England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT IN WALES

		The Civil Justice Centre, Cardiff
		31/07/2017

The Honourable Mr Justice Lewis:

INTRODUCTION

1. This is a claim for judicial review of a decision dated 18 August 2016 of the Welsh Ministers allowing appeals by the interested parties against decisions of the Cwm Taf University Health Board ("the Board"). The Board had considered applications from the Co-operative Pharmacy ("the Co-operative"), whose pharmacies are now owned, or operated, by the claimant, Boots UK Ltd. ("Boots"), and Dowlais Pharmacy Limited ("Dowlais"), all of whom wished to provide pharmaceutical services from premises at the Keir Hardie Health Park ("the Health Park") in Merthyr Tydfil. The applications by the Co-operative and Boots involved the relocation of pharmacies from existing premises in the town centre of Merthyr. The application by Dowlais involved the inclusion of Dowlais on the pharmaceutical list for the purposes of providing pharmaceutical services from new premises in the Health Park. The Board had granted the Co-operative's application and refused the applications of Dowlais and Boots.
2. The Welsh Ministers allowed appeals against the Board's decisions and granted the application by Dowlais and refused the applications by the Co-operative and Boots. As a result, Dowlais would be able to operate a pharmacy at the Health Park but the Co-operative (and Boots) could not.
3. In essence, the claimant contends that the Welsh Ministers erred in their approach to the question of whether there was an overprovision of pharmaceutical services in the town centre of Merthyr Tydfil when deciding to grant Dowlais' application for a new pharmacy at the Health Park rather than permitting the Co-operative to relocate its existing pharmacy at 18 Newmarket Walk, Merthyr Tydfil, to the Health Park or failed to give any, or any lawful, reason for its conclusion on that matter. Permission to claim judicial review on the three grounds arising from these matters had been granted prior to the hearing. The claimant also sought permission to apply for judicial review on an additional ground, namely that the Welsh Ministers failed to have regard to a factor that they were required to have regard to, that is the additional costs to the National Health Service in Wales of permitting Dowlais to be included in the pharmaceutical list.

THE LEGAL FRAMEWORK

4. Section 1 of the National Health Service (Wales) Act 2006 ("the Act") provides that the Welsh Ministers "must continue the promotion in Wales of a comprehensive health service". Section 80 of the Act requires each Local Health Board in Wales to make arrangements, in accordance with regulations made by the Welsh Ministers, for the provision of sufficient drugs, medicines and appliances.
5. The relevant regulations applicable to these applications are the National Health Service (Pharmaceutical Services) Regulations 1992 ("the Regulations"). Regulation 4 of the Regulations provides for a list of persons (other than doctors and dentists) who provide pharmaceutical services. The list contains the addresses of the premises from which services may be dispensed and the hours and days when the premises are open. The Regulations make provision for applications for the inclusion of persons in the pharmaceutical list, to provide services from additional premises and to relocate premises (see regulation 4(2)(a) and (b) of the Regulations).
6. Regulation 4(4) of the Regulations provides that:

"An application … shall be granted by the Local Health Board 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 services are located, the adequate provision, by persons included in the list, of services specified in the application."

7. Regulation 6(7) of the Regulation permits a Board to consider two or more applications together.
8. Regulation 8 provides for an appeal against a decision of a Board to the Welsh Ministers. Regulation 8(5) requires appeals against the determination of applications which were considered together by the Board to be considered together. The Welsh Ministers may require an oral hearing before determining the appeal: see regulation 8(1) of the Regulations. The Welsh Ministers are required to notify the person in writing of the decision and to provide a statement of the "reasons for the decision and his findings of fact": see regulation 8(16) of the Regulations.

THE FACTS

The Applications

9. The background to the applications was the fact that general practitioners providing general medical services from Hollies Health Centre at Swan Street in the town centre of Merthyr Tydfil were to relocate to the Health Park which lies outside the town centre. That relocation took place in about October or November 2012.
10. In anticipation of that relocation, four applications were made between May and July 2012 seeking either inclusion in the pharmaceutical list with a view to providing pharmaceutical premises in the Health Park or a relocation of an existing pharmacy to the Health Park. The three applications material to this claim are the following:

(1) On 28 May 2012 Dowlais applied for inclusion in the pharmaceutical list to provide pharmaceutical services at the Health Park. This would involve permitting an additional pharmacy in addition to those already on the pharmaceutical list;

(2) On 13 June 2012, the Co-operative applied to the Board for permission to change its premises from 18 Newmarket Walk to the Health Park;

(3) On 27 July 2012, Boots applied to the Board for permission to change its premises from a location on the Cyfartha Retail Park to the Health Park

The Decision and the Appeals.

11. The applications were considered together and, by letters dated 10 October 2012, the Board granted the Co-operative's application but refused those of Boots and Dowlais. The two unsuccessful applicants appealed against the decisions to the Welsh Ministers. The appeals were initially considered and allowed, and the application of Dowlais granted and the others refused, by a decision of the Welsh Ministers dated 12 September 2013. That decision was the subject of a claim for judicial review and the decision was quashed by a consent order made on 5 November 2014.
12. The appeals were reconsidered. The Welsh Ministers required the appeals to be considered at an oral hearing by a panel comprising a legally qualified chairman, a pharmaceutical member and a lay member. The oral hearing took place on 5 May 2015 and the Co-operative was represented at that hearing by a solicitor. It prepared a written skeleton argument for the consideration of the panel. It appears that the Co-operative did not submit material such as evidence about the impact of the move of the Hollies medical practice to the Health Park on its pharmacy at 18 Newmarket Walk. It appears that others did submit information (see paragraph 2 of the report of the panel). In dealing with the appeal by Boots and Dowlais against the decision to grant the Co-operative's application, the solicitor made oral submissions on behalf of the Co-operative and was questioned by others.

