Collooney Pharmacy Ltd v North Western Health Board

• Jurisdiction: Ireland
• Judge: McCracken J,Mr. Justice Kearns
• Judgment Date: 06 July 2005
• Neutral Citation: [2005] IESC 44
• Court: Supreme Court
• Docket Number: [S.C. Nos. 316 & 317 of
• Date: 06 July 2005

[2005] IESC 44

THE SUPREME COURT

Denham J

McGuinness J

Geoghegan J

McCracken J

Kearns J

316/04 & 317/04

COLLOONEY PHARMACY LTD v NORTH WESTERN HEALTH BOARD & HOLLY HILL PHARMACY LTD v SOUTHERN HEALTH BOARD

Between:

Collooney Pharmacy Ltd

Applicant/ Appellant

AND

North Western Health Board

Respondents

AND

Between:

Holly Hill Pharmacy Ltd

Applicant/ Appellant

AND

Southern Health Board

Respondents

HEALTH ACT 1970S59

PHARMACY ACT 1962 S2

HEALTH ACT 1970 S59(1)

HEALTH ACT 1970 S59(4)

HEALTH (MISCELLANEOUS PROVISIONS) ACT 2001 S1

MCCORD v ELECTRICITY SUPPLY BOARD (ESB) 1980 ILRM 153

ASSOCIATION OF GENERAL PRACTITIONERS LTD v MIN HEALTH 1995 1 IR 382 1995 2 ILRM 481

TREATY OF ROME ART 6

TREATY OF ROME ART 48

HEALTH (COMMUNITY PHARMACY CONTRACTOR AGREEMENT) REGS 1996

SI 152/1996

O'NEILL v MIN FOR AGRICULTURE & FOOD 1998 1 IR 539 1997 2 ILRM 435

HEALTH ACT 1970 S26

HEALTH ACT 1970 S26(1)

LIVE STOCK (ARTIFICIAL INSEMINATION) ACT 194

Standard form - Community pharmacy contractor agreement -Agreement between Minister and representative pharmacist body - Validity - Whether new contract terms could be imposed by health boards upon individual pharmacies - Failure of health boards to consult pharmacists - Whether health boards acted ultra vires - Whether agreement amounted to quasi-regulation - Whether regulation made without consent of minister - Whether certain terms of agreement ultra vires - Whether requirement for supervising pharmacist with three years experience contrary to terms of Act - Association of General Practitioners Lt. v Minister for Health [1995] 1 IR 382 followed; McCord v ESB [1980] ILRM 153 - distinguished - Pharmacy Act 1962 (No 14,) s 2 - Health Act 1970 (No1), s 59 (1) and (4)- Claim and appeal dismissed

Facts: These two appeals related to the status and content of a community pharmacy contractor agreement between individual health boards and individual pharmacies in relation to the provision of pharmacy services under the Health Act 1970. The appellants contended that the agreement, although contractual in form, was in reality a form of quasi legislation and was in fact regulation under another guise.

Held by the Supreme Court (Denham, McGuinness, Geoghegan, McCracken and Kearns JJ) in dismissing the appeal that the agreement was a contract properly entered into by the Respondents pursuant to s.59(1) of the Health Act 1970 and that none of the individual clauses which had been challenged could be said to be ulra vires the powers of the Respondents under that section to enter into an agreement with the Appellants.

Reporter: R.W.

1 McCracken J delivered the 6th day of July 2005

Background

2 These are two appeals raising similar basic points which were heard together both in the High Court and in this Court. They relate to the status and content of a community pharmacy contractor agreement between individual health boards and individual pharmacies in relation to the provision of pharmacy services under the Health Act 1970.

3 The Appellants are both subsidiaries of McSweeney Group Limited, which is the holding company for several companies which own a number of pharmacies in the State. Prior to 1996 both Appellants were parties to a community pharmacy contract with their respective local health boards and supplied pharmacy services under the provisions of the Health Act 1970, and were reimbursed for such services from the GMS payments board. In August 1996 the respective respondents sought to oblige the Appellants to enter in to a new form of contract as a condition of continuing to supply pharmacy services under the Health Act 1970. Ultimately the Appellants did enter such contracts, but expressly on the basis that their participation was without prejudice to the issues raised in these proceedings.

