Neutral Citation Number: [2008] EWHC 216 (Admin)
Case No: CO/3793/2006
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19th February 2008

Before :

SIR GEORGE NEWMAN

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Between :

	COSTCO WHOLESALE UK LIMITED	Appellant	
	- and -		
	MILTON KEYNES PRIMARY CARE TRUST	Respondent	
	- and -		
	THE SECRETARY OF STATE FOR HEALTH	Interested Party	

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Charles Flint QC (instructed by Nabarro) for the Appellant
John Howell QC and Owain Thomas (instructed by (1) Capsticks and (2) The Office
of the Solicitor, Departments of Health and Works and Pensions) for the Respondent and Interested Party

Hearing date: 4th February 2008

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Judgment
Sir George Newman : 
1.	This is an appeal under section 11 of the Tribunals and Inquiries Act 1992 against a decision of the Family Health Service Appeal Authority (“FHSAA”) given on 18th April 2006.  Such an appeal lies only on a point of law.  
2.	The case raises some points of statutory interpretation of the National Health Service Act 1977 and the National Health Service (General Ophthalmic Services) Regulations 1986.  The points raised have important general consequences in connection with the availability of services provided as part of the National Health Service to all individuals.  
3.	Costco Wholesale UK Limited (“Costco”) operates warehouse buildings and provides cash and carry services but only to its members.  According to the terms of the planning permission granted to Costco to operate its business from premises, Costco is required to do business with members and guests and relatives of members only.  There are two types of members, trade and individual members.  Whether the member is a trade or individual member, the individual is required to establish, by documentary evidence, proof that he qualifies for the status of a trade applicant or, if it be an individual membership, that he meets the criteria, namely that he is a current or retired employee in any one or more of a listed number of identified professions.  It is not necessary to recite the whole range of professions and occupations which are included which are stated to qualify for membership – they appear at page 45 of Bundle 1 of the papers – but it can be observed that they are specific and, although numerous, nevertheless restricted to certain categories of person.  The club is apparently better known in the United States of America where they are known as Warehouse Clubs.  
4.	Costco sells a wide range of food and non-food products.  It sells electrical goods, bedding, catering and cleaning equipment, cookware and tableware, health and beauty aids, office products, sporting goods, tyres, seasonal items and soft lines.  It sells groceries, confectionery, beers, wines and spirits.  In addition, every Costco warehouse has an ophthalmic section which provides eye tests.  The services are provided at all Costco’s UK warehouses.  It has applied for an ophthalmic licence to provide general ophthalmic services (“GOS”) and, as a result, is able to provide free eye tests to eligible persons.  Its application to Milton Keynes Primary Care Trust is the first one to have been refused.  
5.	It is the decision of the FHSAA dated 18th April 2006 which is the subject of the appeal.  In an admirably clear and reasoned decision, the FHSAA dismissed the appeal and concluded that Costco was unsuitable to be included on the list, which the Primary Care Trust had an obligation to establish under the legislation, for three reasons:
(1)	because such inclusion would involve contravention of Regulation 13A(1);
(2)	because it was contrary to the spirit of paragraph 9(4) of the terms of service; and
(3)	in the alternative and by a majority, it concluded that Costco was unsuitable to be included on the list because of the principle of equality of access under the National Health Service which it regarded was, on the facts of this case, not made out.  
The statutory framework
6.	It has been common ground in the argument before the court that the issues on the appeal had to be determined in accordance with the scheme established by the National Health Service Act and the relevant regulations made thereunder.  It can be said that the Appellant’s case has moved upon some fine arguments of terminology and close attention to particular subparagraphs.  
7.	The following provisions of the National Health Service Act 1977, namely section 1, section 38 and section 39, appear to me to be relevant.  In its material part, section 1 provides for the Secretary of State’s duty as to the health service as follows:
“(1) It is the Secretary of State's duty to continue the promotion in England and Wales of a comprehensive health service designed to secure improvement -
(a) in the physical and mental health of the people of those countries, and
(b) in the prevention, diagnosis and treatment of illness,
and for that purpose to provide or secure the effective provision of services in accordance with this Act.
(2) The services so provided shall be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed.”
