Mayfield Care Ltd and Another v St. Helen's Council
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Stephen Davies |
| Judgment Date | 21 April 2015 |
| Neutral Citation | [2015] EWHC 1057 (Admin) |
| Date | 21 April 2015 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/3347/2015 |
[2015] EWHC 1057 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT AT MANCHESTER
Manchester Civil Justice Centre,
1 Bridge Street West, Manchester M60 9DJ
His Honour Judge Stephen Davies
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CO/3347/2015
Aileen McColgan (instructed by Alison Castrey Solicitor, Bristol) for the Claimants
Fenella Morris, QC (instructed by Legal and Administrative Services, St Helens Council) for the Defendant
Hearing date: 31 March 2015
Draft judgment circulated: 13 April 2015
The first and the second claimants each own and operate a care home in St. Helens. They are dissatisfied with the care home payment rates set by the defendant local authority for the provision of residential care accommodation for the financial year 2013/14 and by these judicial review proceedings seek an order quashing the decision to set those rates.
In summary they contend, through Ms McColgan, that the defendant's decision was flawed because of its treatment of a particular element of their actual costs of running their care homes, most commonly known as "return on capital". Their grounds of challenge, for which permission was granted by HHJ Pelling, QC, sitting as a High Court Judge, on their oral renewal from the prior refusal of permission by HHJ Bidder, QC, also sitting as a High Court Judge, are three-fold:
Ground 1: because the model on which the decision is based contains a flawed approach to return on capital (as a component of the actual cost of residential care accommodation), the decision was irrational and/or failed to take into account relevant considerations and/or took into account irrelevant considerations.
Ground 2: by reason of ground 1 the defendant failed to pay due regard to the actual cost of care, contrary to the relevant statutory guidance, thus rendering itself unable to demonstrate that fee levels were sufficient to meet assessed care needs, also contrary to the statutory guidance.
Ground 3: by reason of ground 1 the defendant failed to comply with its public sector equality duty.
The defendant, through Ms Morris, QC, disputes all three grounds, contending that its approach to return on capital was entirely proper and in accordance with the relevant statutory guidance, and that it fully complied with its public sector equality duty.
I am grateful to both counsel for their helpful skeleton arguments and eloquent and focussed oral submissions.
For the reasons given below I am satisfied that the challenge to the decision fails on all three grounds. Grounds 1 and 2 are closely inter-related and I will consider them together. Ms McColgan accepted, rightly in my view, that unless the claimants succeeded on grounds 1 and 2 they could not succeed on ground 3, so that I can deal with that ground subsequently and relatively briefly.
The relevant framework applicable to grounds 1 and 2
There is no need for me to rehearse in detail the relevant legislation, directions and statutory guidance, which were summarised by Sullivan LJ in the decision of the Court of Appeal in R (Care Home East) v Northumberland County Council [2013] EWCA Civ 1740 at [4–7], and which are also set out in more detail in the first instance decisions on this topic, some of which I shall need to refer later.
It suffices to say that the relevant statute imposes a duty on local authorities to make arrangements for residential care accommodation for persons who need it, and that the relevant directions provide that such persons should be entitled to be accommodated at their preferred care homes, but that the local authority should not be obliged to pay more than they would usually expect to pay for the relevant type of residential care accommodation (known for short as "the usual cost"). The relevant statutory guidance exhorts local authorities to set their usual costs at the start of each financial or other planning period, no doubt to ensure that everyone affected (including residents, their families, and care home owners) can know where they stand financially.
What is significant for the purposes of this case is that paragraph 2.5.4 of the statutory guidance requires the usual cost to be "sufficient to meet the assessed care needs of supported residents in residential accommodation" and directs local authorities to "have due regard" to three specified matters, namely:
(1) The actual costs of providing care.
(2) Other local factors.
(3) Best value requirements under the Local Government Act 1999.
