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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Sainsbury's Supermarkets, Re [2002] ScotCS 304 (29 November 2002) URL: http://www.bailii.org/scot/cases/ScotCS/2002/304.html Cite as: [2002] ScotCS 304

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(1) The National Health Service (Scotland) Act 1978 (c. 29) provides:

The National Health Service (Pharmaceutical Services) (Scotland) Regulations 1995 (1995 S.I. 414 (S.28)) provide:

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

Schedule 3 of the Regulations sets out the procedure to be followed by a person applying to a Health Board for inclusion in a list. It states :

Appeals from the decisions of the Board are also dealt with by the Schedule, paragraph 4(6) of which provides for the convening of the National Appeal Panel to determine any such appeal. Schedule 4 covers the procedure to be adopted by the Panel and paragraph 15 of this provides that :

"(1) 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."

(2) By application dated 1 November 2001 (Pro. 6/6), the petitioners requested inclusion of their store at Darnley Mains Road, Glasgow, in the Pharmaceutical List of the Greater Glasgow Primary Care National Health Service Trust. The hours of opening which they proposed were 8 am to 10 pm except on Sundays when the store closed at 8 pm. In a letter attached to the application, the petitioners wrote :

A plan lodged in the Judicial Review process (Pro. 6/8) illustrated the extent of the neighbourhood as defined by the petitioners. This was largely confined to Southpark Village itself, an estate primarily of modern private housing immediately to the south of the petitioners' store.

(3) The application was heard by the Greater Glasgow Primary Care NHS Trust Pharmacy Practice Committee on 24 January 2002 (Pro. 6/5). The Committee refused the application, without holding an oral hearing, upon the general ground:

The Committee narrated that they had considered, amongst other matters: the location of the nearest existing pharmaceutical outlets and the level of dispensing; the location and level of general medical services in the area; demographic information relative to the post code areas in the vicinity; patterns of public transport; and future planning developments as known to the local authorities. It concluded:

The Committee thus found the neighbourhood to extend considerably beyond the northern and eastern boundaries of the petitioners' map, although part of the petitioners' western segment was excluded. The Committee noted that, within the neighbourhood as so extended by it, there were two pharmacies already operating. Both of these pharmacies are to the north of Nitshill Road, some distance from the store and Southpark Village but each in close proximity to the local general medical practitioners' surgeries. The Committee held that the provision of pharmaceutical services by these pharmacies was "adequate" given the level of prescribing and the services offered. On that basis the conclusion was that the proposed new pharmacy was not "necessary or desirable to secure...adequate provision".

(4) The petitioners appealed and the matter came before the National Appeal Panel on 21 May 2002 (Pro. 6/1). The Panel consisted of a chairman, two pharmacists and three lay members from outwith the area. The Panel undertook a site visit prior to the hearing. This took it on a tour of the general and wider area, including Nitshill, Southpark Village, Arden, Kennishead, Darnley, Barrhead and Thornliebank. At the hearing, the Panel permitted oral presentations from the petitioners and various objectors, including some of the local pharmacies. In submissions, the petitioners essentially maintained their position in relation to the boundaries of the neighbourhood but conceded that part of Darnley, to the north of Nitshill Road be included. None of the areas in which pharmacies were already located were included but the petitioners accepted that had a pharmacy been operating in the Darnley area, which they now included as part of the neighbourhood, then they could not have maintained their application. Southpark Village itself, it was said, had some 100 per cent car ownership, although for the extended area, including Darnley, this figure dropped considerably. Interestingly, the petitioners said that the store was a local store for the local population.

