Unison, R (on the application of) v Monitor & Ors

The meaning of statutory income derived from private charges is a question for the court. The regulator must identify the real, rather than merely immediate, source of income, having regard to the statutory purpose. The inquiry is pragmatic and does not require limitless tracing of remote transactions.

Once the correct legal approach has been identified, the regulator may exercise judgment in applying it. It may use sensible approximations, assumptions and de minimis thresholds where precise measurement is impracticable. A policy which limits the cap by reference only to the NHS foundation trust’s control over an intermediate entity is unlawful.

Unison sought judicial review of Monitor’s decision to adopt option 2 for calculating the statutory private patient income cap applicable to NHS foundation trusts. Option 2 included relevant income from subsidiaries, joint ventures and associates, but excluded certain income connected with private healthcare where the trust lacked control or significant influence.

Unison argued that section 44 of the National Health Service Act 2006 required a broader inquiry into the real source of income, including income received through intermediaries, investments and the provision of goods and services to private healthcare providers. The central issue was whether Monitor had lawfully interpreted and applied the phrase income derived from private charges.

1. Claim succeeded in part. Monitor’s adoption of option 2 on 26 November 2008 was unlawful. The court refused relief concerning the earlier operation of option 1.
2. Sections 43 and 44 of the National Health Service Act 2006 establish that the principal purpose of an NHS foundation trust is the provision of goods and services for NHS purposes, while permitting restrictions on non-NHS activity. The cap in section 44(2) is a legislative constraint on Monitor’s discretion and must be applied to secure that purpose.
3. The phrase income derived from private charges requires attention to the real or originating source of income, not merely the person who immediately pays it or the entity through which it is received. The approach in Zim Properties Ltd v Procter (1985) STC 90 and the related authorities supported that construction.
4. The inquiry is pragmatic rather than unlimited. Income may be caught where an intermediate structure, contractual arrangement, investment or supply transaction is genuinely connected with private patient charges. The question is whether, at the time of the transaction, the only genuine or real prospect is use to generate private patient income. More difficult cases remain for Monitor’s judgment.
5. Monitor was entitled to draw practical lines and use approximations, but it had first to adopt the correct legal meaning. It could not treat the question as reviewable only on irrationality grounds or restrict the cap solely by reference to the trust’s control or influence over another entity.
6. The legislation was clear, so the preconditions for using Hansard under Pepper v Hart [1993] AC 593 were not met. If considered, the ministerial statements would have supported a cap extending beyond the narrow control-based approach.
7. The appropriate remedy was a declaration that the adoption of option 2 was unlawful. Monitor was left to reconsider the cap consistently with the statutory interpretation set out in the judgment.

First-instance judicial review. No prior appellate decision is stated in the judgment.