Crouch, R (on the application of) v Secretary of State for Health & Anor

Where regulations create a detailed and balanced code governing termination of a public service agreement, a general notice provision should not ordinarily be read as conferring an additional, unfettered power to terminate without cause. Its function may be procedural: to require written notice and identify when notice may be served, subject to the substantive grounds and safeguards elsewhere in the code. A residual power of termination would require clear language, particularly where it could bypass protections such as remedial notices, dispute-resolution safeguards and restrictions on termination. The termination rights of the Relevant Body were exhaustive where the regulations so provided, whereas the contractor’s rights were expressly preserved as additional to other rights.

An orthodontist challenged draft NHS personal dental services agreement clauses allowing the Primary Care Trust to terminate by written notice at any time. The dispute was referred to the Family Health Services Appeal Unit, which required no amendment. On judicial review, Collins J held that para 67 of Schedule 3 to the National Health Service (Personal Dental Services Agreements) Regulations 2005 did not confer a free-standing right to terminate without cause, and quashed the decision concerning clauses 301A to 301C.

The Secretary of State appealed, arguing that para 67 permitted residual termination subject to the specific grounds in paras 68 to 72. The central issue was the proper construction of para 67 and the consequences for clauses 301A to 301C.

1. Appeal allowed in part; order varied. The Court of Appeal agreed with Collins J’s conclusion that para 67 of Schedule 3 to the National Health Service (Personal Dental Services Agreements) Regulations 2005 does not confer a free-standing power on the Relevant Body to terminate without cause. The court’s reasons differed in part from those of the judge below.
2. The heading and structure of para 67 indicate that it is concerned with notice, rather than a substantive termination right. Paras 68 to 72 provide the substantive grounds for termination and form a comprehensive scheme. Paragraph 67 requires termination by written notice and permits notice to be served at any time once the relevant condition for termination has arisen, subject to the detailed provisions.
3. Reading para 67 as conferring an additional residual power would be inherently unlikely. It would permit termination of a satisfactory agreement without the express protections applicable to breaches, suitability, patient safety, financial loss and related matters. It could also bypass remedial notices, restrictions on repeated breaches and the suspensive effect of the NHS dispute-resolution procedure in para 75.
4. The comparison with para 100 of the National Health Service (Personal Medical Services Agreements) Regulations 2004 did not alter the construction. Nor did the asserted administrative purposes, since the Regulations contain other mechanisms addressing variation, activity reviews, service quality, clinical governance and performers-list removal. The transitional requirement of a minimum five-year agreement under article 21(2) of the Personal Dental Services Transitional Provisions Order 2005 was consistent with the protective construction.
5. Clause 301A was consistent with para 67 when construed as permitting termination only under succeeding clauses 302 to 338. Clause 301B was also consistent if its reference to the date in the notice meant the date specified under the applicable substantive termination clause. Clause 301C was impermissible because para 66 made the Relevant Body’s termination rights exhaustive, unlike the contractor’s rights under para 64(3). The parties were invited to agree an order giving effect to the judgment.

1. Court of Appeal (Civil Division): [2008] EWCA Civ 1365. Agreed with Collins J that para 67 did not confer a free-standing right to terminate without cause, but varied the order: clauses 301A and 301B did not require quashing when properly construed; clause 301C could not stand.
2. Administrative Court, Queen’s Bench Division: Collins J held that para 67 did not confer a free-standing termination right and quashed the defendant’s decision insofar as it related to clauses 301A, 301B and 301C.