Neutral Citation Number: [2017] EWCA Civ 1605
Case No: C1/2015/0259
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
QUEEN’S BENCH DIVISION,
ADMINISTRATIVE COURT IN BRISTOL
HHJ LAMBERT
[2014] EWHC (Admin) 4321
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 19/10/2017
Before :
SIR IAN BURNETT LCJ
LORD JUSTICE BEATSON
and
LADY JUSTICE KING
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Between :
Torbay Council / Appellant- and -
Torbay Quality Care Forum Limited / Respondent
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Charles Bourne QC (instructed by Torbay Council Legal Services) for the Appellant
Mathew Purchase (instructed by David Collins Solicitors) for the Respondent
Hearing date: 27 June 2017
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Approved Judgment
Judgment Approved by the court for handing down. / Torbay Council v Torbay QCFLLord Justice Beatson :
Judgment Approved by the court for handing down. / Torbay Council v Torbay QCFLI. Overview:
1. The respondent, Torbay Quality Care Forum Limited (“the Care Forum”), is an association representing independent care homes in Torbay. It successfully challenged the decision of Torbay Council (“the Council”) dated 5 February 2014 setting the fees it was prepared to pay for providing care to care home residents who are eligible under the National Assistance Act 1948 (“the 1948 Act” and related legislation for council-funded care for the year 2014 – 15. The Council set four banded weekly fee rates of £358 and £431 respectively for “standard” and “standard plus” care, and £464 and £504 respectively for “standard” and “standard plus” nursing care. These fees are referred to as “the usual cost(s)”.
2. In an order sealed on 20 January 2015 following a judgment handed down on 23 December 2014, HHJ Lambert declared that the Council’s decision was unlawful by having regard, in its calculations to fees received by care homes from third-party top-ups, from privately-paying residents, and/or in respect of residents with enhanced needs or on Continuing Healthcare[1] and quashed it. The unlawfulness was declared to be in departing without good reason from the guidance in Circular LAC (2004) 20 on the National Assistance Act 1948 (Choice of Accommodation) Directions 1992 (“LAC (2004) 20”). The Council appeals against this part of the order with the permission of Briggs LJ.
3. The order also declared that the Council relied on a calculation of weighted average staff hours which was significantly flawed but the Council did not seek permission to appeal against that declaration or the order quashing the decision. Accordingly, the sole issue before this court is whether a council setting the “usual cost” of providing care to care home residents is entitled to take into account fees received by care homes from the sources referred to in the order, and to deduct an amount representing an assumed fee from the actual cost of meeting the assessed care needs of the individual in question.
4. The legal regime governing local authorities’ obligations concerning care provision I describe and consider in this judgment is that which applied at the time of the challenged decision. That regime was replaced on 1 April 2015 when the Care Act 2014 came into force and new guidance was issued which replaced that in LAC (2004) 20. Section 5 of the Care Act 2014 creates a duty to promote the efficient and effective operation of a market in services for meeting care needs and requires councils to have regard to the importance of ensuring the sustainability of the market. I do not consider the new regime and express no opinion as to whether, as Mr Charles Bourne QC, on behalf of the Council, suggested, the outcome in this case will have any relevance to decisions under the new regime for future years, or whether, as Mr Mathew Purchase, on behalf of the Care Forum, suggested, this is unlikely because the focus of the new regime is different.
5. In sections II, III, and IV of this judgment, I summarise the legal framework, the background to the challenged decision and the approach adopted by the Council, and the challenged decision. Section V summarises the judgment below. Section VI analyses the submissions of the parties, the meaning of LAC (2004) 20, and gives the reasons for my overall conclusion and for respectfully disagreeing with the Lord Chief Justice and King LJ on the outcome of the appeal. Left to myself, although my reasons differ from the judge’s, I would dismiss the appeal on one of the two bases discussed in Part VI, see in particular [53] - [64]. However, since the Lord Chief Justice and King LJ disagree with my interpretation, the appeal will be allowed.
II. The legal framework:
6. Under section 21 of the National Assistance Act 1948 and directions made under that Act in Department of Health Circulars LAC (93)10 and 2004 (20) issued respectively in March 1993 and 14 October 2004, local authorities have a duty to make arrangements for providing “residential accommodation for persons … who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them”. Subject to means-testing (see section 22 of the 1948 Act), local authorities also have a duty to fund the provision of accommodation and personal care. Where the provision of nursing care is ancillary or incidental to the provision of accommodation and personal care, the local authority’s duty under section 21 includes providing it, although the NHS makes a flat-rate payment to contribute to the nursing costs.[2] Section 26 of the 1948 Act permits local authorities to make such arrangements with voluntary organisations and private care home providers, which provide the accommodation and care in exchange for the fees the relevant local authority has agreed to pay for it.
7. The relationship between local authorities and private care homes is a contractual one, but local authorities are required to act under the general guidance of the Secretary of State in the exercise of their social services functions: see Local Authorities Social Services Act 1970 (“the 1970 Act”), section 7. The National Assistance Act 1948 (Choice of Accommodation) Directions 1992 (“the Directions”), issued on 23 December 1992, provide:
“2. Where a local authority have assessed a person under section 47 of the National Health Service and Community Care Act 1990 ... and have decided that accommodation should be provided pursuant to section 21 of the [1948 Act] … the local authority shall, subject to paragraph 3 of these Directions, make arrangements for accommodation pursuant to section 21 for that person at the place of his choice within the United Kingdom …
3. Subject to paragraph four of these directions 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 –
…
(b) the cost of making 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 ...”