The Report of the Panel

13. The panel reported to the Welsh Ministers in October 2015. Its report records the primary position taken by the Co-operative. It contended that there was:

"an overprovision in pharmaceutical services due to the relocation of the general medical services from the Hollies Health Centre, Swan Street to the Health Park. They submitted that granting their change of premises would redistribute pharmaceutical services in line with the medical services and meet the established need for a pharmacy in the neighbourhood under consideration."

14. The panel records the solicitor for the Co-operative as making essentially the same argument orally, namely that granting the Co-operative's application would secure better distribution of pharmacies consistent with the needs of the local population. He referred to the fact that there were two Co-operative pharmacies a few doors apart in the town centre, a Boots pharmacy opposite and a fourth relatively close by. He submitted that the clustering of pharmacies demonstrated a superfluity of pharmacies in the town centre. He contended that the needs of the population could be met by three not four pharmacies in the town centre. He confirmed that he was measuring whether there was overprovision in the town centre by the fact that there was a cluster of pharmacies there and that was more than was needed to meet the needs of the population of Merthyr Tydfil and secondly, that an additional pharmacy (which would be the result of granting the Dowlais application) would represent an additional cost to the taxpayer. He accepted that the additional cost could be met from the existing budget but said that whether that represented a good use of money was another question. See paragraphs 61 to 78 of the report of the panel. The point about the additional costs, with examples given of the additional costs which might be incurred (and which might amount to about £40,000) was also made in the skeleton argument submitted by the solicitor on behalf of the Co-operative.
15. In considering the appeal in relation to the Co-operative, the panel noted that there had been an increase of 620,000 items being prescribed over the last 5 years for the area of the Board as a whole (that is, not simply for the particular neighbourhood in which the Health Park was situated). The panel was not satisfied that there was overprovision at present in the neighbourhood in which the Co-operative pharmacy was situated. In relation to Dowlais' appeal, the panel expressly noted at paragraph 151 of its report that;

"There will be a cost to granting the application by Dowlais Pharmacy and this was a matter that was considered by the panel However, as previously noted, Mr Morgan had given evidence about the significant increase in the demand for pharmaceutical services in Merthyr and the Health Board's locality, and the average figure of 2,300 items per week was said to be 10% more than the average pharmacy in Wales dispenses. There was no evidence before the panel that contradicted Mr Morgan's submissions upon the affordability of the new contract"."

16. The panel concluded that:

"152. Taking into account the Welsh Health Circular's Guidance about adaptation to change in circumstances and local provisions and the effect upon services to patients rather than on the effect upon other contractors, the panel concludes that patients within the neighbourhood and the LHB area are best served by maintaining the existing pharmaceutical provision in the town centre by the Co-Op and Boots and maintaining the LHB contracted pharmacy with Boots within the Cyfarthfa Retail Park. In the panel's judgement the best way to meet the increasing need for pharmaceutical services is by recommending the Dowlais Pharmacy should be awarded the contract to run the pharmacy within the Keir Hardie Health Park.

"153. This is the only one of three appeals before the panel which would not alter or reduce the existing pharmaceutical provisions within the existing and adjoining neighbourhood and would therefore clearly enable the Local Health Board to adapt to the growing need for pharmaceutical services within the Local Health Board area as well as within the specific neighbourhood.

"154. In making this recommendation, the panel do not do so because they consider the Dowlais Pharmacy would be able to equip and run the pharmacy in the Health Park in a more efficient or modern fashion than Boots or Co-Op. We have already made it clear that we consider that all of the applicants would be able to provide such a service.

"155. The panel note that recommending the allowance of the Dowlais Pharmacy appeal would be the only one of the three applications that would not result in a reduction in service provision. If the Co-Op's relocation for its smaller pharmacy was granted, then the additional hours that that pharmacy is open at the weekends within the town centre, would be lost as the pharmacy in the Health Park would not be open at the weekend. We do consider that the admission by Mr Reissner that the smaller Co-Op pharmacy was being kept on in the hope of relocating it and being used to argue against the inclusion of Dowlais Pharmacy upon the list, would in practice, if accepted, have the same effect as allowing a "closed shop" to operate.

"156. Therefore after very careful consideration of all of the oral and written material before us, the panel recommends to the Welsh Ministers that the appeal by Dowlais Pharmacy against the decision of the Cwm Taf Health Board to refuse their application for inclusion in the pharmaceutical list at Keir Hardie Health Park be allowed."

