The Queen (on the application of (1) South Tyneside Care Home Owners Association (2) Helen McArdle Care Ltd (3) Executive Care Group) v South Tyneside Council
| Jurisdiction | England & Wales |
| Judge | Her Honour Judge Belcher |
| Judgment Date | 28 June 2013 |
| Neutral Citation | [2013] EWHC 1827 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/9191/2012 |
| Date | 28 June 2013 |
[2013] EWHC 1827 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
LEEDS DISTRICT REGISTRY
The Combined Court Centre
Oxford Row, Leeds
Her Honour Judge Belcher
Case No: CO/9191/2012
Mr Mathew Purchase (instructed by David Collins Solicitors) for the Claimants
Mr Philip Engelman (instructed by South Tyneside Council Legal Services) for the Defendant
The First Claimant was formed prior to 2004 and represents the interests of 12 care home operators within South Tyneside. The Second and Third Claimants are each owners or operators of care homes within South Tyneside. Residents in care homes can pay their fees personally, or through relatives, or they can have their fees wholly or partly funded either by their Primary Care Trust if they are primarily in need of nursing care, or by the Local Authority if they are not. This dispute concerns the decision of South Tyneside Council ("the Council") in respect of the fees it will pay to care homes in which it places elderly and/or disabled residents ("the Fees"), as set out in its "Agreement for the Provision of 24 Hour Residential Care Home Services or Nursing Care Home Services" ("the Contract") issued on 31 May 2012. The Claimants' case is that, in various respects, the Defendant's decision was unlawful, procedurally unfair and/or Wednesbury unreasonable. The Defendant denies this.
These proceedings were issued on 29 August 2012, just within the 3 month time limit. In Section 7 of the claim form there was a request that this case be dealt with in the same way as four similar, but not identical, judicial review cases in which HHJ Richardson QC had granted permission and had ordered that the case against Newcastle City Council ( R (on the application of CNEN) v Newcastle City Council CO/6620/2012), should be expedited with the other three cases being listed afterwards. The Claimant sought an order that this case be listed for hearing after the case against Newcastle City Council in the same way as for the other three cases. In effect the Claimant sought to join with the expedition in the other care home cases. In response to that, on 12 September 2012 the Council applied for these proceedings to be stayed. On 17 September 2012 HHJ Gosnell stayed these proceedings until 28 days after judgment was given in the case against Newcastle City Council. The hearing in the case against Newcastle City Council took place on 24 and 25 September 2012 and that Judgment was handed down on 18 October 2012. On 6 December 2012, permission in this case was granted on the papers by HHJ Behrens on the 4 grounds of challenge originally pleaded. On 27 March 2013, HHJ Gosnell granted the Claimants permission to amend the claim by the addition of two further grounds, Grounds 5 and 6.
The 6 Grounds of Challenge in summary are
i) In deciding on the level of the Fees, the Council failed to take into account return on capital/return on equity as a cost of care, and took a flawed approach to the concept of profit.
ii) In setting the Fees on the basis of "bands" the Council failed to pay due regard to the actual costs of care.
iii) In providing an uplift to the Fees for elderly mentally infirm ("EMI") residents, the Council failed to pay due regard to the actual costs of care.
iv) The Council failed to properly consult before reaching the Fees decision.
v) The financial analysis undertaken by the Council for the purpose of determining the Fees is vitiated by a number of identifiable errors.
vi) The Council failed to comply with its "public sector equality duty" pursuant to Section 149 Equality Act 2010.
References to the trial Bundles will be by capital letter A, B or C, Tab number where appropriate, and page number. References to the bundles of authorities will be AB and SAB to denote respectively the authorities bundles and the supplementary authorities bundle, followed by Tab and page number.
The Law
Section 21(1) of the National Assistance Act 1948 ("the 1948 Act"), as amended, gives local authorities the power to provide
"…residential accommodation for persons aged 18 or over who by reason of age, illness, disability or other circumstances are in need of care and attention which is not otherwise available to them." [AB, Tab 1, page 1]
In March 1993 that power was converted into a duty by Paragraph 2(1)(b) of Circular LAC (93)(10) [AB, Tab 6]. By Section 26 (1) of the 1948 Act, local authorities may make arrangements for the provision of residential accommodation with external providers and Section 26(2) provides that the local authority shall make payments for such provision [AB, Tab 1, page 4].