8. The requirement in paragraph 3 of the Directions that a local authority is only obliged to make arrangements for accommodation at a person’s preferred accommodation if this does not cost more than the local authority would usually expect to pay having regard to his assessed needs involves the authority determining what that would be, and this figure has become known as “the usual cost”. There may be different “usual costs” for differing needs; for example, as seen in this case, the Council adopted four banded weekly fee rates.
9. Paragraph 4 of the Directions deals with accommodation chosen by a person assessed to be in need which would cost more than the relevant local authority’s “usual cost” for that person’s assessed needs . Paragraph 4(1) provides that, subject to specified exceptions:
“… paragraph 3(b) of these Directions shall not apply to a local authority who makes arrangements which cost more than the local authority would usually expect to pay in order to provide a person with their preferred accommodation if a third party’s contribution to that person which is treated as that person’s resources as assessed under the National Assistance (Assessment of Resources) Regulations 1992 [SI 1992 No. 2977] is such that he can reasonably be expected to pay for the duration of the arrangements an amount that is at least equal to the difference between –
(a) the cost that the local authority would usually expect to pay for accommodation having regard to the person’s need, and
(b) the full standard rate for that accommodation as specified in section 22(2) of the National Assistance Act 1948 … or pursuant to section 26(2)2(4) of that Act …”
10. Paragraph 4(2) provides that paragraph 4(1) shall not apply to cases in which the third-party’s contributions are made by a person who is liable under section 42 of the 1948 Act to maintain the person (a spouse or children) who wishes to be provided with preferred accommodation. Paragraph 4(3) provides that nothing in the Directions “shall prevent a local authority from making or continuing to make arrangements for a person to be accommodated in his preferred accommodation where the cost of making such arrangements is more than the local authority will usually expect to pay having regard to the person’s assessed needs”.
11. Paragraph 4 thus recognised that care may be provided at rates that exceed the “usual costs” and may be so provided to individuals who are eligible for council-funded care. In this way, the Directions introduced the concept of the “top-up”. Guidance was issued together with the Directions. That guidance was replaced first by the guidance in LAC (2001) 29 and then by the guidance in LAC (2004) 20.
12. Before turning to LAC (2004) 20, I refer to Building Capacity and Partnership in Care, issued in October 2001 by the Department of Health. The cover describes it as “an Agreement between the statutory and the independent social care, health care and housing sectors”. Paragraph 6.2 states:
“Providers have become increasingly concerned that some commissioners have used their dominant position to drive down or hold down fees to a level that recognises neither the costs to providers nor the inevitable reduction in the quality of service provision that follows. This is short-sighted and may put individuals at risk. It is in conflict with the Government's Best Value policy. And it can destabilise the system, causing unplanned exits from the market. Fee setting must take into account the legitimate current and future costs faced by providers as well as the factors that affect those costs, and the potential for improved performance and more cost-effective ways of working. Contract prices should not be set mechanistically but should have regard to providers' costs and efficiencies, and planned outcomes for people using services, including patients.”
13. The summary at the beginning of LAC (2004) 20 states that the Directions are intended to ensure that individuals receiving residential care are “able to exercise genuine choice over where they live”. It also states that “the Regulations give individuals the right to enter into more expensive accommodation than they would otherwise have been offered in certain circumstances”, and that it “is intended to describe the minimum of choice that Councils should offer individuals”.
14. Paragraph 1.3 of LAC (2004) 20 reiterates that local authorities must provide care in an individual’s preferred accommodation if: (a) it is suitable and available, (b) the provider is willing to provide it subject to the local authority’s usual terms and conditions, and (c) it would not cost more than the “usual cost”. Paragraph 1.4 states that a local authority must also arrange for care in more expensive accommodation if the individual requests it, “provided a third party or, in certain circumstances, the resident, is willing and able to pay the difference between the cost the council would usually expect to pay and the actual cost of the accommodation (to ‘top-up’)”. It also states that these are the only circumstances where either a third-party or the resident may be asked to top-up.
15. Cost is dealt with as follows:
“2. Preferred Accommodation
…
(b) Cost
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 usual costs, Councils should have due regard to the actual costs of providing care and other local factors. Councils should also have due regard to best value requirements under the Local Government Act 1999.
2.5.5 Individual residents should not be asked to pay more towards their accommodation because of market inadequacies or commissioning failures. Where an individual has not expressed a preference for more expensive accommodation, but there are not, for whatever reason, sufficient places available at a given time at the Council’s usual costs to meet the assessed care needs of supported residents, the Council should make a placement in more expensive accommodation. In these circumstances, neither the resident or a third-party should be asked to contribute more than the resident would normally be expected to contribute and Councils should make up the cost difference between the resident’s assessed contribution and the accommodation’s fees. Only when an individual has expressed an interest for more expensive accommodation than a Council would usually expect to pay, can a third-party or a resident be asked for a top-up (see paragraph 3.1) …