England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Sitting at: Bristol Crown Court The Law Courts Small Street Bristol BS1 1DA
		23rd December 2014

His Honour Judge Lambert:

I direct pursuant to CPR Part 39 PD 6.1 that no official recording shall be taken of this judgment and that copies of this version, subject to editorial corrections, may be treated as authentic.

Synopsis

1. This is the substantive hearing of an application for judicial review. The Claimant is an association of independent care home operators and challenges the decision of the Defendant local authority dated 5 February 2014 setting a "usual cost" figure in respect of the costs of care. This figure is the amount which the local authority assesses as the normal cost of providing care services for care home residents. It becomes the figure it is prepared to pay to providers where it is responsible for the costs of care.
2. In September 2011 the Defendant local authority received an account's report which it later adopted as its fee model for the calculation of the "usual cost" of care. This governed the period 2012-2014. On 23 October 2013 the Defendant proposed to use the same model for 2014-2015 calculations subject to a very small inflationary increase. On 6 November 2013 the Claimant made representations opposing this proposal. Discussions took place and on 5 December 2013 the parties met to discuss the proposal. On 18 December 2013 the Claimant made more detailed representations in opposition. On 5 February 2014 the Defendant made its decision as to the "usual cost" for 2014-2015 which adopted its previous proposal. On 24 March 2014 the Claimant sent a pre-action letter. On 7 April 2014 the Defendant provided its response maintaining the previous decision.
3. It will be necessary to descend to a further detailed chronology in due course but the above is sufficient for an initial synopsis.
4. By the time of the hearing before me on 2 December 2014 the parties had narrowed the issues to two grounds:

The Claimant contended:

(1) the model on which the decision was based, specifically with regard to a staffing ratio calculation (staff hours required per patient), was mathematically flawed and was, thus, unreasonable; and

(2) the decision was unreasonable as the model considered top-up fees paid by privately paying residents which were not relevant. This took into account costs in an unlawful manner and was contrary to Government guidance.

5. The Defendant contended:

(1) there were no mathematical errors. The challenge to the staffing ratio calculation represented no more than a difference of opinion and approach; and

(2) they were entitled to take into account the fees paid by privately paying residents. The duty here was restricted to ensuring that those residents receiving state-funded care were not required to, themselves, top-up fees paid on their behalf.

Proceedings

6. Counsel both submitted detailed skeleton arguments for which the court was very grateful. I heard argument on 2 December 2014. It will, at times, be necessary to refer to the detailed calculations explored in the skeleton argument and set these out extensively.

The Facts

7. Frances Mason is the Head of Adult Partnership Commissioning for the Defendant. She is responsible for leading the team of commissioning staff who work jointly with health and care staff to commission design and support services for which the Defendant is responsible. She informs the court that after May 2012 the Defendant in cooperation with a healthcare trust embarked upon a detailed process in order to make a detailed decision as to fee rates. A working group was formed which tried to develop the revised banding structure of which care providers were informed in September 2012.
8. The services of an external accountancy consultant, Geoff Thomas (now deceased) were secured in order to develop technical aspects of the mathematical model that was developed. On 4 September 2012 all 108 care home providers in the Defendant's local authority area were sent an e-mail asking for copies of accounts and information on staffing levels and ratios so as to inform the model being developed. At a meeting with providers on 6 September 2012 concerns were expressed over providing this information and consideration was given to anonymized responses. An independent team of accountants were engaged to receive the information and to anonymize it prior to its being used by the team producing the model. Only eight sets of accounts were ever received. Of those two were "parent" company accounts which included care homes from other parts of the country. Responses to the questions on staffing were provided by only nineteen out of the 108 care homes despite reminder calls being made to each provider.
9. None of that would, however, excuse significant error but I place it in the factual part of the judgment to emphasise my ultimate conclusion that whatever the outcome the Defendant was honest and straightforward throughout the process balancing the needs of those requiring care against its duty to ensure that public funds must be properly expended. The Defendant throughout was trying to do the right thing. It recognises that a viable care home market has to be maintained so that it can do its duty and it is largely responsible for funding some parts of that market. The ultimate decision was certainly not approached in a commercial way but with everybody trying to do their duty in difficult circumstances.
10. I am told that the project team then considered responses received and concluded that the information was not reliable due to the small number of responses and the quality of the information. A decision was therefore made to consult further with those in the sector and to identify alternative sources of information so as to attempt to produce a model on which "usual fees" could be assessed.
11. The proposed fee rates were notified to providers on 11 October 2014 and there followed a period of consultation. A decision was taken by the full council on 6 February 2013 whereby the model developed was approved. All care home providers were written to on 13 February 2013 notifying them of the decision that had been taken.
12. The fee levels were therefore set for the period 2012 to 2014. On 15 April 2013 the Claimant's solicitors wrote stating an intention to apply for judicial review of the 2012/14 decision. This was not pursued but it may be important to return to this in due course.
13. The "usual cost" figure for 2014/2015 then fell to be determined. In order to make best use of staff resources and allow time to plan the changes the Defendant proposed to use the existing model adjusting it for inflation. Inflation figures were garnered from the Office of National Statistics and applied to the existing model to give fee proposals for 2014-2015.
14. Consultation then took place between 23 October 2013 and 19 December 2013. Various complaints were made about the model and these were considered by the Defendant.
15. As the lead officer involved in creation of the model Frances Mason sought to be satisfied that each of her assumptions was fair to providers, and consequently to service users. She tells me she is actively aware that other authorities may pay fees in excess of those payable by the Defendant but that she considers the Defendant's model to be "Torbay's model, with assumptions appropriate for Torbay built into it." She points to the fact that in Torbay there is something of an oversupply of residential care (as opposed to nursing care).
16. Ms Mason is aware that other Directors of Adult Social Services have to consider care home fees also. Local authorities are required to produce a usual cost and this is what the model developed was designed to do. The model was produced after development with that of Devon County Council and with the help of an external accountancy consultant, (Geoff Thomas who developed the technical aspects of the Torbay model having been engaged also by Devon to assist previously the development of their own model).
17. Ms Mason can, however, provide only limited help as to how the mathematical model was engineered by Mr Thomas (deceased). She can help as to top-up and other fees which were admittedly taken into consideration. Top-up and income derived from private fees and other publicly funded residents were, she says entirely properly, considered as part of the income which a care home can expect. She says they are therefore relevant when quantifying the further income which a care home needs to earn from local authority-funded residents in order to provide a reasonable and sustainable return on capital for a care home provider. The model, she says, takes them into account by assuming that, over time, a home of average size will receive an average quantity of such revenue. However in the creation of the model officers were quite clear that such payments do not affect the day-to-day running costs of the home. Top-up payments are for additional items such as a better room or view or additional services and these are not to pay for care needs properly so-called. The Defendant's "usual cost" covers the cost of care and accommodation (including a provision for capital maintenance which reflects an allowance on capital costs).
18. Ms Mason maintains that contrary to the suggestion in the Claimant's grounds the Defendant has not overlooked the fact that costs of running a home may be affected by more intensive needs of particular residents. She denies any error in the rates used for private fees. She notes that following consultation responses in 2012-2013 the Defendant used an average of publicly advertised fees in the Laing and Buisson South West rates for residential care, weighted for the proportions of standard to standard plus residents. The other public sector rates are taken from data held within the local healthcare trust as to rates in payment.
19. Lisa Finn is the Finance Manager for Children's and Adult Services for the Defendant. She is a member of the Chartered Institute of Public Finance and Accountancy with considerable experience of local government finance. She helped to review the workings of the Defendant's mathematical model to produce "usual cost" and sought to test the validity of the points made by the Claimant. The Claimant was found to be right about one of its points which was dealt with.
20. She tells me that the model essentially consists of a set of assumptions which are based on research, experience and/or published data about the costs and potential revenues of a care home. In particular she asks me to note that the model calculates four different figures identifying revenue amounts which would be sufficient to cover costs of providing care when measured in different ways. The "usual cost" is determined by selecting the highest of these thereby ensuring proper and sufficient regard to the actual cost of care. She tells me that the Torbay model approached the calculation of staffing ratios in the opposite direction to that adopted by Mr Main, the Claimant's expert witness. The model calculated how many beds are looked after by one staff member during each 24 hour period. The calculation uses formulae where:

