R (Primary Health Investment Properties Ltd) v Secretary of State for Health

JurisdictionEngland & Wales
JudgeMr. Justice McCombe
Judgment Date24 March 2009
Neutral Citation[2009] EWHC 519 (Admin)
CourtQueen's Bench Division (Administrative Court)
Docket NumberCase No: CO/9572/2007
Date24 March 2009

[2009] EWHC 519 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Before:

The Honourable Mr. Justice Mccombe

Case No: CO/9572/2007

Between
(1) Primary Health Investment Properties Ltd
Claimants
(2) Primary Health Properties Plc
(3) Dr N.B. Turnbull, Dr V.L. Beveridge, Dr R.A. Elder, Dr I.M. Wheatley
(1) The Secretary of State for Health & Others
Defendants
(2) The National Health Service Litigation
Authority Family Health Services Appeal Unit
Lincolnshire South West Trust Nhs Teaching Primary Care Trust
Interested Party

Mr. J. Karas Q.C. and Mr. J. Maurici (instructed by Nabarro, Solicitors) for the Claimant

Mr. J. Herberg (instructed by Solicitor to the Department of Work & Pensions) for the 1 st Defendant

Mr. P. Coppel (instructed by Bevan Brittan, solicitors) for the 2 nd Defendant

The Interested Party was not represented

Hearing dates: 3 – 10 February 2009

Mr. Justice McCombe

Mr. Justice McCombe:

(A) Introduction

1

This is a claim for judicial review brought by six Claimants. The first claimant is Primary Health Investment Properties Limited (“PHIP”). The second claimant is Primary Health Properties PLC (“PHP”). The fourth to sixth Claimants, grouped together in the title to the proceedings as a third claimant, are four general medical practitioners (Dr. N.B. Turnbull, Dr. V.L. Beveridge, Dr. R.A. Elder and Dr. I.M. Wheatley) (“the Doctors”), practising together in partnership at the Hereward Medical Centre, Exeter Street, Bourne, Lincolnshire (“the Premises”). The Defendants are the Secretary of State for Health (“SSH”) and the National Health Service Litigation Authority Family Health Services Appeal Unit (“the Appeal Unit”). Lincolnshire South West NHS Teaching Primary Care Trust (“the PCT”) is joined as an Interested Party.

2

The Claimants challenge the dispute resolution procedure adopted under the NHS (Personal Medical Services Agreements) Regulations 2004 (and applied in this case by agreement between the Doctors and the PCT) for determining the “current market rent” of the Premises. In particular, challenge is made to the procedure for resolving the rent dispute between the parties as set out in letters dated 30 July and 14 September 2007 from the Appeal Unit to the Doctors' surveyor.

3

The Claimants contend that the dispute resolution procedure fails to comply with Article 6 of the European Convention on Human Rights, because the determination of the rent is to be carried out by the Appeals Unit as the SSH's delegate: Ground 1, Detailed Grounds, paragraph 58. Further, the Claimants say that the decision of the Appeal Unit to appoint the Chief Executive Office of the Valuation Office Agency (“CEO VOA”) to advise it on the dispute was irrational and unfair, since that also involves a breach of Article 6: ground 2, Detailed Grounds, paragraph 66. It is further argued that the involvement of the CEO VOA is “tainted” with apparent bias, on domestic principles of English law, because of the prior involvement of the DV in acting on behalf of the PCT in the initial negotiations. Although this ground of claim is subsumed in ground 2 as being founded a breach of Article 6, the Claimants have argued the point as a freestanding ground under domestic law, independent of the Convention, without objection from the Defendants.

4

In summary, in many cases general medical practitioners (like the Doctors in this case) enter into agreements with Primary Care Trusts to provide professional medical services to the public. As part of those agreements, in certain circumstances, the doctors can claim reimbursement of rent paid by them for surgery premises from the relevant Trust. The Trust is then required, by nationally or locally negotiated agreements (“GMS” or “PMS agreements), to pay to the doctors a sum representing the lower of the actual rent payable under the doctors' lease of their premises from the landlords and the “current market rent” for those premises. If a dispute arises about the proper figure for current market rent the Trust frequently (as in this case) instructs the District Valuer (“the DV”) to advise it. (There is a dispute here as to the precise capacity in which the DV acted in this matter. Is he an agent of the PCT in the dispute or merely a public officer performing a public function?) If the figure determined by the PCT, on the advice of the DV, is unacceptable to the doctors, they can invoke a standard “disputes resolution procedure” which involves a reference of the matter to the Secretary of State. He has formally delegated his statutory functions in this respect to the NHSLA of which the Appeals Unit is a part.