The Decision of the Welsh Ministers

17. The Welsh Ministers decision is set out in paragraph 1 of the decision letter dated 18 August 2016 in the following terms:

"1. The Welsh Ministers concluded that the provision of a pharmacy at the Health Park was not necessary but was desirable in order to secure the adequate provision, by persons included in the pharmaceutical list, of pharmaceutical services in the neighbourhood. The Welsh Ministers considered the Appeals together as provided for under regulation 8(5) of the Regulations. The Welsh Ministers, having determined that it was desirable to grant an application, decided that if the Boots UK Ltd ("Boots") application were granted it would diminish the pharmaceutical services currently provided to those persons resident in Winchfawr, Heolgerrig, Gellideg and Twyncarmel and to the transient population who visit the Retail Park and the loss of the extended hours provision would amount to a diminution of the pharmaceutical services provided across the wider Local Health Board area; they considered these to be relevant factors with regard to this application. They also decided if the application by the Co-operative Pharmacy Ltd ("Co-op") was granted it would diminish the level of services available to the population in the town centre to a level that would have an adverse effect on the population in that neighbourhood and in the wider LHB area. The Welsh Ministers determined that of the applications made by Boots, Co-op and Dowlais Pharmacy Ltd ("Dowlais"), Dowlais was the only application which would not reduce the existing pharmaceutical services provision across the wider LHB area and, in particular, in the Newmarket Walk neighbourhood and in adjoining neighbourhood."

18. The letter then sets out the background to the appeals, referring to the various applications that had been made and the decision of the Board. It referred to the relevant regulations and the provisions of Welsh Health Circular (FP) (92) 7 ("the circular") giving guidance on matters to do with the provision of pharmaceutical services. The letter expressly confirms at paragraph 17 that the Welsh Ministers had considered the report of the oral hearing of the panel and annexed that report as Annex B to the decision letter. Paragraph 27 of the decision letter notes that the Welsh Ministers had considered all correspondence, the oral hearing report and also the submissions and evidence which had been submitted to them and listed those at Annex A to the decision letter. The final list of documents under the hearing "list of additional representations and evidence received at oral hearing and considered by the Welsh Ministers" includes the following "28 April 2015 – Co-operative skeleton argument prepared by Charles Russell Speechlys LLP".
19. The decision letter then set out the reasons for the decisions of the Welsh Ministers on the various issues calling for determination. First, they defined the relevant neighbourhood within which the pharmaceutical services were to be provided, as required by rule 4(2) of the Regulations. That was an area running along the River Taff and bounded by certain defined points. It included the Health Park. All parties accept that the Welsh Ministers correctly identified and described the relevant neighbourhood.
20. Secondly, the Welsh Ministers concluded that it was desirable (but not necessary) to grant an application for the provision of pharmaceutical services at the Health Park in order to secure the adequate provision of services in the neighbourhood. In reaching its conclusion on this issue, the Welsh Ministers noted that the Health Park was open Monday to Friday approximately 08.30 to 18.30. It noted that there had been a significant increase in the number of prescriptions dispensed in the area of the Board as a whole over the last 5 years, i.e. an extra 620,000 items had been dispensed. The Welsh Ministers also noted at paragraph 51 of the decision letter that:

"there is no national or [Board] target for the number of pharmacy premises within a neighbourhood or wider area. Furthermore that local needs and circumstances may change over time and that the pattern of pharmacy provision must adapt to fill these changing patterns. They were aware that between 14,500 and 15,000 patients were registered with doctors at the Health Park, and it was likely that a large proportion of those would be resident outside the neighbourhood of the Health Park in other neighbourhoods within Merthyr Tydfil. This was considered to amount to a significant transient population which would now be visiting the neighbourhood to access general medical services. Whilst it was likely that some of these patients may be able to access pharmaceutical services on their journeys into and out of the application neighbourhood, it was considered that a proportion of these patients were likely to require access to pharmaceutical services from within the application neighbourhood itself. The Welsh Ministers therefore decided that there had been an increase in demand for pharmaceutical services in the neighbourhood occasioned by the provision of general medical services at the Health Park."

21. The Welsh Ministers then considered the different applications that had been made. They dealt with the Boots application. Those premises were located in the Cyfartha Retail Park (outside the town centre). They noted that residents in specified locations, and a significant transient population travelling to the Retail Park to use businesses located there, would utilise the Boots pharmacy. In addition, access to pharmaceutical services would also be reduced if Boots relocated to the Health Park as the Health Park was open 08.30 to 18.30 on Monday to Friday whereas the Boots pharmacy was open on Saturday from 09.00 to 19.00 hours and on Sunday from 11.00 to 17.00 hours. The Welsh Ministers decided not to grant the appeal by Boots and to refuse its application to relocate its pharmacy from the Cyfartha Retail Park to the Health Park by reason of the loss of extended hours and the reduced accessibility to pharmaceutical services: see paragraphs 59 to 65 of the decision letter.
22. In relation to the appeals by Boots and Dowlais against the decision to grant the Co-operative's application to transfer its pharmacy from 18 Newmarket Walk to the Health Park, the Welsh Ministers noted that:

"66. With regard to the appeals by Boots and Dowlais against the decision of the [Board] to grant the application by the Co-Op for a change of premises to Keir Hardie Health Park: the Welsh Ministers are aware that the central argument put forward by the Co-Op in support of their application is that the effect of the relocation of the Hollies Surgery into the Health Park meant there was an overprovision of pharmaceutical services in the adjoining neighbourhood (including the No 18 Newmarket Walk the pharmacy which it was seeking to relocate). The Co-Op argue that granting their application would secure the better distribution of pharmacies and would address the overprovision in the adjoining neighbourhood. As well as the three pharmacies located on Newmarket Walk, Co-Op have drawn attention to the fact that there is a fourth pharmacy located in the town centre (Beacon Pharmacy) which provides pharmaceutical services to the population in the Merthyr area."