A = daytime hours 0800-2200 plus handover time;

B = night hours including handover;

C = weighted average staff: bed ratio;

D = beds covered per staff member in daytime;

E = beds covered per staff member at night.

She goes on to show how a weighted average staff to bed ratio("C") was produced with the formula:

(AxD) + (BxE)
__________
   (A+B)

This is then applied:

         C
__________
   (A+B) x 7 = beds per staff member in one week

She maintains the Claimant is wrong to suggest that the model fails to take into account the different hours in day and nights shifts respectively and that the formula demonstrates that it does do so. She adds that unfortunately, in the absence of the late Mr Thomas she cannot say why this model of calculating staff ratios was chosen. She states the overall aim was undoubtedly to arrive at a model which would achieve a composite weighted average of staff costs bearing in mind the large number of variables between different staff homes. The different providers to whom the model is applied have a variety of staff in each post with different qualifications and seniority and shift lengths also vary from provider to provider. She says the model therefore cannot avoid a degree of approximation but is aimed at a fair result. She stresses that any attempt to produce a "usual cost" figure is bound to have a degree of approximation in it.

21. In respect of third-party contributions, private fees and income derived from other publicly funded residents the witness maintains this is a legitimate approach. The principle in respect of this income, as explained by Ms Mason, is said to be relevant when quantifying the further income which a care home needs to earn from local authority funded residents. However they are not taken into account when assessing the day-to-day running costs of a home.
22. The Defendant also filed a witness statement from Caroline Taylor, Director of Adult Social Care, dealing with how the mathematical model was commissioned with the assistance of the late Mr Thomas. She stresses that the Defendant has relied upon the decision made in February 2014 as to the "usual cost" for 2014/15 in order to set a balanced budget for the current financial year. If the Defendant is required to reconsider the "usual cost" she did not believe it is possible to do so, consult and decide upon the same prior to the next financial year commencing. This would have a serious impact, she says, on the Defendant's budgetary position and the provision of services by the council.
23. This evidence goes largely as to the remedy point to which I will return in the course of the judgment.

The Law

24. Under section 21 of the National Assistance Act 1948 ('the 1948 Act') and directions made under it in Department of Health Circulars LAC (93)10 and LAC (2004)20, the Defendant has a duty to make arrangements for providing 'residential accommodation for persons aged eighteen or over who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them'. Section 26 of the 1948 Act permits the Defendant to make such arrangements with the private sector.
25. In undertaking those functions the Defendant is required to act under Governmental Direction and guidance. The Local Authority Social Services Act 1970 ('the 1970 Act') provides, so far as relevant, that:

7 Local authorities to exercise social services functions under guidance of Secretary of State

(1) Local authorities shall, in the exercise of their social services functions, including the exercise of any discretion conferred by any relevant enactment, act under the general guidance of the Secretary of State.

7A Directions by the Secretary of State as to exercise of social services functions

(1) Without prejudice to section 7 of this Act, every local authority shall exercise their social services functions in accordance with such directions as may be given to them under this section by the Secretary of State.

(2) Directions under this section—

(a) shall be given in writing; and

(b) may be given to a particular authority, or to authorities of a particular class, or to authorities generally.

