Local Authority decision to set the rate paid to providers of residential accommodation is amenable to judicial review

The recent case of R (on the application for Bevan Clarke LLP and Others) v Neath Port Talbot County Borough Council [2012], has reaffirmed some important public law principles involved with challenges brought by way of an application for judicial review. Neath Port Talbot County Borough Council ("Neath") sought to argue that its decision to set the rate to be paid to providers of residential accommodation for 2011/12 was not amenable to judicial review. Neath considered that the function it was exercising when setting a fee under contracts with residential care providers was not a "public law function" but a "private law function" (ie a matter of contract between the care provider and Neath). The Court disagreed with this argument, and considered that Neath was exercising a public law function, and therefore granted permission for the claim to proceed to a substantive hearing.

Background

9 operators of residential care homes in the Neath area sought to challenge Neath's decision to set the rate paid to them for residential accommodation at £426 per resident per week with a £23 supplement per week for residents with dementia. This was an increase of 5.7%. The Claimants considered that Neath unlawfully failed to set a rate which reflected their costs in providing care and the need to maintain a sustainable sector.

Widening the scope of judicial review?

Unlike other Courts, the Administrative Court, which hears judicial review applications, is not able to make findings of fact when scrutinising a decision of a public authority. This is because the Administrative Court's remit is to review the decision making process rather than review the merit of the decision made. Neath argued that the Claimant's challenge in this case was a "disguised attack" on the merits of the decision or on the weight given to various factors when deciding the rate paid by Neath to private sector providers of residential care. The Court observed that at times the nature of the evidence and the submissions provided by the Claimants appeared as if it was inviting the Court to address the merits of the decision, which was inappropriate. The Court was very concerned about interfering in a process in which local authorities had in effect engaged in a contractual negotiation with providers, who may wish to improve their contractual negotiating position by recourse to public law principles.

Setting the rate of payment for private care providers - public law function

The Court held that the mere fact that Neath's decision concerned the setting of a fee under a contract did not mean that it had to be characterised as a private law act. This is because Neath's decision could not be characterised as purely incidental or supplementary to the function of making arrangements for the provision of care in care homes operated by third party providers. This was a fundamental aspect of Neath's duty to provide care to those that are eligible. Therefore the Court found that Neath's decision was a public law function and that as such, it was amenable to judicial review.

Court not to determine the weight to be given to various factors

The Claimants argued during the case that information which was material to the decision to be made by Neath was not given due weight in a key report that was put before Neath's Cabinet, prior to the decision being made. The Court commented that provided the decision-maker has regard to a factor that is legally relevant for it to take into account, the weight given to it is a matter for the decision-maker and is not a matter for the Court.

Flawed decision-making process

The Claimants assured the Court that their challenge had been brought because Neath's decision-making process failed to take into account relevant factors which rendered the process unlawful. In particular, it was claimed that Neath relied on the fact that the Claimants had not supplied long-term business plans, when such plans were only first mentioned shortly before Neath's decision was made and the Claimants were not informed of their importance for the decision.  The Court considered that the report that was put before the decision-maker did not indicate that Neath's decision was focussed and premised on the absence of business plans.

In addition, the Claimants sought to argue Neath's setting of the rate was flawed because it was determined on "assumed occupancy figures" and that Neath unlawfully directed residents to its own homes and delayed funding assessments in order artificially to inflate a lower occupancy rate upon which the assumptions were based. However the Court held that there was no arguable unlawfulness on the part of Neath and the report that was put to Neath's cabinet included information on an average occupancy rate across the sector, derived from monthly vacancy information. The Court considered Neath's approach reasonable. Finally, the Court concluded that Neath did not fail to take proper steps to balance the welfare of those in care homes whom it funded against its financial resources. In particular the Court determined that Neath recognised the need to maintain an ongoing dialogue with providers to assist them in making long-term plans and increases in rates at a guaranteed minimum level would facilitate this. All of the Claimants' grounds of challenge therefore failed and their application for judicial review was dismissed.

Conclusion

This case highlights that the Court may scrutinise the setting of a fee under a contract if the decision as to the level of fee to set is not merely incidental or supplementary to a public law function of the decision maker. It will therefore be difficult for a local authority to argue that it is not exercising a public function when it is making a decision which affects the services provided to its service users.

The Administrative Court, in this case, was at pains to ensure that it did not stray into reviewing the merit of a decision under challenge, and confirmed that the micro-examination of the calculation of rate/fee is not a function of the Court but that a review of the decision-making process certainly is. Therefore decision-makers will need to ensure that all relevant factors are taken into account before a final decision on the rate is made, although the Court will not involve itself with questions around the weight to be attached to the relevant factors.