23. The Welsh Ministers noted at paragraph 67 of the decision letter that they had:

"considered the effect of the loss of the Co-op pharmacy at 18 Newmarket Walk in the adjoining neighbourhood if Co-Op's application to re-locate those premises to the Health Park were approved. In considering this matter they were, once again, mindful of the evidence that had been presented to the Oral Hearing Panel by Mr Morgan on behalf of Dowlais Pharmacy and the fact that none of the parties at the oral hearing (nor the [Board]) challenged that evidence. That evidence demonstrates an increasing need for pharmaceutical services across the [Board's] area. The Welsh Ministers believe it is reasonable to conclude that a proportion of this increase in need for pharmaceutical services will be for the Merthyr Tydfil area including the neighbourhood served by the Co-op at 18 Newmarket Walk."

24. The Welsh Ministers confirmed that they had given due consideration to the question of whether there was overprovision in the area of the Board as a whole and, in particular, the neighbourhood served by 18 Newmarket Walk. They referred to paragraph 7 of Annex B to the circular which stressed that "it is the effect on services to patients and not the effects on contractors which must be borne in mind".
25. The Welsh Ministers then said:

"74. The Welsh Ministers therefore concluded that, based on the evidence submitted at the Oral Hearing, which shows an increasing need for pharmaceutical services across the [Board's] area, there is not an overprovision of pharmaceutical services in the neighbourhood served by 18 Newmarket Walk and adjoining neighbourhoods. The Welsh Ministers acknowledge that there is a cluster of pharmacies on Newmarket Walk but that this is not unusual as, as submitted at the Oral Hearing by Mr Loughrey on behalf of Boots, pharmacies are often located in town centres because "this is where the population go to". Therefore, to grant the Co-op's application for change of premises to Keir Hardie Health Park would have an adverse effect upon access to pharmaceutical services at Newmarket Walk. In addition granting the application would result in a reduction in the pharmacy opening hours across the [Board's] area as a pharmacy at Keir Hardie Health Park would not be open on the weekends. Welsh Ministers are also mindful that the WHC Guidance requires decision makers to have regard to "the effect on services to patients" when making decisions under the Regulations. Therefore, on the balance of the evidence before them, the Welsh Ministers considered that that the provision of pharmaceutical services to patients in the Newmarket Walk Neighbourhood would be diminished if the Co-op were to relocate its premises at 18 Newmarket Walk to the Health Park. For these reasons the Welsh Ministers uphold the appeals by Boots and Dowlais Pharmacy against the decision of Cwm Taf [Board] to grant the application by the Co-Op pharmacy for a change of premises to the Keir Hardie Health Park.

26. The Welsh Ministers then decided to uphold the appeal by Dowlais against the decision to refuse their application for inclusion in the list of pharmaceutical services to provide services from a location in the Health Park. They considered that:

"… taking into consideration the increasing need for pharmaceutical services across the [Board's] area and number and distribution of pharmacies across the area of Cwm Taf University Health Board, the Welsh Ministers conclude that patients within the neighbourhood of Keir Hardie Health Park, patients within the neighbourhood served by the pharmacies in Newmarket Walk and patients within the wider [Board] area would best be served by maintaining the existing pharmaceutical services provision (by Co-op and Boots and Beacons) in Merthyr town Centre and by Boots within the Cyfartha Retail Park and by granting the application by Dowlais for inclusion in the list at Keir Hardie Health Park.

"79. The Welsh Ministers therefore uphold the appeal by Dowlais against the decision of Cwm Taf University Health Board to refuse the application by Dowlais pharmacy for inclusion in the list at Keir Hardie Health Park."

27. In summary, therefore, the Welsh Ministers;

(1) allowed the appeal by Boots and Dowlais against the decision of the Board to grant the Co-operative's application to transfer its pharmacy from premises at 18 Newmarket Walk, in the town centre of Merthyr, to the Health Park, with the result that it could not transfer its pharmacy;

(2) dismissed the appeal by Boots against the decision of the Board refusing to grant the application by Boots to transfer its premises from the Cyfartha Retail Park to the Health Park; and

(3) allowed the appeal by Dowlais against the decision of the Board refusing its application for inclusion in the pharmaceutical list to provide pharmaceutical services from a location in the Health Park.

THE PLEADINGS AND THE ISSUES

28. The claimant challenges all the decisions taken by the Welsh Ministers. Permission was originally refused on the papers but that refusal was reconsidered and permission was granted on 3 grounds only, namely, that:

(1) The Welsh Ministers misdirected themselves in law regarding the evidence as to the increased need for pharmaceutical services across the Board's area as a whole when considering whether there was an overprovision of pharmaceutical services in the neighbourhood served by the Claimant's existing premises at 18 Newmarket Walk;

(2) The Welsh Ministers took into account an immaterial consideration or reached a finding based on no evidence in respect of its conclusion as to whether there was overprovision of pharmaceutical services in the neighbourhood served by 18 Newmarket Walk; and

(3) The Welsh Ministers failed to provide any, or any lawful reasons for their conclusion that there was no overprovision of pharmaceutical services in the neighbourhood served by 18 Newmarket Walk.

