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Cite as: [2003] ScotCS 175, 2003 SCLR 700

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Lloyds Pharmacy v. National Appeal Panel Entry Pharmaceutical Lists [2003] ScotCS 175 (16 June 2003)

OUTER HOUSE, COURT OF SESSION

P65/03

OPINION OF LADY SMITH

in Petition of

LLOYDS PHARMACY LIMITED

Petitioners;

against

THE NATIONAL APPEAL PANEL FOR ENTRY TO THE PHARMACEUTICAL LISTS

for Judicial Review of the Respondent's decision dated 25 November 2002 refusing the Petitioners' application for inclusion in the Pharmaceutical List in respect of the Waverley Medical Centre at Dalrymple Road, Stranraer

________________

Petitioners: Morton, Solicitor Advocate; Dundas & Wilson C.S.

Respondents: Crawford; R. F. Macdonald

Interested Party (E. A. Baird (N'Ards) Limited): Collins; Balfour & Manson

16 June 2003

Legislation
[1] Insofar as it is relevant to this petition, the National Health Service (Scotland) Act 1978 (c.29) ["the 1978 Act"], as amended, provides:

"27(1) It shall be the duty of every Health Board to make, in accordance with regulations, arrangements as respects its area for the provision to persons who are in that area of -

(a) proper and sufficient drugs and medicines and listed appliances which are ordered for those persons by a medical practitioner in pursuance of his functions in the health service ...

(cc) such drugs and medicines and such listed appliances as may be determined by the Scottish Ministers ... which are ordered for those persons ...

(2) Regulations shall provide for securing that arrangements made by a Health Board under subsection (1) will enable persons in the Board's area for whom drugs, medicines, or appliances ... are ordered ... to receive them from persons with whom such arrangements have been made.

(3) The regulations shall include provision -

(a) for the preparation and publication by a Health Board of one or more lists of persons ... who undertake to provide pharmaceutical services from premises in the Board's area;

(b) that an application to a Health Board for inclusion in such a list shall be made in the prescribed manner and shall state -

(i) the pharmaceutical services which the applicant will undertake to provide ... and

(ii) the premises from which he will undertake to provide those services;

(i) an application for inclusion in such a list by a person not already included; and

(ii) an application by a person already included in such a list for inclusion also in respect of pharmaceutical services or premises other than those already listed in relation to him,

shall be granted only if the Health Board is satisfied, in accordance with the regulations, that it is necessary or desirable to grant it in order to secure in the neighbourhood in which the premises are located the adequate provision by persons included in the list of the services or some of the services specified in the application ..."

The National Health Service (Pharmaceutical Services ) (Scotland) Regulations 1995 (1995 S.I. 414 s.28 ) [" the 1995 Regulations"] provide:

"[5] Pharmaceutical list

(1) The Board or primary care NHS Trust 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 ...

(2) A person ...

...

(b) whose name is already included in the pharmaceutical list, but who intends -

...

(iii) to relocate within the Board's area the premises from which he provides pharmaceutical services ...

shall apply to the Board or primary care NHS trust ...

...

(4) Where an application is made and - ...

...

(b) the Board or primary care NHS trust is satisfied that the relocation is a minor relocation ...

the Board or primary care NHS trust shall grant the application.

...

(10) An application made in any case other than one to which paragraph ... (4) applies shall be granted by the Board or primary care NHS trust, after the procedures set out in Schedule 3 have been followed only if it is satisfied that the provision of pharmaceutical services at the premises named in the application is necessary or desirable in order to secure adequate provision of pharmaceutical services in the neighbourhood in which the premises are located by persons whose names are included in the pharmaceutical list."

The provisions of Schedule 3 to the 1995 Regulations cover the procedures to be followed on applications being made under Regulation 5(10) and they include:

"[1] Receipt and notification of applications

(1) The Board [or primary care NHS trust] shall, within five working days of receiving an application to which regulation 5(10) applies, give written notice of the application to -

...

(c) any person whose name is included in the pharmaceutical list .....and whose interests may, in the opinion of the Board [ or primary care NHS trust] be significantly affected if the application were granted;

...

[2] Determination of applications

(1) In considering an application to which regulation 5(10) applies, the Board [or primary care NHS trust] shall have regard to-

(a) 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;

...

(d) any information available to the Board [or primary care NHS trust ] which, in its opinion is relevant to the consideration of the application.

The Board [or primary care NHS trust] may, in accordance with this Schedule, determine any application in such manner as it thinks fit and may, if it considers that oral representations are unnecessary, determine the application without hearing any oral representations ...

...

The applicant and any person mentioned in sub-paragraph (3) shall be permitted to be assisted in making representations at any such meeting by some other person, but that other person shall not appear in the capacity of counsel, solicitor or paid advocate, nor shall he be entitled to speak on behalf of the applicant or any other person ..."

[2] The same Schedule also makes provision for appeals:

"[4] Appeals

(1) ... the applicant or any person mentioned in paragraph 1 ... may appeal against the decision of the Board [or primary care NHS trust] on the application ...

