Priory Healthcare Ltd v Highland Health Board
| Jurisdiction | Scotland |
| Judge | Lord Bannatyne |
| Judgment Date | 20 February 2019 |
| Neutral Citation | [2019] CSOH 17 |
| Docket Number | No 23 |
| Court | Court of Session (Outer House) |
| Date | 20 February 2019 |
[2019] CSOH 17
Outer House
Lord Bannatyne
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363; 180 CLR 266; (1977) 52 ALJR 20
F (Mental Patient: Sterilisation) (Re) sub nom F v West Berkshire Health Authority [1990] 2 AC 1; [1989] 2 WLR 1025; [1989] 2 All ER 545; [1989] 2 FLR 376
Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742; [2015] 3 WLR 1843; [2016] 4 All ER 441; 163 Con LR 1; [2016] 1 P & CR 13; [2016] L & TR 8
R v Bournewood Community and Mental Health NHS Trust, ex p L [1999] 1 AC 458; [1998] 3 WLR 107; [1998] 3 All ER 289; [1998] 2 FLR 550; [1998] 2 FCR 501; (1997–98) 1 CCL Rep 390; (1998) 44 BMLR 1; [1998] COD 312; [1998] Fam Law 592
Agent and principal — Constitution of agency — Patient admitted to hospital in another local authority area as a consequence of urgent need for medical assistance — Whether agency of necessity
Contract — Constitution of contract — Whether admission of payment of invoices without challenge amounted to an implied acceptance of contractual obligations by a local authority health board in respect of its statutory obligations of care and support — Mental Health (Care and Treatment) (Scotland) Act 2003 (asp 13), sec 25
Process — Pleadings — Admissions — Admission of payments of invoices without challenge by a statutory body — No explanation given for the reason for such payments — Whether an implied admission that the payments were made as a matter of legal obligation — Whether an implied admission that a contract existed between the parties
Priory Healthcare ltd raised an action in the commercial court against Highland Health Board for enforcement of alleged contractual obligations arising in terms of a funding agreement between the pursuer and NHS Cambridgeshire in respect of the care of a patient, Mrs AB. The cause called before the commercial judge (Lord Bannatyne) for debate at the instance of the defender, on 18 December 2018.
Section 25(1) of the Mental Health (Care and Treatment) (Scotland) Act 2003 (asp 13) (‘the 2003 Act’) provides, inter alia, “A local authority– (a) shall– (i) provide, for persons who are not in hospital and who have or have had a mental disorder, services which provide care and support; or (ii) secure the provision of such services for such persons”. Subsection (3)(a)(i) provides that “care and support” includes residential accommodation.
Paragraph 3(1) of sch 1 to the Care Act 2014 (cap 23) (‘the 2014 Act’) provides, “Where a local authority in Scotland is discharging its duty under … section 25 of the [2003 Act] by securing the provision of accommodation in England, the adult in question is not to be treated for the purposes of this Part of this Act as ordinarily resident anywhere in England.”
Regulation 5(1) of the Care and Support (Cross Border Placements and Business Failure: Temporary Duty) (Dispute Resolution) Regulations 2014 (SI 2014/2843) (‘the 2014 Regulations’) provides, in relation to any dispute concerning any of paras 1 to 4 of sch 1 to the 2003 Act, the authorities which are parties to the dispute “must not allow the existence of the dispute to prevent, delay, interrupt or otherwise adversely affect the meeting of the needs of the adult … to whom the dispute relates.” In the case of such a dispute, “(a) the authority which is meeting any needs for accommodation of the adult on the date on which the dispute arises must continue to meet those needs; and (b) if no authority is meeting those needs as at that date, the authority in whose area the adult is living as at that date must do so from that date.” (Reg 5(3).) Said duty must be discharged until the dispute in question is resolved (reg 5(4)) and does not affect the liability of any authority to meet those needs during that period (reg 5(5)).
In October 2016, Mrs AB, a patient who was under the care of the defender's social work department and community health team, voluntarily left her place of ordinary residence in the Highland area, and travelled to Cambridge, in England. On 2 October 2016, she was admitted to Addenbrooke's Hospital under the management of NHS Cambridgeshire (‘Cambridge’) and detained there under the Mental Health Act 1983 (cap 20). She was assessed as being a vulnerable adult at risk of self-neglect due to non-compliance with medication and delusional beliefs. She was transferred to a hospital and rehabilitation facility in Woking, in Surrey, England, operated by the pursuer as an independent healthcare provider. She remained subject to detention until 31 October 2016 and thereafter she remained at the pursuer's facility.
