Scottish Court of Session Decisions

This is an application for judicial review at the instance of Boots The Chemists Ltd ("Boots"). The petition was served on a number of persons having an interest in the subject matter of the application, but only one of them, the Secretary of State for Scotland ("the Secretary of State"), lodged answers. At a first hearing I heard submissions by the solicitor-advocate who appeared for Boots and by counsel for the Secretary of State.

The decision which Boots seeks to have reviewed was made under procedure provided by The National Health Service (Pharmaceutical Services) (Scotland) Regulations 1995 ("the 1995 Regulations), and it is appropriate that I should start by referring to the relevant provisions. Section 27 of the National Health Service (Scotland) Act 1978 lays on every area health board ("Board") the duty to make arrangements in its area for the supply to persons in that area of proper and sufficient drugs and medicines ordered by a medical practitioner and provides that regulations may be made for the preparation and publication of lists of persons who undertake to provide pharmaceutical services and for certain connected purposes. The 1995 Regulations contain the provisions which now regulate the terms on which pharmaceutical services are provided under the 1978 Act. Regulation 5(1) provides inter alia that the relevant Board shall prepare a list, to be called "the pharmaceutical list", of the names of persons who undertake to provide pharmaceutical services and of the addresses of the premises within the Board's area from which these persons undertake to provide such services. Regulation 5(2) provides inter alia that a person (thereinafter referred to as an "applicant") who wishes to be included in the pharmaceutical list for the provision of pharmaceutical services shall apply to the Board in the prescribed form. Regulation 5(10) provides:

Schedule 3 provides by paragraph 1(1) that the Board shall, within five working days of receiving an application to which regulation 5(10) applies, give written notice of the application to inter alios any person whose name is included in the pharmaceutical list and whose interests may, in the opinion of the Board, be significantly affected if the application were granted, and any person so notified may, within 30 days from the date on which the notification was sent to him, make written representations about the application to the Board. Paragraph 2(1) of the Schedule provides that, in considering an application to which regulation 5(10) applies, the Board shall have regard to inter alia the pharmaceutical services already provided in the neighbourhood of the premises named in the application by persons whose names are included in a pharmaceutical list, any representations received by the Board under paragraph 1 and any information available to the Board which, in its opinion, is relevant to the consideration of the application. Paragraph 2(2) provides that the Board may, in accordance with the Schedule, determine any application in such manner as it thinks fit. By paragraph 2(6) the functions of the Board under paragraph 2 are to be exercised by the Pharmacy Practices Committee ("Committee") on behalf of the Board. This Committee is constituted by Part I of Schedule 4, paragraph 2 of which provides that the Committee shall on behalf of the Board exercise the functions of the Board in terms of regulation 5(10) and paragraph 2 of Schedule 3. By paragraph 6(5) of Schedule 4 the Committee must within ten working days of taking its decision give written notification of it to the Board with reasons for that decision. Paragraph 3 of Schedule 3 provides that the Board shall, within five working days of this notification, intimate to the applicant and the persons mentioned in paragraph 1 the decision on the application, the reasons for it, and of any right of appeal applicable under paragraph 4. Paragraph 4(1) provides inter alia that the applicant or any person mentioned in paragraph 1 may appeal against the decision of the Board on the application. By sub-paragraph (4) the Board is required to refer a notice of appeal under paragraph 4 to the chairman of the National Appeal Panel ("the Panel") appointed in accordance with Schedule 4, and sub-paragraph (6) provides that the Panel shall be convened in accordance with Schedule 4 and shall thereafter determine the appeal. Paragraph 15 of Schedule 4 provides that the Panel shall determine an appeal in such manner as it thinks fit and its decision in respect of that appeal shall be final; that within five working days of taking its decision it shall give written notification of that decision with reasons for it to the Board to whom the original application was made; and that the Board shall, within five working days of receipt of such notification, intimate to the applicant and all persons mentioned in paragraph 1 of Schedule 3 that decision and the reasons for it. Finally, by regulation 5(14), where an application is granted, the Board shall make the relevant entries in the pharmaceutical list only after the expiry of the period within which an appeal against the decision to grant the application might be intimated or the conclusion of all the appeal procedures, whichever is appropriate.

