Estate not liable for care home fees under section 7 of the Mental Capacity Act 2005 (High Court)

Practical Law UK Legal Update Case Report 9-555-8545 (Approx. 5 pages)

Estate not liable for care home fees under section 7 of the Mental Capacity Act 2005 (High Court)

Background

Local authority duties

Section 47(1) of the National Health Service and Community Care Act 1990 (NHSCCA 1990) requires a local authority to carry out a needs assessment for a person who may be in need of community care services and decide whether, following that assessment, that person requires services.

Section 47(5) enables the authority to temporarily provide community care services without carrying out an assessment if the person requires those services as a matter of urgency. In these circumstances, a needs assessment must be carried out as soon as is practicable (section 47(6)).

Local authorities have a duty to provide residential accommodation for persons who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them (section 21, National Assistance Act 1948 (NAA 1948)).

Section 22 of the NAA 1948 enables a person receiving care to be charged for it. If they are unable to pay, the authority must decide what lower amount to charge. Local authorities may arrange care provision from a care home provider (section 26). The local authority must pay the fees and recover the relevant contribution from the service user.

Section 26(3A) of the NAA 1948 enables the local authority, care home provider and the service user to come to an arrangement whereby the service user pays their contribution direct to the care home provider and the balance is then paid by the local authority. However, the local authority remains liable for paying the full fees if the service user does not pay.

The Charging and Residential Accommodation Guide (CRAG) issued in support of the National Assistance (Assessment of Resources) Regulations 1992 (SI 1992/2977) states at paragraph 1.031:

Local authorities should note that they remain responsible for the full amount should the resident fail to pay the home as agreed. In such a case the authority will recover the charge from the resident in the normal way. It is not good practice to expect a care home to recover any debt owed to the local authority.

At the relevant time, persons with capital of £16,000 were required to pay the costs of their care in full. However, a local authority must still undertake a needs assessment and arrange care for them if they are unable to make care arrangements and have no one else to make arrangements for them, even where a person's resources indicate that they will be self-funding.

If a person whom the local authority is funding subsequently becomes self-funding, the local authority must satisfy themselves that the person can manage their own affairs or has someone to manage them for them before it ends its contract with the provider.

If a person lacking mental capacity does not have anyone to manage their affairs, the local authority has a duty of care pending the appointment of a Court of Protection deputy.

Mental Capacity Act

Section 7 of the Mental Capacity Act 2005 (MCA 2005) provides that:

If necessary goods or services are supplied to a person who lacks capacity to contract for the supply, he must pay a reasonable price for them.
"Necessary" means suitable to a person's condition in life and to his actual requirements at the time when the goods or services are supplied.

Facts

Mr Shafi, an elderly man suffering from dementia, was admitted to hospital in November 2009. It was subsequently decided that he should be placed in a nursing home. Brent Borough Council (Brent) arranged for Mr Shafi to be placed at one of the claimant's homes from 29 January 2010.

There was no discernible written contract adduced in evidence but the admissions sheet, completed by the claimant, shows the fees payable with an implication that these would be paid by Brent.

Brent was not a party to the action, so many facts were unclear. However, the claimant stated that it had been informed by Brent in February 2010 that a financial assessment had been carried out and had concluded that Mr Shafi would be self-funding. In spite of that, it appeared that the claimant was still chasing Brent for payment of the fees as late as April 2010. In May 2010, Brent formally informed the claimant that Mr Shafi was self-funding and that, if access to Mr Shafi's accounts were frustrated, a member of his family or a care home could apply to the Office of the Public Guardian to take over his finances.

The claimant then attempted to get Mr Shafi's wife to sign a service level agreement in which Mr Shafi was named as being responsible for meeting his own fees and Mrs Shafi was named as his representative who would pay the fees on his behalf.

Mr Shafi died in March 2012. The accumulated fees at his death were £62,199.94.

Decision of the High Court

The High Court allowed the appeal on the following basis.

Contractual claim and local authority duties

As Mrs Shafi had not signed the service user agreement, she was not contractually bound to pay the fees.