(5) The objectors included a Mr Gerrard who operated the Arden Pharmacy, one of the two pharmacies in the Committee defined neighbourhood, on Kyleakin Road. This was across Nitshill Road and the M77 from, but within a mile of, the petitioners' store. Mr Gerrard said, amongst other things, that his pharmacy was a marginal business, opening on four and a half weekdays only. It dispensed some 2,000 prescriptions per month primarily to those in the relatively deprived Arden area, but also to some from the Darnley and Nitshill Road areas. It had a small delivery service to the elderly and housebound. The Arden area had a high non-car ownership quotient and the residents in that category would be unlikely to use the petitioners' store. If this pharmacy closed then there would be a serious loss to the area. Several other pharmacists from the general locality also opposed the appeal, maintaining that there were adequate pharmaceutical services in the neighbourhood in question and from the pharmacies in the immediately surrounding areas. They referred to the existence of pharmacies near the neighbourhood on Nitshill Road itself, Barrhead Road, Crookston Road and Thornliebank. A Mr Rae explained that one of his pharmacies (he had one on Barrhead Road and one on Crookston Road) delivered to Darnley and Southpark Village and his Barrhead Road pharmacy was open on Saturdays.

(6) The Panel first set about deciding the extent of the neighbourhood. It said that it :

This definition was not too dissimilar from that of the Committee but markedly different from that of the petitioners, mainly because it included substantial areas to the east of the M77 both to the south and the north of Nitshill Road. Although it excluded one of the pharmacies in the Committee defined neighbourhood (the one on Main Street, Thornliebank - the extension of Spiersbridge Road), it still encompassed the Arden pharmacy on Kyleakin Road.

(7) The Panel stated :

Having defined the neighbourhood, the Panel continued :

The appeal was refused.

(8) The petitioners' first contention was based upon statement 5(ii) in the petition (paragraph 5(i) was expressly not argued). This was that both the Committee and Panel had misdirected themselves in law on the definition and application of "neighbourhood" in Regulation 5(10). The effect of this was that that the Panel's decision ought to be reduced and the matter remitted to them for reconsideration. It was not necessary to interfere formally with the Committee's decision as the appeal before the Panel amounted to a re-hearing. In approaching "neighbourhood", the Panel had qualified it with the word "natural" and used a test of what was "within reasonable walking distance" along with one of the location of "normal neighbourhood facilities". This was different from the way in which the Committee had looked at the area. The Shorter Oxford English Dictionary gave a number of definitions including :

These definitions suggested that what should be looked at is the area of the local community and not walking distance. Socio-economic factors had to be taken into account and that had not been done in this case. According to the petitioner, the areas of Southpark Village and Darnley had substantially different socio-economic profiles from the surrounding areas. This had not been taken into account properly in defining the "neighbourhood". The M77 had also produced a natural boundary which the Panel had not taken into account either.

(9) The petitioners' second contention was based upon statement 5(iv) in the petition and was that the Panel had taken into account the detrimental effect on another contractor, that is to say it had taken into account the adverse economic consequences upon a competitor. In doing so, it was to an extent speculating but the main point was that it had sought, in its assessment, to protect the local contractor from competition but had not identified any detrimental effect on consumers. In that respect, the protection of such a contractor was an irrelevant consideration. Since all the consumers were in the same neighbourhood, there could be no adverse effect on them in relation to their access to pharmaceutical supplies. Indeed the Panel had also erred in looking to provision outside the neighbourhood to assess adequacy of provision within it.

(10) The petitioners' third submission, in terms of paragraph 5(iii) of the petition, was that the petitioners had provided a positive reason why consumers would benefit, namely the extended opening hours. That pointed to the desirability of their proposal. The Panel had not taken account of this. There was certainly nothing in the reasoning given to suggest otherwise and, since it was a relevant consideration, mention ought to have been made of it. Section 27 of the 1978 Act was intended to be a benefit to consumers. The Southpark area was full of motor bound commuters who would not be in the vicinity during normal opening hours, such as those operated by the Arden pharmacy. Looking at matters realistically, the extended hours had to be one of factors which the Panel was bound to consider.

(11) In reply to the first point, the respondent focussed upon the terms of Regulation 5(10) which essentially said that if services in the relevant neighbourhood were already adequate then that was an end of the matter since an application could only be granted if the new proposal was necessary or desirable to secure adequacy. If adequacy was already there, the Committee or Panel need look no further since desirability and necessity were subsidiary to that adequacy.

