Central Liverpool Primary Care Trust v Charles S Bullen Stomacare Ltd.

Where a pharmaceutical supplier disputes an alleged overpayment, a Primary Care Trust seeking recovery under regulation 24 of the National Health Service (Pharmaceutical Services) Regulations 1992 must first obtain the supplier’s admission or a favourable discipline committee determination, unless the Secretary of State directs otherwise. Without that determination, the Trust cannot establish the overpayment as a defence or counterclaim in ordinary proceedings. A determination fixes the parties’ rights, subject to judicial review. The scheme does not prevent all court recourse, and disputed supply must be meaningfully made from each listed premises. Transient presence or passage through premises is insufficient. The appeal was dismissed.

Charles S Bullen Stomacare Ltd supplied prescribed appliances to NHS patients. Payment was made by the appellant Primary Care Trusts under a tariff which reduced the oncost allowance after a specified monthly volume from each place of business. The Trusts alleged that Bullen had artificially divided its operations between several premises and withheld payment while claiming recovery of earlier overpayments.

Judge Kershaw QC dismissed the allegations of fraud and rejected the proposed duty of care. He held that restitutionary recovery was blocked by regulation 24 of the National Health Service (Pharmaceutical Services) Regulations 1992. The Trusts appealed on the effect of regulation 24, estoppel, the meaning of supply from listed premises, and alleged abandonment of restitution.

1. Appeal dismissed. Sedley LJ delivered the leading judgment, with Parker LJ agreeing. Buxton LJ agreed with the disposal and the treatment of the other issues.
2. Regulation 24 created a mandatory statutory route for recovery of an unadmitted overpayment. The Trust had to obtain a dispensation from the Secretary of State or refer the issue to the appropriate discipline committee under the National Health Service (Service Committees and Tribunal) Regulations 1992. The principle in Pyx Granite Co Ltd v Ministry of Housing [1960] AC 260 required clear words before ordinary court access could be excluded. Here, the statutory scheme and its legislative basis supplied those words, although judicial review remained available.
3. A positive committee determination fixed the existence and amount of the overpayment and enabled recovery by deduction or other proceedings. A negative determination barred recovery, subject to judicial review. Applying the principle stated in Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273, the statutory determination bound both parties. Since no such determination had been obtained, the Trust had no admissible defence or counterclaim to Bullen’s claim for remuneration.
4. The court rejected the estoppel arguments. Separate inclusion of premises on the pharmaceutical list was not an admission that they were physically or operationally separate. Nor did the earlier appeal concerning removal from the list determine the overpayment issue. Those matters fell within the regulation 24 process.
5. For tariff purposes, supply had to be meaningfully made from a listed premises. Transient presence or passage through a building was insufficient. Some material contribution, such as reasonable preparation or modification, or a significant availability function, was required. The adjacent warehouse and office buildings operated as one site on the judge’s primary findings. The disputed use of the other premises was for a discipline committee to determine, not for the Court of Appeal to adjudicate on the evidence.
6. The overpayment claim was a statutory claim independent of deceit or restitutionary pleading. Recovery could follow whether the overpayment had been obtained fraudulently or innocently, provided the correct process was used. The alleged abandonment of restitution was therefore academic.
7. Buxton LJ noted that courts were generally better suited to commercial legal disputes than disciplinary committees, citing Lee v Showmen’s Guild [1952] 2 QB 329, but held that this concern could not displace regulation 24’s mandatory effect.

• Court of Appeal (Civil Division) dismissed the appeal on the ground that, without a statutory discipline committee determination, the Primary Care Trusts had no admissible defence or counterclaim based on overpayment.
• Queen’s Bench Division, Liverpool District Registry Mercantile List, before Judge Kershaw QC, dismissed the fraud allegation, rejected a duty of care, and gave Bullen judgment for unpaid remuneration. The judge held that restitutionary recovery was blocked by regulation 24.