8.	Section 38 of the 1977 Act establishes that it is the duty of every Primary Care Trust and of every health authority: 
“… in accordance with regulations, to arrange as respects their area with medical practitioners having the prescribed qualifications, [and ophthalmic opticians for securing the testing] [by them of the sight]-
(a) of a child;
(b) of a person whose resources fall to be treated under the regulations as being less than his requirements or as being equal to his requirements; or
(c) of a person of such other description as may be prescribed…..
(2) In this section – “child” means –
(a) a person who is under the age of 16 years; 
or (b) a person who is under the age of 19 years and receiving qualifying full-time education; …Then the services so provided are in this Act referred to as “general ophthalmic services”.”
9.	Section 38(7) provides:
“Regulations shall define the services for the provision of which arrangements under this section are to be made and the services so defined are in this Act referred to as “general ophthalmic services”.”
10.	Section 39(1) provides, so far as relevant, that:
“Regulations may provide as to the arrangements to be made under section 38 above, and shall include provision—
(a) for the preparation and publication of lists of medical practitioners, ophthalmic opticians and dispensing opticians, respectively, who undertake to provide general ophthalmic services; 
(b) … 
(c) for conferring on any person a right to choose in accordance with the prescribed procedure the medical practitioner or ophthalmic optician by whom his sight is to be tested, or from whom any prescription for the supply of optical appliances is to be obtained …”.
11.	So far it appears to me that the statutory machinery is absolutely clear.  GOS are services which it is the Secretary of State’s duty to provide and they shall be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed, and the arrangements for the provision of such services are to be laid down and found in the regulations.  
12.	The Act provides for the content of the regulations, namely the arrangements to be made by them, in section 39.  The Primary Care Trust’s obligation is, as set out in section 39(1)(a), to prepare and publish a list of “ophthalmic opticians who undertake to provide general ophthalmic services for persons in the area of the primary trust or health authority”.  So far as practitioners are concerned, section 39 subsection (b) requires provision in the regulations “for conferring a right, … on any medical practitioner having the prescribed qualifications, or ophthalmic opticians” who wishes to be included in the appropriate list to be so included; the subsection is specific as to the grounds upon which there may be disqualification of practitioners and other control over them, but none applies to this case.  The Appellant places considerable weight on subsection (b) of the section and the right to be conferred on practitioners, but subsection (c) provides that the regulations must confer:
“on any person a right to choose in accordance with the prescribed procedure the medical practitioner or ophthalmic optician by whom his sight is to be tested, or from whom any prescription for the supply of optical appliances is to be obtained”. 
13.	It seems to me to be obvious, from the subsections of section 39, that the right of a practitioner to be included in an appropriate list and the right of any person to choose the ophthalmic optician by whom his sight is to be tested are connected.  They are complementary rights which form an integral part of the scheme.  The right of a practitioner to be included on a list forms part of the machinery whereby the Secretary of State performs his statutory obligation to promote a comprehensive health service.  The right thus created does not exist outside the National Health Service.  Thus, if the right of an individual seeking an eye test under the National Health Service cannot be met from the practitioner on the list, the efficacy of the scheme is undermined. 
14.	Equally, if the scheme envisaged that a practitioner could offer a provision of ophthalmic services which appeared to be less than the complementary right of a person to choose from a medical practitioner on the list, one would expect the scheme to provide for a limited service.  There is an example in the legislation which bears out the point, namely the freedom of a practitioner to offer a mobile service which, when offered, whether as the only service or not, will appear upon the list but carrying a statement that the practitioner offers that service.  It was suggested that the existence of this limited service somehow assisted the Appellant’s case.  In my judgment, it indicates the contrary, namely that any limitation upon the broad nature of the service which the scheme envisages, must have specific authority under the scheme.  
National Health Service (General Ophthalmic Services) Regulations 1986/975
15.	The form of application required by regulation 7, which it is not necessary to set out in any detail, requires the practitioner, by his application, to give an undertaking to provide the GOS to which his application refers.  Regulation 2 (the interpretation regulation) defines “general ophthalmic services” as “the services which a contractor must provide pursuant to paragraph 10 of the terms of service”.  A contractor is a person who has undertaken to provide GOS and whose name is included in the ophthalmic list.  The regulations define “patient” as “a person for whom a contractor has agreed to provide general ophthalmic services”.
