Redcroft Care Homes Ltd against City of Edinburgh Council

Factual and Procedural Background

The Plaintiff operates a residential care facility for adults with learning difficulties and complex needs, known as Redcroft House, under a contract with the Defendant local authority. The contract, a Framework Agreement dated 2014, provided for fixed weekly payments per resident but did not specify a minimum number of residents. Between February 2019 and October 2020, the Defendant conducted a large-scale investigation into the Plaintiff's care provision, including concerns about overcrowding, resulting in a moratorium on new resident placements and a reduction in residents from nine to six. The Plaintiff sought additional payments to cover a funding deficit caused by the reduced occupancy and also claimed for "waken" night care costs. The Defendant accepted the night care claim but refused the occupancy rate claim, citing the ongoing investigation and moratorium. The Plaintiff challenged the refusal by way of judicial review, arguing the decision was irrational, procedurally unfair, and breached legitimate expectations. The Lord Ordinary dismissed the petition as incompetent, holding the decision was contractual and not amenable to judicial review. The Plaintiff appealed this decision, contesting the scope of the court's supervisory jurisdiction.

Legal Issues Presented

1. Whether the Defendant's decision to refuse backdated occupancy payments was amenable to judicial review or was a purely contractual matter outside the court's supervisory jurisdiction.
2. Whether the Plaintiff was entitled to a legitimate expectation regarding the basis and procedure of the Defendant's decision-making on the occupancy payment claim.
3. Whether the Defendant's refusal to disclose certain documents amounted to a breach of the duty of candour or procedural fairness.
4. Whether the Defendant's decision was irrational or unreasonable in law.

Arguments of the Parties

Appellant's Arguments

• The Lord Ordinary erred in dismissing the petition as incompetent by incorrectly limiting the supervisory jurisdiction to decisions made under a legally circumscribed power, ignoring that the Defendant exercised statutory discretion in deciding on payments.
• The Defendant's decision was subject to judicial review because it affected statutory duties under the Social Work (Scotland) Act 1968 and the Local Government (Scotland) Act 1973.
• The Plaintiff was entitled to a legitimate expectation that the decision would be made based on financial information and that the investigation would not be taken into account without prior notice.
• The refusal to grant a commission and diligence to recover documents was improper, as the Defendant failed in its duty of candour to disclose relevant material.
• The decision was irrational and procedurally unfair, particularly because the investigation was determinative of the occupancy claim but not of the night care claim.

Respondent's Arguments

• The Defendant complied with the duty of candour by producing all documents in its possession and was entitled to refuse late motions for further disclosure.
• The decision to refuse the occupancy rate claim was a commercial, contractual matter not amenable to judicial review, as the statutory duty was owed to the residents, not the Plaintiff.
• The Framework Agreement governed the payment terms, and the Defendant was not obliged to make ex gratia payments beyond the contract.
• The Plaintiff had no legitimate expectation of payment or procedural fairness beyond contractual negotiations.
• The decision was rational and consistent, distinguishing between payment for additional services and payment for occupancy, which was reduced due to fewer residents.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by considering the scope of its supervisory jurisdiction, reaffirming that judicial review applies only to decisions made under a legally circumscribed power or statutory authority. The Framework Agreement between the parties governed the contractual relationship, including payment terms based on resident numbers. The Defendant's refusal to make additional payments for reduced occupancy was not a decision taken under statutory power but a commercial, contractual decision. The Plaintiff was not a "relevant person" under the Social Work (Scotland) Act 1968, which imposes duties on local authorities towards individuals in need rather than care providers.

The court distinguished this case from precedents where statutory duties or market regulation obligations were involved, noting that here the Defendant was discharging its statutory duty by funding care for residents, not the Plaintiff. The decision to refuse ex gratia payments was intra vires and did not engage the court's supervisory jurisdiction. The Plaintiff's arguments on legitimate expectation were rejected because no clear, unambiguous promise was made that the investigation would not influence the decision. The email correspondence cited did not exclude consideration of the investigation or moratorium.

Regarding procedural fairness and the duty of candour, the court found no breach. The Plaintiff had knowledge of the investigation and moratorium, which were relevant background facts. The refusal to grant a commission and diligence for document recovery was justified by the lateness of the application and procedural rules requiring early disclosure requests. The court emphasized that judicial review is a speedy and inexpensive process and that the Plaintiff had ample opportunity to seek documents earlier.

On the merits, the court found the Defendant's decision rational and not unreasonable. The distinction between accepting the night care claim and refusing the occupancy claim was logical, as the latter related to fewer residents due to death or departure, not the investigation itself. The Plaintiff had no contractual entitlement to payment for residents no longer in care. The court corrected the interlocutor to confine dismissal to competency and refused the appeal, agreeing with the Lord Ordinary's analysis.

Holding and Implications

The court DISMISSED the appeal, affirming the Lord Ordinary's decision that the petition was incompetent and that the Defendant's refusal to pay the occupancy rate claim was not subject to judicial review.

The direct effect of this decision is that the Plaintiff's challenge to the Defendant's refusal of additional funding fails, leaving the contractual framework as the sole basis for payment entitlements. No new precedent was established, and the ruling reinforces the principle that decisions arising purely from contractual relations, absent statutory powers or duties, fall outside the court's supervisory jurisdiction.