Amberley (UK) Ltd v West Sussex County Council

A contractual term stating that fees are subject to review as costs increase does not, without clear language, permit a provider to impose and enforce a unilateral fee increase. The term may entitle the provider to conduct a review, but a binding increase requires the resident’s agreement to vary the contract.

Construction of a wholly written contract requires the court to ascertain its reasonable meaning from the contractual language and relevant background. The court will not imply a right enabling a provider to terminate solely because a resident rejects a proposed increase unless that meaning is necessary and reasonable. A party seeking reasonable remuneration on a quantum meruit must prove that the amount claimed is reasonable.

The appellant operated a residential care home for persons with preserved rights whose accommodation fees had formerly been met through Income Support. From April 2002, Health and Social Care Act 2001 section 50 made the local authority liable for payments due under residents’ existing arrangements where it had not provided the relevant community care services.

Twelve residents had standard Contracts of Residence stating that fees were subject to review as costs increased. The appellant claimed that this authorised it to raise fees unilaterally and that the resulting liability transferred to the council. Four other residents had no such contracts, and the appellant claimed a higher reasonable sum for their accommodation.

Field J rejected both claims. The appellant appealed, principally on the construction of the fee-review term and the adequacy of the evidence of reasonable remuneration.

1. The appeal was dismissed unanimously. Lord Justice Aikens, with whom Lord Justice Richards and Lord Justice Mummery agreed, upheld Field J’s rejection of both aspects of the appellant’s counterclaim.
2. The question was one of objective contractual construction in its factual and contractual context. Although parties may agree that one may vary terms unilaterally to the other’s detriment, that is unusual and requires clear language: [1989] 1 All ER 918. The fee term was laconic. It did not identify the review process or give the provider an express right to declare, impose, and enforce an increased fee.
3. The term therefore entitled the provider to review fees as costs increased, but no more. If it wished to increase the fee, it had to obtain the individual resident’s agreement to a variation. The qualification on a contractual discretion recognised in [2002] 1 WLR 685 did not assist the appellant because the contract conferred no unilateral power in the first place.
4. The court did not accept Field J’s suggestion that refusal of a proposed increase would itself permit the provider to require the resident to leave. Applying the approach to construction and implied terms in [2009] 1 WLR 1988, the contract did not reasonably mean that the provider had such a right. This conclusion did not affect any right to determine the contract on reasonable notice.
5. It followed that the residents had no existing contractual liability to pay the unilaterally increased fees. Section 50(6) transferred only their existing liability to the local authority, so it did not make the council liable for the claimed increases.
6. For the four non-contracting residents, the judge was entitled to find that the appellant had not produced convincing cost or comparative evidence establishing a reasonable rate above the council’s maximum rate. There was no basis to reopen the evidence or adjourn the issue.

• Court of Appeal (Civil Division) — the appeal was dismissed: [2011] EWCA Civ 11.
• High Court of Justice, Queen’s Bench Division — Field J rejected the appellant’s claims for increased contractual fees and for additional reasonable remuneration.