NHS Circular No.1987 (GEN) 14, issued by the Scottish Home and Health Department on 26 March 1987, describes the constitution and functions of a Committee and the Panel in Annex A. (The Circular was prepared under reference to Regulations which came into force in 1987, but remains current.) In the part of the Annex relating to a Committee the following summary appears:

The "commencement date" referred to was that for the 1987 Regulations, but the observations contained in the paragraphs I have quoted appear to me to be equally applicable to the pattern of service obtaining on any other date. Subject to this observation, these paragraphs appear to me to constitute a correct statement of the approach which requires to be adopted by a Committee. The part of the Annex which relates to the Panel states at paragraph 27 inter alia:

The paragraph continues with criteria which it is stated that the Panel should adopt. Although it is not strictly relevant for present purposes to do so, since the Panel in the present case does not appear to have adopted the approach set out in this paragraph, I take this opportunity of observing that the function of the Panel under the Regulations is not restricted in the manner described in the Circular. Counsel for the Secretary of State accepted that in this respect the Circular did not correctly state the position, and both parties before me proceeded on the basis, which I regard as correct, that in the event of an appeal to the Panel against a decision of a Committee the function of the Panel is the same as that of the Committee. For present purposes therefore the function of the Panel was to consider whether it was satisfied, in light of the information placed before it, of the matters set out in regulation 5(10) of and paragraph 2(1) of Schedule 3 to the 1995 Regulations. The decision of the Committee, and the reasons given for it, would of course form part of the information before the Panel of which account would require to be taken, but would not give rise to any presumption.

The present application arises from the following circumstances. Boots occupies premises at Unit 2, Inverness Business Centre Retail Park, Inverness ("the Park"). The Park is a new development situated to the east of Inverness, bounded on the north by the A96 Inverness to Nairn road and to the west by the A9 trunk road and the Raigmore Interchange. A number of premises, including those of Boots, are open for business and other premises are in course of being or still to be developed. People visiting the Park would usually be expected to do so by car. In about July 1997 Boots applied to Highland Health Board for inclusion in the pharmaceutical list for the provision of pharmaceutical services at these premises. In the application the neighbourhood of the premises was defined as being depicted on the attached map, with the Nairn Road (A96) to the north, the A9 to the west and the roads adjoining to the south and east. The map shows the neighbourhood as having boundaries which appear more or less to coincide with those of the Park. In the course of the procedure following the application representations were made to the Board by Hills Pharmacy/Lloyds Chemists, National Co-operative Chemists Limited and the Culloden Pharmacy, whose names were already included in the pharmaceutical list ("the objectors"). After a hearing on 2 October 1997, which was attended by the interested parties, the Committee of the Board agreed that the application for inclusion be granted. In a letter dated 9 October 1997 the Board stated that the reasons for the decision were that

Thereafter the objectors appealed against the decision. The appeal was heard by the Panel on 13 October 1998 and by letter dated 22 October 1998 intimation was given that the Panel had determined that the appeals be upheld and that the Committee's decision be reversed. I need not go into the terms of this letter, because in January 1999 Boots applied to this court for judicial review of the decision and on 24 February 1999 an interlocutor was pronounced in inter alia these terms:

On 10 June 1999 a fresh hearing before a differently constituted Panel took place. The decision of the Panel is set out in a letter by its chairman to the Board dated 14 June 1999. Having regard to paragraph 15(2) of Schedule 4 to the 1995 Regulations this was the notification of the decision. Thereafter on 18 June 1999 the Board intimated the decision to Boots and the objectors. Although nothing turns on this, because the material paragraphs of each letter were identical, both in the petition and in the submissions of the solicitor-advocate for Boots reference was made to the letter dated 18 June 1999 as if it contained the decision, whereas on a proper view of the Regulations the decision was contained in the letter dated 14 June 1999. The text of this letter was as follows:

It was agreed before me that the reference to "Paragraph 4(5) of the Schedule" to the Regulations was erroneous and that the reference should have been to paragraph 15(1) of Schedule 4 to the Regulations.

Boots now seek judicial review of the Panel's decision on a number of grounds. I shall start with one matter on which the parties were agreed. The second sentence of the third paragraph states:

