Judgment: 2008-03-14 · Court archive

High Court grants pharmacies interim injunction in HSE remuneration dispute

The court found a fair issue for trial and said the evidence indicated the proposed remuneration changes could push the pharmacy company into insolvency. It made no finding on the merits of the contract claim.

High Court · [2008] IEHC 106

Who, what, where, when and why

Who
  • Health Service Executive (Defendant)
What

The court found a fair issue for trial and said the evidence indicated the proposed remuneration changes could push the pharmacy company into insolvency. It made no finding on the merits of the contract claim.

Where

No place detail is included in this summary.

When

Judgment:

Other dates in the report
  • 1 March 2007

    The proposed changes were a reduction in the margin from 17.66% to 15% in 2006, then to 8% from 1 March 2007, with a further reduction to 7% planned for later in 2008. The pharmacies alleged those changes would breach their contractual terms. Justice Laffoy expressly made no assessment of the strength of that claim, saying that was not the court’s role at the interlocutory stage.

Why

Reasons reported in the judgment

The judge focused on whether the changes could push the company into insolvency and liquidation. The pharmacies’ evidence suggested a loss of €258,000 in profits against annual dispensing turnover of about €5.1 million. Although the HSE challenged the quality of that evidence, Justice Laffoy considered affidavits from Mr O’Sullivan and accountant Mr Somers sufficiently indicative that the company would probably be pushed “over the edge” if the remuneration arrangements changed as proposed. She concluded that the balance of convenience favoured an injunction.

The High Court granted an interlocutory injunction to five O’Sullivan’s pharmacy companies in a contractual dispute with the Health Service Executive over pharmacy remuneration. The ruling preserves the parties’ position pending trial; it does not decide whether the HSE breached the contract or whether the pharmacies are entitled to the disputed margin.

In her judgment delivered on 14 March 2008, Ms Justice Laffoy said there was a fair issue to be tried over whether the pharmacies’ remuneration included a margin of 17.66% of the ex-factory price, under a 1996 agreement or otherwise. The questions also included whether clauses 12(1) and 19(3) of the Community Pharmacy Contractors’ Agreement had been invoked, and whether the HSE had unilaterally varied the arrangements.

The proposed changes were a reduction in the margin from 17.66% to 15% in 2006, then to 8% from 1 March 2007, with a further reduction to 7% planned for later in 2008. The pharmacies alleged those changes would breach their contractual terms. Justice Laffoy expressly made no assessment of the strength of that claim, saying that was not the court’s role at the interlocutory stage.

The judge focused on whether the changes could push the company into insolvency and liquidation. The pharmacies’ evidence suggested a loss of €258,000 in profits against annual dispensing turnover of about €5.1 million. Although the HSE challenged the quality of that evidence, Justice Laffoy considered affidavits from Mr O’Sullivan and accountant Mr Somers sufficiently indicative that the company would probably be pushed “over the edge” if the remuneration arrangements changed as proposed. She concluded that the balance of convenience favoured an injunction.

The court also rejected delay as a reason to refuse relief, noting caution, reliance on earlier Hickey and Mullally proceedings, and movement by the HSE toward implementation. It considered that the pharmacies could not be faulted, at this stage, for declining interim arrangements that would raise the dispensing fee from €3.26 to €5, because they said the HSE could not impose those terms.

Justice Laffoy also rejected the HSE’s argument that the pharmacies’ undertaking as to damages was worthless. The judgment grants an interlocutory injunction to preserve the claimed contractual position pending trial; it does not state the final outcome of the underlying action.

Read the original court judgment

Something looks wrong?

Highlight the relevant passage or flag this article for review. Review requests do not immediately change the report.

Email a correction request

Request a review