:  Thank you very much. 
56.	MR ROGERS:  My Lord, you have not heard very much from me today, but as the interested party we are also entitled to ask that there be a costs order made. 
57.	THE DEPUTY JUDGE:  You are entitled to ask, but not to receive. 
58.	MR ROGERS:  I would have to accept that the starting point, my Lord, is that the claimant should not ordinarily have to pay two sets of costs.  Essentially, I would have to show that there was some additional issue which the interested party had to raise.  It may be that I would have to moderate my submission by saying I would only ask for a percentage of costs to reflect the additional issue.
59.	I would say this.  My Lord, obviously there was one issue which as my learned friend, Mr Sheldon, said he was not ad idem with me on, because essentially he could not take the point about the admissibility and/or weight of Mr Burns' statement.  So the interested party had to be here for that.
60.	But also, my Lord, there are various points in my skeleton which the defendant as an appeal authority could not take, for example the point that the claimant was essentially making an opportunistic submission.  Now obviously as the appeal authority he could not take that point.  That is just by way of example.
61.	So, my Lord, I do have to accept the starting point, that I have to show some additional issue to ask for my costs.  But if you were minded to accept a moderated submission, I would submit that 25% of the interested party's costs should be recoverable.
62.	THE DEPUTY JUDGE:  Yes. 
63.	MISS LANG:  I oppose that.
64.	THE DEPUTY JUDGE:  I do not need to hear from you on that.
65.	No, I think the normal course will follow, but of course I am grateful for your assistance by way of skeleton argument. 
66.	MR ROGERS:  Very well, my Lord.
67.	THE DEPUTY JUDGE:  I therefore dismiss this application.  The claimant is to pay the defendant's costs in the amount in the summary assessment.  Is that sufficient, to make the order in those terms?
68.	MISS LANG:  I think it is usual for a figure to be specified.  It seems to be £10,018.99.
69.	THE DEPUTY JUDGE:  Is it? 
70.	MISS LANG:  Is that right? 
71.	THE DEPUTY JUDGE:  Has someone added it up, have they? 
72.	MISS LANG:  There is grand total on page 2.  Mr Sheldon will know, because it is his schedule.
73.	THE DEPUTY JUDGE:  My grand total says £9,454. 
74.	MR SHELDON:  My Lord, I have handed up the wrong copy apparently.
75.	THE DEPUTY JUDGE:  You were wise to make the judge spell out a figure Miss Lang, but....
76.	MISS LANG:  Unfortunately I have said a higher figure than Mr Sheldon has put forward.
77.	MR SHELDON:  My Lord, I can only apologise.  This is the final version.
78.	THE DEPUTY JUDGE:  Thank you.  Yes.  So I will start again.
79.	I make an order that the application be dismissed with costs.  Costs are assessed by agreement in the grand total of £10,018.99 -- 
80.	MISS LANG:  Very well.
81.	THE DEPUTY JUDGE:  -- including VAT.
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