4 The reliefs sought by the Appellants in both sets of proceedings were, so far as they affect this appeal, identical, and sought:-

"A An order of certiorari quashing a decision of the respondent made in or about the month of August 1996 to unilaterally impose the terms of a new community pharmacy contractor agreement ("the agreement") on the applicant herein as a condition of the applicant continuing to fully participate in the arrangements made by the respondent pursuant to section 59 of the Health Act 1970for the supply of drugs medicines and medical and surgical appliances to eligible persons.

B A declaration that in purporting unilaterally to impose all the provisions of the agreement on the applicant the respondent has acted out of ultra vires section 59 of the Health Act 1970.

C A declaration that the imposition of the provisions of clause 6(2) of the agreement is ultra vires the powers of the respondent under section 59 of the Health Act 1970and/ or void as being inconsistent with section 2 of the Pharmacy Act 1962.

D A declaration that in particular clauses 19(1), 19(3), 19(5), 20(1), 22(3) and 22(6) and 23(1) of the agreement are ultra vires of the powers of the respondent under section 59 of the Health Act 1970."

The Statutory Provisions

5 Section 59(1) of the Health Act 1970provides:-

"A health board shall make arrangements for the supply without charge of drugs, medicines and medical and surgical appliances to persons with full eligibility."

6 Section 59(4) provides:-

"Regulations relating to the service under this section shall be made with the consent of the Minister for Finance."

7 It should be noted that this section was amended by s.1 of the Health (Miscellaneous) Provisions Act 2001, but that amendment has not yet been brought into force and is not relevant to the appeals. It is also relevant that no regulations affecting the issues in these appeals have been made under s.59(4).

The Agreement

8 Prior to August 1996 negotiations took place between the Department of Health and the Pharmaceutical Contractors Committee which is a committee of the Irish Pharmaceutical Union, which is a registered trade union representing pharmacists nationwide, and of which the Appellants" supervising pharmacists are members. As a result of these negotiations an agreement (hereafter called "the agreement") was drawn up which was intended to constitute a contract between individual health boards and individual pharmacists in each health board area. In August 1996 the Respondents, with the approval of the Irish Pharmaceutical Union, sent copies of the agreement to the Appellants, requiring them to be returned duly signed. It is accepted by both parties that acceptance of this agreement was a precondition of continuing to provide pharmacy services under the Health Act 1970.

9 The Appellants challenged the validity of the agreement, for reasons which I will express in detail later in this judgment, but also took issue with certain specific provisions, which are as follows:-

"6(2) Subject to sub-clause (4) the pharmacy contractor shall ensure that the nominated supervising pharmacist has at least three years experience in the practice of community pharmacy including up-to-date professional knowledge and experience in the counselling of patients in their use of medicinal products and, is not acting in a similar capacity in respect of any other pharmacy."

"19(1) This agreement shall terminate forthwith on the pharmacy contractor or, in the case of a body corporate, the supervising pharmacist, ceasing to be entitled to practice as a pharmacist or upon his/ her ceasing to keep open shop for the compounding and dispensing of medical prescriptions or on the cessation of the said contractors entitlement so to do."

10 19(3) This agreement is to be construed as contingent upon the terms agreed or to be agreed between the Minister and the Pharmaceutical Contractors Committee regarding arrangements for the provision of pharmaceutical services under the provisions of the Health Act 1970. The pharmacy contractor and the board agree that any changes in the terms of such arrangements, which may be agreed between the Minister and the Pharmaceutical Contractors Committee, shall be incorporated into this agreement and the terms of this agreement shall be construed accordingly, following the issue of a notification of such agreed changes by the Minister."

11 19(5) The terms and conditions of this agreement between the Pharmaceutical Contractors Committee and the Minister may be subject to review after a period of five years. In default of agreement in any such review, the matters of this agreement shall be subject to mediation and recommendation by a third party appointed by the Minister following consultation with the Pharmaceutical Contractors Committee. Any alterations to the agreement between the Minister and the Pharmaceutical Contractors Committee arising from the review provided for in this clause, shall be incorporated into this agreement and the terms of this agreement shall be construed accordingly, following the issue of a notification of such agreed changes by the Minister. The terms and conditions of this agreement may also be extended for specified periods with the agreement of the Minister and the Pharmaceutical Contractors Committee."

12 20(1) In the case of a body corporate, the pharmacy contractor shall submit to the Chief Executive Officer a statement in writing signed by two directors, or by a director and the secretary, on behalf of the said body corporate, specifying the name of the supervising pharmacist under whose supervision the community pharmacy in respect of which the agreement relates and the dispensing and compounding of medical prescriptions therein be conducted. This statement shall be submitted in the format prescribed in the appendix to this schedule and shall also be...