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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> NHS Commissioning Board v Bargain Dentist.Com [2014] EWHC 1994 (QB) (18 June 2014) URL: http://www.bailii.org/ew/cases/EWHC/QB/2014/1994.html Cite as: [2014] EWHC 1994 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/06/2014

Mrs Justice Elisabeth Laing :

Introduction

1. These applications concern disputes between the NHS Commissioning Board (the Claimant) and the Defendants, who are providers of dental services. The Defendants have provided dental services under arrangements made between them and primary care trusts ("PCTs"). The Claimant is the statutory successor to those PCTs. At the time when those arrangements were made, the Defendants were regarded as health service bodies. That meant that the arrangements between them and the PCTs were "NHS contracts" (see section 9(1) of the National Health Service Act 2006 ("the 2006 Act").
2. The legislative policy about NHS contracts has three features. First, NHS contracts must not be regarded for any purpose as giving rise to contractual rights and liabilities. Second, disputes about them are not litigated in the ordinary courts. This follows inescapably from the first feature. Third, such disputes are decided by the Secretary of State under the NHS disputes resolution procedure ("the disputes procedure"). This policy is expressed in section 9 of the 2006 Act.
3. The legislative scheme enables a provider such as the Defendants to choose whether or not to be regarded as a health service body. The Defendants were initially so regarded, but have both now chosen not to be. That choice dictates whether or not the arrangements between provider and PCT are NHS contracts. The Claimant believes that the Defendants have overcharged for the services they provided to the PCTs, during the period when the arrangements were still NHS contracts. Indeed, as respects that period, the PCTs served notices of breach on the Defendants, and in the case of Dr Yellon, invoked the disputes procedure in relation to two years (largely unsuccessfully).
4. If a provider ceases to be regarded as a health service body, the disputes procedure (transitional provisions apart) only continues to apply (to what is now an ordinary contract) at the option of the provider. The Defendants have not opted for that procedure to apply here.
5. The Defendants argue that at the time of the breaches alleged by the Claimants, because of the terms of the legislation, the arrangements could give rise to no contractual rights and liabilities. The Claimant, therefore, has no cause of action as respects alleged breaches of the arrangements which took place while the arrangements were still NHS contracts. In short, say the Defendants, the Claimant could, and should have, pursued its remedies under the statutory scheme in respect of breaches of the arrangements which are alleged to have taken place while the arrangements were still NHS contracts, and cannot now remedy that omission by suing in the ordinary courts for sums allegedly due under or in respect of the arrangements.
6. The Defendants' may seem a surprising contention. I express no view about the merits of the Claimant's claims in this case. If the contention were correct, argues the Claimant, it would mean that Parliament in the 2006 Act, and the Secretary of State in the relevant statutory instrument, have created a system in which a provider can, with impunity, break the terms of the arrangements under which he provides services to the NHS, and so long as he exercises his option to cease to be regarded a health service body before the disputes procedure is invoked, escape liability for any breaches before the date when he ceased so to be regarded. The Defendants say, however, that the legislative scheme gives the Claimant the opportunity to invoke the disputes procedure if a provider opts to cease to be so regarded, and that if the Claimant has failed to do that, the Claimant has no remedy in the ordinary courts for breaches of the arrangements which are alleged to have occurred while the arrangements were still NHS contracts.
7. Dr Yellon further argues that the Claimant should not be permitted, in respect of alleged breaches which were the subject of an unsuccessful reference to the disputes procedure, at a time when the arrangements were an NHS contract, to retain sums which would otherwise now be due, under the contract, for services which he has performed under it.
8. There are therefore two issues:

(1) can the Claimant sue the Defendants for alleged breaches of contract which occurred when the arrangements between the parties were an NHS contract?

(2) can the Claimant, whether under the contract, or by relying on the court's equitable jurisdiction, withhold money from Dr Yellon (or counterclaim for it) when the sums in question were the subject of an unsuccessful reference to the disputes procedure?

9. These are applications by the Defendants for summary judgment and/or to strike out the Claimant's statements of case. I must therefore decide not whether the Claimant's claim succeeds, but whether it is arguable.

