FIRST DIVISION, INNER HOUSE, COURT OF SESSION
Lord President Lord Reed Lady Smith	[2010] CSIH NO.55 P744/09 OPINION OF THE COURT delivered by LADY SMITH in RECLAIMING MOTION in Petition of LLOYDS PHARMACY LIMITED Petitioners; against THE NATIONAL APPEAL PANEL First Respondents and Reclaimer; and BOOTS THE CHEMIST LIMITED First Interested Party: for Judicial Review for entry to the Pharmaceutical Lists _______

Act: Lindsay; Dundas & Wilson CS (for the Petitioner)

Alt: MacNeill, Q.C., Khurana; R F Macdonald (for the First Respondent and Reclaimer)

Alt: Crawford, Q.C.; Archibald Campbell & Harley (for First Interested Party)

[Date of Issue]25 June 2010

Introduction

[1] A new health centre opened in Fort William, in 2007, outside the town. The local General Practitioner practices moved there and it also became the main point for the provision of many other medical services. People wanted there to be a pharmacy at the new health centre and there was a pharmacy business that was willing to operate from premises there. The opening of pharmacies in Scotland is, however, subject to statutory control and, in this case, the exercise of that control resulted in permission for the provision of a pharmacy at the health centre being refused.

[2] The pharmacy that wanted to open for business in the health centre was Lloyds Pharmacy Limited ("Lloyds"). They petitioned for judicial review of the decision of the National Appeal Panel for Entry to the Pharmaceutical Lists ("the Panel") to refuse their appeal against the decision of the Highland Health Board ("the Board") not to grant their application to be included in their pharmaceutical list. By interlocutor dated 3 March 2010 the Lord Ordinary inter alia, reduced the Panel's decision and remitted Lloyds' appeal to be reheard by a differently constituted panel. This reclaiming motion is directed to recalling the Lord Ordinary's interlocutor and dismissing the petition.

[3] The petition was served on the Board and on the relevant GP Sub-Committee but neither of them lodged answers. It was also served on Boots the Chemist ("Boots"), as a party having an interest. They lodged answers.

Background

[4] Under reg 5 of the National Health Service (Pharmaceutical Services) (Scotland) Regulations 1995 (SI 1995 No 414) ("the 1995 regulations") health boards and primary care NHS trusts in Scotland require to maintain a list ("the pharmaceutical list"), containing the names of persons who undertake to provide pharmaceutical services and the addresses from which they undertake to do so. If a person on the pharmaceutical list wishes to open additional premises in the area of the same health board, he requires to apply to the board or primary care NHS trust for authority to do so. The respondents made such an application to the Board in the following circumstances.

[5] There are three General Practitioner practices in the Fort William area. Prior to May 2007, they were all located in Fort William town centre. There were two pharmacies immediately adjacent to two of the practices' premises and close to the third practice. One of those pharmacies is operated by Lloyds. All three practices then moved to a new health centre situated at Camaghael Loop Road, Caol. It is some two and half miles from the town centre. The nearest pharmacy is a small one in Caol, also operated by Lloyds, over a mile away from the health centre. The services provided by the pharmacy at Caol were constrained by their size, the inadequacy of the dispensary there and poor consultation facilities.

[6] As is recorded by the Lord Ordinary, a number of concerns were raised by the doctors and Lloyds about the nature and extent of pharmacy provision in the neighbourhood after the health centre moved to its out of town location. It was said that there were difficulties for patients in accessing a pharmacy; none were within walking distance of the health centre, the bus services were not adequate, there were problems with parking in the town centre, particularly during the tourist season, double journeys (one to the doctor and another to the pharmacy) were now required, an ICM survey showed that half of those interviewed considered there to be inadequate access to pharmacies in the area and the geographical distance between the existing pharmacies and the health centre presented a barrier to cross working and learning in circumstances where the multiplicity of disciplines working and training in the health centre meant that valuable opportunities were available in that regard.

