Shashikanth, R (On the Application Of) v NHS Litigation Authority & Anor

Factual and Procedural Background

The Appellant, a general practitioner, entered into two general medical services contracts with Company A (a Clinical Commissioning Group) for the provision of primary medical services at two premises. These contracts were non-NHS contracts, giving rise to private law rights enforceable in civil courts. Company A terminated the contracts on the basis that the Appellant breached a contractual obligation to co-operate with a primary care network, pursuant to a statutory amendment (paragraph 15A of Schedule 3 to the 2015 Regulations) which required contractors to co-operate with primary care networks.

The Appellant referred the dispute to the Secretary of State under the statutory dispute resolution procedure, where an adjudicator appointed by the Secretary of State determined that Company A was entitled to terminate the contracts due to the breach. The Appellant sought judicial review of the adjudicator’s determination and the termination notices, but only the adjudicator’s determination is subject to this appeal.

The High Court Judge held that the adjudicator erred in law by concluding there was a contractual obligation to co-operate, as the contracts had not been varied to include such an obligation. However, the Judge held that the adjudicator’s decisions were not amenable to judicial review because the dispute resolution mechanism was a contractual choice without public law elements. The Appellant appeals this finding on amenability to judicial review. The second respondent filed a respondent’s notice seeking to uphold the Judge’s order on additional grounds, including that the contracts had been varied and that the adjudicator’s decision was not erroneous in law.

The first respondent, a special health authority exercising functions under the relevant regulations, did not take a clear position on contesting the judicial review claim. The British Medical Association intervened in support of the Appellant.

Legal Issues Presented

1. Whether the adjudicator’s determination, made under a statutory dispute resolution process concerning non-NHS general medical services contracts, is amenable to judicial review.
2. Whether the contracts between the parties had been validly varied to include an obligation to co-operate with a primary care network as required by paragraph 15A of Schedule 3 to the 2015 Regulations.
3. Whether the adjudicator erred in law in concluding that the Appellant breached a contractual obligation arising from paragraph 15A of Schedule 3.
4. Whether the Appellant is estopped from denying the existence of a contractual obligation to co-operate with the primary care network.

Arguments of the Parties

Appellant's Arguments

• The adjudicator exercises statutory functions derived from the 2015 Regulations and thus performs public law functions amenable to judicial review.
• The statutory dispute resolution process applies to both NHS and non-NHS contracts and is inherently a matter of public law regardless of the Appellant’s choice to use it.
• The Appellant had a right to challenge the adjudicator’s decision on public law grounds, including errors of law.
• The contracts had not been validly varied to include the duty to co-operate with the primary care network.
• The adjudicator erred in law by treating paragraph 15A as imposing a direct contractual obligation without proper variation of the contracts.
• The Appellant is not estopped from raising the issue of contractual variation.

Intervener's Arguments (British Medical Association)

• The courts have expanded the scope of judicial review to include statutory dispute resolution mechanisms.
• The source of the adjudicator’s power is statutory, making the decision amenable to judicial review despite the element of choice.
• The absence of alternative remedies for challenging the adjudicator’s decision supports the availability of judicial review.

Second Respondent's Arguments

• The adjudicator’s power is both statutory and contractual, but the nature of the decision is private law, involving contractual rights and obligations.
• The Appellant chose to have the dispute resolved under contract rather than by civil courts, and the adjudicator’s function is not a public law function.
• The public service context does not convert the adjudicator’s role into a public function.
• The adjudicator did not err by not considering whether the contracts had been varied, as that was not part of the dispute referred.
• The Appellant is estopped by convention from denying the existence of a contractual obligation to co-operate, based on a common assumption between the parties.
• Relied on authorities indicating that determinations of private law rights are not public functions amenable to judicial review.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
R (Holmcroft Properties Ltd.) v KPMG LLP and others [2020] Bus L R 203	Determination of private law rights under voluntary schemes may not constitute public functions amenable to judicial review.	The court distinguished this case from the present one because the adjudicator’s power here is statutory, making the function public in nature.
R (West) v Lloyd's London [2004] 3 All ER 251	Decisions concerning commercial relationships governed by contract are private law matters not subject to judicial review.	The court held that the present statutory dispute resolution process differs fundamentally and involves public functions.
R (Tucker) v Director-General of the National Crime Squad [2003] ICR 599	Even where power is statutory, the nature of the decision may exclude it from being a public function.	The court noted this case but found the adjudicator’s function here is a public function due to statutory regulation and context.
Mercury Ltd v Electricity Corporation [1994] 1 WLR 521	Limitations on judicial review in commercial contexts.	The court acknowledged the principle but found it did not exclude judicial review of the adjudicator’s determination here.
R v East Berkshire Area Health Authority ex p. Walsh [1985] QB 152	Judicial review is not available to enforce purely private law rights.	The court applied this principle but held the adjudicator’s decision here involves public law functions.
Tinkler v HMRC [2021] UKSC 3, [2022] AC 886	Requirements for establishing estoppel by convention.	The court considered but found the estoppel requirements not met on the facts here.

Court's Reasoning and Analysis

The Court began by reaffirming that judicial review is available only against bodies exercising public functions. Two approaches guide this determination: the source of the power (statutory or prerogative) and the nature of the function performed. The adjudicator’s power in this case is derived from statute, specifically the 2015 Regulations, which confer jurisdiction on the Secretary of State to determine disputes including by appointing adjudicators.

Although the Appellant had the choice to refer the dispute to the Secretary of State rather than to civil courts, this choice does not negate the statutory nature of the adjudicator’s functions. The statutory dispute resolution procedure applies uniformly to NHS contracts (which do not create private law rights) and non-NHS contracts (which do). The Court rejected the view that because the adjudicator determines private law contractual rights, the function is not public in nature.

The Court distinguished this case from precedents involving voluntary or contractual dispute resolution mechanisms without statutory underpinning, such as Holmcroft and West, emphasizing that here the adjudicator’s jurisdiction and procedure are statutory. The Court also noted the statutory framework requires contracts to include provisions enabling referral to the Secretary of State, underscoring the public law context.

Regarding the contractual variation issue, the Court found the adjudicator erred in law by treating paragraph 15A of Schedule 3 as imposing a direct contractual obligation without a valid variation of the contracts. The letter sent by Company A in October 2019 did not constitute a valid contract variation under the contracts’ terms, as it did not comply with the required formalities and was based on a mistaken assumption that paragraph 15A imposed an immediate obligation.

The Court held that the adjudicator should have determined whether the contracts had been validly varied and whether the Appellant breached any such obligation. The Court further rejected the argument that the Appellant was estopped from denying the existence of the contractual obligation, finding no common assumption or detriment sufficient to ground estoppel by convention.

The Court declined to decide whether the dispute resolution process constituted arbitration under the Arbitration Act 1996, as judicial review was available regardless.

Holding and Implications

The Court ALLOWED THE APPEAL.

The adjudicator’s determination is amenable to judicial review because it arises from a statutory dispute resolution process involving public functions. The adjudicator erred in law by finding a contractual obligation to co-operate with the primary care network without valid variation of the contracts. Consequently, the adjudicator’s determination is quashed and the matter is remitted to the adjudicator for reconsideration consistent with this judgment, specifically on the basis that no contractual obligation to co-operate existed under the unvaried contracts.

No broader precedent was overruled or newly established beyond these findings. The decision clarifies the public law nature of statutory dispute resolution for non-NHS contracts and confirms the necessity of formal contract variation to impose new obligations.