(4) The Board [or primary care NHS trust] shall refer a notice of appeal under this paragraph to the chairman of the National Appeal Panel ...

(8) The appellant [and] applicant ... shall be permitted to be assisted in making representations at any Panel by some other person, but that other person shall not appear in the capacity of counsel, solicitor or paid advocate, nor shall he be entitled to speak on behalf of the person being assisted.

[15] Decisions by the National Appeal Panel

The National Appeal Panel shall determine an appeal in such manner as it thinks fit and its decision in respect of that appeal shall be final."

[3] Parties were agreed that the petitioners application did not fulfil the criteria for a "minor relocation" and, accordingly, regulation 5(10) rather than regulation 5(4) was the relevant regulation.

Facts
[4] By application dated 28 March 2002 (Pro. 6/2) the petitioners requested that they be permitted to relocate their premises in Stranraer from an address at 48 Hanover Street to premises situated at the same site as the new health centre at Dalrymple Road, Stranraer, where all the town's general practitioners were to be located together with other professionals such as physiotherapists and podiatrists. Those doctors have since moved to that site, to a purpose built health centre there. There is, within the health centre, a unit available for the petitioners in respect of which they have agreed the terms of a lease, conditional upon the grant of their application for relocation. That unit would enable them to provide a modern pharmacy, readily accessible to those with mobility problems and providing a separate dispensary, an area for the supervised consumption of methadone and a private consultation area. Parking would be available, including four disabled parking bays.

[5] The premises from which the petitioners currently operate are situated in the main street in Stranraer, close to the other two existing pharmacies operated by Boots the Chemist Limited ( "Boots") and by E A Baird (N'Ards) Limited ["Kers"]. The positions of the existing pharmacies and of the new health centre are all marked on a street plan that was attached to the application. It is evident from that plan that the petitioners' current premises are the closest to the new health centre but they are, nonetheless, a significant distance away from it. Judging by the comments made in the Minutes of the meeting of the Dumfries and Galloway Primary Care NHS Trust Pharmacy Practices Committee ("the Committee") of 31 May 2002 (Pro. 6/3), that distance must be about 490m.

[6] In a letter attached to their application (Pro. 6/1), the petitioners wrote:

"Adequacy of Existing Services

The existing pharmaceutical services in Stranraer are all currently clustered around the town centre ...

It is clear that under the Regulations an application should only be granted for the purpose of securing in the neighbourhood 'adequate' access to NHS pharmaceutical services. Clearly what is adequate is a question of degree. There is, as it has been described, a 'spectrum' of adequacy.

So a critical issue in this case is where the current provision of pharmaceutical services in Stranraer lies. The possibilities are 'wholly adequate' or 'wholly inadequate' or somewhere in between.

In our submission the current services in Stranraer do not fully meet the test of 'adequacy'. Our reasons for this are as follows: -

1. Our current premises at 48 Hanover Street are not modern. The small cramped premises hinders easy access for the disabled or perhaps parents with children in pushchairs as well as hindering the provision of supervised methadone services which we currently provide in store.

2. In the neighbourhood there is a demand for the provision of pharmaceutical services within health centres. Indeed the demand for 'on-site' service is on the increase. We believe the demand for this type of service is currently not being met.

Necessary or desirable to secure adequate provision

In support of our application we would refer you to the following:-

1. The relocation would allow the creation of a modern pharmacy with improved facilities and one that afforded safer access for persons including mothers and disabled people. This is a highly desirable improvement.

2. The relocation would result in the pharmacy being co-located with the GP's on a site with greater car parking facilities.

3. The relocation would allow the pharmacist to build stronger relationships with other healthcare professionals for the ultimate benefit of the patient.

4. The demand for pharmaceutical services in the town centre would still be met by other pharmacies.

6. Lloyds Pharmacy would continue to provide all existing services at the new site whilst looking to participate in additional services for patients in conjunction with the Trust and doctors."

[7] The application was heard by the Committee on 31 May 2002 (Pro. 6/3). The Committee undertook a tour of Stranraer and heard from the applicants, Boots, Kers, (both of whom objected to the application) and the Area Pharmaceutical Committee. The Minutes of the meeting are detailed and set out the various submissions advanced. They set out the submissions from the petitioners, expanding on those contained in their letter including explanations that their existing premises were not always readily accessible to those with mobility problems, that the bus service from the site of the new health centre to the town centre was only half hourly, meaning that patients may require to wait for up to an hour to get a bus from the surgery to a town centre pharmacy and that none of the existing pharmacies had a private consultation area or a separate area for the supervised consumption of methadone.

[8] The Committee set out the submissions from Boots which were broadly to the effect that there was still a demand for high street pharmacies and the additional services which the petitioners proposed to provide at the new health centre could be provided from their existing pharmacy, a suggestion which was refuted by the petitioners.