[7] Lloyds applied to the Board for permission to open a pharmacy at the new health centre. The Board refused their application by letter dated 1 September 2008 and Lloyds appealed to the Panel. Their appeal was heard on 27 January 2009. It was opposed by Boots.

[8] The Panel's decision to refuse the respondents' appeal was dated 29 January 2009 and was intimated by letter dated 3 February 2009, paragraphs 22 - 24 of which were in the following terms:

"Adequacy of existing provision of pharmaceutical services and necessity or desirability

22. Having reached that decision [that the relevant neighbourhood was the greater Fort William area], 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.

23. Within the neighbourhood, as defined by the Panel, there are three contract pharmacies, two of which are located in the High Street of Fort William and the other in the village of Caol. In their totality these pharmacies provide a full range of services to meet the needs of the population of the neighbourhood including the elderly, the disabled, mothers with young children and those requiring addiction services. The Panel did find inadequacies in the service provided by the Caol Pharmacy and were encouraged to hear of the plans to address these. The Panel gave particular consideration to the arguments put to them concerning accessibility. It found that many patients wishing face-to-face contact with a pharmacist would be able to travel on foot from their homes in Fort William or Caol. Others, less mobile or living at a greater distance, would be able to access services using the regular bus services or by car, with car parking available at the door in Caol and in nearby car parks in Fort William (with disabled spaces available outside the Boots Pharmacy). In addition, collection and delivery is available and the panel further noted that prescriptions could be faxed from the Health Centre. The Panel identified no unmet need.

24. For the reasons set out above, the Panel considered that the existing pharmaceutical service in the neighbourhood was adequate. Accordingly the Panel was not satisfied that the granting of the application 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 refused."

[9] By letter dated 26 March 2009 Lloyds' solicitors wrote to the Panel requesting that they set aside their decision but they declined to do so.

Relevant Legislation

[10] The National Health Service (Scotland) Act 1978 ( as amended) ("the 1978 Act") provides that it is the duty of every health board to make arrangements in its area for the provision to persons there of proper and sufficient drugs, medicines and listed appliances which are ordered for him by his doctor (s.27(1)). It also states that regulations are to provide for securing that arrangements made by a health board under s.27(1) will enable patients to receive such items, that those regulations are to include provision for the preparation of pharmaceutical lists and that they are to provide that an application by a person already included in the list:

"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 services, or some of the services, specified in the application..." (s.27(3)( c)).

[11] The 1995 regulations were promulgated in exercise of the powers conferred by various sections of the 1978 Act including section 27. The provisions of reg 5(2) of the 1995 regulations reflect those of s.27(3) and include:

"A person ... -

(a) who wishes to be included in the pharmaceutical list for the provision of pharmaceutical services; or

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

(i) to open within the Board's area additional premises from which to provide pharmaceutical services...

(ii) ...

(iii) ...

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

[12] Reg 5(10) applies to the present case and its terms, insofar as relevant, are:

"An application made in any case other than one to which paragraph (3) or (4) applies shall be granted by the Board or primary care NHS trust, ..., 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 Lord Ordinary's Opinion

[13] The Lord Ordinary held that the Panel had misdirected themselves. They had failed to address the essential contention that was before them, namely that the existing pharmaceutical provision was inadequate because of the absence of pharmaceutical services at the new health centre. They had assessed only the extent of the accessibility of the existing pharmacies in Fort William town centre and in Caol. That was not enough.