The facts in outline

(1) Dr Yellon

10. There are two claims. The first, which for convenience I will refer to as 875, was issued on 24 May 2013. It is a claim for damages for breach of contract, arising from alleged overpayments made to the Defendant in each of the years from 2009/10 to 2012/13. The second claim, which I will refer to as 737, was issued by the Dr Yellon. He challenges a proposal by the Claimant to withhold sums otherwise due under his contract in respect of sums allegedly overpaid in 2007/8 and 2008/9. This dispute has already been determined, he says, by the Family Health Services Appeal Unit ("the FHSAU") in his favour, under the disputes procedure. Dr Yellon seeks a declaration that that determination is binding on the Claimant. The Claimant has counterclaimed in respect of alleged overpayments in those years, seeking (at least in part) what were described in argument as equitable remedies.
11. I at first wondered whether the issue by Dr Yellon of the claim in 737 was consistent with his argument that the Claimant's claim against him is misconceived. On reflection, I have concluded that there is no inconsistency. Dr Yellon's claim is properly brought in court, as his claim is that the Claimant is not now entitled to withhold money from him which would otherwise be due under what is now a contract governed by private law.
12. Dr Yellon applies to strike out the particulars of claim in 875 as disclosing no reasonable cause of action and/or for summary judgment. He applies to strike out the counterclaim in 737 on similar grounds. He also seeks an injunction in 737 preventing the Claimant until trial from withholding any money based on the counterclaim.
13. Dr Yellon's general dental services contract ("GDSC") was made in November 2007. It was an NHS contract. In October 2011, a targeted check by the PCT revealed approved overpayments. A breach notice was served on 15 November 2011.
14. On 7 March 2012, disputes about the years 2007/8 and 2008/9 were referred to the FHSAU under the disputes procedure.
15. Dr Yellon requested a variation of the contract in February 2013. He signed that on 4 February 2013 and the Claimant signed it on 14 February 2013. The effect of the variation was that he ceased to be regarded as a health service body from 14 February 2013, and the contract ceased to be an NHS contract from that date.
16. As I have mentioned, the claim form in 875 was issued in May 2013.
17. The FHSAU made an initial determination on 27 August 2013, and a final determination on 15 November 2013. In short, the FHSAU decided that most of the Claimant's claim was time-barred. On 3 February 2014, the Claimant wrote to say that it was proposing to withhold payments (in respect of the alleged overpayments in 2007-2009), and in February 2013, the claim form in 737 was issued.

Bargain Dentist.com Limited

18. Bargain Dentist.com Limited ("BDC") applies to strike out the Claimant's claim in the third action, which I will refer to as 925, on grounds similar to those relied on by Dr Yellon. The Claimant's claim was issued on 13 May 2013, claiming damages for breach of contract.
19. BDC made a GDSC with Hertfordshire PCT on 1 April 2009. It was an NHS contract. On 3 May 2011, 27 January 2012 and 27 February 2013 the Claimant served breach notices on BDC.
20. On 22 June 2012, BDC wrote to the PCT to say that it wished to vary the GDSC. On 16 July 2012, BDC and the PCT signed a notice of variation. Its effect was the same as the variation in Dr Yellon's case. The Claimant's claim was issued on 30 May 2013, as I have mentioned.