[9] The Committee set out the submissions from Kers who submitted that the existing provision was adequate and it was not necessary for the petitioners to relocate and expressed a view that one of the other two pharmacies would close, due to a downturn in business, if the petitioners relocated although it was accepted that they could not validate that view by reference to any detailed analysis.

[10] The Committee also set out the submissions from the Area Pharmaceutical Committee which were broadly to the effect that one of the existing pharmacies might become non-viable as a result of the proposed relocation.

[11] From paragraph 19.19, the Committee set out its the main aspects of its reasoning and decision on the question of adequacy. It stated:

"19.19 The Committee considered the adequacy of existing services against the background of :

[a] the implementation of the Disability Discrimination Act by 2004;

[b] the changing face of Stranraer with inadequate parking near town centre pharmacies and the option of an on-site pharmacy;

[c] a mobile population in a town with a medical centre out of town with a range of health centres attached.

19.20 The Committee considered that two of the town - centre pharmacies were not located in ideal premises and were unable to provide the modern facilities that the public had a right to expect. Two of the pharmacy premises were considered not to be adequate for easy access by wheelchair users, which left substantial room for improvement.

19.21 On a point of information requested by the Chairman, the non contractor pharmacist advised that the pharmacy strategy and development document, The Right to Medicine, published by the Scottish Executive in March 2002, highlighted the need to improve pharmacy premises to ensure that all premises had better access for people with disabilities and that a professional environment should be provided.

19. 22 The Committee considered that the existing service in Stranraer was not wholly adequate and that there was considerable room for improvement. It was noted that at least two of the pharmacies did not have a private consultation area and the premises were, generally, very cramped. For this reason the Committee was of the view that the existing services were not wholly adequate and did not comply with the standards expected of a modern pharmacy service.

19.23 Whilst it was recognised that there was a very high level of collection and delivery of prescriptions in operation, the Committee noted that access to existing pharmacies might present difficulty for specific groups in the population: disabled patients and those with mobility problems, families with young children and people disadvantaged by having transport difficulties.

19.24 For these reasons the Committee was of the view that the pharmaceutical services in the neighbourhood of Stranraer were not wholly adequate."

[12] The Committee dealt with necessity or desirability at paragraph 20, where it stated:

" 20.1 The Committee acknowledged that it was not necessary for Lloyd Pharmacy to provide pharmaceutical services from the medical centre to ensure the adequate provision of pharmaceutical services in the neighbourhood of Stranraer.

20.2 The Committee noted that with the proposed relocation of the Lloyd Pharmacy, patients would have access to both a health centre-based pharmacy and pharmacy services provided in the town centre.

20.3 However, using the test of desirability, the Committee was satisfied that it was desirable to have Lloyds Pharmacy provide pharmaceutical services at the proposed location in Waverley medical centre to secure adequate provision of pharmaceutical services in the neighbourhood for the population of Stranraer, including the groups listed in paragraph 19.22."

and they unanimously approved the application.

[13] Boots and Kers both appealed , setting out their grounds in two letters (Pros. 6/5 and 6/6). Their grounds reflected the submissions made before the Committee and also contained arguments to the effect that the Committee had erred in law in taking account of convenience of the interior of the premises, convenience of access and in adopting an approach that considered desirability where existing provision had been found to be adequate. Further, Boots submitted that to allow the application would possibly result in the closure of one or both of the other pharmacies, although that was not a submission that they had made to the Committee. Ker's did not found on viability in their appeal.

[14] The appeal came before the National Appeal Panel ("the respondents") on 19 November 2002 at a hearing which was chaired by the respondents' Vice Chairman, Mr J.M.D Graham. The membership of the appeal panel is not evident from the terms of their decision document (Pro. 6/9) but in the absence of submission to the contrary, it is to be assumed that they were quorate, as required by regulation 13 of the 1995 Regulations. The respondents undertook a site visit prior to holding a hearing at which each party was invited to make oral submissions. In paragraph 5, they state that they took account of all relevant factors concerning neighbourhood, adequacy of existing pharmaceutical services and whether provision of pharmaceutical services in accordance with the petitioners' application was necessary or desirable to secure adequate provision of pharmaceutical services in the neighbourhood. They added, in paragraph 6, that they had taken into account all the written representations and supporting documents submitted by the appellants and the petitioners and that they had noted the decision of the Committee. The petitioners had provided written submissions in response to appeal letters seeking to refute the arguments advanced and submitting that although the existing pharmaceutical services in Stranraer were not wholly inadequate, they could not be described as wholly adequate either and their proposal to relocate would allow gaps in the present service to be plugged and allow additional services to be provided in the future without threatening the viability of the existing services.

[15] In paragraphs 7 to 11, the respondents record the submissions advanced by the appellants and the petitioners and their responses to questioning which included, in the case of Boots, that they had "no issues regarding viability with reference to the Bathgate figures" those figures being ones that related to the minor relocation of a pharmacy into the Bathgate Health Centre. The submissions on behalf of Ker's are said to have included a reference to the case of Low (2001) EWCA Civ 128, which appears to have been a reference to the case of R v The Family Health Services Appeal Authority (Ex parte Dr Lowe &c) (2001) EWCA Civ 128 which is referred to later in this opinion, and on the basis of that case, it was argued that the statutory test was not "wholly adequate" but "adequate". On questions regarding viability of the existing pharmacies, Ker's position was that they could not state whether one of the pharmacies would close if the application was granted.

