Heathlands Village Charitable Trust (Heathlands) was a private charitable care provider contracted to provide care to clients via the defendants Bury Metropolitan Borough Council. (Bury) It applied for permission for judicial review by Heathlands of the mechanistic way in which Bury had set the rate payable to Heathlands and other care providers and its failure to take into account certain considerations such as the standard way in which rates are calculated within the industry. It was alleged that the rate was insufficient to cover the basic costs of the providers and as a result Bury were putting at risk the provision of care within the borough. Heathlands sought a quashing order of the decision to refuse a higher rate and an order for Bury to reconsider their decision.
The two key issues for the judge, who had to decide whether permission ought to be granted for a full hearing, were whether (1) Heathlands had an arguable case and (2) if they did, whether the application had been made within the timescale or if not, whether any delay could be properly justified.
The basis of Bury’s argument against permission was that the rate paid to providers was a private contract law matter that was not amenable to judicial review proceedings and could be dealt with by the appropriate court on a quantum meruit basis. Heathlands argued that there were several public and private issues at stake, particularly the issue of Bury’s budget determining the rate that the care providers would receive. Bury were in the same position as many other local authorities in that they were required under the Care Standards Act 2000 to provide a minimum standard of care for their service users. In order to do this it relied on the private and charitable sector to provide these services. Several of the providers, including Heathlands, felt that the amount that Bury were willing to pay for services was inadequate, so much so that it made it uneconomic for them to continue their businesses profitably. Bury could not provide a methodology as to how it arrived at its rate and only provided one standard rate for all providers. This differed to the recognised way in which rates were arrived at within the industry. Heathlands argued that the issue of affordability went beyond the narrow boundaries of contract law and in any case would not be relevant to a quantum meruit claim. It was clearly a public law matter where a local authority’s refusal to pay a higher rate to care providers directly affected the standards of care provided by them. The court felt if the dispute was resolved under private law proceedings it would avoid material issues such as Bury’s statutory obligations to provide care. The manner in which Bury had set their rate was material and was seemingly based on their lack of funding available for care. They had paid providers what they could afford rather than what was reasonably required to cover their costs plus a small profit.
On the question of whether the application had been made within the timescale, the court held that the relevant date from which the time ran was from the date of the final offer to Heathlands which in this case was within the three month limit.
Permission was therefore granted on both key issues, namely that Heathlands had an arguable case with public law issues suitable for judicial review and that the application was made within the statutory timescales.