The legislative scheme and its effect

(1) Section 9 of the National Health Service Act 2006

21. Section 9(1) of the 2006 Act provides that an NHS contract is an arrangement under which one health service body arranges for the provision to it by another health service body of goods and services. By section 9(5), an NHS contract "must not be regarded for any purpose as giving rise to contractual rights and liabilities". By section 9(6), "If any dispute arises with respect to such an arrangement, either party may refer the matter to the Secretary of State for determination under this section". The Secretary of State may determine that dispute himself, or appoint a person to consider and determine it in accordance with regulations (section 9(8)). A determination of a reference under section 9(6) may include such directions (including directions as to payment) as are considered appropriate to resolve the matter in dispute.
22. It is clear beyond argument that section 9 gives effect to the policy which I have described in paragraph 2, above. It is not possible to give section 9(5) any meaning other than the meaning conveyed by its clear words. An NHS contract "must not be regarded for any purpose as giving rise to contractual rights and liabilities". If this has undesirable consequences for the Claimant in cases such as these, then the remedy is for Parliament to amend section 9. It is true that legislative policy has the three features I have described in paragraph 2, above. But this first feature is crucial, and the two further features are its consequences in this scheme. Ms Morris QC, in her able submissions, tended to focus on the third feature of the scheme, but to ignore the first.
23. It is an inevitable consequence of section 9(5) that the Claimant cannot sue the Defendants for breaches of the arrangements between them and the relevant PCTs which are alleged to have been committed before the notices of variation were signed in each case. It is true that the NHS contracts between the PCTs and the Defendants, and the contracts by which they have been superseded, are on identical terms. But they are not the same "contract". The first, NHS "contract", was a contract only in name, because of the terms of section 9(5). The creation of an ordinary contract on the same terms on the date the variation notices were signed cannot change history by creating contractual rights and liabilities (and flowing from those, causes of action) which did not exist, and could not have existed, before that date. Section 9(5) affects both parties equally in that respect.
24. This conclusion is supported by the reasoning of the Court of Appeal in Pitalia v National Health Service Commissioning Board [2014] EWCA Civ 474. This was a dispute about an NHS contract. The parties to it were the claimants and a PCT. The contract ceased to be an NHS contract on 1 December 2012. The claimants brought proceedings against the PCT in the Accrington County Court. Vos LJ, giving the leading judgment, referred to section 9(5) and said, at paragraph 5, that "An NHS contract cannot, therefore, be sued upon in the courts". At paragraph 37, he said that the claimants had "no legally enforceable contractual rights ... when they issued these proceedings". He made the same point in paragraph 40, and went on to say, "... As for the [claimants'] pre-1st December 2012 rights, they could never have been vindicated in these legal proceedings, and the fact that they may have a problem now doing so (as to which we say nothing as the matter has not been fully argued) is nothing to the point in these proceedings." Paragraph 46 of the judgment of Aikens LJ is to similar effect.
25. The Claimant's skeleton argument sought to distinguish this reasoning. It seems to me that in key material respects, the Pitalia case is on all fours with this one, and that I should follow the approach of the Court of Appeal. It is true that the Court of Appeal did not deal with the point which arises in this case. But I cannot see how, consistently with the express reasoning of the Court of Appeal, it possible to conclude that the fact that an NHS contract has been superseded by an ordinary contract can bring into existence contractual rights and liabilities as respects the past which could not have existed before the "contract" was varied.

The Regulations

26. The relevant regulations in these cases are the National Health Service (General Dental Services Contracts) Regulations 2005 ("the 2005 regulations"). One of the enabling powers cited in the preamble to the 2005 regulations is section 4(5) of the National Health Service and Community Care Act 1990 ("the 1990 Act"). That is the predecessor of section 9(8)) of the 2006 Act.
27. The arrangements in question here are GDSCs pursuant to section 100 of the 2006 Act. Section 104 of the 2006 Act provides that their content is in regulations. The other enabling powers for the 2005 regulations include the predecessor (in the 1990 Act) of section 104 of the 2006 Act. The GDSC is a detailed, complicated document. It is about 250 pages long, and has over 300 clauses. It is supported by the General Dental Services Statement of Financial Entitlements ("the SFE") which appears to be issued annually and is made by the Secretary of State in the exercise of powers of direction conferred by sections 103, 109(4) and (5), 272(7) and (8) and 273(1) of the 2006 Act. The SFE is 60 pages long.
28. The regulations deal, among other things, with two matters which are relevant to the issues in this case:

(1) the disputes procedure; and

(2) the effect of a change in a contractor's status on the applicability of the disputes procedure.