[16] In paragraphs 14 to 16, the respondents set out their decision on neighbourhood, determining that the neighbourhood to which they had to have regard was the town of Stranraer. In paragraphs 17- 19, they set out their decision on what they refer to as "Adequacy of existing provision of pharmaceutical services and necessity or desirability" which is as follows:

"17 ... the Panel was then required to consider the adequacy of existing pharmaceutical services in that neighbourhood, and whether the granting of the application was necessary or desirable in order to secure adequate provision of pharmaceutical services in that neighbourhood.

18 Within the neighbourhood, as defined by the Panel, it was considered that there was adequate provision of pharmaceutical services provided by the pharmacies located in the neighbourhood. There was a good collection and delivery service for the neighbourhood provided from the three existing pharmacies together with an adequate Methadone and oxygen service. There was no evidence available for the Panel that the present pharmaceutical services provided by the pharmacies within the area were not adequate. There was no evidence to suggest that the pharmaceutical services in the neighbourhood would not remain adequate in the future. The pharmaceutical contractors in the neighbourhood adequately meet the existing requirement for pharmaceutical services.

19. For the reasons set out above, the Panel considered that the existing pharmaceutical service in the neighbourhood was adequate. Accordingly the Panel were not satisfied that the provision of pharmaceutical services at the premises of the Applicant was either necessary or desirable in order to secure adequate provision of pharmaceutical services in the neighbourhood in which the premises were located by persons whose names are included in the pharmaceutical list. In the circumstances, it was the decision of the Panel that the appeal be upheld."

[17] The respondents do not appear to have given consideration to the detailed concerns as to the adequacy of the existing services that were set out by the Committee in their paragraph 19. Their failure to do so would seem to flow from their approach being that they were not obliged to look beyond the simple question of whether the existing provision could be described as "adequate".

Submissions
[18] On behalf of the petitioners, Mr Morton moved for reduction of the decision of the respondents and for the appeal to be remitted to a freshly constituted appeal panel. He submitted that the respondents had adopted the wrong approach to the application of regulation 5(10) of the 1995 Regulations in that the approach they adopted was to treat necessity and desirability as subsidiary to adequacy whereas they were not. They were, he submitted, integral. He stressed that the petitioners were simply looking to move premises, not to add another set of premises to the neighbourhood, that the Committee had concluded that there was room for improvement which would be afforded by the relocation and submitted that the respondents had clearly not looked at the facts that were presented regarding the potential for improvement. They should, however, have done so. They should have considered adequacy and formed an initial view, then they should have looked at necessity and desirability and only after having done so formed a definite view.

[19] No submissions were made in support of the averments in the petition to the effect that the respondents failed to give reasons for its decision. The issue between the parties was confirmed as being the sole question of whether or not the respondents were entitled to cease their consideration of the question before them once they had decided that the present provision of pharmaceutical services in the neighbourhood was adequate. The resolution of that issue depended on the application and interpretation of regulation 5(10) of the 1995 regulations.

[20] Mr Morton referred me to three authorities. The first was the case of Safeway Stores PLC v National Appeal Panel 1997 S.C. 189 and was decided under reference to regulation 28[4] of the National Health Service (General Medical and Pharmaceutical Services) (Scotland) Regulations 1974 which was in almost identical terms to regulation 5(10) of the 1995 regulations. He relied on it as authority for the proposition that, to satisfy the regulation, the appeal panel required to look at adequacy, necessity and desirability. The second was the case of Sainsbury's Supermarkets Ltd. v The National Appeal Panel for Entry to The Pharmaceutical Lists 2003 S.L.T., a case which was decided under reference to the 1995 regulations and in which the central issue was that of what constituted neighbourhood. Mr Morton relied, however, on Lord Carloway's general discussion as to the object of the statutory scheme and the appropriate interpretation of regulation 5(10), Lord Carloway being of the view that it should be given an interpretation which is wide enough to allow for services being improved by the grant of an application made under it. The third was the decision of the Court of Appeal in the case of R v The Family Health Services Appeal Authority ex parte Dr Lowe which was also relied on by him as supporting his contention that the decision maker cannot properly ignore desirability albeit that he submitted that Lord Carloway's approach should be preferred. He submitted further that the regulations should not be applied in such a way as to produce an anti-competitive result. It would be, he submitted, to adopt an anti-competitive approach to refuse to look at questions of necessity or desirability where there was an existing adequacy.