29. For completeness, an additional ground originally included in the claim alleged a breach of the duty imposed by section 149 of the Equality Act 2010 but that claim was not pursued and permission was not granted to argue that ground of challenge.
30. At the oral hearing seeking permission to apply for judicial review, counsel for the claimant raised, for the first time, a claim that there had been a failure to take account of the fact that the grant of the application by Dowlais would involve additional costs as that application was for the inclusion of an additional pharmacy in the pharmaceutical list rather than a transfer of an existing pharmacy. As it is important that claims are properly formulated so that the parties, and the court, know precisely what grounds of challenge are being pursued, the claimant was required to formulate an amended ground to reflect this new challenge. Fairness requires that. The question of whether permission should be granted in relation to that ground could then be considered at the hearing in relation to the other three grounds where permission had already been granted. In the event, the amended grounds include a claim that the decision-maker failed to take account of a consideration that it was required to consider namely that the granting of the Dowlais application would result in an additional cost to the National Health Service and failed to have proper regard to the relevant guidance which required this to be considered as a factor without having good reason to do so.
31. In the light of the amended grounds, written skeleton arguments and oral arguments, the relevant issues in my judgment are:

(1) Did the Welsh Ministers err in their approach to the question of whether there was an overprovision of pharmaceutical services in the neighbourhood including the town centre of Merthyr Tydfil, or act irrationally or on the basis of no evidence and did they fail to give adequate reasons for their conclusion ?

(2) Is it arguable that the Welsh Ministers failed to have regard to the fact that granting the application by Dowlais would incur additional cost and, if so, did the Welsh Ministers act unlawfully and should any remedy be granted?