16.	It is clear from regulation 6, if it was not clear from the plain purpose of there being a list, that because the list, in its relevant part, had to contain the names of persons entitled to be included on it, their qualifications and the addresses and places (except in the case of a mobile practice) from which they have undertaken to provide GOS and the particulars and the days on which the hours will normally be available, that the list is for the benefit of the person requiring an eye test and to inform him or her as to who, where and when the service, which is required, can be provided to him or her.  There is nothing in regulation 6 to indicate that, apart from the details to which I have already referred, the scheme contemplates that, before being able to make a choice in accordance with the list, the person seeking ophthalmic services will be required to meet some provision or condition, laid down by the practitioner, before the service will be available to him or her.  
17.	The comprehensive nature of the scheme as laid down by the regulations is borne out by regulation 10, regulation 11 and regulation 12.  The statement, the terms of service and payment for services which the regulations refer to govern the arrangement between the Secretary of State and the practitioner and lay out the terms and conditions upon which the services are to be provided.  These documents are available for inspection to inform any interested person as to what the particulars are.  
18.	Next it is necessary to refer to regulation 13 and, in particular, regulation 13A, this being the regulation which the FHSAA concluded had been infringed by the application of the Appellant.  Regulation 13 defines the categories of people who are eligible to have their sight tested under GOS.  It is not in dispute that a significant number of the members of the Costco Warehouse Club would fall within these categories.  Equally, it is not in dispute that, outside the membership of Costco, there may be a significant number of persons within the region of the Primary Care Trust who might select Costco as their provider of services.
19.	Regulation 13A puts beyond doubt the purpose of contractors being on a list.  A contractor, being a person who has undertaken to provide GOS and whose name is included in the list, is someone (to) whom, under regulation 13A subparagraph (1): 
“An eligible person who wishes to have his sight tested under general ophthalmic services may make an application … for his sight to be tested.” 
	It is material to note that this regulation, therefore, implements the obligation of the Primary Care Trust under section 38(1) for securing the testing by practitioners of eligible persons and implements the statutory obligation to confer a right under section 39(1)(c) on any person to choose in accordance with the prescribed procedure the person by whom his sight is to be tested.
20.	The prescribed procedure is set out in Regulation 13A(2), namely that it shall be on a form provided for that purpose to contractors by the health authority and it requires a written declaration signed by the applicant to the effect that he is an eligible person.  The prescribed procedure envisaged in section 39C includes, under regulation 13A(4), that the contractor shall be under an obligation before testing, to satisfy himself that the person is an eligible person and to ensure that particulars of the patient and the approximate date of the last testing are to be inserted in a sight test form by the patient or on his behalf and further to satisfy himself that the testing of sight is necessary.
21.	It seems to me to be clear that once a person has applied on a form provided for that purpose and the form is submitted to a contractor then, subject to that contractor being satisfied as to the matters which are set out in regulation 13A(4), the contractor comes under an obligation to carry out a test.  It seems to me clear that, since there is a right in a person to choose in accordance with prescribed procedure from any contractor who is on the list, it is not open to a contractor who is on the list and, where the prescribed procedure has been followed, to impose some further requirement before he carries out an eye test.  I reach this conclusion not only by reference to use of the words “any contractor” in regulation 13A(1) but from what I regard as the proper interpretation of the way in which the arrangements under the scheme were meant to operate.  
22.	Against this statutory background it has been submitted, on behalf of the Appellant, that the FHSAA erred in law, because it concluded that the Appellant was unsuitable to be on the list because one of the special conditions attached to the provision of ophthalmic services was, that the individual requesting the service was a duly paid up member or accredited member of the Costco Warehouse Club and, in the normal course, would have paid a subscription of up to £25.  The Appellant’s argument on this part of the case depends upon a submission that, where regulation 13A refers to the permissive application which can be made to any contractor for his sight to be tested, it is directed to establishing the freedom of choice of an individual, without diktat from the Primary Care Trust to make a choice of contractor.  Further, it is submitted that the regulation contains no reference to any corresponding obligation being imposed upon a contractor.  I am afraid I cannot accept the argument.  It involves looking at the subsection in isolation as though it can stand alone in the statutory scheme.  This seems to me to fly in the face of all the regulations which make up the scheme.  As I have outlined above, the right of the person to apply, in accordance with the prescribed procedure, gives rise to obligations upon contractors.  
