Lowe & Ors, R (on the application of) v Family Health Services Appeal Authority

Under regulation 4(4) of the National Health Service (Pharmaceutical Services) Regulations 1992, adequacy is a matter of degree. The decision-maker must locate the existing provision of pharmaceutical services on a spectrum. Wholly adequate provision requires refusal; wholly inadequate provision ordinarily makes additional provision necessary; and a marginal case may make it desirable.

Asking first whether provision is wholly adequate is legitimate, but that question is not determinative. If the answer is no, the decision-maker must assess the level of adequacy before applying necessity or desirability. The resulting decision must disclose that sequence of reasoning sufficiently clearly. A decision which may have treated absence of wholly adequate provision as determinative is unlawful for want of adequate reasons.

The Family Health Services Appeal Authority granted Snowden James Group Ltd preliminary permission to open a pharmacy in Cropwell Bishop. The respondent general practitioners, who dispensed medicines from their village surgery, successfully obtained judicial review of that decision before Janet Smith J. She quashed it because the Authority had applied the wrong test under regulation 4(4) of the National Health Service (Pharmaceutical Services) Regulations 1992.

The Authority appealed. The principal questions were how adequacy, necessity and desirability relate under regulation 4(4), and whether the Authority's decision letter disclosed a lawful application of that test.

1. The appeal was dismissed unanimously. Laws LJ delivered the leading judgment. Thorpe LJ agreed with his proposed approach and test. Buxton LJ agreed with the disposition and the decisive criticism of the decision letter, although he considered that the Authority had also made an identifiable error of law.

2. Regulation 4(4) permits a pharmaceutical licence only to secure adequate provision by persons on the pharmaceutical list in the relevant neighbourhood. Adequacy is a relative concept and must be assessed on a spectrum. If existing provision is wholly adequate, the application must be refused. If it is wholly inadequate, further provision will ordinarily be necessary. In an intermediate or marginal case, a grant may be desirable. The assessment is pragmatic, and some overlap may occur between the marginal cases and the extremes.

3. Laws LJ approved the general direction of the reasoning in R v Yorkshire Regional Health Authority, ex parte Baker (1996) 35 BMLR 118, while expressing the statutory analysis in simpler terms. The word “wholly” has no independent legal force. It describes an end of the spectrum at which there is no real question that provision suffices.

4. A decision-maker may therefore begin by asking whether provision is wholly adequate. If it is not, the decision-maker must determine where the case lies on the spectrum and then apply necessity or desirability as appropriate. The Authority's letter did not follow that sequence clearly. It moved between conclusions that provision was not adequate and not wholly adequate without identifying the actual degree of adequacy.

5. A sensible reader might conclude that the Authority treated the absence of wholly adequate provision as sufficient to grant the application. If that was its substantive approach, it was an error of law. At minimum, the letter did not give adequate reasons demonstrating that the correct statutory test had been applied. Buxton LJ additionally concluded that the Authority had wrongly placed the relevant borderline around whole adequacy rather than adequacy. Thorpe LJ considered that the Authority had set the standard of adequacy too high.

6. The order quashing the Authority's decision therefore remained effective. The appeal was dismissed with costs, to be assessed in detail.

1. Court of Appeal (Civil Division): The Family Health Services Appeal Authority's appeal was dismissed unanimously. The order quashing its decision remained effective: [2001] EWCA Civ 128.

2. High Court, Queen's Bench Division: On 20 June 2000 Janet Smith J quashed the Authority's decision of 30 September 1999. She held that the Authority had applied the wrong test under regulation 4(4) of the National Health Service (Pharmaceutical Services) Regulations 1992, while rejecting the challenges based on irrationality and insufficiency of reasons.

3. Earlier judicial review: On 4 May 1999 Latham J quashed the Authority's first decision granting the pharmacy application. The Authority then reconsidered the appeal and made the decision challenged in the present proceedings.