[21] Miss Crawford submitted on behalf of the respondents that the petition should be dismissed. She took issue with Lord Carloway's statement [at paragraph 15] that the object of the statutory scheme is "to ensure that everyone has ready access to prescribed drugs and medicines." She submitted that, on the contrary, so long as there is a sufficiency then the duty of the NHS trust is fulfilled. A two stage test had to be applied the first part of which required considering the question of whether there was already an adequate provision of pharmaceutical services. It was only, she submitted, if it was not possible to conclude that the current provision was adequate that the second stage arose. That second stage involved considering necessity or desirability. In this case, the respondents were not required to consider questions of necessity or desirability because they had determined that the existing provision of pharmaceutical services was adequate. That submission was in accordance with revisals that had been made to the respondents' answers which averred that they did not need to and did not address the issue as to whether the services in the neighbourhood would be improved by the proposed relocation because they had concluded that the existing provision of pharmaceutical services was adequate. In the light of that averment, Miss Crawford did not pursue a tentative submission to the effect that the bald statement in paragraph 5 of respondents' determination that they had considered whether the provision of pharmaceutical services at the proposed relocated premises was necessary or desirable to secure adequate provision showed that they had done so.

[22] In looking at the matter of the formulation of the correct test, Miss Crawford stressed that the regulation only required adequacy to be achieved which was not a term which implied that the best had to be provided. A value judgment had to be exercised by the decision maker who would decide where to draw the line between adequate and inadequate. She did, however, also accept that there may be a spectrum to consider when looking at the question of whether or not the existing provision was adequate.

[23] Under reference to Dr Lowe's case she submitted that what was set out by Laws L.J. at paragraph 14, which contains a five stage construction of regulation 5(10), was correct. By so doing, as is evident from the terms of that paragraph, she was accepting that when the decision maker asks whether provision is adequate, he is inevitably asking where on "the sliding scale or spectrum of adequacy" the case, on its own facts and circumstances, lies.

[24] As regards the Sainsbury's case, she sought to criticise the Lord Ordinary's reasoning as being circular and as failing to recognise that, as she submitted, Parliament did have in mind making provision for anti-competitive practices to be endorsed.

[25] As regards the Safeway Stores case, Miss Crawford submitted that it was not in point since it was a case about reasons and adequacy had not, she said, been considered at all initially.

[26] On behalf of Kers, Mr Collins, advocate, submitted that the petition should be dismissed. The panel had done all that was required of them and addressed the correct question. It was important, he said, to appreciate how the statutory provisions and the regulations had developed over the years since the National Health Service (Scotland) Act 1978 ["the 1978 Act"] was first enacted. At first, Parliament was concerned only to control entry of a pharmacist onto the list. Once on the list, a pharmacist could open whatever he premises he wished to open and would be entitled to a contract to provide pharmaceutical services involving payment of a practice allowance plus a profit element on drugs dispensed. Negotiation of these contracts was, he said, a complex and sensitive matter. Parliament then decided, he said, to seek to restrict the number of pharmacies and so the provisions of the 1978 Act were amended. This was not, however, a case where Hansard was of any assistance. He submitted that, in introducing the references to premises which are to be found in the present s.27(3), a subsection which was not to be found in the section as originally enacted, it was clear that Parliament had intended to move from an unrestricted, unregulated regime which was perceived to have become an unacceptable cost to the taxpayer into one which imposed restrictions on who could be on the list by reference to their premises.

[27] Regarding the construction of regulation 5(10), Mr Collins submitted that the panel were obliged, in looking into the matter of securing adequacy, to look not just to present provision but also to the question of whether there would be adequacy in the future. The object of the regulation was not as the Lord Ordinary had stated it in the Sainsbury's case at paragraph 15 but was to restrict and control the number of pharmacies permitted to access NHS contracts thereby minimising public expenditure whilst providing pharmaceutical services. It was not, he said, about improving services, it was about value for money. Further, the Lord Ordinary was wrong to have said, as he did, that regulation 5(10) did not need to have its present wording. Given the provisions of s.27(3) of the 1978 Act, it did require to do so. Unfortunately, the Lord Ordinary had not, in that case, been referred to the amended legislation nor had he been referred to the Dr Lowe case which was also relied on by Mr Collins as being in his favour.

[28] Mr Collins, adopting a slightly different approach from Miss Crawford, submitted that the panel required to ask a composite question. They had to ask themselves whether they were satisfied that the provision of pharmaceutical services at the premises named in the application was necessary or desirable in order to secure adequate provision. Only if they were so satisfied could they grant the application and questions of improvement were irrelevant. He said that there was no room for an approach which said that even if the panel was sure there was adequate provision, they still had to go on and consider whether it was necessary or desirable to grant the application in order to secure it. However, if a panel felt that provision was adequate but were not very sure, then they might go and ask whether it was necessary or desirable to grant the application but the panel in this case were not in that position.

[29] As regards the Safeway Stores case, Mr Collins strongly urged me to take the view that it was of no assistance. It was simply a decision on reasons and did not, he said, support the submission that where a panel has made a finding of adequacy, it has to go on and consider desirability.