THE FIRST ISSUE: THE QUESTION OF OVERPROVISION

32. The claimant contends that the effect of the transfer of general practitioners' surgeries to the Health Park would diminish the need for pharmaceutical services in the town centre of Merthyr Tydfil. The claimant contended that the decision-maker needed to consider the decrease in demand for pharmaceutical services in the town centre in assessing whether there was over provision of pharmaceutical services in the town centre. In the claim form, the claimant contended that the decision-maker had erred in approaching this question in a number of ways. First, the claimant says that the decision-maker erred in considering the evidence of an increase in demand for pharmaceutical services across the Board's area as a whole as that was relevant to the question of whether a pharmacy was necessary or desirable in the Health Park but that the question of whether there was over provision in the neighbourhood served by 18 Newmarket Walk was a different issue and required consideration of the position in that area not the position across the area of the Board as a whole. Secondly, it said that the decision-maker had regard to an immaterial consideration, or reached a finding based on no evidence, because it considered the evidence in relation to an increase in pharmaceutical services across the area of the Board as a whole and there was no evidence of overprovision in the neighbourhood served by 18 Newmarket Walk. Thirdly, it says that no adequate reasons were given for the conclusion reached.
33. In its skeleton argument, the claimant puts the points somewhat differently. It says that the panel did not appreciate the growth in demand for pharmaceutical services was only 1.2% per annum. It further says the panel failed to take account of the substantial diminution in demand in the town centre neighbourhood caused by the relocation of GP practices to the Health Park and the future opening of a pharmacy there and also looked only at the current position not the future position or future levels of demand. The claimant contends that these were logical flaws in the panel's reasoning and, as the decision-maker adopted the reasoning of the panel at paragraph 70 of its decision, their decision was similarly flawed.
34. In my judgment, the Welsh Ministers have not made any of the errors alleged. Read fairly, and as a whole, the decision letter is clear. The Welsh Ministers had decided that it was desirable to provide for a pharmacy at the Health Park. The reasons for that was the fact that GP surgeries had relocated there and approximately 14,500 to 15,000 patients (out of the population of Merthyr) had registered there. They knew that a proportion of the demand for pharmaceutical services had switched to the Health Park: see paragraph 51 of the decision.
35. The question then was which of the three applications should be granted: that of Boots or the Co-operative involving the transfer of existing premises from the Cyfartha Retail Park or the town centre respectively, or including Dowlais in the pharmaceutical list and allowing an additional pharmacy to be located at the Health Park?
36. The Welsh Ministers did consider that a proportion of the prescriptions that might have been provided by pharmacies in the town centre would be provided by a pharmacy at the Health Park (hence their conclusion in paragraph 51 that a pharmacy there was desirable). In reaching their judgment on the need for services in the town centre, however, the Welsh Ministers also considered that the evidence demonstrated an increase in the need for pharmaceutical services across the area of the Board as a whole. They considered that it was "reasonable to conclude that a proportion of this increase" will be for the Merthyr Tydfil area including the neighbourhood served by the Co-operative pharmacy. That is a judgment or assessment that the Welsh Ministers were also entitled to make. In the light of all of the factors involved, they were entitled to form a view about the level of need for pharmaceutical services in the town centre, bearing in mind that they judged that it was reasonable to assume that a proportion of the increase seen in the demand for services generally would be for services provided in the town centre.
37. In addition, they were also entitled to consider the effect of the loss of a pharmacy at 18 Newmarket Walk on the services available. The Co-operative would not be able to provide extended opening hours on a weekday beyond 6.30 p.m. in the evening, or provide services on Saturdays (as they currently do from 9 a.m. to 5 p.m.), if they relocated as the Health Park closed at 6.30 p.m. and was closed at weekends. The Welsh Ministers noted that the services provided by the Co-operative on a Saturday would be lost (although they recognised there would still be two remaining pharmacies there).
38. The Welsh Ministers therefore considered that granting the Co-operative's application and allowing them to relocate to the Health Park would have an adverse affect on access to pharmaceutical services in Newmarket Walk and would result in a reduction in pharmacy opening hours. The Welsh Ministers were mindful of the circular and the importance of having regard "to the effect on services to patients". They therefore decided not to grant the Co-operative's application but to grant, instead, the application by Dowlais which did not have an adverse effect on the provision of pharmaceutical services. As the Welsh Ministers noted at paragraph 76 of its decision, the application by Dowlais was "the only application which would not reduce the existing pharmaceutical services provision across the wider [Board] area but, in particular, in the Newmarket Walk neighbourhood and adjoining neighbourhood". That is a rational decision, made on the basis of the evidence available, and reasonable inferences from that evidence, and adequate reasons are given for the conclusion.
39. In terms of the particular grounds of challenge, the Welsh Ministers did not misdirect themselves by reference to the evidence on the increase in demand for pharmaceutical services as alleged at paragraph 42 of the grounds. That matter was relevant to the question of whether it was desirable for there to be a pharmacy at the Health Park. It was also relevant as part of the process of assessing which application should be granted. While a proportion of the demand for pharmaceutical services would transfer to any pharmacy located at the Health Park, given that the GP surgeries were there, the impact of that transfer would be reduced as there was an increase in the demand for services generally and it was reasonable, as the Welsh Ministers judged, to assume that a proportion of the increased demand would be for pharmaceutical services in the town centre. The Welsh Ministers were having to make a judgment on the appropriate arrangements for the provision of pharmaceutical services. There was no misdirection in relation to the evidence of an increase in demand generally.
40. Nor is it correct to say that the approach involved a failure to have regard to an immaterial consideration or that there was no evidence of a demand for the number of pharmacies in Newmarket Walk, or what the level of demand would be once a pharmacy opened at the Health Park. The Welsh Ministers were seeking to form a judgment on the need for pharmaceutical services and the best pattern of distribution of pharmacies. They took the view that there would be a proportion of people going to the Health Park who would wish to access pharmaceutical services. They knew that approximately 14,500 or 15,500 patients had registered with doctors at the Health Park. They also knew that there had been an increase in the number of prescriptions dispensed in the area of the Board generally and took the view, as they were entitled to, that a proportion of that increase would be for services in the town centre. Based on that information, and the judgments they made, the Welsh Ministers considered the best distribution for pharmaceutical services. They did not take into account an immaterial consideration nor did they proceed on the basis of no evidence.
41. Nor is it feasible to suggest that there was some legal flaw because the panel and hence, it is said, the Welsh Ministers, were unaware that the increase represented an annual increase of 1.2%. This is a point made in paragraph 26 of the claimant's skeleton argument but not the grounds. The Welsh Ministers had evidence, which was not challenged and which they accepted, that there had been an increase of 620,000 prescriptions dispensed over the previous five years. There is no flaw because the decision letter expresses those figures in absolute terms rather than choosing to express them in some other way.
42. There was criticism of the fact that the Welsh Ministers referred to there being a cluster of pharmacies on Newmarket Walk as this was the place that the population goes to. It appeared to be submitted in argument that the Welsh Ministers were wrong to infer that the existence of a cluster of pharmacies meant there was a demand for pharmacies. The comments need, however, to be read in context. It was the solicitor for the Co-operative who was arguing before the panel that the existence of four pharmacies clustering together was evidence of overprovision. A representative of Boots suggested to him in questioning that the fact that there was a cluster in a town centre was not of itself evidence of overprovision but rather a reflection of the fact that town centres tend to be the places where the population tend to go. Read in context, the comments of the Welsh Ministers in paragraph 74 of their decision letter are dealing with this argument. They are addressing the point that the fact there is a cluster of pharmacies in a town centre is not evidence of overprovision. If there is a demand for pharmaceutical services, that will manifest itself in the town centre as that is where people go. Hence the real question was whether or not there was overprovision and the judgment of the Welsh Ministers, on the material before it, was that there was not.
43. At one stage in oral argument, Mr Lock Q.C. for the claimant submitted that the panel had regard to the commercial motivation of the claimant. The Welsh Ministers, whose decision is the one under challenge, expressly said at paragraph 75 of the decision letter that they did not take into account any commercial motives that the Co-operative may have. In the light of that paragraph of the decision letter, Mr Lock wisely did not maintain this criticism of the decision.
44. None of the grounds of challenge, nor the additional criticisms made in the skeleton argument or orally, are made out.

