“NHS Earnings” Means Statement-of-Dental-Remuneration Income: Annual Assessment, Continuous Commitment, and Year-by-Year Prescription in Dental Bursary Repayment

Court: Scottish Court of Session (Outer House)  |  Citation: [2026] CSOH 9  |  Judge: Lord Sandison  |  Date: 6 February 2026

1) Introduction

These linked commercial actions—The Scottish Ministers v Donald Leggat (CA57/25) and The Scottish Ministers v Gabrielle Griffin (CA58/25)—were transferred to the Court of Session as test cases for a far larger cohort (about 1,300 dentists). The disputes concern a closed bursary scheme (closed to new entrants in 2018) under which undergraduate dentistry students received a bursary of £4,000 per year in return for a post-graduation commitment to practise in NHS dentistry in Scotland.

The Scottish Ministers sought repayment on the basis that the defenders did not meet the contractual “agreed commitment”, chiefly the requirement that NHS earnings constitute at least 80% of total earnings for the relevant period. The core issues were interpretative (what “NHS earnings” means; how and when compliance is measured; whether gross or net figures are used; how absences such as maternity leave are treated) and time-bar related (negative prescription under the Prescription and Limitation (Scotland) Act 1973, including whether section 6(4) postpones prescription for alleged “fraud”).

2) Summary of the Judgment

  • “NHS earnings”: The court held that “NHS earnings” means earnings generated by NHS treatment “in accordance with the Statement of Dental Remuneration” (i.e., NHS services), not simply earnings from treating NHS-registered patients regardless of whether the treatment is privately funded.
  • Assessment is year-by-year: Although the contract itself was silent, the application form undertaking (signed immediately before the contract) formed part of the admissible background and was treated as decisive: the 80% threshold must be met in each year of the commitment period.
  • Commitment period is continuous: The commitment period must be continuous, but “justified” absences (e.g., maternity/sickness) are not treated as breaking compliance where not “by their own volition”.
  • Justified absences—treatment in calculations: The court concluded that justified absence periods are left out of account for “dental work” compliance, and payments relating to those absences (e.g., maternity pay, sick pay) are likewise left out of account for the 80% calculation.
  • Gross not net: “Earnings” are measured on a gross basis (revenue generated by the dentist’s work), not net after practice splits/overheads.
  • Repayment is pro-rated by “failure years”: A dentist repays a proportion of total bursary equal to the number of years in which the threshold was not met, over the total commitment years (e.g., 20% per failure year in a 5-year commitment; 25% per failure year in a 4-year commitment).
  • Prescription runs year-by-year: Because breach is annual, a repayment obligation becomes enforceable at the end of each failure year; the prescriptive period runs from then.
  • Section 6(4) “fraud” not engaged on these pleadings: Silence did not amount to “fraud” where the contract expressly required provision of earnings information only “when requested”; there was no duty to volunteer the information absent a request.
  • Outcome on prescription: The claim against Dr Leggat was in time; parts of the claim against Dr Griffin had prescribed (2015/16 and 2016/17), but not the final year (2017/18). Final disposal was continued “by order”.

