I have just realised something that I never knew and I wanted to get confirmation that it is expected behaviour or whether the website I am working was behaving incorrectly.
I creating a page - lets call it "page".
Whenever I went to this page, I getting the following message: Directory Empty
I then discovered I had a directory in the root Wordpress directory called "page" which was empty - so I deleted it and it worked.
Is it correct that Apache will check locally first before allowing htaccess to process the Wordpress permalinks? Is this normal, expected behaviour?