Schedule 1 Regulations, Namely Terms Of Service
23.	The content of the terms of service become relevant in connection with the charging issue.  Article 2 of Schedule 1 provides that the provisions of the Schedule affecting the rights and obligations of contractors shall form part of the terms of service, in particular the regulations.  Regulation 9 is concerned with payment to a contractor.  Regulation 9(1) provides:
“Any claim by a contractor for fees in respect of the provision of general ophthalmic services shall be made by completing or securing the completion of a sight test form and sending it to the Primary Care Trust in whose locality the services were provided within six months after the date of completion of the provision of the services.”
	Article 9(4) of Schedule 1, the terms of service, provides:
“Except as may be provided in the regulations, in the Statement or in sub-paragraph (5), a contractor shall not demand or accept from any patient or from other persons the payment of any fee or other remuneration in respect of the provision of general ophthalmic services.”
24.	The FHSAA concluded that the pre-condition to the grant of services presented by the requirement for membership and the payment of a membership subscription rendered the services offered by the Appellant contrary to “the spirit of paragraph 9(4) of the terms of service”.  Mr Howell, who has appeared for the Respondent and the Interested Party in this court, submits that the pre-condition constitutes an infringement of the terms of service.  In essence, the Appellant’s case is that the requirement for membership and the payment of a subscription is not a fee or other remuneration in respect of the provision of GOS because it is paid, where it has been paid, by an existing member, not just for the provisions of ophthalmic services but for the range of other services which the members receive from the Warehouse Club.
25.	The argument, which I unhesitatingly reject (see paragraph 27 below), can only apply to existing members who wish to avail themselves of ophthalmic services at Costco.  It seems reasonable to envisage that circumstances could arise in which a person makes a selection of Costco, being a practitioner on the list, who is not a member of the Club.  According to the terms of the planning permission granted to Costco, it is not open to it to deal with a person who is not a member.  Putting aside any difficulties there may be in gaining access to the premises of a warehouse, even though the person may have completed an application form in accordance with the regulations in the prescribed form and further even though the applicant can satisfy the requirements as to eligibility and the need for an eye test, the services will not be available to that person unless he becomes a member of Costco or qualifies as a guest or relative of a member of Costco.
26.	Indeed, further, even if he is prepared to pay a subscription, unless he comes from the category of occupations and professions which meet the criteria laid down by Costco, the mere payment of money will not be enough to enable him to receive the service from Costco.  In this set of circumstances it was argued for the Appellant that the correct approach was to view the membership requirements as distinct and separate from the provision of GOS which may or may not ensue and to conclude that there was no fee or remuneration “in respect of” the provision of services.  
27.	I am bound to say I am wholly unpersuaded by any of these arguments.  So far as an existing member is concerned there is no reason to exclude from the considerations which affected the choice of a duly qualified person to seek membership any one of the whole range of services, including ophthalmic services, which Costco provide.  So far as the member is concerned, he or she may or may not have considered the potentiality of a need for an eye test and the question of any payment therefor.  It may well be that some contemplated that they might have to pay towards the cost of an eye test, since they have to pay in respect of other services available at the Warehouse Club. 
28.	In the circumstances under consideration, it is not the contemplation of the member which has any bearing on the question.  This case has arisen because of the desire on the part of Costco to be included on the list, so that it can offer to its members, who are eligible, free services in respect of an eye test, because it, Costco, can then claim from the Primary Care Trust for the cost of the services.  Put another way, if a Costco member, conscious of the rights available under the National Health Service and its scheme for a free eye test, was to look at the list and see Costco upon the list, he or she could well conclude, assuming the prescribed procedure was followed, that Costco were bound to provide the services free of charge.  In my judgment, giving the ordinary and natural meaning of the words “in respect of” in Article 9(4) of Schedule 1, whether it be an existing member or somebody who is not a member, it is the case that Costco will receive or will have received a fee or other remuneration in respect of the provision of the services of ophthalmic services.  Unlike the FHSAA, I conclude that the membership requirements of Costco give rise to a charging contrary to Article 9(4).
29.	In order to avoid the impact of the plain meaning of the Article, reliance was also placed upon the prohibition, being a prohibition upon the contractor demanding or expecting from a “patient” any fee or remuneration.  It was submitted that by reason of the definition of “patient”, namely a person for whom a contractor has agreed to provide GOS, the admission to membership was to be treated separately from the provision of services.  The argument, although faintly advanced, is plainly wrong because, so far as Costco are concerned, they have agreed to provide GOS only upon condition that the applicant becomes a member or is a member.  Thus it was submitted that the use of the word “general”, namely GOS, related to the full range of the GOS and the obligation to provide was only triggered by acceptance of the application and an agreement with the patient to provide GOS.  