3) Analysis

3.1 Precedents Cited

(A) Modern contractual interpretation: text, context, and commercial sense

  • Glenfiddich Wind Limited v Dorenell Windfarm Limited [2025] CSOH 62: Cited by the defenders as a recent review of modern construction principles. Lord Sandison’s approach is consistent with the emphasis on objective meaning and the structured use of context and purpose, while warning against over-reliance on extraneous materials to rewrite contractual terms.
  • Arnold v Britton [2015] UKSC 36, [2015] AC 1619: Relied on by the pursuers for the orthodox “reasonable person with background knowledge” test and for considering purpose and commercial common sense. The court accepted that background may be used, but stressed that the application form and website materials are background, not freestanding contractual terms.
  • Wood v Capita Insurance Services Limited [2017] UKSC 24, [2017] AC 1173: Used by the pursuers (and reflected in the reasoning) for balancing the literal text against contextual factors, with sensitivity to drafting quality. The judgment highlights the contract’s non-negotiated, pro forma character as increasing the importance of what the words can reasonably bear and the practical consequences of rival constructions.
  • HOE International Ltd v Andersen [2017] CSIH 9, [2017] SC 313: Cited for purposive construction. The court’s ultimate definition of “NHS earnings” is explicitly tied to the contract’s purpose (NHS service provision) but remains anchored to what the phrase can naturally mean.
  • L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235: Cited for the proposition that the more unreasonable a result, the clearer the words needed to justify it. This underpins the court’s rejection of readings producing anomalous or unworkable results (notably, treating any private work for an NHS-registered patient as “NHS earnings”).

(B) Background materials and unilateral undertakings

  • Regus (Maxim) Ltd v Bank of Scotland Plc [2013] CSIH 12, 2013 SC 331: Cited by the pursuers in support of the relevance of unilateral promises. While the Ministers ultimately positioned the application form primarily as background, the case assisted in rebutting the defenders’ attempt to treat the application form as legally irrelevant to construing annual assessment.

(C) Contra proferentem: status and “quiet survival”

Lord Sandison did not apply contra proferentem as a decisive tool, but made an important doctrinal observation: the “situational” fact that the contract was drafted unilaterally and presented on a take-it-or-leave-it basis is a legitimate contextual consideration, meaning that contra proferentem may be “living more quietly” rather than being extinct. This is a noteworthy signal for Scottish contract disputes involving standard-form public schemes.

(D) Prescription: enforceability, knowledge, and section 6(4)

  • Glasgow City Council v VFS Financial Services Ltd [2022] CSIH 1, 2022 SC 133: Relied on by the defenders for the proposition that the prescriptive period is for assembling information; lack of knowledge does not stop time running for ordinary contractual obligations. Lord Sandison’s reasoning aligns with the strict “can sue” test for when an obligation becomes enforceable.
  • McPhail v Cunninghame District Council 1983 SC 246: Relied on by the Ministers to argue that certification postponed enforceability. The court distinguished it: unlike a third-party certification condition precedent in a building contract, the accountant certificate here was merely informational and not constitutive of the obligation.
  • BP Exploration Operating Co Ltd v Chevron Shipping Co [2001] UKHL 50, 2002 SC (HL) 19 and Dryburgh v Scotts Media Tax [2014] CSIH 45, 2014 SC 651: Cited by the Ministers on the breadth of “fraud” for section 6(4). The court accepted the general breadth but rejected its application on these facts, focusing on whether omission/silence can qualify as “conduct” where no duty to speak exists.
  • Heather Capital Ltd (in liquidation) v Levy & McRae [2016] CSOH 107 and Heather Capital [2017] CSIH 19, 2017 SLT 376: Used in argument on whether omission can constitute “conduct” and whether inquiry is required. Lord Sandison used Lord Doherty’s analysis (Outer House) to frame omission-as-conduct, but made the crucial move: omission only matters where it is in breach of a duty/obligation to act—here, the contract’s structure negated such a duty absent a request.
  • Glasper v Rodger 1996 SLT 44 and Johnston, Prescription and Limitation (2ndedition): Cited in relation to reasonable diligence under section 6(4); ultimately not determinative because section 6(4) failed at the “fraud/conduct” stage.
  • Batchelor v Opel Automobile GmbH [2025] CSOH 93 and Mackie v Mercedes-Benz Group AG [2025] CSOH 94: Cited by Lord Sandison for refinement of the Dryburgh formulation—suggesting “calculated” may be preferable to “intended” in describing the debtor’s actings. This is doctrinally significant but did not alter the result.

3.2 Legal Reasoning

(A) Defining “earnings” and excluding non-dentistry income

The court first anchored “earnings” to the “monetary fruit of one’s own labours” in dentistry, rejecting any interpretation that would incorporate unrelated income (e.g., second jobs) or income generated by other staff (e.g., hygienists). This was a classic contextual narrowing: broad words (“total earnings”) were read in the only way consistent with the contract’s dental-service purpose.

