Aster Healthcare Ltd v Shafi (Estate of) [2014] EWHC 77 (QB)

This was a successful appeal against the decision to grant summary judgment to the Claimant in a claim against the Estate of Mr Shafi for outstanding care home fees.

Mr Shafi, who was 81 and suffering from dementia, was admitted to a hospital under Section 2 of the Mental Health Act 1983 after his behaviour became increasingly aggressive and erratic. It was later decided that he should be placed in a nursing home, and Brent Borough Council (‘Brent’) arranged for him to be placed in one of the Claimant’s care homes. Fees then began to accrue in respect of his care, and a dispute arose as to who was responsible for them.

When large fees arrears had accrued and Brent Council refused to pay, the Claimant home unsuccessfully tried to get Mr Shafi’s wife (Mrs Shafi) to sign a ‘Service User Agreement’ in which Mr Shafi was named as being responsible for meeting his own fees, with Mrs Shafi identified as the representative who would pay the fees ‘on his behalf’.

The Claimant had originally made the wife into a Defendant in her own right, but that claim had been struck out as unarguable, bearing in mind that she had refused to sign anything. The instant court reiterated that she bore no liability, on the facts.

Whilst no written contract could be adduced, the original  ‘admissions sheet’, completed by the Claimant home’s manager, implied that the fees would be paid by Brent. Brent was however not a party to the action either. Despite the fact that Brent had informed the Claimant home in February 2010 that a financial assessment had concluded that Mr Shafi would be self-funding, evidence indicated that the Claimant home continued to pursue Brent for payment of Mr Shafi’s fees until April 2010. In May 2010, Brent formally informed the Claimant that Mr Shafi was self-funding, adding that a member of his family or a care home could apply to the Office of the Public Guardian to take over his finances if access to Mr Shafi’s accounts were frustrated.

Mr Shafi died in March 2012, with the accumulated fees amounting to £62,199.94. The Judge at first instance held that the Estate was liable to pay this, concluding that there was an unanswerable claim under Section 7 of the Mental Capacity Act 2005, and that there was no prospect of Brent having the primary responsibility to pay. The defendant appealed.

The primary way in which the claim against Mr Shafi’s Estate was put at first instance was as a claim for breach of contract (of the Service User Agreement). The alternative claim under the Mental Capacity Act was introduced as a response to the plea of ‘lack of capacity’ in the Defence. In relation to the contractual claim, the Court declared that Mrs Shafi could not be contractually bound to pay the fees because she had not signed the Service User Agreement. The Court considered that the contractual agreement was either between the Claimant and Brent under Section 21 and Section 26(1) of the National Assistance Act 1948 (‘NAA 1948’); or alternatively that an agreement had been made between the two on a temporary basis under Section 47(5) of the National Health Service and Community Care Act 1990 (‘NHSCCA 1990’), which was dependent upon the outcome of an assessment as to whether care was ‘otherwise available to him’. The fact that the arrangements were made with Brent, as opposed to Mr Shafi or his family, were underlined by the fact that Mr Shafi’s family had expressed reservations about the care home that he was eventually admitted to, and would have objected to Mr Shafi going there due to its distance from the family home.

The Court also noted that Brent had breached the Local  Authority Circular number LAC (98)19 from the Department of Health, which gave binding guidance to local authorities on how they should exercise their statutory duties and powers under Part III of the 1948 Act. The Circular (even in those early days) obliged local authorities to ensure that relevant individuals were able to make their own arrangements, or had others who were willing and able to make arrangements for them for appropriate care. Where there was no identifiable advocate or representative to act on the individual’s behalf, it was the responsibility of the local authority to make the arrangements and to contract for the person’s care. It was not enough that Brent knew that Mr Shafi had a wife (or other family members) who could organise the appointment of a Deputy for Mr Shafi.

Regarding the Mental Capacity Act 2005, the Court found that Section 7 did not apply where the supplier of the goods or services intended the payee to be someone other than the incapacitated recipient. The Court acknowledged that if Mr Shafi had simply been physically disabled, and the Claimant had provided him with the necessary services through a contract made with a third party who was to pay for them (instead of Mr Shafi), then there would be no legal or equitable basis for pursuing him or his Estate for payment if the intended payer failed to pay. Taking this into account, Section 7 of the Mental Capacity Act could not then put an individual with a mental incapacity in a worse position than another individual suffering from a physical incapacity who was otherwise in identical circumstances.

This section only applied if it could be shown, at the time of contracting, that the supplier intended the recipient to pay for the relevant goods or services. Such intent was absent on the facts of the case. For example, when the original admission forms were dealt with by the local authority, only afterwards was it established by the local authority that Mr Shafi would be a ‘private payer’. Additionally, by attempting to contract with Mrs Shafi in order for her to undertake to pay the fees, this clearly showed that the Claimant had not intended Mr Shafi to pay the fees.

Further, the Court adjudged that even if an arrangement was in place under section 26(3A) of the 1948 Act; which authorised an arrangement where an individual would pay his share of the fees directly to the care home, with the balance being paid by the local authority; it was still not intended that the individual would be indebted to the service provider for those services. The debt would rather be owed by the individual, or his estate, to the local authority.

The defendant’s appeal was allowed, and the order for summary judgment was set aside.

Comment

Readers will be aware that councils are told in CRAG in the up to date version, that when a person is assessed as lacking capacity and needs residential care, the council should not assume that members of the family would wish to take out deputyship. It is from this edict but without having it cited to it in current form, it seems, that the court has derived the implicit legal principle, that if a person lacks capacity at the time of needing a care home contract to be made, and has no-one else willing and able to do it, the council MUST use its National Assistance Act powers to avoid precisely this sort of thing happening. So Brent ‘got lucky’ in this case, not to be made a party, in my view.

Mrs Shafi did well too, to refuse to sign the service user agreement in her own name or on her husband’s behalf, as an agent of necessity, in my view, too. The only way the relative can be expected to sign – if the home is daft enough to accept informal arrangements when the council is OBLIGED to make the arrangements even for those who are rich enough to count as full cost payers – is in their own name, ie agreeing to pay their own money out for the individual, on the basis that they will inherit whatever is left of the person’s money later. Many people get manoeuvred into this, and it is entirely unnecessary in a civilised country whilst the NAA still exists.

What is interesting about this case is that even when the council made it plain that they would not be regarding themselves as contracting, the home did not have the good sense or the legal advice necessary to say to the gentleman’s wife as follows: the council is not paying for you, and we need the bed back to make money from it, so either you pledge his credit, Mrs Shafi, under the MCA, s8, so that we DO have a right of action against his estate, or we give notice, and you and the Council will have to sort your differences out and move him.

If either of those things had happened, the council would have had to have done the right thing under CRAG, if Mrs Shafi still did not want to apply for deputyship.

Care homes have trouble enough managing the stay viable, and this should be an object lesson for them all.

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