Moreover, paragraph 3.3 of the guidance requires a local authority to "be able to demonstrate that this [usual] cost is sufficient to allow it to meet assessed care needs and to provide residents with the level of care services that they could reasonably expect to receive if the possibility of resident and third party contributions did not exist". Thus local authorities must exclude the possibility of "top-up" payments from consideration when fixing the usual costs.
The legal principles applicable to grounds 1 and 2
The Court of Appeal in Northumberland emphasised the following important points:
(1) In complying with the statutory guidance to have due regard to the actual costs of care local authorities are not obliged to follow any particular methodology, whether structured or otherwise [16–17]. In particular, whilst one way of having due regard to the actual costs of care is by carrying out an arithmetical calculation, identifying the figures attributed to the constituent elements, there is no obligation to do so, and that is not the only legally permissible way of having due regard to the actual costs of care [23].
(2) Whilst local authorities are under a public law duty to make a sufficient inquiry into the actual costs of care [18], it is generally for them to decide on the manner and intensity of that inquiry [19]. Sullivan LJ referred with approval to the earlier judgment of Beatson J (as he then was) in R (Bevan & Clarke LLP) v Neath Port Talbot County Borough Council [2012] EWHC 236 (Admin).
(3) Since these are claims for judicial review and not appeals on the merits, and bearing in mind that the manner and intensity of the inquiry is generally a matter for the local authority, judges at first instance should refrain from delving in great detail into the facts [35]. The approach adopted by Supperstone J at first instance in Northumberland, and previously by Singh J in R (South West Care Homes) v Devon County Council [2012] EWHC 1867 should be followed [36]. Aikens LJ in his concurring judgment specifically associated himself with these observations [40].
The approach of Supperstone J and Singh J which was commended to first instance judges by the Court of Appeal is to be found in [36–37] of the judgment of Supperstone J at first instance in Northumberland.
(1) The obligation to have due regard to actual costs means no more than when determining usual costs local authorities should bear in mind, amongst other matters, the providers' need to recover their costs. There is no obligation to calculate or ascertain the actual cost of care [36].
(2) It is for the local authority to decide not only the nature and intensity of the inquiry, but also on the weight to be given to a relevant factor in the absence of irrationality [37].
As Singh J said in South West Care Homes in this context at [25], the relevant factors may well pull in different directions, and the balancing exercise is "quintessentially a function of the public authority concerned, subject always to judicial review on the ground of irrationality". Moreover, as Stanley Burnton J (as he then was) said in R (Birmingham Care Consortium) v Birmingham City Council [2002] EWHC 2118 (Admin), questions of affordability and of the allocation of resources are for the democratically elected executive and legislature, not for the courts [32].
(3) The local authority is entitled to have due regard to actual costs of care not by an exercise in precise quantification, but by exercising its judgment and experience in the light of how the market was functioning [37].
There are also some other relevant points which emerge from the decision of the Court of Appeal in Northumberland and some of the first instance cases which I should mention at this stage.
First, it is common ground that when setting usual costs local authorities are entitled to have regard to all relevant factors, not just to the three particular matters to which they are directed to have due regard by the statutory guidance. Given the breadth of the specified category of "other local factors", many will fall within this category in any event but, even if they do not, local authorities are entitled to have regard to such other factors as are relevant.
In particular I refer to two factors which have featured in this case:
(1) Affordability.
Stanley Burnton J said in the Birmingham case at [32] that "affordability is in general a highly relevant consideration to be taken into account by a local authority in making its decisions on rates to be offered to service providers, subject to the local authority being able to meet its duties at the rates it offers".
That statement was endorsed by Hickinbottom J in (Forest Care Home Ltd) v Pembrokeshire County Council [2010] EWHC 3514 (Admin) at [142].
Beatson J also held in terms in Bevan & Clarke that a local authority is entitled to take its resources into account in setting the fee to be provided to providers [68].
(2) The state of the local...
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