Boots made no such concession. Its position was that, while it accepted that the provision of pharmaceutical services in Inverness Town Centre was adequate, the provision of pharmaceutical services in the neighbourhood (as defined by Boots) of its premises in the Park was inadequate, in respect that there were no existing pharmacies there. Counsel for the Secretary of State suggested, under reference to the Minutes of the hearing, that the Panel had not in fact misunderstood Boots' position, and that the appropriate course would be to remit back to the Panel to provide reasons which reflected that position. I do not accept that this would be the appropriate course to follow. It is clear from the Regulations that the decision and the reasons for it must be taken to be those communicated by the Panel to the Board. No doubt, where the Panel has not given adequate reasons for its decision, the appropriate course may be to remit to the Panel to provide a proper and adequate statement of the reasons for its decision, and in particular to state what material factors it considered in arriving at its decision, and what conclusion it reached on these material factors: Safeway Stores plc v National Appeal Panel 1996 S.C. 37 at p.41. But where, as here, it can be seen from the terms of the decision and the reasons for it as communicated by the Panel to the Board that the Panel has proceeded on the basis of a misapprehension of the applicant's position on one of the central issues in the appeal hearing, this must in my view be regarded as a material misdirection; and I was referred to no authority that such a misdirection can be cured in the manner suggested on behalf of the Secretary of State rather than by reducing the decision and remitting to the Panel to hear the appeal anew.

The Panel's decision is clearly flawed in another respect. Regulation 5(10) of the 1995 Regulations provides that the test to be satisfied is whether the provision of pharmaceutical services at the premises in question is necessary or desirable in order to secure adequate provision of pharmaceutical services in the neighbourhood. What therefore requires to be considered is whether such provision is either necessary or desirable. While, in the fourth paragraph of the letter dated 14 June 1999, it can be seen that the Panel considered the test of necessity, there is no indication that it considered the test of desirability in the alternative. Counsel for the Secretary of State submitted that this could be taken by implication from the concluding paragraphs of the latter. I do not accept this. The flaw here is the same as it was in Safeway Stores plc v National Appeal Panel 1997 S.C. 189 (the sequel to the case referred to above). In that case the court said, at p.193:

The position is the same in the present case. Indeed, leaving aside for the time being the question of the identification of the neighbourhood, there are indications that the flaw may be even greater than it was in the Safeway case. The conclusion of the Panel "that while it may be convenient for people visiting the Business and Retail Park to have a pharmacy at the park, it was not necessary" may indicate that the Panel accepted that the provision of pharmaceutical services at the premises was desirable, but failed to recognise that this would then be sufficient (subject to the question of neighbourhood, which I discuss below) to satisfy the test provided by regulation 5(10). The concluding words of the same sentence, that "the granting of an application to Boots would be detrimental to existing local NHS pharmaceutical services", may also reflect a failure to apply the correct test. As I have already said, I agree with the statement in NHS Circular No.1987 (GEN) 14 that at all times the governing principle will be to provide the local population with reasonable and adequate access to the full range of NHS pharmaceutical services. This appears to me correctly to reflect the policy underlying the 1995 Regulations. The maintenance of existing pharmaceutical services may be properly regarded as a means to this end, but it is not an end in itself, as the Panel may perhaps have thought.

I heard extensive submissions, particularly on behalf of Boots, about the meaning of the word "neighbourhood". This is not defined in the Regulations and must therefore be given the meaning which would normally be attributed to it as an ordinary word of the English language. As the word is ordinarily understood, it has connotations of vicinity or nearness. I was referred to a number of decisions of the English and Northern Irish courts relating to the corresponding provisions of the regulations in force in those jurisdictions: R v Family Health Services Appeal Authority, ex parte Boots the Chemists Limited (1996) 33 B.M.L.R. 1 and R v Family Health Services Appeal Authority, ex parte Tesco Stores Limited and Another, 30 July 1997, both decided in the English High Court; and In re Boots the Chemists Limited, 2 February 1994, decided in the High Court in Northern Ireland. These decisions appear to me to give support to the view that the word "neighbourhood" in regulation 5(10) of the 1995 Regulations means an area which is relatively near to the premises in question, which need not have any residents, and which can be regarded as a neighbourhood for all purposes. On this approach, a retail park may properly be regarded as a neighbourhood. As Collins J put it in R v Family Health Services Appeal Authority, ex parte Tesco Stores Limited and Another at p.8:

In R v Family Health Services Appeal Authority, ex parte Boots the Chemists Limited Tucker J (in a passage followed by Collins J) said at p.6:

I would respectfully adopt this passage as representing the correct approach for a Committee or the Panel to follow in Scotland under the 1995 Regulations. Following this approach, it might well be possible to conclude that the Park is the neighbourhood of the premises occupied by Boots. It might be far less easy to conclude, as the Panel did, that the whole of the town of Inverness and its outlying areas, including Smithton, Culloden, Balloch and Westhill, is the neighbourhood.

