Surrey County Council v NHS Lincolnshire Clinical Commissioning Group

Hearing dates: 24 – 25 November 2020

(Approved by the court)

The Hon.Mrs Justice Thornton

Introduction

Surrey County Council brings a private law claim in restitution against the Defendant, NHS Lincolnshire Clinical Commissioning Group (“Lincolnshire NHS CCG”), to recover sums paid by the Council for the costs of accommodation and care of JD, a young man with autism spectrum disorder. JD was born in Surrey but accommodated in specialist autism care in Lincolnshire at the age of 17 years.

Surrey Council's claim was originally to recover sums paid for JD's care and accommodation during the period 01 August 2008 to 31 January 2015 in the sum of £1,571,431.47 plus interest. By the time of the hearing the Council had accepted that by virtue of limitation, its claim was restricted to restitution of sums paid after 31 July 2013, amounting to £310,587.25 plus interest.

It is common ground that the predecessor to the Defendant, the Lincolnshire Primary Care Trust (“Lincolnshire PCT”) made an error of public law in 2008 when it declined to assess whether JD was eligible for NHS care on the basis that, even if JD were eligible for such care, it was not responsible for commissioning services for JD. The public law error was repeated in 2010 when the PCT reaffirmed its earlier position. Its errors meant that Surrey Council continued to pay for JD's care in Lincolnshire until the Defendant accepted responsibility, with effect from 1 February 2015.

It is also common ground that the claim in restitution is novel. It is a claim by one public body against another, in relation to care services provided to a third party, where both public bodies have distinct statutory caring responsibilities and where the basis of the claim is said to be an unlawful public law decision to refuse to accept responsibility for the care of the third party.

On behalf of Surrey Council, it is said that a claim in restitution is established on the facts. Lincolnshire PCT accepts it acted unlawfully in refusing to accept commissioning responsibility for JD and thereby declining to assess JD's eligibility for continuing NHS care. As a result, the Council was left to fund the care of JD leaving the NHS Trust unjustly enriched.

On behalf of the CCG, the claim is said to be an entirely novel and unmeritorious private law claim. It is fundamentally misconceived, being a private law challenge to public law decisions by the NHS Trust. In any event, there cannot be a viable claim in restitution because the PCT did not benefit from its public law error and the defence of change of position applies. Any money ‘saved’ on the costs of JD's care was spent on other patients and no money was retained by the PCT.

Issues

The parties were agreed on the issues which arise for consideration by the Court:

1) Is the Council barred from advancing a private law claim given the public law issues which arise? If not;

2) Is any claim barred by reason of section 5 of the Limitation Act 1980 on the grounds that the cause of action accrued more than 6 years before proceedings were issued? If not:

3) Do the facts of this claim fall within an established category of restitution claims? If not, should the court permit the establishment of a new category of restitution claim? If so:

4) Are all the necessary elements of the cause of action of unjust enrichment made out on the facts of this case. In particular: was the PCT enriched? If so:

5) Is the defence of change of position available to the Defendant?

Unjust enrichment

The concept of unjust enrichment lies at the heart of and is the principle underlying the instance in which the law gives a right of recovery in restitution ( Lipkin Gorman (a firm) v Karpnale Ltd [1992] 4 All ER 512 Lord Goff at §532)

When determining whether the elements of an unjust enrichment claim are made out, it is necessary to address the following four questions. Each part of the test must be satisfied:

a. Has the defendant been benefited, in the sense of being enriched?

b. Was the enrichment at the claimant's expense?

c. Was the enrichment unjust?

d. Are there no defences?

(Lord Steyn in Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221, 227)

The following general principles set out by Lord Reed in the recent Supreme Court authority of HMRC v The Investment Trust Companies[2017] UKSC 29 are instructive:

“39. First, it is important, when dealing with personal claims based on unjust enrichment, to bear in mind what was said by Lord Goff of Chieveley inLipkin Gorman v Karpnale Ltd [1991] 2 AC 548, 578, when rejecting a submission that, when dealing with a claim to restitution based on unjust enrichment, it was for the court to consider the question of injustice or unfairness on broad grounds, and that it should deny recovery if it thought that it would be unjust or unfair to hold the defendant liable:

“The recovery of money in restitution is not, as a general rule, a matter of discretion for the court. A claim to recover money at common law is made as a matter of right; and even though the underlying principle of recovery is the principle of unjust enrichment, nevertheless, where recovery is denied, it is denied on the basis of legal principle.”

As Lord Steyn remarked inBanque Financière, unjust enrichment ranks next to contract and tort as part of the law of obligations (p 227). A claim based on unjust enrichment does not create a judicial licence to meet the perceived requirements of fairness on a case-by-case basis…”

English law does not have a unified theory of restitution. Its legal principles have developed incrementally:

“246 English law does not have a unified theory of restitution……For the moment, therefore, as Lord Hoffmann observed inDeutsche Morgan Grenfell Group plc v Inland Revenue Comrs[2007] 1 AC 558, para 21, the claimant has to prove that the circumstances in which the payment was made come within one of the categories which the law recognises as sufficient to make retention by the recipient unjust.” ( Patel v Mirza[2017] AC 467 (Lord Sumption)).

In Gibb v Maidstone & Tunbridge Wells NHS Trust[2010] EWCA Civ 67, Laws LJ acknowledged the tension inherent in the development of the law and considered that clear reasoning was necessary for any extension of unjust enrichment.

“…There is, I think, something of a tension underneath this reasoning. It is between these two propositions. (1) The categories of unjust enrichment claims cannot be closed, for if they were this branch of the law would be condemned to ossify for no apparent reason; and nothing could be further from the common law's incremental method. But (2) such a claim must fall “within one of the hitherto established categories of unjust enrichment” which suggests (at least) that the categories rather than any overriding principle are paramount. The authorities' reluctance to assert first principles may be ascribed to the justified fear of the palm tree: if the principle of unjust enrichment does no more than to invite one judge after another, case by case, to declare that this or that enrichment is inherently just or unjust, it is not much of a principle. That is why, with all due deference, I wonder whether Lord Hoffmann's formulation in Banque Financière de la Cité v Parc (Battersea) Limited[1999] 1 AC 221at 234C – D has not too much of a broad-brush or legislative flavour…

27. If one looks at the matter from what is perhaps a more modest standpoint, we may see at once that clear reasoning is at least required for the elaboration of any extension of unjust enrichment. Clear reasoning, if it allows a claim in seemingly new circumstances, will provide clear analogues with other cases. No doubt this is what Mann J had in mind when he qualified his reference to established categories by the phrase “or some justifiable extension thereof.

28. I make these points only to show, with respect, that Miss McNeill's forceful plea that this case lies outside the established categories of unjust enrichment may do less than justice to the subtleties of the way the law develops.”

Chronology

The chronology of events giving rise to the claim was as follows:

The regulatory framework