[14] The Lord Ordinary discussed the construction of reg 5(10) under reference to Safeway Stores Plc v National Appeal Panel 1997 SC 189, Sainsbury's Supermarkets Limited v National Appeal Panel 2003 SLT 688, Lloyds Pharmacy v National Appeal Panel 2004 SC 703, R v Family Health Services Appeal Authority, ex p. Lowe [2001] EWCA Civ 128 and R (On the Application of Assura Pharmacy Limited) [2008] EWCA Civ 1356. He observed that the most recent consideration of the regulation by the Second Division in the Lloyds Pharmacy case referred to there being a two stage test involved in its structure and that whilst the Court of Appeal had taken a different approach in the Assura Pharmacy case, rejecting the two stage approach, considered that it made no practical difference. The Lord Ordinary said that he suspected that it was an "overly rigid" application of the two stage approach discussed in the Lloyds Pharmacy decision that led to the Panel's rejection of Lloyds appeal. He concluded that the Panel had erred because, when assessing adequacy of provision (the first stage of the test set out in the Lloyds Pharmacy case) they had failed to have regard to the fact that the changed circumstances meant that there was no pharmacy in the new health centre. He explains, in paragraph 28 of his opinion, that:

"The matter can be resolved if one recognises that if the existing provision is missing a desirable feature, then it may not be adequate."

and adds:

"The above suggestion would allow for the application of a two stage approach as set out in the Scottish decision."

[15] At the end of paragraph 28 he observes:

"...there is nothing to stop the Panel from concluding that the existing provision is inadequate because of the absence of a pharmacy in the health centre. Whether or not it takes that view is a matter for the Panel."

Parties' Submissions

[16] The submission by Mr MacNeill QC, for the Panel, which was adopted by Miss Crawford QC, for Boots, was that the Lord Ordinary had not applied the test set out in Lloyds Pharmacy, as was evident from his referring to the Panel having engaged in an "overly rigid" application of it. He was said to have looked at matters by starting with his conclusion and working backwards, conflating the two stages of the test in doing so, in circumstances where it was evident that the Panel had applied the law correctly, in accordance with the Lloyds Pharmacy decision. Although he purported to apply the Lloyds Pharmacy case, he had not done so as was, it was said, evident from his having focussed on there being a gap in provision by reason of the lack of a pharmacy at the health centre. That decision was binding on us and if there was any doubt regarding its clarity then the reclaiming motion should be referred to a court of five judges, a submission which was not acceded to by counsel for Lloyds who submitted that any criticism that it might be thought that the Lord Ordinary had made of the two stage test set out in the Lloyds Pharmacy decision was obiter. Mr Lindsay submitted that it was clear that the Lord Ordinary had, in determining that the Panel had missed the point in looking only at the issue of accessibility to the existing pharmacies, applied the two stage test. In circumstances where the situation in the neighbourhood had changed Lloyds Pharmacy had envisaged such change being taken into account when adequacy was being assessed. There had been a change here and there was no sign of the Panel having taken it into account.

Discussion and Decision

[17] The Panel's reasons indicate that they addressed the issue of adequacy of provision by assessing the accessibility of the existing three pharmacies. There is no indication of them having considered the matter in the light of the change in the circumstances of the neighbourhood that involved the town's three General Practitioner practices all having relocated to the new health centre outside the town centre. The Lord Ordinary considered that they required to do so.

[18] The question for us is whether in so concluding, the Lord Ordinary followed the decision in the Lloyds Pharmacy case or, as was submitted, departed from it. The approach of the Second Division in that case was to construe reg 5(10) as requiring a "two stage approach" (paragraph [8]) which is further explained, at the end of paragraph [8] as follows:

"The fundamental criterion against which the application is to be judged is the adequacy of pharmaceutical services in the relevant neighbourhood. A deficiency in those services must exist before an application can be granted. Consequently the existence of such a deficiency must be identified before it is necessary to consider what may be done to provide a remedy. The second question relates to the manner in which an identified deficiency is remedied."