The disputes procedure

29. Part 5 of the 2005 regulations is headed "Contracts: Required Terms". Regulation 24 is the penultimate provision in Part 5. It is headed "Other contractual terms". It provides that a contract must, unless it is of a type or nature to which a particular provision does not apply, contain other terms which have the same effect as those specified in Schedule 3, except paragraphs 55(4) to 55(13) and 56.
30. Part 7 of Schedule 3 is headed "Dispute Resolution". Paragraph 53 provides that "In the case of any dispute arising out of or in connection with the contract" the contractor and the Claimant must "make every reasonable effort to communicate and co-operate with each other with a view to resolving the dispute before referring" it for determination under the disputes procedure, or were appropriate, before commencing court proceedings.
31. Paragraph 54 is headed "Dispute resolution: non-NHS contracts". It provides that "In the case of a contract which is not an NHS contract, any dispute arising out of or in connection with the contract ... may be referred for consideration and determination by the Secretary of State" if the contractor agrees to it, regardless of the views of the Claimant. If such a dispute is referred to the Secretary of State, the procedure to be followed is that set out in Part 7, and the parties agree to be bound by any determination made by the adjudicator.
32. Paragraph 55 is headed "NHS dispute resolution procedure". Paragraph 55(1) provides that the procedure specified in paragraphs 55 and 56 applies in the case of any dispute arising out of or in connection with the contract "which is referred to the Secretary of State in accordance with section 4(3) of the 1990 Act (where the contract is an NHS contract), or in accordance with paragraph 54 (where the contract is not an NHS contract) ...". Section 4(3) of the 1990 Act is the predecessor of section 9(5) and (6) of the 2006 Act. One effect of paragraph 55(1) is that it is unnecessary for any contract to specify the matters set out in paragraphs 55(4)-(13) and 56.
33. The disputes procedure can be invoked very easily: see paragraph 55(2). All that is needed is a letter to the Secretary of State asking for the dispute to be resolved, which includes, or is accompanied by, the names and addresses of the parties to the dispute, a copy of the contract, and "a brief statement describing the nature and circumstances of the dispute". Service of a breach notice is not a pre-condition. There is a mandatory time limit (paragraph 55(3)). The request for dispute resolution must be sent to the Secretary of State within the period of three years beginning with the date on which the matter giving rise to the dispute happened, or should reasonably have come to the attention of the person wishing to refer the dispute. Paragraph 55(4)-(12) makes detailed provisions about the procedure. Sub-paragraph (13) provides, "Subject to the other provisions of this paragraph and paragraph 56, the adjudicator shall have wide discretion in determining the procedure of the dispute resolution so as to ensure the just, expeditious, economical and final determination of the dispute". The adjudicator must record his "determination" and the reasons for it in writing and "shall give notice of the determination (including a record of the reasons) to the parties" (paragraph 56(1)).
34. All this appears to suggest, if one goes back to the wide words of section 9(6), that (subject to the time limit) the parties may refer any dispute with respect to an NHS contract to the Secretary of State for him to determine, and that he will determine it in accordance with the procedure set out in paragraphs 55 and 56 of Schedule 3 to the 2005 regulations. However, it is not as simple as that, because of the provisions of regulation 9 of the 2005 regulations.
35. Part 4 of the 2005 regulations is headed 'Health Body Status'. It consists of regulation 9 only. By :

(1) regulation 9(4), a contractor may ask for a variation of the contract to include or remove a provision that the contract is an NHS contract, and, if it does so, the PCT must agree to that variation;

(2) regulation 9(5) where the PCT has agreed to the variation, the contractor shall be regarded, or cease to be regarded, as a health service body for the purposes of section 4 of the 1990 Act (the predecessor to section 9(5) of the 2006 Act) from the date when the variation takes effect; and

(3) regulation 9(6), a contractor shall cease to be regarded as a health service body for the purposes of section 4 of the 1990 Act if the contract is terminated.