(B) “NHS earnings” = earnings from NHS services (Statement of Dental Remuneration)

Between the competing constructions—(i) Ministers: earnings from NHS services/treatments (including patient charges for NHS treatment) and (ii) defenders: any earnings from treating NHS-registered patients even for privately funded work—the court preferred the Ministers’ reading. The decisive points were:

  • Language fit: “NHS earnings” cannot naturally mean privately funded work merely because the patient is NHS-registered.
  • Purpose fit: The scheme aimed at actual NHS service provision; treating private work as NHS would defeat that.
  • Workability: The defenders’ construction generated “highly anomalous results”; the Ministers’ construction aligned with a recognisable operational benchmark (the Statement of Dental Remuneration).

Importantly, the court also excluded the implausible sub-reading that “NHS earnings” means only payments made by the NHS (excluding patient contributions), because that would make the 80% threshold potentially impossible in ordinary NHS dentistry where patient charges are routinely part of the allowable fee.

(C) Annual assessment: the application form as powerful admissible background

Although the contract did not state whether the 80% threshold applied annually or in aggregate, the court held that the application form’s express undertaking (“for each of these years”) provided “effectively unassailable” background demonstrating the parties’ objective understanding: compliance is assessed year-by-year.

A further operational point followed: the Ministers’ practice of using 1 August–31 July is not a contractual term; where a dentist starts later (the contract only requires starting within one year of graduation), the annual periods run as calendar years from actual start date unless agreed otherwise.

(D) Continuous commitment, “by their own volition”, and justified absences

The court rejected any construction allowing indefinite “make-up” years without an end-point (which would undermine enforceability and certainty). The “by their own volition” phrase in clause 14 was given real work: it prevents repayment liability where the failure is not the dentist’s free choice (e.g., justified maternity/sickness absence).

However, the court went beyond merely excusing absence as “not failure”: it held that justified absence periods should be left out of account for measuring compliance, and payments associated with those periods (maternity/sick pay) should also be excluded from the 80% calculation. This avoids forcing the contract to answer difficult classification questions (are such payments “earnings”? are they NHS or not?) by treating them as neutral once the underlying time is neutral.

(E) Gross vs net: objective measurability and avoiding arbitrary practice-structure effects

The court held that the calculation is gross, not net. Net accounting would introduce distortions driven by practice arrangements, efficiency, overhead allocations, and difficult apportionment exercises (e.g., lab costs)—none of which correlate reliably with the intended measure: the proportion of NHS vs non-NHS dental activity.

(F) Repayment quantum: pro-rata by “failure years”

While clause 14’s wording might naturally suggest full repayment, both sides accepted the SAAS website statement as admissible background clarifying proportionality. The court adopted the simplest pro-rating mechanism: repayment corresponds to the number of years in which the threshold was not met divided by total commitment years (20% per failure year in a five-year commitment; 25% in a four-year commitment).

(G) Prescription: enforceability arises at end of each “failure year”

The court’s prescription analysis is tightly tied to its construction findings. Because the obligation is annual, a breach in year 1 creates an immediately prestable pro-rata repayment obligation at the end of that year. That obligation is not defeasible by later compliance. Accordingly, the quinquennium runs from when the Ministers could sue for that year’s tranche, not from when it is convenient to sue, not from when the Ministers request/receive certification, and not from when they learn the facts.

The court rejected the Ministers’ attempt to analogise to McPhail v Cunninghame District Council 1983 SC 246: the accountant certificate is informational and contestable; it does not constitute the debt or postpone enforceability.

