Analysis
This was an appeal from a decision to grant summary judgment to the claimant (C) in a claim against the defendant (D) for outstanding care home fees.
C is a company that owns and runs care homes registered under the Care Standards Act 2000 including a residential nursing home in Southall specialising in caring for elderly persons suffering from dementia (the Home). The majority of referrals to the Home are made by the local authority (LA). Mr Shafi was a resident of the Home from 29 January 2010 until his death on 28 March 2012. The total outstanding fees claimed amounted to £62,199.94.
The key issue before the court was who, if anyone, is legally liable for payment of the fees to C? The two candidates were: D or LA.
C’s claim was for: (i) breach of contract (being breach of a Service User Agreement) or in the alternative, (ii) a claim under the Mental Capacity Act 2005.
The judge in the county court held that D was liable to pay because there was an unanswerable claim under s7 of the Mental Capacity Act 2005 and there was no prospect of it being established that LA had the primary responsibility to pay.
On 13 November 2009, Mr Shafi was admitted to hospital pursuant to s2 of the Mental Health Act 1983 for assessment. It was concluded that he lacked capacity to make decisions regarding his future care and he was referred for placement. A social worker employed by LA (F) contacted the Home and it is pleaded by C that the manager of the Home (S) attended the hospital on 29 January 2010 to assess Mr Shafi’s needs and suitability for the Home. In F’s presence, S concluded that Mr Shafi’s needs were suited to the care that the Home provided and evaluated C’s fees for providing the care.
The particulars of claim were silent as to whether F and S made a verbal agreement or whether there was any written confirmation of the placement by LA. An admission sheet was completed by S dated 29 January 2010 describing duration of stay as ‘longterm’ and the boxes under the heading ‘funding source’ were filled in a way to make it clear that S believed that LA was the funding source and that invoices should go to LA.
Mr Shafi’s wife’s evidence was that she had no knowledge that her husband was being admitted to the Home and had she been consulted she would have objected to him going there due to distance between it and his family.
C said that ‘in or around February 2010’ it contacted F regarding invoicing to LA and that F stated that a financial assessment had been carried out and determined that Mr Shafi could pay for his fees and was to be termed a ‘private payer’. However, a letter dated 5 May 2010 (the 5 May Letter) from LA to the Home indicates that a letter had been written by the Home to F on 13 April 2010 concerning payment of outstanding fees. There was no evidence as to when the financial assessment was carried out or what information was used by LA to do so.
C had also tried to get Mr Shafi’s wife to sign the Service User Agreement but she refused to sign it. It was signed by someone in the name of Mr Shafi and is dated 29 January 2010. The Service User Agreement provided that the fees would be paid by Mrs Shafi alone, who is defined in the agreement as the ‘Representative’. C contended that it was plain that the parties intended Mrs Shafi would be acting as agent for Mr Shafi in making the payment of the fees under the service user agreement.
Held:
1) Regarding the breach of contract claim, the service user agreement had obviously been backdated since the admission sheet made it clear that C expected LA to pay for the care at the time of admission. It seems likely that the attempt to get Mrs Shafi to sign the agreement came after the 5 May letter because until then C was still trying to get LA to pay the fees. It was also highly likely that some of the invoices sent to Mrs Shafi had been backdated. All of these matters will have to be fully investigated at trial.
2) The contract claim was doomed to failure because, properly construed, the Service User Agreement does not contemplate that Mr Shafi would incur any personal liability to make payment of fees to C. D’s argument that the parties intended Mrs Shafi to be acting as his agent is rejected; ‘Representative’ is just a convenient contractual label describing the person representing Mr Shafi’s interests in dealing with the Home. Clause 7 unambiguously makes plain that Mr Shafi is not liable if someone else is defined as the payer in the agreement. Thus, the contract claim against D should either be struck out or summary judgment should be entered for D on that claim.
3) In light of the terms of the Service User Agreement it would appear that there is, at the very least, a strong argument that C never intended Mr Shafi to be responsible for paying the fees, or at the very least, had no such intention whilst it intended that Mrs Shafi would pay them, which it plainly did throughout the time when it sought to pursue her personally for the fees on the basis of the Service User Agreement.
4) Regarding the duty of LA to provide accommodation, the judge was wrong to describe LA’s obligations under s21 of Part III of the National Assistance Act 1948 as a ‘power’ rather than a duty.
5) The evidence points towards the conclusion that the admission of Mr Shafi to the Home on 29 January 2010 was probably made pursuant to a contractual arrangement between LA and C under s21 and s26(2) of the National Assistance Act 1948.
6) It was implicit in the 5 May Letter that LA did not intend to pay the fees, at least from that time onwards. Whether LA was entitled to take that stance is another matter.
7) The 5 May Letter in and of itself is not enough, for summary judgment purposes, to enable the court to conclude that LA was not liable to make payment of the fees to C, or that its duties under Part III of the National Assistance Act 1948 were not engaged after the 5 May Letter was received. There is plainly an arguable case that they were engaged before that time.
8) Regarding the claim against D under s7 of the Mental Capacity Act 2005, s7 cannot be construed in such a way as to put a person under a mental incapacity in any worse position than a person in identical circumstances suffering from a physical incapacity. Section 7 cannot be engaged in circumstances in which the services in question are being provided to the mentally incapacitated individual pursuant to an arrangement made by the service provider with a local authority exercising its statutory duty under Part III of the National Assistance Act 1948 (referred to Wychavon DC v EM (HM) [2012] UKUT 12 (AAC) and Re Rhodes (1890) 44 Ch Div 94). In those circumstances, even if the arrangement is in place under s26(3A), it is never intended that the individual will be indebted to the service provider for those services. The debt, if any, is owed by the individual or his estate to the local authority. If the services are not being provided under an agreement with the local authority exercising its duties under s21, but pursuant to an arrangement made with a third party, then the question whether s7 of the Mental Capacity Act is engaged will depend on the facts and circumstances and in particular whether the arrangement made with the third party contemplated that payment would be made by that person or by the person under the incapacity.
9) There is no evidence at present that any arrangements were made by anyone other than LA.
10) The trial judge will have to determine whether there ever came a time at which the services were supplied in circumstances in which any statutory duty on LA to make payment had ceased (assuming that it ever arose) and it was intended by C that Mr Shafi would pay for them. There is a possibility that LA may be liable for all of the fees, subject to its right to recoup them in whole or in part from D.
11) Appeal allowed and order for summary judgment set aside in its entirety.
ANDREWS J: [1] This is an appeal from the decision of HH Judge Million in the Willesden County Court to grant summary judgment to the claimant in a claim against the estate of the late Mr Mohammed Shafi for outstanding care home fees. It raises interesting and important issues about the relationship between s7 of …Continue reading "Aster Healthcare Limited v The Estate of Mohammad Shafi [2014] EWHC 77 (QB)"