26. The National Assistance Act 1948 (Choice of Accommodation) Directions 1992,which were made under s7A of the 1970 Act, provide, so far as relevant, as follows:

'2. Where a local authority have … decided that accommodation should be provided pursuant to section 21 of the National Assistance Act 1948 (provision of residential accommodation), the local authority shall, subject to paragraph 3 of these Directions, make arrangements for accommodation pursuant to section 21 for that person at the place of his choice within the United Kingdom (in these Directions called "preferred accommodation") if he has indicated that he wishes to be accommodated in preferred accommodation.

'3. …the local authority shall only be required to make or continue to make arrangements for a person to be accommodated in his preferred accommodation if –

(a) the preferred accommodation appears to the authority to be suitable in relation to his needs as assessed by them;

(b) the cost of making arrangements for him at his preferred accommodation would not require the authority to pay more than they would usually expect to pay having regard to his assessed needs;

(c) the preferred accommodation is available;

(d) the persons in charge of the preferred accommodation provide it subject to the authority's terms and conditions, having regard to the nature of the accommodation, for providing accommodation for such a person under Part III of the National Assistance Act 1948.'

27. The cost referred to in paragraph 3(b) is generally known as the 'usual cost'. It is the basis on which local authorities set the fees they will normally be prepared to pay to care homes.
28. Circular LAC (2004)20 ('the Circular') is Governmental guidance by which local authorities are bound under section 7 of the 1970 Act. In R v London Borough of Islington ex parte Rixon [1997] ELR 66 at 77, Sedley J stated that:

'… Parliament by section 7(1) has required authorities to follow the path charted by the Secretary of State's guidance, with liberty to deviate from it where the local authority judges on admissible grounds that there is good reason to do so, but without freedom to take a substantially different course.'

29. The pertinent parts of the Circular for the purposes of the present case are:

'2.5.4 …[The usual cost] should be set by councils at the start of a financial or other planning period, or in response to significant changes in the cost of providing care, to be sufficient to meet the assessed care needs of supported residents in residential accommodation… In setting and reviewing their costs, councils should have due regard to the actual costs of providing care and other local factors. Councils should also have due regard to Best Value requirements under the Local Government Act 1999.'

'3.3 When setting its usual cost(s) a council should be able to demonstrate that this cost is sufficient to allow it to meet assessed care needs and to provide residents with the level of care services that they could reasonably expect to receive if the possibility of resident and third party contributions did not exist.'

30. In the case of R (Members of the Committee of Care North East Northumberland) v Northumberland County Council [2014] PTSR 758 the Court of Appeal considered a challenge to a local authority decision dealing with the cost of care. It held that the guidance contained in Local Authority Circular LAC (2004)20 should not be equated with a statutory duty and did not prescribe any particular methodology which local authorities had to adopt in order to have "due regard to the actual costs of providing care". An arithmetical calculation setting out the figures attributed to the individual cost of elements of providing care was but one way of carrying out the exercise of having such due regard but was not the only legally permissible way. The court observed:

"15. In support of her submission that the respondent did not have "due regard", Ms Mountfield referred us to a number of authorities in which the nature of the obligation to have "due regard" to a particular matter or matters was considered in other statutory contexts, including the Public Libraries and Museums Act 1964, the Disability Discrimination Act 1995, and the Equality Act 2010.

16. While the court's conclusions as to what would constitute a sufficient inquiry for the purpose of having "due regard" to the relevant considerations in those cases, were entirely appropriate in those statutory contexts. It is not appropriate to "read across" and to seek to reply to the circumstances of this case. Thus, for example, the proposition that there should be a "structured attempt to focus upon the details of equality issues", see paragraph 61 of Bracking v Secretary of State for Work and Pensions [2013] EWCA Civ 1345 is readily understandable if the decision taker is having to demonstrate compliance with the statutory duty to have due regard to various factors as part of the public sector equality duty imposed by section 149 of the Equality Act 2010. It does not follow that it is necessary for a local authority to follow what Ms Mountfield described as a "structural approach" when it is following the guidance in the Circular to have "due regard to the actual costs of care" for the purpose of setting and reviewing its "usual costs".

17. The Circular contains guidance. It is not to be equated with a statutory duty imposed by an enactment and as would be expected in the case of guidance, it does not prescribe any particular methodology, whether "structured" or otherwise which local authorities must adopt in order to have had "due regard" to the actual costs of providing care.

18. The claimant's submission that as a matter of law a "structured" approach (whatever that may mean, see below) is required, treats a single sentence in guidance in a circular as though it was a duty imposed by primary legislation. When we asked Ms Mountfield what the respondent had failed to do which it was under a duty to do as a matter of law, her reply was that the respondent had not focused on the question of actual cost and had failed to make a "sufficient inquiry" contrary to the well-established principle that a decision-maker must "ask himself the right question and take reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly", see the Secretary of State for Education v Tameside [1977] AC 1014, per Lord Diplock at page 1065."

It seems from this that a structured approach is not required:

"20.The submission that there had been insufficient inquiry was coupled with a submission that the underlying fault in the respondent's approach was that it did not focus on ascertaining the actual cost of providing care because it never asked the correct question of the appellants: "What are your actual costs of providing care?", and instead asked them the wrong question: "Why are you not able to provide care at the lower fee levels being paid by neighbouring local authorities in the North West?".