[30] By way of response, Mr Morton submitted that, notwithstanding the fact that s.27(3) was the result of amendment, it was still correct to say that it was not necessary to provide in the regulations that an application should only be granted if it was necessary or desirable to secure in the neighbourhood of the premises in question the adequate provision of pharmaceutical services if that application was in respect of a major relocation, as in the present case. Section 27(3)(c)(ii) had the effect of requiring such provision to be made in the regulations if a pharmacist was applying to have a pharmacy included in the list which would be in addition to any already held by him but not where he was asking that a new set of premises be put into the list instead of premises from which he presently operated. That much was clear from the use of the term "also". Nor did he accept that Parliament's objective had become as suggested by Mr Collins. Rather, he submitted, it was a matter of Parliament seeking to avoid a situation whereby pharmacists would set up where they choose in a distribution which failed to provide an adequate service. Further, regarding any financial implications, the cost to the taxpayer of the petitioner's relocation would be neutral. The scheme did not allow for any payment to be made to them upon or to assist in relocating and although the practice allowance and drugs payments would continue the former would be the same and the latter would not, as a matter of logic, increase for Stranraer overall.

Decision
[31] I cannot accept that the principal object of the scheme that is to be found in the 1978 Act is that the burden to the taxpayer should be minimised by limiting the number of pharmacies that can be operated. Whilst that may have been amongst the considerations that Parliament had in mind when amending the original legislation, it seems clear, in my view, that the principal object of the Act is to enable members of the public who have had drugs, medicines and appliances prescribed for them, to get access to them by utilising the services of registered pharmacists. I would add that, on the submissions put before me, the idea that Parliament was concerned to limit the cost to the taxpayer emerged in anecdotal fashion and the petitioners' response that Parliament was concerned to seek to secure an even spread of pharmacies, rather than have them all concentrated in one area seemed to be as credible an explanation for the legislation. No doubt that, by preventing too heavy a concentration of pharmacies in one area, viability might be protected, but it is as likely that that would emerge as a beneficial side effect from a system of control that sought, in the public interest, to keep pharmacies available to all members of the public.

[32] In any event, in this case, viability is not and was not an issue between the petitioners and the interested party nor did any apprehended effect on the viability of the existing pharmacies feature as a reason in the respondents' decision. The result of granting the petitioners' application would be that there would not be any increase in the number of pharmacies in Stranraer. Rather, there would be the same number of pharmacies but they would not all be concentrated in the one area, as they are at present.

[33] The regulations have to be considered in the light of the object of the primary legislation and in the light of any specific directions as to their content that are contained in it. The Lord Ordinary in the Sainsbury's case did not consider the impact on interpretation of the regulation of any specific statutory direction because his attention was, apparently, not drawn to any such direction. It is, however, appropriate in this case, to consider what, if any, is the effect of the terms of s.27(3)(c)(ii) of the 1978 Act.

[34] It is, in my opinion, clear from the use there of the word "also" that the direction to the effect that regulations must contain the provisions set out applies only where the applicant is seeking authority to open in the area of a particular Board or NHS trust a pharmacy that will be in addition to any pharmacy which he already operates. The statute does not direct that the regulation must contain the provisions set out in s.27(3)(c)(ii) where the application is to enable a pharmacist to open a new pharmacy in place of an existing one. If that had been the intention, it would not have been necessary to use the word "also".

[35] It is, though, not only a question of language. Looking at the matter against the background to the changes in the legislation as discussed above whether the concern was cost to the public purse or not, it is understandable that it could be thought necessary to exercise particular and specific control where the result of granting the application would be to add a new pharmacy to the area whether because the applicant was not already on the list, a situation which is covered by s.27[3](c)(i), or because the applicant proposed to open an additional pharmacy. It seems clear that Parliament's concern was with pharmacies being opened in addition to those which already existed so as to increase the total number of pharmacies in an area, not with the circumstances surrounding the relocation of an existing pharmacy.

[36] It must then be assumed that the intention of the regulations was to implement the statutory scheme including its principal object of enabling members of the public to get access to drugs etc. that have been prescribed for them by utilising the services of registered pharmacists. The regulations go further than is required of them, however, in that regulation 5(10), which contains the wording of s.27(3)(c)(ii), applies to the petitioners' application for relocation in circumstances where they are not seeking to open a pharmacy that will operate in addition to their existing pharmacy. That is the background against which the regulation has to be interpreted for the purposes of this particular application.

[37] The wording of the regulation gives rise to a number of questions most of which have been answered to a greater or lesser extent in the cases to which I was referred. Clearly questions of what amounts to adequacy in terms of the regulation, arise. So do questions, for the purpose of this case, where necessity was not an issue, of how and when a proposal to open a pharmacy can be desirable to secure adequacy. None of the authorities looked at seemed to consider the effect of the use in the regulation of the word "secure".

