The King (on the application of Sarcp) v Stoke-on-Trent City Council

Hearing dates: 13 th December 2024 and 10 th January 2025

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

HHJ

Introduction

This case concerns vulnerable older people in care homes. But it takes the form of a dispute between a local authority and some care home providers about a below-inflation rise in standard rates the authority pays the care homes for their residents. However, it affects those residents and those families directly because the less the authority pays the provider, the more the provider may ask the resident and their families to pay in ‘top-up’ fees, so the care home can remain economically viable. After all, like the residents and their families, the care homes and the authority itself are also all trying to cope with the financial squeeze of a ‘Cost of Living Crisis’.

In 2021, the Stoke-on-Trent City Council, which I shall refer to as ‘the Defendant’, agreed a standard contract (which I will call ‘the Contract’) with care home providers. Some of those providers were represented by a trade organisation, ‘SARCP’ (formerly known as the ‘Staffordshire Association of Registered Care Providers’) a company limited by guarantee, with Mr Oliver Bull a director, founding member and Honorary President. I shall refer to SARCP as ‘the Claimant’.

The Contract was originally for a period of two years but has been extended by a further year twice, but its current period expires in March 2025 and a new contract will then have to be negotiated. This claim is part of the ongoing battle between the Claimant (and its members) and the Defendant. Key to this claim is Clause 18.3 of the Contract setting out a mechanism for annual adjustment of standard rates the Defendant paid ‘providers’ (i.e. care homes) for different categories of residents (‘residential’, ‘nursing’ etc), which are defined as ‘the Price’. Clause 18.3 states:

“The Price shall be subject to annual indexation at a rate to be determined by the Council following consultation with the Provider. The rate shall be no less than 1.4% per annum. The first application of the indexation to the Price shall take effect on 1 ^st April 2022.”

In April 2024, that ‘annual indexation’ was up for review once again. The original March decision of the Defendant's Cabinet due to the financial conditions of the Defendant, was no increase in standard residential fees (particularly affecting care homes like the Claimant's members), with the budget focussed on increases for nursing fees (often but not always in nursing homes). When the Claimant pointed out that was inconsistent with Clause 18.3, the Defendant withdrew that decision and began a consultation proposing increase in residential fees of the (below-inflation) minimum of 1.4% in Clause 18.3. Despite consultation responses from the Claimant suggesting the effects of inflation and other factors in costs of care suggested a 9% increase, on 4 ^th July 2024, the Defendant decided the increase should only be 1.4%. I shall refer to that as ‘the Decision’ challenged by this claim.

The six grounds of challenge in the Statement of Facts and Grounds (‘SFG’) drafted by Mr Rule KC for the claim issued on 25 ^th September 2024 are similar to the Claimant's pre-action letter dated 22 ^nd August 2024 (to which the Defendant's Director of Adult Social Care, Mr Tomlin, responded on 4 ^th September). They are:

(i) Ground 1: Inadequate consultation not properly considered in the Decision;

(ii) Ground 2: Failure to consider material considerations;

(iii) Ground 3: Breach of the Public Sector Equality Duty;

(iv) Ground 4: Failure to follow statutory guidance;

(v) Ground 5: Breach of the Art.8 ECHR rights of residents;

(vi) Ground 6: Wednesbury Unreasonableness.

In the Summary Grounds of Defence (‘SGD’) drafted by Mr Straker KC, the Defendant denied these allegations and suggested some were not permissible grounds of review classically categorised by Lord Diplock in his landmark speech in CCSU v MCS [1985] AC 374 (HL): illegality, procedural impropriety or irrationality. Mr Straker also (relatively briefly) argued the claim was not in public law but in private law under the Contract and queried the Claimant's standing. The Claimant's Reply answered the SGD, including on the public/private law issue.

On 4 ^th November 2024, I granted permission on all grounds, but invited the parties to focus on Grounds 1, 3 and 4, since I considered Grounds 2, 5 and 6 added little. However, I also said the Defendant could raise the public/private law issue at the expedited hearing which I listed before myself on 13 ^th December 2024. I also made directions and in response the parties both filed statements: from Mr Tomlin on 14 ^th November to which Mr Bull responded on 20 ^th November, to which Mr Tomlin in turn responded on 3 ^rd December. I give permission to rely on all these statements.

Before the hearing Mr Rule's Skeleton Argument maintained the arguments set out at greater length in the SFG but narrowed the focus of the claim to Grounds 1, 3 and 4 as I had encouraged, without abandoning Grounds 2, 5 and 6. However, he also alleged breach of the Defendant's duty of candour in failing to disclose documents concerning internal decision-making and invited adverse inferences. Mr Straker and Mr Sanghera's Skeleton Argument took issue with that but also maintained denial of the grounds, particularly focussing on Ground 1. However, they also invited relief to be refused as a matter of discretion because of the impact of quashing the Decision on third parties and alternative remedy in private law under the Contract. But principally, their Skeleton focussed on the ‘public/private’ point: arguing that it was a private law claim under the Contract masquerading as a public law one. The Defendant also applied for a non-party costs order against Mr Bull personally.

At the start of the hearing, I referred Counsel to the recent Supreme Court decision of In Re McAleenon [2024] 3 WLR 803 on factual issues in and alternative remedies to Judicial Review. Given that we were already relatively tight for time with a day's hearing, Counsel agreed debates about the duty of candour would not assist and I should simply decide the case on the evidence I have. They also agreed these issues:

a. Whether the Claimant had an alternative remedy under the Contract;

b. Whether there is a ‘sufficient public law element’ in the whole claim;

c. Whether each ground of challenge is within the ‘scope of review’;

d. Whether each ground succeeds, focussing on Grounds 1, 4 and 3;

e. Whether relief should be refused as a matter of discretion.

I shall consider those issues in that order (although I will take (b) and (c) together), after setting out the factual background and legal framework.

Factual Background

Contrarily, I will start the factual background with the correct approach in law to factual disputes, confirmed by Lords Sales and Stephens in McAleenon at [40]–[42]:

“40 Judicial review is directed to examination of whether a public authority has acted lawfully or not. This means that the general position is that the focus of a judicial review claim is on whether the public authority had proper grounds for acting as it did on the basis of the information available to it. This may include examination of whether the authority should have taken further steps to obtain more information to enable it to know how to proceed: Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014, 1065 (Lord Diplock). Accordingly, it is for the public authority to determine on the information available to it the facts which are relevant to the existence and exercise of its powers, subject to review by a court according to the usual rationality standard. The court has a supervisory role only….

41 Judicial review is supposed to be a speedy and effective procedure, in respect of which disputes of fact which have a bearing on the legal question to be determined by the court — that is, whether the public authority has acted lawfully — do not generally arise. A public authority is subject to a duty of candour to explain to the court all the facts which it took into account and the information available to it when it decided how to act.

42 Given the nature of the legal question to be determined by the court and the duty of candour, the usual position is that a judicial review claim can and should be determined without the need to resort to procedures, such as cross-examination of witnesses, which are directed to assisting a court to resolve disputed questions of fact which are relevant in the context of other civil actions, where it is the court itself which has to determine those facts. In judicial review proceedings the court is typically not concerned to resolve disputes of fact, but rather to decide the legal consequences in the light of undisputed facts about what information the public authority had and the reasons it had for acting.”

In McAleenon itself, the Northern Ireland Court of Appeal had rejected a claim by someone living next door to a waste disposal site for judicial review of a regulator's failure to stop statutory nuisance because the nuisance was disputed in fact by the site which was not a party (and due to alternative remedy, considered...