Kemp (a patient, by his litigation friend) v Denbighshire Local Health Board and Powys Local Health Board [2006] EWHC 1339 (Admin)

This case relates to the entitlement of the claimant, K, to interest, on the reimbursement of monies paid by him for his care and accommodation when the costs should have been free, as NHS continuing care.

K had initially paid the costs of his care in a nursing home because the defendant local health boards had decided that he was not eligible for NHS funding.

K challenged that decision and by his litigation friend issued judicial review proceedings.

A review panel decided that K was eligible and the defendants agreed that K was entitled to reimbursement before any hearing, but the issue of costs and interest proceeded to court.

The court’s provisional view had been that K should not be entitled to interest over and above the retail price index. (RPI)  In order to reimburse K the defendants offered to pay interest based on the RPI, following their policy (the Policy), which was partly based on advice issued to Strategic Health Authorities in England by the Department of Health.  The basis for the Policy was to avoid legal challenge based on no interest being included.. This was a good start point and the policy did broad justice across a range of cases, but did not always deal conclusively with particular circumstances of an individual case.  A person should not be in a less favourable position under such policy than if he or she had pursued a claim through the courts.  Although most claimants would have originally received the funds to pay for the care via benefits from the Department for Work and Pensions (DWP), it was not the DWP’s policy to reclaim any benefit payments out of restitution made by the NHS.

K submitted that there was no justification for limiting the amount of interest that could be claimed under the defendant’s policy, to the RPI, and he claimed that if it was based on the DWP’s policy not to recoup benefits then it was unlawful.  The defendants argued that the policy was fair and took into account the “windfall effect” arising out of the receipt of state benefits to which a patient accommodated in a care home would not be entitled but for the fact that he was being required to pay himself toward the cost of his accommodation.  The sums which the defendant had agreed to pay were according to the Policy, not by court order, and consistency required that the court should follow the same approach.

The court held that interest paid under s35 Supreme Court Act 1981 was discretionary.  Such discretion “should be exercised in manner which satisfied the requirements of relevance, reason, justice and fairness inherent in all judicial discretion.”  The award of interest could be tailor-made to fit the particular facts of a case and may be awarded upon part or all of the principal sum and for such period as the court thinks right.  It found that the defendant’s policy was broadly fair and could not be regarded as unlawful.  However the policy did not deal conclusively with the particular circumstances of a case or how the question of interest should be resolved if court proceedings were underway.  The court agreed with K’s submission that no account should be taken of payments made to the claimant by third parties such as the DWP in deciding the rate of interest payable.  The nature of the sums paid by the DWP (for attendance or disability living allowance) was significantly different to that of those paid by the claimant for his care and accommodation. The court changed its provisional decision that K should receive interest at the RPI rate and ordered that he should receive interest at the special account rate.

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