(12) It was said that there had been no superior court determinations relative to "neighbourhood" under either the Scottish or English regulations, although single judges sitting alone had applied their minds to the meaning of the word. The absence of such determinations was not surprising because it was practically impossible to come up with a definition which could cover the huge variety of different situations to which the word might be applicable. It could apply to a small area or a large area and was incapable of precise definition. It was also a matter of fact for the primary fact finders, the Committee and the Panel, to determine looking at a number of different factors. The reasoning of the Panel in reaching their conclusion was adequate. The factors mentioned in paragraph 15 had not been exhaustive but in paragraph 17 the Panel had regard to the incidents which most people would use to determine the issue. The use of the word "natural" there was surplus to the meaning of the word. There was no regulatory requirement to have regard to socio-economic factors in defining "neighbourhood", but these had been taken account of generally.

(13) In relation to the second contention, the respondent stressed that what was under consideration was the supply of prescribed medicines. These would be prescribed during the hours when the pharmacies in the vicinity were open. Any emergency prescriptions could be obtained either from the general medical practitioner or through hospital services.

(14) Finally, so far as the third point was concerned, enhanced desirability or improvement was not the correct approach standing the terms of the Regulation. The Panel, on the other hand, had applied the correct test in paragraph 20 where it considered the detrimental effect which the proposal would have upon the adequacy of local provision. The Panel had determined that the existing provision was adequate and had rejected the petitioners' submission that their proposal enhanced that adequacy. For these reasons the prayer of the petition should be refused.

(15) The object of the scheme set out in section 27 of the 1978 Act is to ensure that everyone has ready access to prescribed drugs and medicines. The Regulations must be looked at in light of that object. The Act itself makes no reference to "adequate provision" being relative to "the neighbourhood" in which a pharmacy is, or is to be, established. That concept appears solely in the Regulations. On a superficial reading of these, it may appear that the Regulations, notably Regulation 5(10), seem to impose a restriction on the number of pharmacies that might be permitted to operate in a particular area and thus establish a potentially anti-competitive regime. However, it must be assumed that this is not the intention of the Regulations. Rather, they are designed to pursue the object of the scheme set out in section 27 of the Act, albeit that such pursuit may result in one pharmacy not being permitted to operate if the effect of that operation is to undermine the adequacy of provision to persons in its vicinity or, to be more accurate, as the Regulations phrase it, in its neighbourhood.

(16) The ascertainment of the neighbourhood in which a proposed pharmacy is to be established is primarily a matter of facts and circumstances more suited to resolution by a Committee or Panel of the type established under the Regulations than through rigorous and detailed legal or linguistic analyses. The extent of a neighbourhood may depend on a great number of factors. No doubt what the Committee or Panel will be looking to do in general is to define the area from which the vast bulk of the customers of the proposed pharmacy will be drawn. But the boundaries of the neighbourhood may, in certain cases, be incapable of precise definition. The references in the Oxford Dictionary are helpful but not definitive. For example, in rural areas a neighbourhood may encompass very great distances, incapable of being traversed, in a practical sense, on foot. In urban areas, walking distance, as a factor, may be a very useful tool in ascertaining the extent of a neighbourhood albeit that the customers, or a large number of them, may not be expected to walk to the pharmacy in question. A neighbourhood in which a pharmacy is located may or may not include a large residential component and it is possible to envisage a neighbourhood with no inhabitants at all, such as in an urban business centre. In this case, on the other hand, it is important to note that the submissions of the petitioners and most, if not all, of the objectors sought to persuade the Panel to define the area by reference to the petitioners' store and the residential areas in its vicinity.

