Aster Healthcare Ltd v The Estate of Mr Mohammed Shafi, Deceased

A care provider cannot assume that a local authority’s direction to seek payment from a resident terminates an apparently long-term care contract. Where the resident lacks capacity and has no deputy or other person able to arrange care, the local authority may remain under a statutory duty to arrange and fund accommodation. The court should not lightly construe its communication as abandoning that duty.

Under the Mental Capacity Act 2005, section 7, recovery for necessary services depends on whether they were supplied on terms that the incapacitated person was to pay. The issue is the parties’ actual payment intention, not whether the supply was a gift. Where the evidence leaves the intended payer uncertain, liability cannot be resolved on summary judgment.

Aster Healthcare Limited sought recovery of care-home fees from the estate of Mr Mohammed Shafi, a dementia patient who had lived at its nursing home. The claim was advanced under a Service User Agreement and, alternatively, under section 7 of the Mental Capacity Act 2005.

The Willesden County Court granted summary judgment to the care provider. Andrews J allowed the Estate’s appeal, set aside that order and entered summary judgment for the Estate on the contractual claim in [2014] EWHC 77 (QB). The care provider appealed with limited permission. The central issues were whether Brent Council’s letter directing the provider to seek payment from Mr Shafi ended Brent’s contractual or statutory responsibility, and whether section 7 enabled recovery from the Estate.

The Master of the Rolls gave the leading judgment. Lord Justice Beatson and Lord Justice Briggs agreed.

1. Disposition. The appeal was dismissed. Permission to appeal on the second ground was refused.
2. Contract and local-authority responsibility. The evidence indicated that Mr Shafi’s placement was long-term, rather than temporary pending assessment or terminable on notice. The letter of 5 May 2010 did not itself establish termination of any contract between Brent and the care provider. At most, it was capable of amounting to a repudiatory breach, which had not been accepted. The contract therefore arguably continued after the letter.
3. Statutory context. The National Assistance Act 1948, the Circular and CRAG supported the conclusion that Brent remained at least arguably under a duty to assist Mr Shafi. He lacked capacity, no deputy or other representative had been appointed, and accommodation was arguably not otherwise available to him. If he remained at the Home under the existing arrangements, Brent was at least arguably obliged to continue paying the provider and managing the arrangement. The court would not lightly impute an intention to abandon statutory obligations. In the absence of a clear contrary indication, the letter should be construed consistently with those obligations.
4. Section 7 of the Mental Capacity Act. The common-law principle in Re Rhodes [1890] 44 Ch Div 94 was applied. The relevant question was not whether the services were supplied as a gift, but whether they were supplied on terms that Mr Shafi was to pay for them. That was a question of fact. The available evidence, including the Agreement identifying Mrs Shafi rather than Mr Shafi as payer, left it arguable that Brent or Mrs Shafi was intended to pay. The issue could not be resolved before trial, and the proposed second appeal had no real prospect of success.

1. Court of Appeal (Civil Division). In [2014] EWCA Civ 1350, the appeal from Andrews J’s decision was dismissed. Permission to appeal on the second ground was refused.
2. High Court, Queen’s Bench Division. Andrews J allowed the Estate’s appeal, set aside the County Court’s summary judgment and entered summary judgment for the Estate on the contractual claim in [2014] EWHC 77 (QB).
3. Willesden County Court. HH Judge Million granted the care provider summary judgment for the unpaid fees on 26 September 2013.