CCP Graduate School Limited v The Secretary of State for Education

An implied contract between a course provider and the Secretary of State will not be inferred merely because student-loan payments are made directly to the provider. The contractual scheme is workable through separate contracts between the student and provider and between the student and Secretary of State. Implication requires necessity.

Under the Contracts (Rights of Third Parties) Act 1999, a term which purports to confer a benefit may be enforceable by a third party, but the court must determine objectively whether the contracting parties intended that result. A weak statutory presumption does not displace ordinary contractual construction. A claim which could and should have been brought in earlier proceedings may be an abuse of process, even if the earlier attempt was procedurally defective.

The Secretary of State applied to strike out CCP's claim or obtain reverse summary judgment. CCP claimed unpaid student-loan tuition fees and consequential losses. Its original case relied on an alleged direct contract with the Secretary of State. It later sought permission to amend to rely on the student contracts and the Contracts (Rights of Third Parties) Act 1999.

The claim followed earlier litigation in which the Secretary of State had unsuccessfully sought recovery of payments made to CCP. CCP had attempted, unsuccessfully and late, to advance substantially the present claim as a counterclaim in that action. The issues included contractual formation, limitation, third-party enforcement and abuse of process.

1. Direct contract. The alleged direct contract had no real prospect of success. The evidence disclosed a commercially workable arrangement consisting of a contract between CCP and each student, and a separate student loan contract under which the Secretary of State paid the tuition fee loan to CCP. There was no necessity for a further contract between CCP and the Secretary of State. The statutory scheme contained no such contract and the designation process did not imply one. Reverse summary judgment was therefore appropriate on this claim (paras [115]–[124]).
2. The court declined to determine finally, for present purposes, whether the students fell within the transitional wording concerning students who had commenced their courses and were already in receipt of support. Those issues involved contractual construction, factual questions concerning individual students and unreliable or incomplete spreadsheets. CCP therefore had real prospects on those points (paras [125]–[141]).
3. The direct contract claim was also limitation-barred. No term could properly be implied into the statutory or contractual scheme suspending accrual or limitation during a reasonable investigation. The Secretary of State had not communicated any assumption concerning limitation, and CCP had ample opportunity to sue after the investigations ended. The estoppel arguments therefore failed (paras [142]–[175]).
4. Third-party enforcement. Following Secretary of State for the Home Department v Cox, the student contract satisfied section 1(1)(b) of the Contracts (Rights of Third Parties) Act 1999 because payment to CCP factually benefited it. However, applying the objective contractual-construction exercise required by section 1(2), the parties did not intend CCP to enforce the payment term. The term was principally a mechanism for conferring the statutory loan benefit on the student, and enforcement by CCP could interfere with variations, disputes and the student's liability to repay the loan. Permission to amend was refused on this ground (paras [198]–[236]).
5. The proposed student-contract claim would otherwise have arisen from the same or substantially similar facts under CPR 17.4 and section 35 of the Limitation Act 1980, but it was separately limitation-barred and lacked real prospects (paras [237]–[243]).
6. Abuse of process. The claims could and should have been advanced in the first action. Applying the broad merits-based approach in Johnson v Gore Wood and Aldi Stores v WSP Group plc, the later proceedings would duplicate factual, documentary and legal work and risk altering the course of the earlier litigation. No sufficient excusing or special circumstances existed. The claim was struck out and permission to amend refused for abuse of process (paras [244]–[280]).

First-instance decision. The judgment records earlier litigation in which May J dismissed the Secretary of State's recovery claim: [2021] EWHC 2432. The present claim was struck out and amendment was refused.