(17) When looking at the way in which a Panel sets about its task in a given appeal, the Court will be anxious to determine whether it has: misdirected itself on the issue it requires to resolve; taken into account an irrelevant consideration or ignored a relevant one; or otherwise reached a decision on any aspect of the appeal which no reasonable Panel could have reached. In this case, I am unable to detect an error in any of those respects. The determination of a body such as the Panel has to be looked as a whole, taking care not to analyse words out of their context or in the manner appropriate to an examination of a conveyancing deed or fiscal statute. The Panel here carefully defined the boundaries of the neighbourhood as a matter of fact, differing slightly from the view of the Committee, and proceeding in a manner which reflected the submissions made. The Panel gave its reasons for selecting the area defined. These reasons were because it appeared to the Panel that the area they chose was the "natural" neighbourhood. In so saying, the Panel was simply expressing the view that this area seemed to it to be what looked like the obvious extent of the neighbourhood. The Panel referred in that connection to the whole area being within walking distance of the petitioners' store but that is not to say that the Panel was adopting "reasonable walking distance" as a formal definition of neighbourhood. That would not be appropriate and the Panel had already stated that it had taken into account a number of factors in reaching its decision. Walking distance can, as noted above, be a useful guide or pointer to the extent of a neighbourhood in an urban residential setting and that appears to have been how the Panel regarded it. The Panel also had regard to the location of the facilities which might be expected to exist in a given neighbourhood, including shops, primary schools and post office. Again, the existence of these facilities may be elements which a Panel can look to in determining the extent of a neighbourhood but they are simply that. In certain areas, one or more of the elements may be missing. Socio-economic factors may also play a part but there is no reason to suppose that the members of the Panel were ignorant of, or ignored, the obvious differences in housing types and standards between, for example, Southpark Village and Arden. The fact that there are different socio-economic groups in an area by no means results in these groups having to be categorised into different neighbourhoods, although in certain situations they may be. The opposite would be likely to be the case if, for example, substantial numbers of persons from both socio-economic groups would be expected to use the proposed pharmacy. The building of a motorway, such as the M77, through an area may result in a single neighbourhood being divided into two but, once again, that is not necessarily the case. It can only be one figure in the equation.

(18) The members of the Panel went upon an extensive site visit when the different natures of the component parts of the ultimate neighbourhood area would have been clear to them. They listened to extensive argument upon the factors which one side or another sought to stress as important in setting the final boundaries. The Panel made its decision and provided a number of reasons for the selection of the boundaries using factors of an ordinary type which might be regarded as helpful in the balancing exercise necessary to fix the limits in an urban setting such as the present one. Indeed many of the factors looked at, including distance, shops and facilities are features listed in Dictionary definition. In looking at the reasons given, it cannot be said that the Panel took into account an irrelevant factor or ignored a relevant one. The ultimate decision which the Panel reached was one which was open to it in all the circumstances, albeit that a different Panel might not have reached an identical view upon the same information.

(19) Having defined the neighbourhood, the Panel next considered the adequacy of the pharmaceutical services within it. Once more, the adequacy of such services within an area is primarily a question of fact for the Committee and Panel to resolve rather than one that can be determined purely by legal reasoning. It is, of course, important that a Panel does not misconstrue the terms of the Regulations, and in particular that it correctly construes "adequacy" and what constitutes "necessity" and "desirability" in securing that adequacy. It must have in mind not the protection of existing pharmacies, in the sense of preserving a particular pharmacist's established trade, but the object of the scheme set out in section 27 of the Act to secure the adequacy of provision to persons in the relevant area. The terms of Regulation 5(10), at least if looked at in isolation, might suggest that, once adequate provision exists in a neighbourhood, no new pharmacies can be permitted. After all, provision must either be adequate or not and adequacy is not a word which is easily qualified. However, a construction of this type could potentially hinder the improvement of pharmaceutical services in a given area by preventing the creation of better services where bare adequacy has been achieved. That is not a construction that should readily be reached. Rather, the use of the term "desirable" in conjunction with the securing of adequacy would suggest that, even if adequacy is achieved, measures to improve pharmaceutical services in an area must nevertheless be permitted under the guise of such measures being desirable to secure adequacy. If, however, new proposals might improve services in part of an area yet be detrimental to them in another part then they would not be permissible if they resulted in pharmaceutical services in the neighbourhood as a whole being characterised as something less than adequate.