21. There are two answers to that submission: first, it does not accord with the judge's factual conclusions in paragraphs 39 to 44 of the judgment as to what the respondent actually did against which there was no challenge in the grounds of appeal. Secondly, in any event, the difference between the two questions is a matter of semantics rather than substance. Looking at these two answers in turn, I will not repeat the details of the judge's factual findings which can be found in paragraphs 39 to 44 of his judgment. In summary, the judge found that the respondent had:

(i) considered to what extent its existing rates of payment were leading to overcapacity in the market in its area;

(ii) compared its own rates with those being paid by other local authorities in the region and considered whether there was anything to explain why the cost of providing care in Northumberland should be materially higher than elsewhere in the region;

(iii) taken account of the position of those providers with whom it was able to reach agreement and the evidence that they had provided as to how they had determined that the proposed rates would enable them to meet the actual costs of care;

(iv) sought information from the appellant and when management accounts were provided by one of the members of CNEN, Mr Macado(?), who had sought to explain why the provision of care in Northumberland costs more than elsewhere, carefully considered those accounts;

(v) explained why it did not think it appropriate to accede to the appellant's request to use the PWC model before calculating its "usual costs""

Then at [29] :

"In reality, the members of CNEN, save for Mr McArdle, were unwilling to disclose their management accounts because at that stage and, indeed, throughout the negotiations prior to the claim for judicial review, they were maintaining that the respondent should use the PWC model to ascertain the costs of care, see paragraph 66 of Mr Hunter's witness statement."

31. The court stated further at [31]:

"As I have already indicated, the decisions to which we were referred in very different statutory contexts do not support the proposition that such an analysis, or any particular form of analysis, is required in the present context. Nevertheless, we sought to explore the matter further and asked Ms Mountfield what the respondent should have done in order to carry out a "structured" analysis, given that the appellant accepted that local authorities are not required to use the PWC or any other form of model."

Northumberland, as I shall refer to it, also imports a very significant health warning, if I can put it that way, in paragraph 34:

"Each of these cases turn very much upon its own particular facts, thus in Sefton, the local authority had imposed a freeze on fees without any prior consultation with the care home providers. In EMCARE, the claimant had sent a report prepared by Laing & Buisson (consultants with expertise in ascertaining the cost of care) to the local authority but the local authority had made no attempt to respond to the detailed points that had been made in the report. In Newcastle the local authority had attempted to use the PWC model as a means to ascertain the actual cost of care but had fed inaccurate figures into the model. In Redcar the judge concluded that the local authority had simply "bench marked", ie looked at the fees paid by neighbouring authorities and said that while such information was no doubt useful, it had to be combined with some information which specifically related to the local authority's own area. In South Tyneside the judge distinguished the present case because the local authority in that case had not relied on its own judgment and experience but had instead undertaken what the judge described as "an arithmetical exercise", see paragraph 61 of his judgment, in which the authority had made a number of significant errors, see paragraph 75 of the judgment in that case."

32. Having due regard to the strictures of the Court of Appeal a similar first instance decision may be of some assistance in general terms when considering this particular case. In R (South Tyneside Care Home Owners Association and Others) v South Tyneside Council ("South Tyneside") [2013] EWHC 1827 (Admin) HHJ Belcher stated at paragraph 65:

"A further point made by Mr Purchase is that, notwithstanding they did not complete the spreadsheets, the Claimants clearly put the Council on notice that the spreadsheet was not capable of capturing information on return of capital. He submitted that the Council could and should have written to providers at that point to see if there were other capital costs which they had not included on the spreadsheet. He submitted this was so even if the Council thought the spreadsheet was adequate to capture the information, since three of the spreadsheets returned to the Council contained no financing or other capital costs at all (References 3, 5 and 7 at B2, pages 539, 547, and 559). It was not in providers' interest to exclude such information and Mr Purchase submitted this supports the Claimants' arguments that the providers cannot have understood that capital cost information was being sought. Taken with the Claimants' complaints that the spreadsheets would not capture such costs, the Council was, submitted Mr Purchase, plainly on notice that the spreadsheet was, or might be, inadequate and a reasonable council would have checked the position. They could have written to check whether providers had put cost of capital in the spreadsheets and if so, what capital cost it was, and if not, to get such information."

And the judge found at paragraph 75:

"Whilst Paragraph 3.3 of the Circular does not expressly mention "subsidisation", in my judgment it quite clearly requires a calculation to be done on the basis that the possibility of resident and third party contributions should be excluded. In my judgment on the facts of this case, where privately paying clients pay significantly more that the Council rate, taking those fees into account on a profit analysis is contrary to the guidance in the Circular, and results in a skewed calculation which does not pay due regard to actual costs. It follows in my judgment that this is a further significant error in the decision making process, the failure properly to pay due regard to actual costs and to disregard the effect of any payments from other sources such as privately paying residents."

33. Whilst not an authority in any sense of the word as purporting to decide any point of general principle the decision in South Tyneside does give an example as to how one judge dealt with a similar situation.
34. The general principles to be applied in cases of judicial review were not in dispute and I adopt the agreed approach at paragraph 12 of Mr Purchase's skeleton argument.

"(1) Its analysis must ask the right questions (Secretary of State for Education and Science v Tameside [1977] AC 104 ).

(2) It must take into account all material considerations, must not misunderstand material considerations, and must leave out of account immaterial considerations (see, for example, R (Alconbury Development Limited) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295, paragraph 50 ).

(3) Its approach must be reasoned and reasonable in the Wednesbury sense (which is to say, the decision-making must be rational and logical, and must 'add up' – R v Parliamentary Commissioner for Administration, ex parte Balchin [1998] 1 PLR 1, at 13 ).

(4) The approach must be supported by evidence and not demonstrably wrong (Reid v Secretary of State for Scotland [1999] 2 AC 512, at 541)."

35. In the course of argument we considered each and every proposition set out above and how it was grounded within the authorities. It is not necessary in the circumstances to set out in full the passages in the authorities which support that general approach to public law principles which apply in this case.