36. Regulations 9(5) and (6) are subject to regulation 9(7), which provides for the contractor to continue to be regarded as a health service body for 3 purposes. They are, where the contractor has ceased to be regarded as an NHS body pursuant to:

(1) regulation 9(5) or (6), if it has entered into any other NHS contract while it was a health service body, for the purposes of any other NHS contract until that other NHS contract is terminated;

(2) regulation 9(5), if either party has referred any matter to the NHS disputes procedure before the contractor ceases to be an NHS body, so as to be bound by any determination reached in that procedure, as if the dispute had been referred pursuant to paragraph 54 of Schedule 3 to the 2005 regulations; or

(3) by regulation 9(6), for the purposes of the disputes procedure, where that procedure has been started before the termination of the contract, or, after the termination of the contract, for which purpose it ceases to be such a body at the conclusion of the procedure.

37. Regulation 9 has apparently been drafted with some care. It deals with the status of the contractor, and the consequences of this for the application of the disputes procedure. The Claimant submits that regulation 9 does not make any express provision for the application of the contractual disputes resolution procedure contained in the 2005 regulations to a dispute about a subsisting arrangement which has ceased to be an NHS contract at the option of the contractor, but which is a dispute arising from the time when the arrangement was still an NHS contract. Such provision is made for an arrangement which ceased to be an NHS contract on termination, but is not made in respect of a former NHS contract which subsists, and ceased to be an NHS contract at the option of the contractor, unless a dispute has already been referred before the variation took effect. That submission is correct.
38. Does it follow from these provisions, however, that there is no means of resolving a dispute about a former NHS contract in the circumstances of this case? I do not consider that this is the effect of the legislative scheme. This is because, as the Defendants point out, paragraph 60(1) of Schedule 3 to the 2005 regulations provides that no variation shall have effect unless it is in writing and signed by or on behalf of the Claimant and the contractor. Paragraph 60(1) is referred to in regulation 9(4), and in regulation 9(5), which provides that the contractor shall be, or cease to be, regarded as a health service body from the date the variation takes effect pursuant to paragraph 60(1) of Schedule 3. The effect of this is that if a contractor requests a variation of the contract so as to change its status (and thus, the nature of the arrangements, and the applicability of the disputes procedure), the Claimant has an opportunity, before signing the variation, to invoke the disputes procedure as respects any disputes about the arrangements which have arisen before the date when the variation takes effect. This should not be difficult whether or not a breach notice has been served, as the procedure is simple to invoke.
39. I accept the submissions of Ms Morris QC that such an opportunity may be short, because the Claimant has no option but to agree the variation. That may mean that it is too short to enable the Claimant to refer all outstanding matters to the FHSAU before it has to agree the variation, and, it follows, the Claimant will not be able to refer potential disputes which it does not yet know about. That may be so even if, as Mr Butler submits on behalf of BDC, because the parties have an express contractual obligation to act reasonably, the Claimant will not always be obliged to sign a variation notice immediately, or because, obligations apart, there have been cases in which the Claimant in fact has refused to sign a variation pending investigation.
40. On any view, there is gap to some extent. But the draftsman has made careful transitional provision in regulation 9. For whatever reason (perhaps because it is necessary to have a cut-off point somewhere, for the sake of legal certainty) he has opted not provide for a period after the variation takes effect during which, for the purposes of the disputes procedure, the variation is treated as not having taken effect.