(20) The Panel adopted the correct overall approach to the question of adequacy. The fact that the opening of a new pharmacy in an area will damage the business of another to the extent of diminishing its trade cannot, of itself, constitute a good reason for refusing to allow a new pharmacy to open. The Panel did not suggest otherwise. Having decided that the services in the neighbourhood were adequate, the Panel determined, as they would be bound to do in such circumstances, that the new pharmacy was not "necessary" to secure adequacy. However, it did not then stop and refuse the petitioners' application. It went on to consider whether, nevertheless, the new pharmacy would improve the services or, as the Panel put it, make them "more adequate". This was, no doubt, an exercise which required a number of factors to be weighed but the conclusion was that the new pharmacy could actually have a detrimental effect on the local contractors, particularly those in areas serving deprived communities. This was presumably a reference in particular to the Arden pharmacy, which had already been described as "marginal" and which seemed to be an important unit serving a somewhat deprived area in the community. The Panel's regard to the detrimental effect, which the new pharmacy could have, was not directed towards the protection of the Arden pharmacy's viability in economic terms but towards its retention as an important element in maintaining the adequacy of services in the defined neighbourhood. That was a relevant consideration for the Panel to have in mind. In that regard, looking at the extent of the neighbourhood, it cannot be maintained that the closure of the Arden pharmacy could not effect the adequacy of provision in the neighbourhood simply because the new pharmacy would also be in that neighbourhood and could be used by the inhabitants of Arden. Although the proposed pharmacy is in the same neighbourhood and within general walking distance, it may not be reasonable to impose upon those, especially the infirm or ill, living in a deprived area an obligation to walk to the petitioners' store. The primarily car owning population of Southpark Village or the nearer occupants of Darnley might not have quite the same practical difficulties in securing their drugs and medicines. These were all matters available for the Panel's consideration and there is no reason to suppose that the Panel failed to consider them.

(21) In conjunction with this consideration of adequacy, it was also legitimate for the Panel to have regard to the provision of pharmaceutical services in the neighbourhood not only by pharmacies located in the neighbourhood but also those upon its fringes. It is the adequacy of provision to persons in the neighbourhood which has to be looked at and that provision will not necessarily come exclusively from pharmacies actually within the neighbourhood boundaries. Indeed, in this case, some of the provision to those in the neighbourhood inevitably comes from the surrounding pharmacies, such as the second pharmacy identified by the Committee but excluded from the boundaries of the Panel's neighbourhood and from those nearby easily reached by the car owning section of the community.

(22) There is no reason to suppose that the Panel were not fully aware, as would perhaps have been obvious, that the petitioners' store, as a major supermarket, proposed to open for a much greater number of hours, indeed days, than the local Arden pharmacy and other small pharmacies in the vicinity. It is true that there is no specific reference to the petitioners' opening hours in the Panel's determination, although there is a reference by incorporation since the Panel stated that it took account of the supporting documents and the decision of the Committee (see paragraph 6 of the Panel decision). The absence of an express reference is not at all surprising given the submissions made to the Panel and the context in which it was making its decision. It is important to note that the Panel was considering the adequacy of pharmaceutical services, being drugs and medicines prescribed primarily by a general medical practitioner. These will generally be prescribed during normal surgery opening hours or, for emergencies, perhaps dispensed in a limited way by the general practitioner himself or in a hospital setting. The Panel did have regard to the hours of opening of the existing pharmacies and indeed questioned a number of the objectors on their opening hours, presumably with a view to ascertaining adequacy of provision. Perhaps of greater importance is that the petitioners remarked in submissions that "had there been a pharmacy in the Darnley area of the neighbourhood, then [they] would not have been making an application for the premises in this instance" (Panel determination paragraph 8). This concession puts the extended opening hours issue into its proper context as a matter carrying little, if any, weight in the balancing exercise carried out by the Panel. Standing the petitioners' own approach to the importance of their own extended opening hours both as inferred from this concession and from the absence of any specific mention of them by the petitioners as a factor of weight in submissions, it should not be regarded as of any moment that the Panel made no express reference to them in its determination. That is not, as noted above, to be taken as an indicator that the Panel was not aware of the petitioners' extended opening hours, merely that it did not attach significant weight to them. That was something which the Panel were entitled to do given the issues for determination and the submissions made.

(23) For these reasons, I am unable to detect any error of law in the Panel's determination nor any matters not properly taken into account or illegitimately excluded from consideration. Having regard to all the facts and circumstances, the decision reached by the Panel was one which was reasonably open to it. In these circumstances, I will repel the petitioners' first to third pleas-in-law and the respondent's first (relevancy) plea-in-law, sustain the respondent's second to fourth pleas-in-law and refuse the prayer of the petition as set out in paragraph 3 thereof.