The Arguments - Claimant

36. Mr Purchase for the Claimant submitted that the guidance in Local Authority Circular LAC (2004)20 means that "usual cost" must be sufficient by itself to maintain a viable care home. It does not contemplate "usual cost" plus other sources of income. He maintains if it were otherwise then the Circular would say so. In particular he emphasises that paragraph 3.3 is an application of the general principle first found in paragraph 2.5.4. He contended that the guidance was intended to provide a "usual cost" that would be sufficient and that any additional income must be stripped out particularly any third-party contributions. This he emphasised had been accepted by HHJ Belcher in South Tyneside and should similarly be accepted here. He accepted that there was more than one legitimate way of approaching the issue and emphasised that a local authority does not have to undertake an arithmetic calculation. He accepted the local authority could use other methods in order to have "due regard" to cost but a choice was made here to produce a mathematical model. The model being used in Northumberland was not a mathematical model. Nothing in Northumberland, he said, casts any doubt on the fact that if a mathematical modelling approach is taken this must comply with general public law principles.
37. Although no particular approach is necessary to the consideration of costs Mr Purchase said that if the particular choice was made of the mathematical approach it must be done properly. The Court of Appeal recognised this in paragraph [33-34] of the Northumberland case and the South Tyneside decision emphasises the fact that if the arithmetic approach is used it must be correct. He stated further that paragraph [35] of the judgment in Northumberland clearly acknowledges that a relevant fact will be whether the arithmetic is correct and whether a significant error has been made. Acknowledging the limits of South Tyneside Mr Purchase submitted it does however provide sound guidance for the determination in this case. It shows, he said, that the broad approach was for the local authority but once it is settled upon its approach to the question this has to be implemented properly on public law principles. He conceded that it is not for the court to make a second guess or estimate where there is genuine scope for a difference of opinion. He acknowledges a limited scope of the function of judicial review but submits that the process here undertaken is well within that scope. There is irrationality within the meaning of Balchin (R v Parliamentary Commissioner for Administration ex parte Balchin and Another [1998] 1 PLR 1) in the sense properly set out by Sedley J (as he then was) meaning something which does not add up. In other words there is an error of reasoning which robs the decision of logic. (See page 11).
38. Mr Purchase submitted that material considerations must be taken into account and that the mistake made here was in respect of a relevant factor. What happened here was the equivalent of not taking something properly into account which should have been taken into account he submits.
39. Mr Purchase submitted, rightly, that if a judgment is required it is not for the court to substitute its own view nor is it for the court to make its own inquiry. The court must, however, examine the facts here to consider the merits of the process itself. The court must correct mistakes or errors in the process and that which has not properly been taken into account. If there is a material consideration that is incorrect then the decision may be rendered irrational and the conclusion is something which the court should interfere with.
40. He submitted further that private fees were clearly taken into account when they should not have been.
41. In order to emphasise one aspect of his submissions Mr Purchase took me to an issue which was, in fact resolved. He pointed out the fact that a food costs error had been denied by the Defendant only later to be conceded with the acceptance that that must now be corrected. He made the point of forensic emphasis that that was only conceded in the detailed grounds of opposition and said this demonstrated that where errors had been accepted they could be corrected by the local authority. This in turn demonstrated, he said, that where there is an accepted error on the court's determination this could be corrected by the Administrative Court and properly should be.

Ground 1 – Miscalculation of Staff Hours

42. Mr Purchase contended that there was a plain public law error in respect of staff hours per resident. The amended table at C/2/356 was that which he impugned. He made the point firstly that staff ratios in respect of residents were a matter of judgment and that this was not challenged. The eventual extrapolation to secure staff/resident hours was a calculation which admitted of only one answer and was a matter of pure arithmetic he said. He referred back to Balchin and things simply not adding up. This is a matter of pure logic and arithmetic said Mr Purchase. If it is wrong then it is wrong. The Defendant had previously accepted it crept into error in respect of food costs and the maths behind that needed to be corrected. There the Defendant accepted that, if necessary, there should be a declaration. The same was true in respect of staff/resident ratios and their calculations he said. The ratio is dealt with and there is then a simple calculation of hours times hourly wage to arrive at expense. This later process is a matter of judgment and the expertise which is applied there is not challenged. The earlier parts of the exercise are, however, purely arithmetic and fall to be impugned as irrational. The arithmetic argument can be set out by reference to the skeleton argument submitted which states:

"30. For the reasons set out in the two reports of Mr Main [B/2/23-78; B/3/79-91], it is submitted that the Defendant's calculations of the number of staff hours required per resident per week are simply wrong, on the basis of the Defendant's own assumptions.

31. The Defendant's assumptions comprise set ratios of the numbers of staff required to be present at a care home per resident during the 'day' and during the 'night', with a measure of overlap for staff handovers. They are as follows [C(2)/28/356]:

(1) Standard nursing – nurses

1 member of staff is needed per 20 residents during the day (0800 – 2240)

1 member of staff is needed per 20 residents during the night (2200 – 0840)

(2) Standard nursing – care assistants

1 member of staff is needed per 6 residents during the day (0800 – 2212)

1 member of staff is needed per 12 residents during the night (2200 – 0824)

(3) Standard plus nursing – nurses

1 member of staff is needed per 18 residents during the day (0800 – 2236)

1 member of staff is needed per 18 residents during the night (2200 – 0836)

(4) Standard plus nursing – care assistants

1 member of staff is needed per 5 residents during the day (0800 – 2210)

1 member of staff is needed per 10 residents during the night (2200 – 0820)

(5) Standard residential – care assistants

1 member of staff is needed per 8 residents during the day (0800 – 2216)

1 member of staff is needed per 12 residents during the night (2200 – 0810)

(6) Standard plus residential – care assistants

1 member of staff is needed per 5 residents during the day (0800 – 2210)

1 member of staff is needed per 10 residents during the day (2200 – 0820)

32. On the basis of these assumptions, the Defendant then purported to calculate the number of staff hours required per resident per week. It then multiplied that figure by a set hourly rate of pay, so as to produce the staff cost per resident per week for each of the above categories [C(2)/28/356].

