NHS Commissioning Board v DR Karol Silovsky (First Defendant) DR Paul Driscoll (Second Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leggatt |
| Judgment Date | 24 September 2015 |
| Neutral Citation | [2015] EWHC 3141 (Comm) |
| Docket Number | Case No: 2014 No. 1267 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 September 2015 |
[2015] EWHC 3141 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
7 Rolls Buildings
Fetter Lane
London
EC4A 1NL
The Honourable Mr Justice Leggatt
Case No: 2014 No. 1267
and
Simon Butler (instructed by Hempsons Solicitors) for the Claimant
David Lock QC (instructed by Lockharts Solicitors) for the Defendants
Hearing date: 23 September 2015
The claimant has by statute taken over the role of the Suffolk County Primary Care Trust which I will call "the Trust", the body which commissioned NHS primary care services in Suffolk. The defendants are general practitioners who run a GP practice in Felixstowe. In December 2007, the Trust entered into a contract with the defendants to govern their relationship, called a Personal Medical Services Agreement. Amongst many other things covered by the agreement, it provides for certain payments to be made to the defendants to compensate them for the cost of providing their premises. It is the claimant's case in this action that it has, since 2008, mistakenly paid to the defendants larger sums in relation to their premises than they are entitled to receive under the contract. Alternatively, the claimant contends that, if that is not so, it is because the contract does not accurately record the agreement of the parties so that the contract ought to be rectified. The claimant is seeking on one or other of those bases to be repaid sums currently totalling some £428,000 plus interest on those sums.
This is an application by the defendants for summary judgment. On their behalf, Mr Lock QC submits that the claim has no real prospect of success and should be summarily dismissed. There is a cross-application to make certain amendments to the particulars of claim, principally to plead more particulars of the claimant's rectification case. There has also been a body of witness evidence served. For the purpose of the summary judgment application, I will take the claimant's case to be as pleaded in the draft amended particulars of claim.
I shall approach the application applying well established principles which I need not rehearse. In particular, where there is any issue or potential issue of fact to which the answer might be affected by a full investigation, I shall assume for present purposes that the issue is to be answered in the claimant's favour. Where, however, the question is one of law or is otherwise one which I am as well placed to decide now as a judge would be at trial, it is appropriate that I should decide it now and not put the parties to further cost and delay. It seems to me that this is the position in relation to the issue of interpretation of the contract which arises.
Relevant background
Before I come to the contract itself, I will outline the relevant background. There are two types of contract made between NHS Commissioners and GPs which are relevant for present purposes. The first type is called a General Medical Services (or GMS) contract. The second type is called a Personal Medical Services (or PMS) agreement. For each type of contract, there are statutory regulations relating to it which require certain terms to be included in the contract, although the regulations do not prevent other terms from being included as well. GMS contracts are the default form of contract which GPs are entitled to have unless they are offered and agree to enter into a PMS agreement.
Under the National Health Service Act 2006 the Secretary of State has power to issue legally binding directions providing for payments to be made to GPs under GMS contracts. There is a similar power in relation to PMS agreements. There were directions made in 2004 in relation to GMS contracts which were in force at all relevant times governing payments to be made in relation to premises. Their full title is the National Health Service (General Medical Services — Premises Costs) (England) Directions 2004, and I will refer to them for short as the "GMS Premises Directions." Those directions are detailed but the general scheme of the provisions relevant for present purposes is as follows. If the premises used by the GP practice are rented premises, the directions provide for reimbursement of the rent paid so long as it does not exceed the current market rent for the premises. If the premises are owned by the practice outright without a mortgage, the practice may apply for payments based on a notional market rent. If the practice has borrowed money to purchase or refurbish the premises, it may apply for financial assistance towards meeting the cost of borrowing. Importantly for present purposes, there have been no directions given by the Secretary of State providing for payments to be made for premises under PMS agreements.
The defendants' practice had borrowed money under mortgage to purchase the premises which they use. They obtained a bank loan for a period of 25 years which commenced on 1 April 1998. For an initial period of 10 years, the loan was at a fixed rate of interest. Interest then became payable at a variable rate of one percent above the bank's base rate for the remaining period of the loan. The defendants applied for financial assistance towards their costs of borrowing. In accordance with the GMS Premises Directions, the Trust agreed to make payments of £77,238 per annum. The calculation of those payments was based on the fixed rate of interest which the practice was then paying.
In 2004, the Trust entered into a PMS agreement with the defendants. That agreement contained at clause 440 a term which provided that:
"Where premises costs are payable to the Contractor, these are excluded from the annual contract price and paid separately in accordance with the [GMS Premises Directions]."
It is common ground that the contract by that clause expressly linked the calculation of sums payable for the premises under the contract to the GMS Premises Directions.
A schedule to the agreement, which specified the sums payable under it, included the item:
"Cost rent (fixed interest rate) 77,238"
On 18 December 2007, a new PMS agreement was made between the parties which replaced the previous contract with effect from 1 April 2008. It is this 2007 agreement which is the subject of the present action. The new agreement was in a different form from the previous agreement, having been redrafted by a different firm of solicitors. It is a long document of over 300 pages. Contracts in a similar form were offered at the same time to all GP practices with which the Trust contracted. The terms of the standard contract were negotiated between the Trust and the Suffolk Local Medical Committee, a body with which the Trust was statutorily obliged to consult.
The payment provisions in the 2007 agreement are contained in Part 17 which starts at clause 373. Clause 375 provides:
"Payments to be made to the Contractor and any relevant conditions to be met by the Contractor in relation to such payments in respect of services where payments or the amount of any such payments are not specified in directions pursuant to clause 374 are set out in Schedule 7 to this Agreement."
The directions referred to in clause 374 are directions relating to PMS agreements. As mentioned earlier, there have been no directions made in relation to premises under the statutory power to make directions relating to PMS agreements.
The dispute
Schedule 7 to the agreement has a heading, "Premises Payments." Under that heading, opposite the word "Rent" and in a column headed "Annual Value", appears the figure of £77,238. The claimant's case is that, although the agreement specifies the figure of £77,238 which I have just mentioned, this is not the amount which the defendants are entitled to receive annually under the agreement in respect of the costs of their premises. On behalf of the claimant, this case is put by Mr Butler in two ways. First, Mr Butler argues that, although the 2007 agreement does not contain any clause equivalent to the clause in the 2004 agreement which provided for premises costs to be paid in accordance with the GMS Premises Directions, this is what has impliedly been agreed. Second, he argues that, if this is not the effect of the contractual document as drafted, the document should be rectified to have that effect either on the basis of a common mistake or a unilateral mistake.
Mr Lock on behalf of the defendants submits that neither way in which the case is put has a real prospect of success. He argues that the contract on its plain meaning provides for premises payments to be made in an amount of £77,238 each year, which is a fixed amount and not an amount which may vary in accordance with the regime of the GMS Premises Directions. In contrast to the 2004 agreement which incorporated that regime by reference, the present agreement does not. Nor, Mr Lock submits, has the claimant pleaded or put forward admissible evidence of facts which are capable, if proved, of supporting a claim for rectification. The claim is, therefore, bound to fail and should be summarily dismissed.
Construction
I take, first, the question of construction or implication of a term. The claimant's pleaded case is that the agreement contains an implied term that entitlement to financial assistance for the premises shall be subject to and consistent with the GMS Premises Directions. There is a further plea that there is an implied term that the entitlement to financial assistance for the premises shall be payable in accordance with the terms and conditions of the loan agreement but that contention was not pursued in argument and I therefore need not address it, except to say that it is in my view clearly untenable.
It was common ground in...
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