THE SECOND ISSUE – FAILURE TO TAKE ACCOUNT OF FINANCIAL CONSIDERATIONS

45. The amended ground contends that the decision maker did not take account of a factor that they were required to consider, namely the additional cost to the National Health Service in Wales of permitting an extra NHS pharmacy to enter the pharmaceutical list. On any reasonable reading of the amended grounds, the claimant is asserting simply a failure to take account of a consideration which it must take into account. It is said that the decision-taker must take that into account, or alternatively, that the relevant circular required the decision-maker to take that factor into account and no reasons were given for departing from that guidance, that is no reasons were given for the alleged failure to take this factor into account. The amended ground does not, on any fair reading, amount to a contention that a decision which took this factor into account but nonetheless granted the Dowlais application (which involved additional cost) would be irrational. Nor do the amended grounds contend that the decision-maker failed to give any reasons in relation to this matter. As I understand it, Mr Lock accepted that he was not alleging that there was any unlawful failure to give reasons. His submission was that, given that he was alleging that there was a failure to take into account a relevant consideration, it would not be logical to allege that there was a failure to give reasons for the way in which the matter was dealt with. It is not easy to follow the logic of that position. It is not unusual, or illogical, to assert that a decision-maker failed to take into account a relevant consideration but, if it did consider it, it has failed to give adequate reasons for the decision in relation to that consideration. Be that as it may, Mr Lock did not wish to amend the grounds to include a reasons challenge in respect of the way in which the Welsh Ministers dealt with this consideration if they took it into account. On that basis, the amended grounds only involve a challenge that any additional costs that would arise from granting the application by Dowlais was a material consideration and the decision-maker failed to have regard to it.
46. In my judgment, the Welsh Ministers were aware of and did consider the arguments put by the claimant that granting the Dowlais application would involve approving an additional pharmacy and that there would be additional costs which might amount to about £40,000. The Welsh Ministers expressly referred to the skeleton argument submitted by the Co-operative's solicitor which made this point and expressly said, in paragraph 27 and Annex A, that they had considered this skeleton argument. Secondly, the report of the panel expressly recorded that there would be a cost to granting the application by the panel in more than one place in its report. At paragraph 61 of its report for example, it recorded the fact that an additional pharmacy would be a further cost to the NHS although it noted that the solicitor for the Co-operative accepted that it was affordable within the existing budget. At paragraph 151 of the report, as part of its reasoning process, the panel expressly recorded that there was a cost to granting the application by Dowlais but that it was affordable. The Welsh Minsters expressly record at paragraph 17 of their decision letter that they had considered the report of the hearing and annexed it to their decision. In the circumstances, therefore, in my judgment, it is clear that the Welsh Ministers were aware of, and considered, the argument put forward by the solicitor for the Co-operative that granting the application by Dowlais would have additional cost implications. For that reason, the amended ground of challenge is not arguable and permission to apply for judicial review will be refused on this ground.
47. I make a number of further observations. First it is not necessary to determine whether or not the additional costs would be a mandatory consideration that the Welsh Ministers would have to have regard to as a matter of law, whether or not the matter was drawn to their attention. It is not necessary to determine whether or not it is implicit in section 1 of the Act that the Welsh Ministers must have regard to additional costs, or whether they are required to do so by the provisions of paragraph 7 of the circular (unless the Welsh Ministers have reasons for departing from the circular). As a matter of fact, the additional costs were drawn to the attention of the decision-maker and the Welsh Ministers did have regard to that matter.
48. Secondly, there would be no basis for saying that this decision would be irrational because the course of action that the Welsh Minsters favoured would involve the use of additional resources whereas a different course of action would not. The fact is that the Welsh Ministers considered that the provision of pharmaceutical services would be diminished if the Co-operative were to relocate its premises from 18 Newmarket Walk and that patients within the neighbourhood served by Newmarket Walk and patients within the area of the Board would best be served by maintaining the existing pharmaceutical services provision and by granting the application by Dowlais for inclusion in the pharmaceutical list to provide services from premises at the Health Park. It would not, in principle, be illogical or irrational for the Welsh Ministers to decide that that was the best means of arranging the provision of pharmaceutical services within the area of the Board notwithstanding that that would involve extra costs being incurred that would have to be funded.
49. Thirdly, I have considered what the position would be if, in fact, there had been a challenge alleging that there was a failure to provide adequate reasons for the conclusion reached. The relevant test would be that in South Bucks v Porter (No. 2) [1994] 1 W.L.R. 1853 at paragraph 36:

"36 The reasons for a decision must be intelligible and they must be adequate. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the "principal important controversial issues", disclosing how any issue of law or fact was resolved. Reasons can be briefly stated, the degree of particularity required depending entirely on the nature of the issues falling for decision. The reasoning must not give rise to a substantial doubt as to whether the decision-maker erred in law, for example by misunderstanding some relevant policy or some other important matter or by failing to reach a rational decision on relevant grounds. But such adverse inference will not readily be drawn. The reasons need refer only to the main issues in the dispute, not to every material consideration. They should enable disappointed developers to assess their prospects of obtaining some alternative development permission, or, as the case may be, their unsuccessful opponents to understand how the policy or approach underlying the grant of permission may impact upon future such applications. Decision letters must be read in a straightforward manner, recognising that they are addressed to parties well aware of the issues involved and the arguments advanced. A reasons challenge will only succeed if the party aggrieved can satisfy the court that he has genuinely been substantially prejudiced by the failure to provide an adequately reasoned decision."