By virtue of Sections 7 and 7A of The Local Authority Social Services Act 1970 ("the 1970 Act"), in undertaking its social services functions, the local authority is required to act under the general guidance of the Secretary of State (Section 7), and in accordance with written directions given by the Secretary of State (Section 7A) [AB, Tab 2, pages 1 and 2]. Directions given under Section 7A of the 1970 Act are plainly mandatory. Statutory guidance under Section 7 is not mandatory, but an authority can depart from it only for good reason and following a considered and properly reasoned decision. In R v London Borough of Islington ex parte Rixon [1997] ELR 66, Mr Justice Sedley (as he then was) said at page 71:
"…while "guidance" does not compel any particular decision….especially when prefaced by the word "general", in my view Parliament by section 7(1) has required local authorities to follow the path charted by the Secretary of State's guidance, with liberty to deviate from it where the local authority judges on admissible grounds that there is good reason to do so, but without freedom to take a substantially different course." [AB, Tab 16, page 71]
The National Assistance Act 1948 (Choice of Accommodation) Directions
The National Assistance Act 1948 (Choice of Accommodation) Directions 1992, which were made under Section 7A of the 1970 Act, provide that a person entitled to accommodation under Section 21 of the 1948 Act should be accommodated at the place of his choice (the "preferred accommodation"), subject to paragraph 3 which, so far as relevant, provides as follows:
"3…the local authority shall only be required to make or continue to make arrangements for a person to be accommodated in his preferred accommodation if –
(a) the preferred accommodation appears to the authority to be suitable in relation to his needs as assessed by them;
(b) the cost of making the arrangements for him at his preferred accommodation would not require the authority to pay more than they would usually expect to pay having regard to his assessed needs;
(c) the preferred accommodation is available;
(d) the persons in charge of the preferred accommodation provide it subject to the authority's terms and conditions, having regard to the nature of the accommodation, for providing accommodation for such a person under Part III of the National Assistance Act 1948." [AB, Tab 5]
The cost referred to in paragraph 3(b) of these Directions is generally known as the "usual cost". It is the basis on which local authorities set the fees they will normally be prepared to pay to care homes.
Circular LAC (2004) 20
Circular LAC (2004) 20 ("the Circular") is Governmental guidance by which local authorities are bound under Section 7 of the 1970 Act. The relevant parts of the Circular for the purposes of this case are as follows:
"2.5.4…[The usual cost] should be set by councils at the start of a financial or other planning period, or in response to significant changes in the cost of providing care, to be sufficient to meet the assessed care needs of supported residents in residential accommodation…In setting and reviewing their costs, councils should have due regard to the actual costs of providing care and other local factors. Councils should also have regard to Best Value requirements under the Local Government Act 1990.
2.5.7 Councils should not set arbitrary ceilings on the amount they expect to pay for an individual's residential care. Residents and third parties should not routinely be required to make up the difference between what the council will pay and the actual fees of the home. Councils have a statutory duty to provide residents with the level of service they could expect if the possibility of resident and third party contributions did not exist.
3.3 When setting its usual cost(s) a council should be able to demonstrate that the cost is sufficient to allow it to meet assessed care needs and to provide residents with the level of care services that they could reasonably expect to receive if the possibility of resident and third party contributions did not exist." [AB, Tab 8]
The Building Capacity and Partnership in Care Agreement
In addition there is non statutory guidance, (that is guidance not issued under Section 7 of the 1970 Act), in The Building Capacity and Partnership in Care Agreement ("the BCPCA") issued by the Department of Health. The BCPCA was considered by HHJ Raynor QC in R(Sefton Care Association) v Sefton Council [2011] EWCH 2676 (Admin). HHJ Raynor QC decided that it made little difference that the BCPCA was not statutory guidance and that the council would have to justify departure from it. [AB, Tab 21, paragraph 19]
Section 1 of the BCPCA is the...
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