[19] Thus, assessing adequacy involves asking whether or not there is a deficiency in provision and at paragraph
[10] the court explains how the Panel is to go about answering that question:

"The question that the decision-maker must address is the adequacy of the existing provision to serve the neighbourhood in question. In addressing that question, however, it is in our opinion proper to have regard to probable future developments, for two reasons. First, the standard of adequacy in a particular neighbourhood will obviously change with time. The relevant neighbourhood may change, for example, through the construction of new housing developments or the movement of population out of inner-city areas. Likewise, changes inevitably occur in pharmaceutical practice, and the standard of 'adequate' pharmaceutical provision must accordingly develop over time. The proposal under consideration may well provide an illustration of how pharmaceutical practice is developing, and may be relevant to show what sort if provision is possible in the neighbourhood. We are in full agreement with the Lord Ordinary that changes in pharmaceutical practice should be taken into account by the decision-maker. Secondly, reg 5(10) uses the word 'secure' in relation to the adequate provision of pharmaceutical services. That word seems to us to indicate that the decision-maker can look to more than merely achieving a bare present adequacy of pharmaceutical services. 'Secure' suggests that it should be possible to maintain a state of adequacy into the future. That indicates that the decision-maker must have some regard to future developments, in order to ensure that an adequate provision can be maintained."

[20] We note, in particular, the references in that passage to the relevancy of changes in the neighbourhood, the relevancy of changes in pharmaceutical practice, the relevancy of development of the standard of pharmaceutical provision, and the relevancy of what it is possible to provide by way of pharmaceutical services in the neighbourhood. That all makes sense. To use an analogy referred to in the course of the hearing before us, the fact that there is a staircase in a multi- storey building may seem to provide adequate access to its upper floors until an assessment of it shows that the incorporation of a lift into it would be feasible. It would then be not at all surprising if the conclusion was that access to the upper floors of the building was inadequate. In our example, the assessor of the adequacy of access to the building would not be limited to examining the stairs and asking whether it was possible to climb them to reach the upper floors. He would require to take account of the fact that a lift could be incorporated into the building and certainly entitled to conclude that the existing access by stair alone was not adequate. Likewise, once a lift was installed he might readily come to the conclusion that the previous access was not adequate.

[21] Unlike Lawrence Collins LJ in the Assura case, we would not describe the approach in Lloyds Pharmacy as being that "adequacy" connotes an absolute concept since it makes it clear that what is involved in the standard of adequacy in any particular case may vary according to its own circumstances. We do, however, agree with him where, at paragraph 50, he explains that any conflict in approach between his opinion and this court is not important because it makes no practical difference given his understanding of the Lloyds Pharmacy decision which he summarises as follows:

"...the Court of Session recognised (para 10) that the decision- maker could properly have regard to probable future developments, because the standard of adequacy in a particular neighbourhood would obviously change with time, and the Regulation used the word 'secure' in relation to the adequate provision of pharmaceutical services."

We agree with that summary.

[22] We do not read the decision in Lloyds Pharmacy as having required the Panel to confine its considerations to the question of the accessibility of the existing pharmacies. That was a narrow and restricted approach which ignored what were evidently very significant changes that had taken place in the neighbourhood when the local doctors' practices relocated to the new health centre along with the providers of a wide range of other medical services, thus putting substantial distances between the place where such provision was made and the locations of the existing pharmacies. It seems to us that those are the sort of changes that fall within the category of developments identified by the court at para [10] of its decision in Lloyds Pharmacy as being relevant to the consideration of the question of whether or not there is a deficiency in current provision. That, of course, was the question that the court identified as needing to be asked and answered when determining whether or not, in a particular neighbourhood, there is an adequate provision of pharmaceutical service. In the present case to address that question, the Panel required to have regard to these developments before reaching its conclusion.

[23] It follows that we do not consider that the Lord Ordinary fell into error. He correctly identified that Lloyds' contention was that the existing provision was not adequate in the new changed circumstances. That issue was a relevant one for the reasons which we have explained and the Panel do not appear to have considered it. They seem to have confined their consideration to access by patients from their homes. Insofar as his opinion might be read as calling into question the analysis of the construction of reg 5(10) in the Lloyds Pharmacy decision as involving a two stage approach, we agree with Mr Lindsay that his observations fall to be read as obiter dicta and that he has in fact applied the construction of the regulation that that case required of him. We are not, accordingly, persuaded that there is any need to refer the matter to a bench of five judges.

[24] We will, in these circumstances, pronounce an interlocutor refusing this reclaiming motion.