50. The argument relating to additional costs is one that was made by the Co-perative in its written skeleton argument and in oral submissions to the panel, albeit that it was a secondary argument. In principle, I would be minded to take the view that this was an argument raised and brief reasons should have been given. Those reasons could have amounted to no more than a statement that, given the conclusions on the best arrangements for securing pharmaceutical services within the neighbourhood served by Newmarket Walk and the area of the Board generally, the additional costs were ones that should be borne to enable that provision to be made.
51. In the present case, the decision letter does not specifically address the issue of the additional costs. The defendant seeks permission to adduce a witness statement dealing with the matter. The witness statement is made by Karen Eveleigh the person who took the decision under challenge. That statement confirms that Ms Eveleigh had considered the issue of costs. She was content to proceed on the basis that the costs might be up to about £40,000 (although the witness statement explains how such costs arise on inclusion of a pharmacy in the pharmaceutical list and only certain costs are bound to be incurred and other costs may be incurred, depending on the particular circumstances). Ms Eveleigh was content to regard these as a cost to the taxpayer (although the witness statement explains that additional funds would not be provided to meet the additional costs; rather the costs would have to be funded out of the existing budget allocated to the Board; nonetheless, it would mean that money from that budget would be spent in relation to the additional pharmacy and would not available for other health expenditure). However, Ms Eveleigh explains that for the reasons given in the decision letter, she believed that the application of Dowlais should be preferred over that of the Co-operative's and Boots and the additional costs did not alter that view.
52. The claimant objects to that evidence being admitted or the defendant being allowed to rely upon it. They point out that there is a statutory obligation on the Welsh Ministers to give reasons for their decision and they did so in a lengthy decision letter. They relied upon the decision of the Court of Appeal in R (Ermakov) v Westminster City Council [1996] 2 All ER 302 and, in particular, the judgment of Hutchinson L.J. where he indicated that the court ought to be circumspect about gaps in reasoning being filled by later evidence. Hutchinson L.J. indicates that the courts can admit evidence to eludicate or exceptionally correct or add to reasons but should be very cautious about doing so. Such evidence should generally only be admitted for the purpose of "elucidation not fundamental alteration, confirmation not contradiction". He further observed that where reasons in a decision letter were shown to be manifestly flawed, it should only be in very exceptional cases that a remedy should be refused on the strength of reasons adduced in evidence after the commencement of proceedings. In that case, the decision concerned the refusal to provide accommodation. The reasons for refusal in the decision letter stated that the local authority did not accept that the applicant had experienced harassment. The affidavit submitted by the defendant in the legal proceedings, however, indicated that the local authority officer did believe the applicant's account that he and his family had been harassed but considered that, nevertheless, it was reasonable for him and his family to occupy the accommodation. The claimant also relied on the decisions in Nash v Chelsea College of Art and Design [2001] EWHC (Admin) 538, R (Ashworth Hospital Authority) v Ealing, Hammersmith & Hounslow Health Authority [2001] EWHC (Admin) 901, and R (Richards) v Pembrokeshire County Council [2004] EWCA Civ 1000.
53. Had the claimant been seeking permission to challenge the decision on the basis that the defendant had failed to give adequate reasons for its conclusion in relation to the question of additional costs, I would have been minded to admit the statement of Ms Eveleigh and to allow the defendant to rely upon it. This statement does not seek to contradict or give different reasons for the decision. Indeed, the reasons for the decision remain those set out in the decision letter. This statement elucidates that reasoning by confirming that the decision-maker had considered the question of costs (indeed, that is clear, in my judgment from paragraph 17 and 27 of the decision letter and the documents referred to in those paragraphs) and that she considered that the fact that the course of action she preferred carried additional cost did not cause her to favour a different course of action.
54. In those circumstances, I would not have been minded to grant any remedy on the grounds of inadequate reasons. As I would have been minded to refuse a remedy, I would, as a matter of discretion, have refused to grant permission to apply for judicial review. Furthermore, and separately, I would have been minded to refuse permission in accordance with the provisions of section 31(3D) of the Senior Courts Act 1981. That provides that if it appears to the High Court to be highly likely that the outcome would not have been substantially different if the conduct complained of had not occurred, the court must refuse to grant leave. On this hypothesis, the conduct complained of would be the failure to give reasons in accordance with regulation 8(16) of the Regulations in relation to the question of additional costs. The outcome for the claimant would be highly likely to be substantially the same even if reasons addressing the question of additional costs had been given. On the facts of this case, the decision maker had considered the question of the additional costs that would arise if the application by Dowlais were granted. The decision-maker considered that the application should be granted, and the appeal against the decision granting the Co-operative's application should be allowed, as that represented the most appropriate arrangements for securing the provision of pharmaceutical services. That was a rational decision. All that was missing, and which is provided in the witness statement of Ms Eveleigh, is confirmation that that view was not altered notwithstanding the additional costs that that would be involved.
55. In conclusion on this issue, therefore, the only ground raised in the amended ground is that the decision-maker did not take into account the additional costs that would be incurred if the application by Dowlais was granted. It is clear from paragraphs 17 and 27 of the decision letter and the annexes that the Welsh Ministers did take that consideration into account. That ground of challenge is therefore not arguable.
56. No other ground of challenge is made in relation to the question of additional costs. Had the claimant been contending that the decision-maker had failed to give adequate reasons on this issue, I would have been minded to admit, and allow the defendant to rely on, the witness statement of Ms Eveleigh. In the light of that witness statement, I would not have been minded to grant any remedy (even if there had been a failure to give adequate reasons) and I would have refused to grant permission in relation to this ground as a matter of discretion and, in any event, pursuant to the provisions of section 31(3D) of the Senior Courts Act 1981.

CONCLUSION

57. In reaching their decision on the appeals, the Welsh Ministers did properly consider the question of whether there was or would be overprovision of pharmaceutical services in the neighbourhood of Newmarket Walk if the Co-operative's application to relocate their premises to the Health Park was refused. The Welsh Ministers did not misdirect themselves; they did not take into account immaterial considerations and their decision was not one based on evidence. The Welsh Ministers gave adequate reasons for their conclusions on this issue. The claim for judicial review on the three grounds on which permission was granted is dismissed. The Welsh Ministers did have regard to the additional costs of granting the application by Dowlais and permission to seek judicial review on the fourth ground of challenge in paragraph 4(5) and 28(4) of the amended grounds is refused as this ground is not arguable.