5

The procedure provides for the Secretary of State (or now the Appeals Unit) either to decide the matter himself or to appoint another person to make the decision. In either case the “adjudicator” may consult, if he wishes, with other persons whose expertise he considers will assist him in his consideration of the matter. In many cases, including the present, the Appeals Unit consults the CEO VOA to advise as to the disputed rental figure. Both the DVs and CEO VOA are emanations of the “Valuation Office Agency” (which is in turn an Executive Agency of HM Revenue and Customs). It is said by the Claimants that the Appeals Unit is simply a creation of the Department of Health which is directly interested in health service budgets and, therefore, (indirectly) in the amounts which PCTs are required to reimburse to doctors. Thus, the Claimants say, the procedure fails to provide the determination of their civil rights and obligations by a fair and independent tribunal established by law, within the meaning of Article 6 of the Convention.

6

In the present case, PHIP is the freeholder of the Premises. The Doctors are the tenants. Under the Doctors' lease it is open to PHIP, as a matter of private right, to trigger a rent review with a view to bringing the rent for the Premises in line with the “Open Market Rent”. They have done that in this case. If the PCT does not agree to pay the whole of the reviewed rent then the Doctors are obliged under the terms of the lease to instruct PHIP, acting as their agents, to negotiate with the PCT to obtain full reimbursement of the rent as arrived at under the contractual rent review, including submitting evidence and making representations to the DV and/or the SSH and any other relevant authority.

7

In the end after the exhaustion of the procedures, if the rent recoverable from the PCT turns out to be less than the rent set under the rent review, then the lesser sum becomes the rent payable under the lease. Accordingly, the Doctors do not generally run the risk of a shortfall between the reviewed rent under the lease and the sum that it can recover from the PCT (although there is a limited exception to this upon which the Claimants rely in part of the argument). It is generally (subject to the exception) PHIP that has the primary financial interest in the outcome of the negotiations with the PCT and of the dispute resolution procedure. Clause 60.2 of the lease provides as follows:

“If following the agreement or determination of the New Rent on any relevant Review Date or calculation of the Substituted Rent pursuant to clause 21 hereof the New Rent first receivable (having made the Retention) is less than the Rent receivable (having made the Retention) prior to the relevant Review Date then the retention determined in accordance with Clause 60.1 hereof shall be decreased by such amount to ensure that the New Rent (less the Retention) following any Relevant Review Date is not less than the Rent (less the Retention) prior to such Review Date,”

8

The exception mentioned in paragraph 7 is that the lease permits the Doctors to retain a proportion of the rent (“the Retention” provided for in clause 60.2), varying from 2.5% in the first three years up to 7.5% in the final years of the term. I was told that the retention provision was intended to provide a contribution towards the Doctors repair liability under Part 7 of the lease, clause 31 and following. Thus, the lower the sum reimbursed by the PCT the lower is the retention available to the Doctors for repairs. This, say the Doctors, gives them a direct financial interest (amounting to a “civil right” for Article 6 purposes) in the quantification of the reimbursement from the PCT.

9

PHP is the holding company of PHIP and has a financial interest in relation to the Premises as such and in relation to similar medical premises elsewhere.

10

There is a challenge by the Defendants as to the “locus standi” of both PHIP and PHP as Claimants, although following encouragement from the bench, in view of the accepted locus standi of the Doctors, neither Defendant has advanced oral submissions on the point. Oral argument has been on the “merits” of the claim as a whole.

(B) The Agreements and the Statutory Background

11

In a masterpiece of understatement the statutory framework in issue in this case is described by the deponent for the SSH as being “somewhat complex”. That is a kind description; I shall not venture another. I shall endeavour as a consequence of this complexity, however, to keep citation from the myriad of statutory and quasi-statutory material to an absolute minimum. In doing so, I acknowledge with gratitude the very full written and oral arguments of Counsel that have pointed the way, through the statutory darkness, into the relative sunlight of the relevant materials. Fortunately, for the practical purposes of this case it is not necessary to go much beyond the summary of the legal relationships set out above, save in those areas where the agreements and/or the statutory material go to the crux of the Claimants' Article 6...

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