Judge: Master of the Rolls, Beatson and Briggs LJJ
Citation:  EWCA Civ 1350
We have previously reported upon the first instance judgment in this case  EWHC 77 (QB)) was reported on in the edition of our newsletter. In this appeal against the High Court’s order overturning summary judgment for the claimant, the Court of Appeal unanimously dismissed the appeal.
The Claimant owned six care homes registered under the Care Standards Act 2000. In one of those care homes, Raj Nursing Home (‘the Home’), the majority of the referrals were made by Brent Council. Mr Shafi resided at the home from 29 January 2010 until his death on 28 March 2012. Fees of £62,199.94 accrued for his care and accommodation. The Claimant sought recovery of the fees from the estate of Mr Shafi. HH Judge Million granted the Claimant summary judgment for the fees, but this was overturned by Andrews J in the High Court. Permission to appeal to the Court of appeal was granted in limited circumstances.
Mr Shafi was admitted to Park Royal Centre for Mental Health (‘the Hospital’) on 13 November 2009 for an assessment under s.2 MHA 1983 The Hospital decided that he lacked capacity to make decisions as to his future care and a social worker employed by Brent Council contacted the Home for an admissions assessment. He was assessed as suitable and the admission sheet, completed by the manager of the Home, showed the duration of his assessment as long term and Brent Council as the “funding source.” The Claimant wrote to Brent Council in 2010 as to outstanding fees and Brent Council responded as follows:
“Mr Shafi had a financial assessment completed and it indicated that he had in line with fairer charging criteria enough money readily available in bank accounts to pay for his care. Mr Shafi is thus considered to be a self funder and as such should be charged for his care accordingly.
Should access to Mr Shafi’s accounts be frustrated as it appears is the case a member of his family, or indeed on certain occasions a care home can apply to the Office of Public Guardian in respect of an apointeeship (sic). As such management of Mr Shafi’s finances can be taken over.”
After this, Andrews J had held in the High Court, the Claimant had tried to get Mrs Shafi to sign an agreement, which she refused to sign, but someone else did, for Mr Shafi. The judge had held that the agreement was obviously backdated and that Mr Shafi lacked capacity on the date of the agreement.
For a reminder of the judgment of Andrews J in the High Court, please see our earlier report.
On appeal, Counsel for the Claimant conceded that Mr Shafi’s estate had an arguable defence to the claim for fees up to the period when Brent Council notified the Claimant that Mr Shafi should pay the fees rather than Brent Council, but he argued that there was no defence to the claim for fees after that date, or after a reasonable period from that date. There were two grounds of appeal. The first was that Brent Council placed Mr Shafi at the home either:
The second ground of appeal was that the judge had incorrectly proceeded on the basis that the claimant could not rely on s.7 MCA 2005, which provides that:
“(1) If necessary goods or services are supplied to a person who lacks capacity to contract for the supply, he must pay a reasonable price for them.
(2) ‘Necessary’ means suitable to a person’s condition in life and to his actual requirements at the time when the goods or services are supplied.”
The Claimant’s argument was that s.7 MHA 1983 would assist it unless it were held that the services were provided as a gift, which it considered unlikely.
In respect of the first ground of appeal, the Court of Appeal held that there was clear evidence that the contract between Brent Council and the Claimant was a long term contract and there was no evidence that there was a temporary contract. As a matter of contract law, Brent Council’s letter amounted at most to a repudiatory breach of the contract, but there was no evidence as to the acceptance of that repudiation or the end of the contract. In terms of statutory provisions, the Court of Appeal held, Brent was at least arguably always under a duty to provide assistance to Mr Shafi, whatever his resources, because he lacked capacity, no one had been appointed as his Deputy and accommodation was not otherwise available to him within the meaning of the National Assistance Act. The Circular LAC98 and paragraph 1.022 of CRAG supported this reading. It was therefore at least arguable that had Brent Council terminated its contract in its letter, it would have been in breach of its statutory obligations. Brent Council therefore remained at least arguably liable for the Claimant’s fees after the date of its letter. The Court of Appeal therefore dismissed this ground of appeal.
In respect of the second ground of appeal, the Claimant was refused permission to appeal on the basis that the question is not whether the services were provided as a gift but rather whether it provided services to Mr Shafi on terms that he was not to pay for them. This was a question of fact, and the Court of Appeal held that it could not improve upon Andrew J’s reasoning in concluding that this could not be determined in advance of a trial. The Court of Appeal also confirmed that Andrews J had been correct to hold that s.7 MCA 2005 mirrored the common law rule on “necessaries,” and (as under the common law) it did not come into play where it was not intended by the supplier that the recipient should pay for the goods and services.
The Court of Appeal’s decision is unsurprising, and useful in upholding the reasoning of Andrews J as to the operation of s.7 MCA 2005. It follows that where P has no Deputy or LPA and is accommodated by a Local Authority in residential care under the 1948 Act, the Local Authority is under a statutory obligation to pay the care home fees. It can, of course, seek to reclaim against P’s estate but the important point to note is that the debt would lie between the Local Authority and P, and not between the care home and P.