In light of these decisions, the solicitor-advocate for Boots invited me to hold either that the Panel had misdirected itself in its interpretation of the word "neighbourhood" or in any event that its decision in respect of the neighbourhood was unreasonable (in the sense defined in Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223). The difficulty with this approach is that the Panel has not given reasons for its approach to the question of neighbourhood. The solicitor-advocate for Boots submitted that the Panel did require to give such reasons, more particularly so when it was differing from the Committee on this question. It was a proper inference from the Committee's decision that they had accepted Boots' description of the neighbourhood. Counsel for the Secretary of State, however, while accepting that regulation 5(10) required the decision-taker to define the neighbourhood, submitted that there was no need for reasons to be given for this definition. Counsel referred to Caledonian Nightclubs Limited v Glasgow District Licensing Board 1996 S.C. (H.L.) 29, in which it was held inter alia that the Board had been entitled to take the area within a 200 metre radius of the premises in question as the locality for the purposes of section 17(1)(d) of the Licensing (Scotland) Act 1976 and had not been bound to define the locality in terms of a named street or streets or an identifiable area. I do not find this case to be any assistance for present purposes (apart from the light that the approach to the question of locality might cast on the question of neighbourhood in the present one). The Panel is required by paragraph 15(2) of Schedule 4 to the 1995 Regulations not only to give written notification of its decision but also to give reasons for it. In the first Safeway case, Safeway Stores plc v National Appeal Panel 1996 S.C. 37 the court, following Wordie Property Co Limited v Secretary of State for Scotland 1984 S.L.T. 345, said at pp.40-41:

It is clear from the terms of regulation 5(10) and my discussion of the meaning of "neighbourhood" that one of the substantial questions in issue in a case such as the present is the definition of the neighbourhood of the premises in question. In my view, therefore, the Panel should have given reasons for its definition of the neighbourhood. In addition, where the Panel is differing from the Committee, it must give reasons for doing so. As the court put it in the first Safeway case at p.41:

In the absence of such reasons in the present case I do not think it is open to me to reach a view on the question whether the Panel misdirected itself in its approach to the question of neighbourhood or whether its decision in that regard was unreasonable. Having regard to what I have had to say about the meaning of neighbourhood and the proper approach to be adopted by the Panel, it might be difficult for the Panel's decision to be justified. But in order to see if that were so it would be necessary to remit to the Panel to provide a proper and adequate statement of reasons for their decision, as was done in the first Safeway case. This is the course which I would have been minded to adopt in the present case if it were not that the Panel's decision is flawed in the other respects which I have discussed. It therefore appears to me that the appropriate course is to reduce the Panel's decision.

The solicitor-advocate for Boots invited me not only to reduce the decision but also to pronounce an order ordaining the Board to appoint the name of Boots and its premises to the pharmaceutical list for the Board's area. He relied to some extent on Macbeth v Ashley (1874) 1 R. (H.L.) 14 and the provisions of Rule 58.4(b) of the Rules of Court, which empowers the court to make such order in relation to the decision in question as it thinks fit; but he relied principally on a passage in the second Safeway case at 1997 S.C. pp.193-4. He suggested that, although the court had there refused to grant a similar remedy, they had done so simply because intimation of the application for judicial review had not been made to the objectors in that case. He submitted that the present case could be distinguished because intimation had been made to the objectors, who had not lodged answers. The passage referred to does not appear to me to support this contention. The court concluded by saying:

The same appears to me to apply in the present case. The objectors, and not only the petitioners, have an interest in the proper disposal of their appeal and the flaws in the decision are such that, without a fresh hearing, they will have been deprived of this. Moreover, to grant the remedy sought by Boots would, as I see it, involve me in coming to a view about the merits of the appeal to the Panel, particularly on the question of neighbourhood, which is something that it is not open to me to do in an application for judicial review. The solicitor-advocate accepted that this Court's jurisdiction is as stated in Moss' Empires Limited v Assessor for Glasgow 1917 S.C. (H.L.) 1 per Lord Shaw of Dunfermline at p.11:

Given this, although I have some sympathy with Boots who will now be involved in a third hearing by the Panel, the limits on my powers are such that I do not regard it as being open to me to do other than reduce the Panel's decision and order a re-hearing.

In the foregoing circumstances I shall accordingly reduce the decision of the Panel set forth in the letter dated 14 June 1999 and remit to the Panel to re-hear the objectors' appeal against the decision of the Committee. I shall direct that the Panel should be differently constituted from that which participated in either of the two previous hearings, with the exception (having regard to paragraph 13 of Schedule 4 to the 1995 Regulations) of the chairman, or vice-chairman if acting as chairman.