41. I do not accept the submission that the situation which arises here has been left out by oversight. The draftsman has made careful express transitional provision, to the extent that he considered it desirable, for cases in which there is a change in the contractor's status. The assumption of the court construing regulation 9(7) must be that regulation 9(7) covers the field to the extent that the drafter considered necessary. It is neither necessary, nor would it be right, to imply something further (cf R (Crouch) v Secretary of State for Health [2008] EWCA Civ 1365 at paragraphs 38, 47 and 48, per Dyson LJ, as he then was, giving the leading judgment).
42. I have considered, nonetheless, whether it is arguable that there might be some mechanism outside regulation 9 which would enable the Claimant to invoke the disputes procedure if it has not done so before the variation takes effect. Section 9(6) provides that "either party [to an NHS contract] may refer "any dispute [which] arises with respect to such an arrangement to the Secretary of State for determination under [section 9]". Section 9(6) is not expressly subject to any narrower provision made in regulations. But section 9(8) provides that where a reference is made to the Secretary of State, "he may determine the matter himself or appoint a person to consider and determine it in accordance with regulations".
43. This leads to paragraph 55 of Schedule 3. The procedure provided there applies in the case of "any dispute arising out of or in connection with the contract which is referred to the Secretary of State in accordance with section 4(3) of the 1990 Act (where the contract is an NHS contract) or in accordance with paragraph 54 (where the contract is not an NHS contract)".
44. Is it arguable that this broad provision would enable the Claimant now to invoke the disputes procedure even though regulation 9 does not apply? I do not think so. Paragraphs 54 and 55 distinguish carefully between references concerning NHS contracts and references concerning contracts which are not NHS contracts. As regards the latter, it clearly contemplates references concerning a contract which "is" an NHS contract, not references about contracts which were once, but are no longer, NHS contracts.
45. But even if I am wrong about all of this, and there is a really significant gap in regulation 9 of the 2004 regulations, it cannot be supplied by somehow ignoring section 9(5) of the 2006 Act. I consider, for the reasons I have already given, that the PCTs (now the Claimant) are/is prevented by the clear words of section 9(5) from suing for breach of contract in relation to alleged breaches of an NHS "contract" which occurred when it was an NHS "contract", even if, by the time the proceedings were issued, the arrangement in question had become an ordinary contract. The court cannot plug a suggested gap in secondary legislation by ignoring the clear effect of primary legislation.
46. Ms Morris QC appealed to Parliament's intention; it was unlikely that Parliament could have intended any such gap. But the surest guide to Parliament's intention is the words of an enactment; and those are clear. There are no words, either in section 9, or in the 2005 regulations, which would enable a court to hold that Parliament intended the Claimant now to have a private law remedy (or a remedy under the disputes procedure) for alleged breaches of the NHS contract in the circumstances of these cases.
47. The submissions on behalf of the Claimant appeared to be that because the terms of the contract, post-variation, were the same as the terms of the NHS "contract", the Claimant must have a private law remedy for breaches of the NHS "contract" which occurred before the variation. It was submitted that whether "misdeeds" were committed was a question of fact. The question of liability for those misdeeds, it was submitted, was to be determined either by the FHSAU, or by the court, at the point when that body was asked to adjudicate. Liability could not appear and disappear. Before the variation, there was no liability in private law, but a liability capable of determination by the FHSAU; and after the variation there was liability in private law, if there was no agreement to use the disputes procedure.
48. There are 3 related points about this submission:

