SSP Health Ltd v The National Health Service Litigation Authority (Primary Care Appeals Service) & Ors

Factual and Procedural Background

The Appellant, Company A, provided primary care services under NHS contracts by taking over multiple failing GP practices and health centres pursuant to arrangements governed by the National Health Service Act 2006 ("the Act"). These NHS contracts, while not contracts at law, allowed disputes to be resolved via an adjudication scheme implemented by the Secretary of State and administered by an appointed adjudicator from Company B. Company A alleged significant underpayment under 20 such NHS contracts and referred these disputes to adjudication. The adjudicator awarded Company A the claimed sums but declined to award interest on those sums.

Company A then initiated Judicial Review proceedings against Company B, joined by NHS England and the Secretary of State as interested parties, challenging the adjudicator’s refusal to award interest. The Learned Judge upheld the adjudicator’s decision, concluding that the adjudicator had power to award interest but had lawfully exercised discretion not to do so. Company A appealed this decision.

Legal Issues Presented

1. Whether the Learned Judge was correct in concluding that the adjudicator acted on the basis that she had the power to award interest but declined to exercise it in the circumstances.
2. Whether the Learned Judge should have remitted the case to the adjudicator on the grounds that (a) the adjudicator acted on the basis that she did not have power to award interest, or (b) having the power, she ought to have made an award of interest.

Arguments of the Parties

Appellant's Arguments

• The adjudicator wrongly concluded she had no power to award interest because the NHS contracts were not contracts at law.
• The adjudicator erred in refusing interest by failing to apply the Late Payment of Commercial Debts (Interest) Act 1998 and common law or equitable principles to justify awarding interest.
• The Learned Judge erred by holding that the adjudicator had lawfully exercised discretion not to award interest and should have remitted the case for reconsideration.

Defendant's Arguments (Company B)

• The NHS contracts are enforceable only through the adjudication scheme and do not give rise to legal contractual rights enforceable in civil courts.
• The Late Payment of Commercial Debts (Interest) Act 1998 does not apply as the arrangements are not contracts at law.
• There is no general power under the NHS adjudication scheme to award statutory or other interest on awards.
• If the Court finds otherwise, the appropriate remedy is a declaration of power and a remittal to the adjudicator to reconsider interest.

Interested Party's Arguments (NHS England)

• The appellant failed to provide adequate calculation or basis for the interest claimed.
• The 1998 Act and provisions of the Senior Courts Act 1981 and County Courts Act 1984 do not apply as the adjudicator is not a court and NHS contracts are not contracts at law.
• Interest could be awarded as an appropriate sum in the adjudicator’s discretion, which the adjudicator exercised by awarding nil interest.
• It was accepted that the adjudicator had power to award interest but rejected the legal bases advanced by Company A for such power.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court agreed with the Learned Judge that the adjudicator had the power to award interest under sections 9(11) and 9(12) of the National Health Service Act 2006, which empower the adjudicator to give directions including payment and to vary or end NHS contracts to resolve disputes.

The Court rejected the applicability of the Late Payment of Commercial Debts (Interest) Act 1998, the Senior Courts Act 1981, and the County Courts Act 1984 because NHS contracts are not contracts at law, and the adjudicator is not a court. The Court also rejected the adjudicator having inherent equitable jurisdiction, confining the power to award interest to that expressly or impliedly conferred by the Act.

The Court noted the adjudicator’s reasons for refusing interest were unclear and somewhat contradictory: some reasons suggested the adjudicator accepted power to award interest but declined due to lack of calculation or basis; others suggested the adjudicator considered she lacked power. The Court found that the natural reading of the adjudicator's reasons was that she acted on the basis that she did not have power to award interest.

Given this ambiguity, the Court concluded that the adjudicator should reconsider whether to award interest, exercising her discretion properly informed by the power conferred under the Act and relevant principles by analogy.

The Court declined to determine the appropriate rate or method of calculation of interest, leaving such matters to the adjudicator upon remittal after any necessary further information is provided.

Holding and Implications

The Court ALLOWED THE APPEAL.

The effect of the decision is to remit the dispute back to the adjudicator to reconsider whether to award interest on the sums found due, exercising the discretion that the adjudicator possesses under the NHS contract dispute resolution scheme. The Court confirmed that adjudicators have power to award interest where appropriate, but did not set any new precedent beyond clarifying the scope of this power and the need for clear reasoning in its exercise. The decision does not preclude the adjudicator from declining to award interest if justified by the facts and submissions.