(H) Section 6(4) “fraud”: no duty to volunteer = no relevant “fraud” by silence

The Ministers argued that dentists’ failure to inform them of non-compliance amounted to “fraud” postponing prescription under section 6(4)(a)(i). Lord Sandison treated two points as central:

  • Omission as “conduct” requires breach of a duty/obligation: Drawing from Heather Capital Ltd (in liquidation) v Levy & McRae [2016] CSOH 107, omission may count as “conduct” only where the omission itself breaches a duty to act.
  • This contract specified when the duty arises: Clause 10 required earnings certification only “when requested”. That express structure precluded treating silence absent a request as a fraudulent concealment capable of engaging section 6(4).

Therefore, section 6(4) did not suspend prescription. On the resulting timeline, parts of the Griffin claim were time-barred.

3.3 Impact

(A) Practical operational rule for the cohort

For the ~1,300 dentists, the judgment supplies a concrete and administrable construction:

  • “NHS earnings” track NHS services as per the Statement of Dental Remuneration (including patient charges for NHS treatment).
  • Compliance is assessed annually (year-by-year).
  • Calculations use gross earnings generated by the dentist’s work (not net after splits/overheads).
  • Justified absences and related payments are excluded from the computation.
  • Repayment is pro-rated by the number of annual shortfall years.

(B) Prescription risk: earlier “failure years” may be irrecoverable

The year-by-year enforceability finding materially raises the prescription stakes for the Ministers: where monitoring/requests were delayed, earlier annual tranches may be prescribed even if later tranches remain enforceable. The judgment is likely to shape settlement positions by requiring a year-specific prescription analysis for each dentist.

(C) Section 6(4) limits in information-asymmetric schemes

The decision signals that, in standard-form schemes where the creditor elects to request information only “when requested”, it will be difficult to re-characterise participants’ silence as “fraud” for section 6(4). If scheme designers want “self-reporting” to protect recovery rights, they may need to draft express proactive disclosure duties (and consequences) rather than relying on section 6(4) as a backstop.

(D) Contra proferentem: not dead, but reframed

Although not outcome-determinative, Lord Sandison’s discussion suggests Scottish courts may continue to treat “who drafted and imposed the term” as relevant context, even if not deploying contra proferentem as a mechanical tie-breaker. This may matter for other public-sector standard-form contracts.

4) Complex Concepts Simplified

  • Contractual construction (interpretation): The court asks what the contract’s words would mean to a reasonable person with the background knowledge available at the time—not what either side now says they meant.
  • Statement of Dental Remuneration: A published NHS schedule setting out which dental services are remunerated under NHS arrangements and at what rates; it provides a workable benchmark for identifying “NHS” services.
  • Gross vs net earnings: “Gross” is the total revenue generated before deductions/splits; “net” is what the dentist ultimately keeps after costs/overheads and practice-sharing arrangements. The court chose gross to avoid disputes and distortions unrelated to NHS/private workload.
  • Negative prescription (5 years): Many contractual payment obligations in Scotland expire if not enforced within five years from when they first became enforceable.
  • Section 6(4) of the 1973 Act: A rule that can stop the five-year clock running where the creditor is induced to refrain from suing because of the debtor’s fraud (or induced error). The court held it did not apply where the debtor had no duty to volunteer information.
  • Prestable: A Scots term meaning the obligation has become due and enforceable (you can sue for it).

5) Conclusion

Lord Sandison’s opinion establishes a coherent framework for interpreting and enforcing Scotland’s dental undergraduate bursary contracts. The key holdings are that “NHS earnings” are earnings from NHS-remunerated services (not merely NHS-patient status), the 80% test is annual, the commitment period is continuous but justified absences (and their related payments) are excluded from calculations, and repayment is pro-rated by “failure years”. Critically, the court held that each annual shortfall creates an immediately enforceable repayment tranche for prescription purposes, and that section 6(4) “fraud” cannot be built from mere silence where the contract requires disclosure only upon request. For the broader cohort, the judgment is likely to be most consequential not only for the substantive metric of compliance, but for the year-by-year prescription filter that may extinguish older repayment tranches.