(1) It confuses the point at which liability is determined by a tribunal with the point when liability arises.

(2) It is necessary to characterise the liabilities at issue accurately. The formulation of Ms Morris QC assumed that the liabilities were contractual liabilities before the variation took effect. But it is clear that they were not, and could not have been, contractual liabilities, because of the effect of section 9(5) of the 2006 Act. There is no legislative mechanism which, on variation, converts liabilities for breaches of an NHS contract into breaches of a contract governed by private law.

(3) The legislative regime does not permit liabilities for breaches of the NHS contract and liability for breaches of the contract to be elided, which was the effect of the submission. Liabilities for breaches of the NHS contract can be adjudicated by the FHSAU and only by the FHSAU provided that a dispute is referred in time; liabilities for breaches of the contract can be adjudicated by the court (or by the FHSAU at the option of the contractor). What the scheme does not allow, in my judgment, is litigation in court about alleged liabilities for breaches of the NHS contract which pre-date a variation.

The Relationship of the Legislative Scheme with Equitable Remedies

49. The issue about equitable remedies arises in relation to the alleged breaches by Dr Yellon of his NHS contract in the years covered by the FHSAU's adjudications in his case. He submits that the decision of the FHSAU binds him and the Claimant. It prevents the Claimant from resurrecting claims about those years as a reason for withholding sums which would otherwise be due to him under the current (non-NHS) contract. The Claimant's submission is that equity will give it a remedy when that is "fair".
50. I accept the submission of Ms Morris QC that section 9(5) of the 2006 Act only refers expressly to contractual rights and obligations. This leaves open, at a high level of abstraction, the availability in principle of equitable remedies, but that is only the start of the inquiry. There is still a question whether the sort of remedy for which she contends can co-exist with the legislative scheme (which I will consider in due course).
51. I also accept that equitable remedies may be available where there are no contractual remedies. What I have more difficulty with is the suggestion that equity should step in so as to enable the Claimant to ignore the decision of the FHSAU, and to withhold from Dr Yellon sums which would otherwise be due to him under the current contract, in respect of sums which were the subject of a determination of the FHSAU which was adverse to the Claimant. I accept that paragraph 11.7 of the SFE gives the Claimant an apparently wide power to withhold sums from contractors. But it cannot entitle the Claimant to do so unlawfully. In my judgment, despite the submissions of Ms Morris QC to the contrary, the effect of paragraphs 55(13) and 56(1) of Schedule 3 to the 2005 regulations is that the determination of the FSHAU is (unless challenged by judicial review) binding on both parties to it. It cannot make a difference that the adverse determination of the FHSAU was based on a time bar point, rather than being a determination on the merits. The Claimant did not challenge the determinations by applying for judicial review. Ms Morris QC accepted that that remedy was "theoretically" available.
52. I also have great difficulty with the suggestion that in circumstances where there is a very detailed legislative and contractual framework (as I have explained), the Claimant should be able to invoke a nebulous concept of fairness so as to circumvent that machinery, and, in effect, pick and choose the bits of the scheme which happen to suit it, and ignore those that do not.
53. It also seems to me that this is a dangerous submission for the Claimant to make, as, if it is right, it would enable contractors also to pick and choose the bits of the scheme they like, and claim that other parts should be disregarded as unfair. In his submissions, Mr Hugh-Jones QC for Dr Yellon gave several examples of contractual provisions which would be vulnerable to such an argument by contractors (though his submission was that any such argument would be bound to be rejected by the court). One example was paragraph 11.13 of the SFE, which, in general, disentitles contractor to payment unless it submits its claims within 3 months of doing the work.
54. I asked Ms Morris QC if she could show me any authority which supported her submissions. She relied on Banque Financière de la Cité v Parc (Battersea) Limited [1999] 1 AC 221. In that case the House of Lords held that the equitable remedy of subrogation was available to prevent the unjust enrichment of the second defendants at the plaintiffs' expense. The dispute arose from the short-term re-financing of part of a loan. The transactions at issue were complicated and the issue involved the priority of two debts when a group of companies became insolvent. That decision does not help here. The transactions are totally different, and, importantly, it is possible to see, on the facts, that absent the availability of subrogation, the second defendants would have been unjustly enriched at the plaintiff's expense, because the plaintiffs' expectation, founded on a letter of postponement, on the basis of which they had advanced money, had, in the events which happened, been defeated (or would have been defeated, absent subrogation). It is true that, in the result, the plaintiffs got something which they had not precisely 'bargained for', but that is the only real aid that Ms Morris QC gets from this case.
55. She relied on Lord Steyn's statement at page 22A that "... unjust enrichment ranks next to contract and tort as part of the law of obligations. It is an independent source of rights and obligations". But this is too general a statement to help me to understand by what principle I can ignore the detailed legislative scheme in this case, so as to decide that it is "fair" for the Claimant to withhold from Dr Yellon sums which the FHSAU has, in effect, held are due to him.
