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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Boots The Chemist Ltd, Re Application For Judicial Review [2000] ScotCS 111 (26 April 2000) URL: http://www.bailii.org/scot/cases/ScotCS/2000/111.html Cite as: [2000] ScotCS 111

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[1] The National Health Service (Scotland) Act 1978 (c. 27) provides:

[2] The National Health Service (Pharmaceutical Services) (Scotland) Regulations 1995 (1995 S.I. 414) provide:

(2) A person ... ["an applicant"] -

[3] The town of Troon has three General Medical Practitioners' surgeries and four pharmacies, three of which are contractors for the National Health Service. One of the surgeries is in a street called Templehill and there is a NHS contracted pharmacy close to it on the street on the way into the centre of town. The other two surgeries are on Portland Street and at Dukes Road at a point near its junction with Portland Street (one of Troon's main shopping streets). Almost directly across from that junction is a further junction with Church Street where there is another NHS contracted pharmacy. That pharmacy is reasonably close to the two surgeries. Rather further away, on Ayr Street, is the petitioners' NHS contracted pharmacy. The petitioners wished to "relocate" that pharmacy to their non contracted pharmacy in Portland Street much nearer to the two surgeries. The various locations are all outlined on a plan produced by the petitioners and not disputed by the respondents (6/4).

[4] The petitioners completed the appropriate Form A(MR) on 21 October 1998 (6/5). This made reference to a covering letter (6/6) and stated that the relocation was "to move to improved premises". The letter, which clearly had in mind the potential difficulties which did in fact arise, contains, at least in part, what is essentially a legal argument based upon the petitioners' interpretation of the Regulations. It said:

[5] By letter dated 29 January 1999 the respondents (the Ayrshire and Arran Primary Care NHS Trust) refused the application. That was the subject of a judicial review process which resulted in an interlocutor dated 15 October 1999 of consent reducing the refusal. The application therefore required to be reconsidered. In seeking that reconsideration, the petitioners sent a letter to the respondents dated 9 November 1999 founding upon the terms of Scottish Home and Health Department Circular 1987 (GEN) 14 issued on 26 March 1987. This Circular states:

[6] The Board received the views of the Area Pharmaceutical Committee (7/3) in terms of Regulation 5(7) to the effect that the relocation was not a minor one in terms of the Regulations because:

The Senior Pharmaceutical Adviser reached a similar conclusion (7/3) to the effect that the proposed relocation did not fall within Regulation 5(6). He also focused on the move closer to the two surgeries. He said:

Neither the Committee nor the Adviser saw any patient benefit deriving from the move.

[7] By letter dated 18 January 2000 (7/5 and 6/6), the decision of the respondents at their meeting on 23 December 1999 was conveyed to the petitioners. That decision was that the respondents were not satisfied that the relocation was a minor one in terms of Regulation 5. The respondents accepted the advice given by the Committee and the Adviser. The respondents looked at the terms of Regulation 5(6) and especially to whether there were "other circumstances" such that there will be an "appreciable effect on the pharmaceutical services provided by the applicant or any other person whose name is included in the pharmaceutical list of the Board." They looked at the guidelines and observed that they provided no guidance on "appreciable effect" (the reasons for this will become obvious later). The respondents concluded that the relocation was not minor because:

[8] The petitioners presented this petition for judicial review of that decision.

(a) petitioners

[9] At the outset, the solicitor advocate appearing for the petitioners indicated that he was not seeking to argue grounds (e) and (f) in the sixth "Statement of Fact" in the petition and therefore his fourth and fifth pleas-in-law fell to be repelled. Ultimately, he did not argue his third plea either. These three pleas therefore fall to be repelled. He presented four arguments in support of his remaining two pleas of error in law and insufficiency or absence of evidence.

[10] In relation to error of law, he first submitted (under reference to the seventh statement in the petition) that the purpose of both the Act and the Regulations was to secure the adequacy and appropriateness of the supply of pharmaceutical services to the public and that economic effects of a decision on a contractor or the applicant were irrelevant at least unless those effects threatened the economic viability of the contractor. In taking into account these effects in this case, the Board had regard to irrelevant considerations. He referred to J. Fleming Wallace QC's article on The Interpretation of Statutes (Stair Memorial Encyclopaedia Vol. 12 paragraph 1131) relative to the well known presumption in favour of freedom of action in statutory interpretation. He contrasted the absence of any need to notify other contractors in an application for a minor relocation as distinct from where a new application was made under Regulation 5(10). This, he maintained, showed that the economic effects on other contractors were irrelevant. At a slightly later point in his argument he referred to the English Court of Appeal case of R. v Yorkshire Regional Health Authority ex parte Suri (1995) 30 B.M.L.R. 78 which, following R. v Cumbria Family Practitioner Committee ex parte Boots the Chemist (1988) The Times 25 November, seemed to support this proposition too.