[38] Two of the authorities on which I heard submission were at appellate level. I consider that the Safeway Stores case is of some assistance, contrary to the submissions on behalf of the respondents and the interested party that it was of no help, being only a decision on "reasons". It concerned an application to be included on the list for the area covered by Lanarkshire Health Board. It is evident from the report that the panel had looked at the question of whether the existing provision in the area was adequate and had found that the area in question was adequately served, that being the obvious inference from their comment that the area of Stewartfield was "as adequately served by pharmacies as other areas of East Kilbride". They then determined that "accordingly" it was not "necessary" that there be a further pharmacy. Against that background, the Second Division, whose opinion was delivered by the Lord Justice Clerk (Ross) stated that they considered it "crucial" that;

" at no stage in the statement of reasons is there any indication that the panel ever applied its mind to the question of whether the provision of a further pharmacy was desirable",

commenting that "even if something is not necessary it may yet be desirable."

[39] Whilst there was no discussion in the case regarding the nature of adequacy and whether it is an absolute or relative concept, what is clear is that the Second Division took the view that it was not enough to decide that adequacy existed and then ignore the matter of desirability. The whole question of whether an additional pharmacy was necessary or desirable to secure adequate pharmaceutical services in the area required to be considered by the National Appeal Panel.

[40] Dr Lowe's case should be given consideration not only because it was referred to and relied on by all parties in the course of the hearing before me but also because it was the only authority referred to at the appeal hearing before the respondents. As I have already noted, the interested party relied on it for their submission to the respondents that the statutory test was not "wholly adequate" but "adequate", a submission which seems to have been made because the Committee had determined that the application should be granted against a background of the existing services not being "wholly adequate". The Committee had, as is evident from the detailed section of their decision entitled "Adequacy of Existing Services" (paragraph 19), in which they identify deficiencies in the present level of service, reached the view that they were not "wholly adequate" (paragraph 19.22) and also that there was "considerable" room for improvement. The interested party made their submission that the test was "adequate" and not "wholly adequate" under reference to the judgment of Lord Justice Buxton but the respondents do not appear to have been referred to the leading judgment which was delivered by Lord Justice Laws and with which Lord Justice Buxton agreed. I have, of course, already noted that the regulations prohibit a party from being represented by counsel or a solicitor at an appeal hearing. Perhaps a fuller reference to the case would have been made if there had been such representation.

[41] Had the respondents been referred to the judgment of Lord Justice Laws, they would have had to consider his approach to the construction of regulation 4(4) of the National Health Service (Pharmaceutical Services) Regulations 1992, which is in almost identical terms to regulation 5(10). He explains it at paragraph 14 in the following terms:

"I believe that the regulation's true construction may be expressed ... through these following five steps:

1. A licence to provide pharmaceutical services is only to be granted under regulation 4(4) for the purpose of securing in the relevant neighbourhood the adequate provision by listed pharmacists of the services in question. So much is plain and elementary.

2. What is "adequate" is a question of degree. There is, as has been described, a spectrum or "continuum" of adequacy.

3. That is, I think, ordinarily a feature of the term ; 'adequate' as a matter of language. But it is in any case a necessary feature of the term as it is used in regulation 4(4) since if it were otherwise - if 'adequate' were to denote a single sharp edge, such that any given set of facts would fall plainly upon one or other side of it - then it would be impossible to arrive at any construction of the earlier phrase, 'necessary or desirable', other than one in which the word 'desirable' were otiose. If the provision were inadequate it would simply be necessary to make it up by granting the application. If it were adequate, the application would have to be refused.

4. It follows that, while on the surface the first question for the decision-maker is simply whether existing provision is adequate, the real question is where on the sliding scale or spectrum of adequacy does the case on its facts belong.

5. To this, the logically available answers are:

(a) Wholly adequate. There is no magic in the word 'wholly'; it simply refers to a state of affairs in which there is no question but that the existing provision suffices.

(b) Wholly inadequate. Again, there is no magic in the adverb. This looks at a state of affairs where further provision must necessarily be made.

(c) Marginal, or somewhere between (a) and (b). There the decision- maker may conclude that it is desirable to grant the application in order to secure adequate provision. But

(d) There may be some slippage between what is marginal and the extremes, wholly adequate or wholly inadequate. To that extent there may be slippage also between what is necessary and desirable. The judgment to be made is emphatically pragmatic."

[42] At paragraph 16, he added:

"If the approach that I have described is correct, then there is nothing objectionable in the decision-maker first asking itself whether existing provision is wholly adequate. Indeed, that is a useful approach since, if the answer is "yes", then that is the end of the case."

What Lord Justice Buxton seems to have been concerned to add was not that it was wrong for the decision-maker to ask itself whether the existing provision of pharmaceutical services was wholly adequate but that, ultimately, what the decision maker had to have in mind was that the regulation was directed towards the provision of pharmaceutical services that are simply described as "adequate". He did not, in any way, disagree with Lord Justice Laws' analysis. In particular, he did not disagree with his view that the concept of adequacy was not an absolute one but was, rather, a matter of degree. That being so, it is unfortunate that the respondents were not referred to the whole judgments in the case. Had they been, they may not have fallen into error, something which I am satisfied that they did do.

