Cygnet Health Care Limited, R (on the application of) v Care Quality Commission

Apparent bias is assessed by asking whether a fair-minded and informed observer, having considered all relevant circumstances, would conclude that there was a real possibility of bias. The test does not change because the decision-maker is a regulator, although the continuing and multi-stage nature of regulatory relationships may enlarge the relevant factual matrix.

A regulator’s failure to follow its own conflict policy may materially support a finding of apparent bias. Such a finding does not automatically require every affected decision to be withdrawn. Relief must be assessed decision by decision, including whether it is highly likely that the outcome would have been substantially the same under Senior Courts Act 1981, section 31(2A).

Cygnet challenged the Care Quality Commission’s decisions that inspection reports and enforcement decisions involving inspector AA were not tainted by apparent bias and would not be revisited, reviewed or withdrawn. AA had previously been detained in two Cygnet hospitals and had complained about his treatment. CQC later failed fully to apply its conflict policy when allocating him work involving Cygnet.

The challenge concerned seven inspection reports and enforcement decisions relating to several Cygnet sites. The central issues were whether AA’s involvement created apparent bias and, if so, what relief should follow, having regard to the multi-person inspection and quality-assurance processes and the likely effect of any procedural unlawfulness.

1. Apparent bias. The applicable test was whether a fair-minded and informed observer, having considered all relevant facts, would conclude that there was a real possibility of bias: Porter v Magill [2002] 2 AC 357. The observer must consider the totality of the circumstances and is neither unduly sensitive nor complacent. The same test applies to regulatory decisions.
2. The court was entitled to treat CQC’s conflict policy as the appropriate standard against which its conduct should be assessed. The policy required senior escalation before a former service-user inspected the provider, but that process was not followed. The failure was significant because it prevented adequate inquiry into AA’s recollections, views and the potential for either favourable or adverse bias.
3. The evidence relating to the inspection decisions was nevertheless substantial. The reports covered different sites and circumstances, were produced through multi-disciplinary teams, and were subject to quality assurance and, in some cases, further ratings approval. Those features did not eliminate the apparent bias, but they were relevant to the appropriate remedy.
4. The first CQC decision, that the impugned decisions were not affected by apparent bias, was unlawful. The court declared that the impugned decisions were tainted by apparent bias.
5. Under section 31(2A) of the Senior Courts Act 1981, relief was assessed separately for each decision. The finding of apparent bias did not automatically require withdrawal of all reports or enforcement decisions. The same or substantially the same outcome was highly likely for Bostall, Blackheath, Harrow and the Beckton enforcement decisions, so further relief was refused for them. The Acer report and rating required reconsideration because the court could not reach that conclusion to the necessary high standard.
6. The claim therefore succeeded. The decision not to withdraw the Acer decision was quashed and CQC was directed to reconsider it. Cygnet was awarded 90% of its reasonable costs, with £125,000 payable on account.

First-instance judicial review. Permission was granted on renewal by Mould J on 24 April 2024. The High Court declared that the impugned decisions were tainted by apparent bias and directed reconsideration of the Acer report and rating.