It considered that the admission of Mr Shafi to the home was probably made under a contractual arrangement between the claimant and Brent under section 21 and 26(1) of the NAA 1948 (the evidence suggests the needs assessment was probably completed before Mr Shafi moved to the home), or alternatively that he was admitted to the home on a temporary basis under section 47(5) of the NHSCCA 1990, pending the outcome of an assessment as to whether care was "otherwise available" to him.

In any case, the court was satisfied that:

The arrangements made by the home were with Brent, not with Mr Shafi or his family. (Indeed the evidence suggested that Mr Shafi's family would have chosen a home closer to where Mrs Shafi lived.)
When it became clear that Mr Shafi would be self-funding, Brent should have ensured someone could take responsibility for making the payments on his behalf. There was no evidence as to the steps Brent had taken to ascertain this. The fact that Mr Shafi was married was not sufficient; if he were unable to make those arrangements himself, Brent had a continuing duty to discharge them. Brent could not require Mr Shafi to pay the fees directly as there was no agreement under section 26(3A) of the NAA 1948 and there could be no such arrangement until a Court of Protection deputy was appointed, at which point the deputy could decide whether to make an arrangement with the claimant.

The High Court was unclear whether Brent's letter of May 2010 was an attempt to:

Breach its contract with the claimant.
Terminate the contract as a temporary arrangement.

However, the letter did not inform the claimant that the arrangements were at an end and that the claimant would have to make new arrangements with Mrs Shafi or a deputy.

The High Court considered that an alternative interpretation of Brent's letter of May 2010 was that Brent was satisfied that there was someone able to take on responsibility for Mr Shafi's care and the letter was intended to provide sufficient information to enable those arrangements to be made, therefore discharging any remaining statutory duties.

However, in the absence of further evidence, and as Brent was not a party to the proceedings, any findings of fact on these issues will be for the trial judge to determine.

Mental Capacity Act claim

In relation to the Mental Capacity Act 2005 aspect of the claim, the High Court considered that section 7 of the MCA 2005 does not apply where the evidence shows that the supplier of necessary services intended that someone other than the incapacitated recipient of those services should pay for them.

(The case can therefore be contrasted with the decision in Wychavon District Council v EM [2012] UKUT 12 (AAC) (see Legal update, Person lacking capacity has obligation to pay for necessary accommodation (Upper Tribunal)).)

The position was that if Mr Shafi had been of full mental capacity but physically disabled, and the claimant had made arrangements with a third party to provide Mr Shafi with services, and that third party failed to pay, there could be no claim against Mr Shafi or his estate. The court was satisfied that:

Section 7 cannot be construed to put a person without capacity in a worse position than someone in the same circumstances suffering from a physical disability.
Section 7 cannot therefore be engaged where services are being provided to a mentally incapacitated individual under an arrangement made with the local authority exercising its statutory duties. If an arrangement under section 26(3A) of the NAA 1948 had been made, the debt would still be owed to the local authority, even if the local authority had the right to recoup 100% of the costs of care from the recipient.

If the local authority had no obligation to pay, a claim under section 7 may succeed if the claimant could show that at the time of making the arrangementsit intended the individual to pay the fees. The fact that the claimant had sought to enter into a contract with Mrs Shafi to undertake to pay the fees demonstrated that it had not intended Mr Shafi to pay the fees. Indeed, the claimant had pursued a contractual claim against Mrs Shafi on that basis.

For these reasons, the High Court allowed the appeal and set aside the summary judgment in its entirety. However, the judge speculated that the trial judge, who would be determining the matter, might conclude that Brent, which would have to be joined as a party, would be liable for all the fees, subject to its right to recoup them from Mr Shafi's estate.

Comment

The case highlights the importance to local authorities of ensuring that, in respect of individuals who can self-fund but who lack capacity, they identify an appropriate person to make arrangements directly with a care provider, or under a section 26(3A) arrangement with the authority and provider.

A care provider cannot rely on section 7 of the MCA 2005 to recoup its costs unless it is clear that it provided those services with the intention that the incapacitated person would pay for them.

Case

Aster Healthcare Limited v The Estate of Mr Mohammed Shafi (by its representative Mrs Batool Shafi) [2014] EWHC 77 (QB)

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Also Found In

Resource ID 9-555-8545

Published on 29-Jan-2014

Resource Type Legal update: case report

Jurisdictions

England
Wales