[43] The question of what is and what is not adequate in the context of service provision must be one of degree. What seems to be adequate provision today may seem inadequate tomorrow. Further, what can properly be regarded as adequate is bound to be informed by assessment of what is possible. The provision of a service in one form may seem adequate until account is taken of how that provision could, by effecting a change that is possible, be better. The use in the regulation of the term "desirable" seems clearly to recognise just that. Once a possible change is taken into account, it may seem desirable to effect it on the view that adequacy will then be secured. Indeed, there may be cases where, once the effect of possible changes are properly taken into account, the existing provision appears to be so deficient that it is considered necessary to effect the proposed change to secure adequacy.

[44] Accordingly, whilst I agree with the principles of the construction of the terms of the regulation set out by Lord Justice Laws in his judgment in the Dr Lowe case, in that clearly, the concept of adequacy is one of degree, may involve the application of something that could be described as a sliding scale and certainly calls for a pragmatic approach, I would go further. As I have noted above, he seems to envisage that there will be cases where the decision-maker need only consider adequacy because the services that exist are thought to be "wholly adequate". I do not see that that conclusion could be reached without looking at the changes that are proposed in the application. Only then can the decision-maker see what would be possible by way of service provision and only then, in my view, can a fully informed decision be made as to whether that which presently exists can properly be described as adequate.

[45] Further, the use of the term "secure" in the regulation requires to be considered. The regulation could have provided simply that an application could be granted if it was necessary or desirable for the provision of adequate pharmaceutical services but it does not do so. It provides that an application can be granted if it is necessary or desirable to secure the adequate provision of pharmaceutical services. The use of the word "secure" indicates, in my view, that it is open to the decision-maker to grant an application on the basis that although service provision will thereafter go further than the minimum that is necessary to achieve adequacy, that being adequacy in the sense that I have already discussed, it does so on the basis that the provision of the service covered by the grant will afford reassurance that adequate service will be maintained. Another way of expressing it would be to say that the use of the term "secure" connotes that the decision-maker could grant the application so as to allow for a safety margin as regards the maintenance of an adequate provision of pharmaceutical services.

[46] This recognition of the impact of the use of the word "secure" accords with the need to give some content to the word "desirable". If the intention was that applications were to be granted only where what was proposed would improve service provision against an existing state of inadequate provision, that could have been achieved by the use of the word "necessary" alone. The use of the word "desirable" as an alternative to "necessary" makes it clear that the intention was that the decision-maker could, if he felt it appropriate, take a less restrictive approach and grant an application on the grounds that it was desirable. This would clearly be a valuable tool for the decision-maker to use in cases where it could be argued that existing provision was adequate but there was room for reasonable improvement which, once effected, would not seem excessive and would be liable to make what existed previously seem inadequate.

[47] It is, accordingly, not enough for the decision-maker to look at existing provision, ask whether it is "adequate" and if that question is answered in the affirmative, ask no further. The regulation gives rise to a composite question, namely that of whether granting the application is necessary or desirable to secure the adequate provision of pharmaceutical services. To answer that question, the decision-maker must look at the whole circumstances including what would be achieved if the proposed changes were effected and the questions of whether, once that is done, it is necessary or desirable to effect those changes in the interests of the provision of adequate pharmaceutical services, recognising the fluidity of the concept of adequate service provision in a changing society.

[48] The respondents failed to look beyond the question of whether, in their assessment, the existing provision was adequate. Their reasons for refusing the application are to be found in paragraph 18 of their decision, as above.

[49] Also, in the revisals to their Answers, they aver :

"The Respondents concluded that the provision of the relevant services in the neighbourhood was adequate. It therefore did not need to, and did not, address the issue as to whether the services in the neighbourhood would be improved by the opening of a pharmacy at the premises identified in the application."

It is, though, evident that not only did they not address the issue of whether services would be improved by granting the application, they simply did not look beyond the question of what was the existing provision. For reasons that I have already explained, that is, in my view, an erroneous approach. They were wrong, in my opinion, to close their minds to what would be achieved if the application were granted. They should have considered that question, considered how the adequacy of the existing provision of pharmaceutical services appeared once the possibility of the changes that could be effected if the application were granted were taken into account and they should then have asked whether it was desirable to grant the application to secure the adequate provision of pharmaceutical services. They should have done so bearing in mind that adequacy is not an absolute concept but one of degree which may involve the application of a sliding scale and bearing in mind also the impact of the use, in the regulation, of the word secure. Further, they should have been mindful of the fact that the primary legislation does not require the test set out in regulation 5(10) to be applied to an application for relocation where the end result will be that there will not be any increase in the number of pharmacies on the list for that neighbourhood. That being so, a less rigid approach to compliance with the terms of the regulation was justified and ought to have been adopted.

[49] I will accordingly, accede to the petitioners' motion, sustain their first plea in law, repel the first and second pleas in law for the respondents and interested party and, having reduced the respondents' decision of 25 November 2002, remit to the respondents to proceed as accords and re-hear the interested party's appeal against the decision of the Committee.