30.	In my judgment Costco does demand and accept payment in respect of any ophthalmic services it provides, as only those who have paid to receive Costco’s services or their guests may avail themselves of such services.  The subscription payable to Costco is a payment made to obtain whatever services Costco may provide its members and the fact that it may also be a payment made in respect of other services does not mean that it is not a payment in respect of such ophthalmic services as Costco provide.  I reject the suggestion advanced by the Appellant that the issue must be decided at the time when any payment is demanded or accepted that for any payment in respect of services “it must be a payment directly and clearly referable to their provision” or thirdly that there is no sufficient connection between the payment of the subscription and the provision of GOS as the person making that payment may not be eligible for them, may never apply for them or may never become a patient. 
31.	I was referred to the decision of Waller LJ in R (Geologistics Ltd) v Financial Services Compensation Scheme [2003] EWCA Civ 1905 and invited to follow the guidance as to the meaning of the words “in respect of”, namely that they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer.  In my judgment, the submission for the Respondent and the Interested Party is correct; there is simply no reason to give the phrase in paragraph 9(4) of the terms of service any narrow construction.  It is plain that the object of the paragraph is to limit strictly what a contractor may receive and I would hold that any payment which a contractor may demand before he is prepared to consider providing services for a person is a payment he receives in respect of their provision.  
32.	My conclusions on the above two issues upon which the FHSAA decided the appeal are sufficient to dispose of it.  Nevertheless the FHSAA went on to consider the principle of equality of access under the National Health Service scheme on the assumption that, on either one of the grounds I have covered above, it was wrong and therefore it was material to decide an argument advanced under equality of access.  The reasoning of the FHSAA on this question is set out in paragraph 31 of the Reasons.  It states:
“Lest our view as to the interpretation of regulation 13A(1) is incorrect we have balanced the benefit to existing or potential Costco members against the general principle of equal access to NHS services.  Our majority view is that the principle of equality of access should prevail.  Any person eligible for a free eye test can obtain his/her prescription and/or any voucher from any contractor under GOS and is then free to purchase glasses at wholesale premises such as Costco or wherever he may so choose.  In our majority view, the inconvenience of this section of the public having to access two premises in order to exercise consumer choice is outweighed by preservation of the principle that inclusion to the list of contractors who provide NHS services should be on the basis that the services that a NHS contractor offers should be available to all without prior condition in relation to membership or contingent upon payment or other conditions that may exclude or restrict access by sections of the general public.”
33.	The breadth of this argument before the FHSAA clearly involved arguments not simply by reference to the charging provisions but by reference to what, in truth, should be regarded as the meaning of the general principle underlying National Health Services, namely that they should be on the basis that the services are be available to all without prior condition and so forth.  In support of this conclusion, no attention has been drawn to a statutory provision establishing “equality of access”.  The submission for the Appellant and the Interested Party is (applying a Wednesbury approach) that the principle of “equal access” was one which any reasonable person would have recognised in the context of the issues arising in this case.  In my judgement the question goes wider.  The specific argument advanced to the FHSAA plainly involved the suggestion, repeated in the argument advanced for the Appellant in this court, that “under the banner of promoting equality of access, the decision of the FHSAA actually reduces the availability of National Health Services”.  By this it was meant that those members of Costco who have already paid their subscription and who desire to receive ophthalmic services from Costco will not be able to do so under the National Health Service scheme.  Persuaded as they were to carry out a balancing exercise, the FHSAA put in the scale the inconvenience to members of having to attend two centres for the provision of the necessary services, including the provision of glasses and the non-availability of the services to any person other than a member of Costco Warehouse Club.
34.	For my part, I consider the meaning of “equality of access” and its legal foundation to be unclear and the ambit of the evidence available in this court to decide the question to be inadequate.  The balancing exercise engaged in by the FHSAA might be relevant to the principle of equality of access but, without evidence as to the numbers involved, it is not clear to me what conclusion should be drawn.  If a large number of the population, not being members of Costco, do not have access to the services it is not clear why it is relevant to put in the scale those who might have access, by reason of membership, but would not enjoy the advantages that membership might have otherwise have brought.  The members have equal access to the services available generally.
35.	It follows the appeal is dismissed for the reasons given above.