Law Report: Care services contract lawful: Regina v Newcastle upon Tyne City Council, Ex parte Dixon. Queen's Bench Division (Mr Justice Auld). 20 October 1993

A local authority which discharges its statutory duty to provide residential community care services by entering into contractual arrangements with the operators of registered care homes can impose contractual terms, uninhibited by the Registered Homes Act 1984, to secure a commercial and economical agreement which balances its duty to provide services against its fiduciary duty to tax payers who fund the services.

Mr Justice Auld dismissed an application by Victoria Dixon and other members of the Newcastle Association of Care Homes for judicial review of the council's standard form of agreement for the provision of social care and nursing home care.

The applicants are an association of proprietors of residential care and nursing homes registered under the Registered Homes Act 1984. The council is required by the National Assistance Act 1948, as amended by the National Health Service and Community Care Act 1990 and Community Care (Residential Accommodation) Act 1992, to make arrangements to provide accommodation for persons who are in need of care and attention. The council may provide residential care pursuant to its duties under the 1948 Act, as amended, by entering into contracts with those who operate homes registered under the 1984 Act. The council will place persons in registered residential care homes only if the operator will submit to certain contractual terms, which impose on the operator obligations additional to those imposed for registration under the 1984 Act.

The applicants submit that the mixing of statutory standards and contractual requirements in the contract is unlawful because it produces conflict with the 1984 Act and creates uncertainty as between the rights and duties under the Act and those under the contract.

Gerald Moriarty QC and Rubin Taylor (Hammond Suddards, Leeds) for the applicants; Anthony Scrivener QC and Mark Lowe (council solicitor) for the council.

MR JUSTICE AULD said that the applicants did not suggest that it was unlawful to incorporate in the contract higher contractual duties than those provided by the 1984 Act but that the terms of the contract conflicted with the enforcement and other procedures imposed by the Act.

However, there was no reason in law why councils should not impose a stricter contractual regime on residential care home operators for the purpose of enabling the councils to fulfil their community care duties under the 1948 Act as amended. None of the contractual requirements conflicted with or purported to curtail the rights of residential care home owners under the 1984 Act or was ultra vires the 1948 Act.

None of the contractual provisions purported to or was capable of affecting the statutory rights and duties under the 1984 Act. Moreover, there was a strong argument in favour of the reasonableness of the contractual terms as a means of enabling the council to secure a proper balance between its community care duty to persons whom it placed in registered residential care homes and to tax payers.

Where a local authority had a statutory duty to provide services and to fund them in part or in whole out of monies provided by tax payers, it must balance two duties one against the other. On the one hand, it must provide the statutory services required of it; on the other, it had a fiduciary duty to those paying for them not to waste their money. It must fairly balance those duties one against the other.

An insistence on high contractual standards coupled with firm and economical means of enforcing them was an essential means of achieving such a balance.

Neither the 1984 Act nor the 1948 Act, as amended, imposed a public law duty of restraint on councils in the contractual terms on which they sought to rely when making arrangements with operators of registered residential care homes for the provision of community care services.