56. Mr Hugh-Jones QC referred me to Pan Ocean Shipping Limited v Creditcorp Limited [1994] 1 WLR 161 at page 164 E-H for a general statement by Lord Goff that where there is a contractual regime which deals with an issue, the law of restitution usually has no part to play.
57. He also referred to R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54; [2011] 2 AC 15. That was a case in which the Secretary of State argued that he had a right to recover benefits overpaid pursuant to a miscalculated award (a particular class of mistaken payment). Section 71 of Social Security Administration Act 1992 did provide for recovery of some overpaid benefits, but only if there had been misrepresentation or non-disclosure by the claimant. It did not provide for recovery of benefits overpaid by reference to a mistaken award, or other administrative error (such as a failure by the Secretary of State to take into account a change of circumstances notified by the claimant).
58. The Secretary of State argued that section 71 had not expressly, or by necessary implication, removed the Secretary of State's rights to recover such sums at common law. The House of Lords rejected that argument unanimously.
59. Lord Brown and Lord Dyson JJSC each gave a judgment, and the other members of the Court agreed with them. Lord Brown decided that section 71 was "a comprehensive and exclusive scheme" for dealing with all overpayments. There was, in any event, because of the statutory history, no relevant common law right of recovery. He also thought it "inconceivable" that Parliament could have left a suggested common law right of recovery to exist in parallel with a complex express machinery for determining entitlements, including appeals. Such an arrangement would "create well-nigh insoluble problems".
60. Lord Dyson said that the issue was one of statutory construction. The question was whether section 71 was an exhaustive code for the recovery of overpayments by the Secretary of State, or not. It was common ground that payments made by mistake could be recovered at common law. Given the fact that there was no relevant common law right of recovery, the statutory right of recovery as introduced was bound to be exhaustive.
61. Lord Dyson also considered whether, if that was wrong, and the Secretary of State did have a common law right of recovery, that had been excluded, expressly, or by implication, by section 71. This part of his reasoning is obiter, but it helps me. "The question is whether, looked at as a whole, the common law remedy would be incompatible with the statutory scheme and therefore could not have been intended to coexist with it" (judgment, paragraph 34).
62. I accept that, as Ms Morris QC submitted, the parties in the CPAG case agreed that section 71 of the 1991 Act did not exclude a common law remedy for money paid under a mistake of fact. That case was not, in any event, about money paid under a mistake of fact, and as Mr Hugh-Jones QC pointed out, nor is this. But the agreement on the basis of which the CPAG case was argued and decided does not undermine the significance, for this case, of the approach of the Supreme Court to the arguments about the common law remedial scheme for which the Secretary of State contended in that case.
63. As I have already explained, the legislative scheme is very detailed. It provides for dispute resolution, and for that to be binding on the parties. In my judgment, it is inconceivable that Parliament intended that scheme to co-exist with a parallel scheme of 'equitable' remedies (if it can be called a scheme, or equitable); a scheme which would be of uncertain scope, and arbitrary in its application. The two schemes would be incompatible with each other. The Claimant's counterclaim in 737 shows this incompatibility clearly. The Claimant submitted its disputes about the years 2007-8 and 2008-9 to the FHSAU and received a dusty answer, which, despite being unwelcome, was binding on it. For the Claimant now to withhold money from Dr Yellon in respect of the disputed payments would be inconsistent with the legislative scheme. So, in my judgment, the remedial scheme for which the Claimant contends has, by necessary implication, been excluded by the legislative scheme. I make it clear that it is not, in any event, arguably unjust, or unfair, for Dr Yellon to retain those sums in circumstances where the body with power to determine the dispute about them has rejected the Claimant's claim to them.
64. Ms Morris QC submitted that this part of the Claimant's claim was inapt for decision on an application to strike out, as, in order to determine it, a court would need to investigate the facts in detail. That might be true in some cases, but it is not so here. There is no need for a factual investigation, because the argument fails as a matter of principle. She also submitted that this part of the case was inapt for decision on an application for a strike out because the restitutionary claim raised novel issues of law. I am not deterred by their novelty from concluding that the counterclaim is not arguable. Finally, her submissions were pervaded with the suggestion that the Defendants had contrived an advantage from a "cynical exploitation" of the legislative scheme to the detriment of the public purse, and that that meant the Claimant should have a remedy. I cannot accept that submission, either. The legislative scheme entitles contractors to change status, and makes some transitional provision for the remedial consequences of that choice. It is not the court's job to supplement that provision on the basis that the scheme might have been better organised in some other way.

Conclusion

65. For these reasons my decision is to allow the Defendants' applications to strike out the Claimant's claims in 875 and 925, and Dr Yellon's application to strike out the Claimant's counterclaim in 737.