33. This ought to have been a straightforward arithmetical exercise. Take, for example, the assumptions applied to 'Standard plus nursing – care assistants'. The calculation runs as follows.

The Defendant's staffing assumptions are:

1 member of staff is needed per 5 residents during the day (0800 – 2210)

1 member of staff is needed per 10 residents during the night (2200 – 0820)

This calculation assumes a care home with a capacity of 50 beds (as the Defendant did when setting the Fees [C(2)21/230])^[1].

The day period

This covers 14 hours and 10 minutes, i.e. 14.17 hours.

During that period, 1 care assistant is required per 5 residents, so 10 care assistants will be required for 50 residents.

This means that the care assistant hours required for 50 residents during the day period is 10 x 14.17 =

141.7 hours.

The night period

This covers 10 hours and 20 minutes, i.e. 10.33 hours.

During that period, 1 care assistant is required per 10 residents, so 5 care assistants will be required for 50 residents.

This means that the care assistant hours required for 50 residents during the night period is 5 x 10.33 =

51.65 hours.

Totals

Accordingly, over a single day, the total care assistant hours required for 50 residents is 141.7 + 51.65 =

193.4 hours.

Over a week, the total hours required for 50 residents is 193.4 x 7 =

1353.8 hours.

So the number of care assistant hours per resident per week is 1353.8/50 =

27.1 hours.

34. This figure is confirmed in appendix 2 of Mr Main's first report [B/2/42] and – like Mr Main's other figures – it is not challenged by the Defendant. It is irrefutable, based on pure arithmetical logic. Accordingly, although there may be different ways of performing the calculation, the result will always be the same. If a different methodology produces a different result, the methodology must be wrong.

35. For example, the same answer is reached if one takes the more direct approach of simply working out the number of care assistant hours required per single resident. The mathematics runs as follows:

During the day period of 14.17 hours, the care assistant hours required per resident are 14.17 x 1/5 = 2.834 hours.

During the night period of 10.33 hours, the care assistant hours required per resident are 10.33 x 1/10 = 1.033 hours.

Accordingly, over a single day, the total care assistant hours required for a single resident are 3.867 hours.

Over a week, the hours required per resident are 3.867 x 7 = 27.1 hours.

This is the application of the formula set out in paragraph 2.6 of Mr Main's supplementary report [B/3/83].

36. However, the Defendant has calculated that only 24.1 hours of care assistant time is required per resident per week in a standard plus nursing home. That is a significant difference of 3 hours per resident per week, at a cost of £24.33 per resident per week.

Extrapolated into a 50-bed care home over a year, this is a massive annual shortfall of £63,258.

37. As noted above, the Defendant has rightly not challenged the accuracy or propriety of the Claimant's calculations or results. It follows that the Defendant's methods must be logically flawed. It is submitted that it is quite wrong to present this as a matter of 'opinion' on which different people could reach different conclusions. Using the Defendant's own set assumptions about staff hours and staff ratios, there can only be one correct answer to the question as to how many staff hours are needed per resident. (There may be scope for judgment or discretion in setting the assumptions in the first place, but the Claimant does not challenge the assumptions; there is no scope for judgment or discretion in extrapolating those assumptions to produce weekly staff hours per resident.)

38. In any event, it is submitted that the Defendant's approach is clearly flawed on its face. It is submitted that it is both obscure and overcomplicated. Further, the Defendant's explanation for its conclusions has changed over time.

39. At first, the Defendant set out its calculations in Appendix 2 to the Report of 5 February 2014 [B/6/267-273]. It is respectfully submitted that these are baffling. Taking the 'Standard plus nursing – care assistants' example [B/6/271], the Defendant purports to calculate the 'number of Bed Hours covered per day' by a single member of staff, which results in a figure of 170. This is plainly nonsense: quite apart from the fact that 'Bed Hours' is a completely obscure concept, a single member of staff could not possibly do 170 hours in a single day. The Defendant then purports to calculate the 'Number of Beds Covered per staff Hour', but this is illogical because the Defendant does not pay fees per member of staff; it pays fees per resident. In addition, it is unreal to think of members of staff actually tending to a given number of 'beds' every hour: caring is not so rigid or formulaic – the staff ratios are there to ensure cover as and when it is needed, not to be apportioned into hourly rations, and staff certainly do not spend all of their time at individual 'beds'.

40. In any event, the Defendant now seeks to explain the positon by putting forward a complex 'formula' which it claims was used to calculate staff hours: see paragraphs 13-15 of the Detailed Grounds [A/7/45-46]. The formula is as follows:

F

_______________________________

(AxD)/(A+B) + (B-E)/(A+B)

where: A = daytime hours 0800-2200 plus handover time, B = night hours plus handover, D = beds covered per staff member in daytime, E = beds covered per staff member at night and F = total hours paid per week (7 x 24 + handover time)."

Mr Purchase developed these points by underscoring that the 27.1 hours as against the 24.1 hours produced as being required for each resident as shown at B/356 simply cannot stand together. There cannot be two correct answers to the same mathematical problem he says. The Defendant's approach has been one of illogicality and is necessarily wrong. The difference is, in fact, a large one and amounts to 12.5% and is not any minor immaterial difference. The cost as he extrapolates it at paragraph 36 of his skeleton argument is a large one when looked at overall for say a 50 bed care home. He submits the Defendant's formula must be wrong because there is only one logical deduction here. That which the Defendant eventually deduced is just plain wrong and should be quashed he says.