[11] Secondly (under reference to the eighth statement), using a similar argument about the thrust of the legislation, he maintained that the respondents had failed to apply the Guidelines. These indicated that it was only when the economic viability of another contractor was effected that economic factors could be material yet here the respondents had expressly found that such viability was not threatened.

[12] Thirdly (under reference to the ninth statement), the solicitor advocate submitted that the reasoning relative to the figures used by the Adviser was flawed. What had started as a "possibility" of a change in the prescription levels in the pharmacies had become a probability for no reason. Having said that he could not estimate the relative effects, the Adviser had then purported to do that by using the percentage figures mentioned above. These failed properly to take into account various factors concerning the habits of the prescription buying public. Ultimately, this seemed to amount in part to a challenge to the reliability of the Adviser's figures with the solicitor advocate saying that the relationship between the two competing pharmacies ought not to be, as the Adviser seemed to be suggesting, "linear".

[13] Fourthly (under reference to the tenth Statement and the case of Suri (supra)) the solicitor advocate returned to the respondents having taken into account the economic effects on the other contractor and maintained that such effects could not be looked at legitimately merely by looking at them from the point of view of an increase in the petitioners' business as distinct from a decrease in the other contractor's prescriptions. I pause to note that I was also referred to the Northern Ireland Regulations and guidelines in connection with this argument. In all the circumstances, he invited me to reduce the decision and remit the matter back to the respondents for reconsideration.

(b) respondents

[14] Counsel for the respondents first emphasised the terms of the Regulations and stressed that the cases of Suri (supra) and Boots the Chemist (supra) were of little assistance because in Scotland, unlike England, there was a definition of "minor relocation". The critical area was the second leg of that definition in Regulation 5(6) which stated that a relocation was not minor where other circumstances were such that there was an "appreciable effect" on the pharmaceutical services provided by the applicant or another contractor. If the relocation were deemed "minor" then the Board had no discretion but to grant the application under Regulation 5(4) if the specified conditions were met. If the Board were not satisfied that it was "minor" then the Regulation 5(10) procedure had to follow with suitable intimation to other contractors who might be effected by it. The distinction emanated from the fact that with a minor relocation there would be no material effect on other contractors whereas in a standard relocation there might be and the applicant would have to meet the somewhat stringent necessity and desirability tests set out.

[15] Secondly, so far as the Guidelines were concerned, on the crucial issue of "appreciable effect" counsel submitted that they did not assist. In so far as they purported to lay down a test whereby economic factors could only enter into play if the viability of a contractor was affected, they contradicted the Regulations, notably Regulation 5(6), and should not be followed on that point. They were not so followed on the point although alluded to in the reasons for refusal given by the Board. The notification provisions of the Regulations on minor relocations were also wrong and this reflected just how little reliance could be placed on them. They pre-dated the current Regulations.

[16] Thirdly, in relation to the figures, the exercise carried out by the Board in obtaining the advice of the Committee and the Adviser was the one stipulated in the Regulations and that advice had reflected exactly the task which Regulation 5(6) provided the Board had to do so, namely determine whether the relocation would have an "appreciable effect" on pharmaceutical services. The figures and reasoning was perfectly intelligible.

[17] Fourthly, counsel submitted that the respondents' decision was justified on the facts and figures made available. The ground for refusal was that the relocation was not minor in terms of the second leg of Regulation 5(6) and not that some other condition was not met. That second leg had been introduced into the definition in Scotland by the National Health Service (General Medical and Pharmaceutical Services)(Scotland) Amendment (No.2) Regulations 1990 (1990 S.I. 2506).

4. DECISION
[18] The application in the case was one which sought to establish that the relocation proposed by the petitioners was a "minor" one in terms of the 1995 Regulations. As distinct from the position in England, there is a clear definition of what a "minor relocation" is. It is one where:

It is, in my opinion, a question of fact primarily for the respondents to resolve upon receiving the prescribed advice whether there is or is not going to be such an effect. The respondents have resolved the question as a matter of fact and, as will be observed later, had a sufficient basis for doing so.

[19] The way in which the Regulations are framed make it clear that if there is no appreciable effect anticipated then that is an end of the matter and the application must, unless some other condition comes into play, be granted. There is no discretionary element. If, on the other hand, it is anticipated that such any effect will occur then the particular application must fail. However, that does not prevent the applicant from securing a relocation but he has to do so applying under Regulation 5(10) in which case the necessity and desirability tests have to be met. Put another way, he cannot circumvent these tests in the case of a relocation which is other than truly "minor".