In October 2016, the pursuer entered a funding agreement with Cambridge for the patient's care. The contract made no reference to the defender. From sometime after the patient's transfer to the pursuer's facility until 25 April 2017, the defender paid without challenge the pursuer's invoices for her care. Thereafter, the defender declined to pay any fees incurred by the patient after 31 April 2017.
The pursuer contended that a contract had come to exist between the pursuer and defender on three alternative bases: (1) the contract was entered by Cambridge as agent of necessity on behalf of the defender; (2) the defender had adopted and ratified the contract by accepting the obligations imposed by the contract and paying the agreed costs of care without challenge; and (3) the defender was personally barred from now disputing its contractual liability. The pursuer further argued that it was an implied term of the contract that it could not be terminated by the defender if such termination breached the statutory duties owed by it to the patient as the local authority for the purposes of sec 25 of the 2003 Act and placed the patient at material risk of harm. The pursuer submitted that the payments were made by the defender in fulfilment of its duties under sec 25(1)(a)(ii) and in accordance with para 3 of sch 1 to the 2014 Act.
The defender challenged the relevancy of the pursuer's case and advanced the following arguments. Cambridge had detained the patient in terms of its obligations under secs 2 and 3 of the Mental Health (Scotland) Act 1983 (cap 36). There was no absolute obligation upon the defender in terms of sec 25(1)(b) of the 2003 Act to provide care and support services to a patient who was in hospital as at the date of the contract being entered into by the pursuer and Cambridge. Paragraph 3(1) of sch 1 to the 2014 Act did not apply where, as in the present case, the defender had not made a decision to fulfil its obligations under sec 25 of the 2003 Act by securing the provision of accommodation in England. In the circumstances averred, no agency was created of necessity or otherwise. Nor was there any urgency justifying Cambridge acting without the defender's authority. An implied term was not necessary, reasonable or equitable. In any event, having regard to the overall statutory context, the patient's discharge would not breach the implied term contended for by the pursuer.
The pursuer contended that the defender had, by its pleadings, admitted in substance that a contract had existed between the pursuer and defender. The defender's admission that the invoices had been paid without challenge, where the defender had no power to make donations or ex gratia payments, constituted in substance and effect an admission that there was a contractual obligation to make those payments.
Held that: (1) the contract having been entered into by the pursuer and Cambridge when the patient was in hospital and being transferred to the pursuer's facility, it could not have been entered in fulfilment of the defender's obligations under sec 25(1)(a)(ii) of the 2003 Act, which provided for care and support to be secured for those “who are not in hospital” (paras 56, 57); (2) the patient having been compulsorily detained by Cambridge in terms of the Mental Health Act 1983 at the relevant time, the contract was not entered into by Cambridge on behalf of the defender in fulfilment of the defender's obligations under sec 25 of the 2003 Act (paras 65, 66); (3) the principle of necessity was to justify otherwise unlawful action, the patient's detention and treatment was not otherwise unlawful, in any event there was no obligation incumbent upon the defender at the relevant time under sec 25 of the 2003 Act (paras 68–73); (4) there was no continuing obligation upon a local authority in Scotland where it had no control over a patient's entry into residential accommodation in England as the ordinary meaning of “securing” in para 3 of sch 1 to the 2014 Act required some form of act by the defender whereby the residential accommodation was obtained (para 60); (5) the acceptance of payment did not inexorably lead to acceptance that a contract had been formed where a local authority may have believed that it had statutory authority to pay but later concluded that it was not obliged to, the defender's averments anent payment had to be considered in the context of the whole pleadings which explicitly and unequivocally denied the existence of any contract between the defender and the pursuer, and accordingly the pleadings could not be read as a deemed admission (paras 76–80); (6) the conditions for implication of an implied term were not satisfied, it being unnecessary for the protection of the patient from harm due to the existence of statutory safeguards in terms of secs 2 and 3 of the Mental Health (Scotland) Act 1983 and reg 5 of the 2014 Regulations (paras 103–105); and, accordingly, pursuer's case held irrelevant.
Marks and Spencer plc v BNP Paribas Security Services Trust Co (Jersey) Ltd [2016] AC 742 considered and R v Bournewood Community and Mental Health Board, ex p L[1999] 1 AC 458applied.
At advising, on 20 February 2019—
Lord Bannatyne—
[1] This matter called before me...
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