43. Mr Purchase secondly submitted that the formula applied by the Defendant was simply wrong. The author of the formula can no longer help us and for reasons given at paragraph 46 of his grounds he said that the formula was plainly flawed and should never be used. The approach undertaken focused on residents per member of staff rather than staff per resident he said. The weighted average staff to bed ratio introduced an over-complication and was liable to lead to error. Trying to justify it on the basis of an average number of hours of care devoted to a particular bed in the week simply was not right he said. There was no such person present all day every day all week. This was just a completely unreal approach to the world of work.
44. The Defendant's initial approach set up an irrational staging post of bed hours that simply made no sense. The Defendant had kept saying it was right about other calculations for a very long time. Here there were real problems about the mathematical model and its maker is not available to help with those. The Defendant's witnesses did not understand Mr Thomas's approach and could not be blamed for that but the approach was convoluted and opaque he submitted.
45. Even if a weighted average approach was a correct approach the Defendant had got this wrong and there was no question of this being a dispute between experts. There was a single expert available to now provide evidence and the formula which he could produce provided a simple result which allowed the same conclusion to be derived. The Defendant's formula, said Mr Purchase, was simply wrong.
46. Mr Purchase further argued that the Defendant's formula was wrong because a weighted average ratio had split the ratios and produced a simple average ignoring the fact that a ratio was being fed into the equation. He produced the following homely schoolroom example and demonstrated he said the correctness of his argument by looking at boxes of apples and pears:

Box 1 = 2 apples and 10 pears ratio 5:1;

Box 2 = 1 apple and 10 pears ratio 1:10;

The Defendant's method he said adopted 5+10÷2 and then turned this into a ratio of 1:7.5. This is plainly not so, the ratio is 3:20 when comparing apples and pears in the boxes. Feeding in a whole number rather than a ratio completely distorts the equation and there is no room for a reasonable difference of opinion about this. The decision that has to be reached is what is a correct formula if a formula is needed. Here there is only one available correct answer. The conclusion cannot be avoided by saying the mathematics is complicated and declining to decide it because here the Defendant had chosen to adopt a complicated and convoluted approach and if that choice is made it must achieve the correct result travelling the chosen route. Even if the maths is not easy it is not something that requires specialist experience or expertise.

Ground 2: Illegitimate Account Taken of Private Income Streams

47. By taking into account higher fees paid by way of third-party top ups, by privately-paying residents and/or in respect of residents with enhanced needs and on Continuing Health Care, the Defendant unlawfully transferred some of the cost of providing care to its residents onto other residents in care homes. Further or alternatively, this 'cross-subsidisation' is contrary to Governmental guidance and/or Wednesbury unreasonable.
48. Mr Purchase submitted that the approach taken by the Defendant was simply impermissible. The Circular LAC (2004)20 states the impermissibility of taking into account other sources of income at 2.5.4 and says so for a very good reason. The balance between private and publicly funded clients can vary greatly over time and capital depreciation for residents will cause them later to become eligible for local authority assistance. Some homes can also have a very low number of residents paying privately and some none at all. Making assumptions about the number of private payers will result in some homes not getting this subsidy at all in practice if they have few or no private residents. There is no reason to take the cross-subsidy into account and privately paying individuals should not subsidise those for whom the local authority must pay. Mr Purchase says the Circular is quite clear on this point when it says these additional income streams should not be taken into account when calculating the "usual cost" figure. He submits that HHJ Belcher found this to be the case on similar facts and declared it to be inappropriate. South Tyneside guides the way to the appropriate approach and Mr Purchase invites me to adopt a similar course.
49. Mr Purchase submits further that some private payers may well pay more for extras and it would be irrational to take that into account in assessing the usual cost of standard care. Healthcare payments from the NHS are in respect of nursing which costs more than standard care and this should not be taken into account he says. There was a specific prohibition in paragraph 3.3 of the Circular and it refers to third party top-ups. There is further an incorrect assumption that those paying privately will always pay more. This is inappropriate and the Defendant has improperly taken into account matters which it should not have considered and its determination to do so should be adjudged and declared to be unlawful.
50. Mr Bourne QC submitted that the Defendant had been trying to do the right thing throughout and to do its duty properly. He said that two specific errors in computing the cost of care had been corrected by the Defendant showing its willingness to be flexible. He submitted that there in the past had been two streams of authority and these were analysed in Northumberland so as to demonstrate that it must be shown that the local authority failed to have regard to the costs of care which it may do in different ways. The local authority will successfully defeat a challenge if it shows that it has had regard to the costs of care and the manner and intensity of the scrutiny devoted to this do not give grounds for judicial review. He relied heavily upon the judgment of Beatson J (as he then was) in R (Bevan and Clarke) v Neath Port Talbot County Borough Council [2012] LGR 728. He submitted that the detailed determinations in the cases considered by the Court of Appeal in Northumberland gave rise to a very big red warning sign being posted by the Court of Appeal as to the future approach in these cases. The cases were determinations by judges on their own specific facts but the Court of Appeal in Northumberland was emphasising the need for judges at first instance to steer well clear from an approach that treated judicial review as an appeal on the merits rather than public law scrutiny of the decision making process. Mr Bourne QC emphasised paragraphs 16, 22, 23, 33 and 35 which I set out in relation to the matter (some once more):

"17. While the court's conclusions as to what would constitute a sufficient inquiry for the purpose of having "due regard" to the relevant considerations in those cases, were entirely appropriate in those statutory contexts. It is not appropriate to "read across" and to seek to reply to the circumstances of this case. Thus, for example, the proposition that there should be a "structured attempt to focus upon the details of equality issues", see paragraph 61 of Bracking v Secretary of State for Work and Pensions [2013] EWCA Civ 1345 is readily understandable if the decision taker is having to demonstrate compliance with the statutory duty to have due regard to various factors as part of the public sector equality duty imposed by section 149 of the Equality Act 2010. It does not follow that it is necessary for a local authority to follow what Ms Mountfield described as a "structural approach" when it is following the guidance in the Circular to have "due regard to the actual costs of care" for the purpose of setting and reviewing its "usual costs".