[20] I take from the definition and the structure of the Regulations that the distinction is reasonably understandable. If the relocation is "minor" then the interests of other parties, economic or otherwise, will not be materially affected and thus there is no need for them to become involved in the process at all. If, on the other hand, their interests might be effected, they are entitled to make such representations as they think fit. The reference to "appreciable effect" on the provision of services is specifically to the services of the applicant and contractors and not simply those generally provided in the area. Giving the words in Regulation 5(6) their plain and ordinary meaning, the "effect" must include a material effect on the level or quantity of provision from the particular outlets mentioned in the Regulation and not solely overall. It must, therefore, at this stage of the exercise, involve considering the potential economic effects on both the applicant and his competitors. If these are "appreciable" then the "minor relocation" route is blocked and a standard relocation application has to be followed. At that stage, no doubt the general purpose of the primary and subordinate legislation could be considered and appropriate weight, or lack of it, put upon any complaints of the Board's potential decision constituting an interference with the competitive market. However, I do not consider that these arguments can prevent the words of Regulation 5(6) being given the interpretation which, in my opinion, they merit.

[21] It is certainly true that in Boots the Chemist (supra), the Court of Appeal in England stated that the economic effects on a competitor should not prevent a relocation being classified as "minor". However, that case and Suri (supra) were decided upon Regulations which contained no definition of the critical phrase and, in particular, no specific reference for the need to consider the effects on the services provided by the applicant and his competitors. Indeed, it may be of some note that it was not long after the decision in Boots the Chemist (supra) (25 November 1988) that amending Regulations were promulgated in Scotland specifically to provide what is the current definition (Amendment (No. 2) Regulations 1990 (supra) made on 10 December 1990). Because of the material differences in the Regulations, noted by Sir Ralph Gibson in Suri (supra) at page 88, I was unable to derive any material assistance from the Court of Appeal cases.

[22] Accordingly, I am of the view that material economic variations in the quantity of prescriptions supplied can amount to an appreciable effect on the provision of pharmaceutical services within the meaning of Regulation 5(6) and the petitioners' argument on this point fails.

[23] The Guidelines are dated 26 March 1987 and thus pre-date the introduction of the definition of "minor relocation". On that basis alone they must be of limited assistance. They also seem contradictory of the Regulations themselves in part or at least apply glosses to them which do not seem merited. They require intimation to competitors when none is required in the Regulations themselves. For these reasons, clearly any use of the Guidelines has to be with care. However, it does seem to be the case that the respondents did pay some heed to the Guidelines in that they were reluctant to regard any economic impact on the competing pharmacy as material unless that impact threatened the viability of that pharmacy. In so far as the respondents did take that stance, their approach seems to favour the petitioners. Reading the language of Regulation 5(6) in the manner which I have done, there is no reason to restrict consideration of economic factors to those which might result in the closure of the competing pharmacy. Whilst therefore it may be true to say that the respondents may have erred in that regard, it is an error in favour of the petitioners and ultimately not one which affected the respondents' decision.

[24] Turning to the respondents' use of the figures supplied by the Adviser, I am unable to accept the criticisms made of the Adviser's approach. He is an expert in his field and might be expected to be able to use his expertise to reach a reasoned prediction on the likely impact of a proposed relocation on the competing pharmacies. Of course his prediction is only that and it might turn out to be in error. Furthermore, the degree to which his prediction can be analysed must bear in mind the nature and context of the exercise he is being asked to carry out. In the present case he did phrase the alteration in the distribution of prescriptions as being "a possibility". However, he was not using that word in the sense that a lawyer might use it as being something less than probability.

[25] It is not too difficult to conclude that the proposed move of the petitioners' NHS pharmacy will have a material effect on the other pharmacy and it is clear that the Adviser was not simply regarding that as a "possibility" in the legal sense but as something which, in his view, was likely to happen. This at least is shown by his use of the phrase "the balance of probability" in his next sentence. The next two sentences, reasonably regarded, set out the Adviser's prediction as an expert and having looked at the figures. The 25% is not something "plucked out of the air" as was submitted but an expert's view on what was likely to occur. This occurrence, he concluded, would have an appreciable effect in terms of the Regulations. He was entitled to express that view. It is a legitimate one on the facts which the respondents were equally entitled to follow.

[26] Finally, having regard to my view on taking into account the economic effects of the relocation, the care with which the Guidelines had to be treated and the legitimacy of the Adviser's approach, I am of the view that the decision of the respondents dated 23 December 1999 and set out in their letter of 18 January 2000 was one which they took having properly directed themselves upon the Regulations and taken into account all relevant considerations put before them. It was one which they were entitled to take within the statutory framework and upon the material presented to them.

[27] For all these reasons, I will sustain the first to third pleas-in-law for the respondents, repel the first to fifth pleas-in-law for the petitioners and refuse the prayer to reduce the respondents' decision of 23 December 1999.