21. There are two answers to that submission: first, it does not accord with the judge's factual conclusions in paragraphs 39 to 44 of the judgment as to what the respondent actually did against which there was no challenge in the grounds of appeal. Secondly, in any event, the difference between the two questions is a matter of semantics rather than substance. Looking at these two answers in turn, I will not repeat the details of the judge's factual findings which can be found in paragraphs 39 to 44 of his judgment. In summary, the judge found that the respondent had:

(i) considered to what extent its existing rates of payment were leading to overcapacity in the market in its area;

(ii) compared its own rates with those being paid by other local authorities in the region and considered whether there was anything to explain why the cost of providing care in Northumberland should be materially higher than elsewhere in the region;

(iii) taken account of the position of those providers with whom it was able to reach agreement and the evidence that they had provided as to how they had determined that the proposed rates would enable them to meet the actual costs of care;

(iv) sought information from the appellant and when management accounts were provided by one of the members of CNEN, Mr Macado(?), who had sought to explain why the provision of care in Northumberland costs more than elsewhere, carefully considered those accounts;

(v) explained why it did not think it appropriate to accede to the appellant's request to use the PWC model before calculating its "usual costs".

22. On the basis of those factual findings as to the steps that were taken by the respondent to acquaint itself with the relevant information, the judge's conclusion that the respondent did have "due regard" to the actual costs of care as required by the Circular was plainly correct. In reaching that conclusion, the judge followed the approach adopted by Singh J in R (on the application of South West Care Homes Ltd) v Devon County Council [2012] EWHC 1867 (Admin), see paragraph 37 of the judgment below.

32.. I confess that I found the appellant's answer to this question less than clear unless it was in substance a submission that the local authority must produce some form of arithmetical calculation setting out the figures attributed to the individual cost elements of providing care, such as: occupancy, staff, operating costs, management and administration, capital values per bed and financing costs, to take the list of cost elements in the PWC model as an example. If that was the appellant's submission, then I do not accept it. Carrying out such an arithmetical calculation is one way of having "due regard for the actual costs of providing care" but it is not the only legally permissible way.

34. Each of these cases turn very much upon its own particular facts, thus in Sefton, the local authority had imposed a freeze on fees without any prior consultation with the care home providers. In EMCARE, the claimant had sent a report prepared by Laing & Buisson (consultants with expertise in ascertaining the cost of care) to the local authority but the local authority had made no attempt to respond to the detailed points that had been made in the report. In Newcastle the local authority had attempted to use the PWC model as a means to ascertain the actual cost of care but had fed inaccurate figures into the model. In Redcar the judge concluded that the local authority had simply "bench marked", ie looked at the fees paid by neighbouring authorities and said that while such information was no doubt useful, it had to be combined with some information which specifically related to the local authority's own area. In South Tyneside the judge distinguished the present case because the local authority in that case had not relied on its own judgment and experience but had instead undertaken what the judge described as "an arithmetical exercise", see paragraph 61 of his judgment, in which the authority had made a number of significant errors, see paragraph 75 of the judgment in that case."

Mr Bourne QC emphasised that the manner and intensity of the required inquiry is something for the decision maker. Paragraph 35 of the judgment in Northumberland provides a very important polite warning against relying upon other cases for anything that goes beyond the facts of that individual case he said. The previous close examinations of the decision making process are to be confined to their own facts and these contain no principle of law. Paragraph 75 of the South Tyneside decision although mentioned by the Court of Appeal is not approved or vindicated by the judgment. Other cases were decided on their own facts as was the South Tyneside case, paragraph 75 does not govern other situations by being required to start a process of reasoning over again without specific reference to that. Mr Bourne emphasised that Northumberland shows that the local authority has to have regard to the actual cost of care but is not required to do that in any particular way. Particular assistance on the "hands off" approach, as I shall call it, Mr Bourne QC said was given in Reid v Secretary of State for Scotland [1999] 2 AC 512 at 541F-542A. This, said Mr Bourne QC, underscores heavily that it is not for the court to take its own preferred view of the evidence but rather to examine alleged error on proper public law principles which are distinct from any ordinary appeal. When examining alleged error context will be everything he said. It may well be there are different ways of describing the same thing but R v Parliamentary Commissioner for Administration, ex parte Balchin and Another [1998] 1 PLR 1 and R (Alconbury Development Limited and Others) v Secretary of State for the Environment, Transport and Regions [2003] 2 AC 295 are instructive as to the proper approach to judicial review requiring a very different assessment from that which is made in an ordinary appeal. Alconbury he said needs to be approached with caution being a determination in a planning case that judicial review was an adequate remedy. Judicial review is flexible depending upon the subject matter he said, the current case is unlike human rights type cases which have given rise to a more interventionist approach. This case is a pure administrative decision making case and the "usual cost" figure is not something that is set in the Administrative Court but determined by the local authority decision makers. He cautions the court not to overstep the boundaries of judicial review and rush into a merits assessment of the case which is outwith the scope of judicial review in this area.

51. Mr Bourne QC explained how the method of assessment had been adopted according to the Defendant's witness statements and how the ultimate decision appeared to have been reached based on the mathematical model. The approach of the local authority to private income streams had been explained by Ms Mason and it was pointed out that the model adopted assumed an average quantity of private revenue. This was a swings and roundabouts approach and the point was appreciated by the local authority that sometimes there will be significant private income and sometimes there will not. The local authority here had tried for a fair average. Top-ups tried to give more choice to residents and the extra payment did not impact on cost. The evidence here it was said was to try to secure a weighted average to be fair to everyone. Wherever possible the evidence showed that the benefit of the doubt or anything difficult was given to care homes and a particular example was chosen demonstrating this.

Staffing Ratio

52. Mr Bourne QC submitted the case was not just about sums, he suggested in this case there was proper regard for the cost of care and that the Claimant's approach was misconceived. The average derived would divide into the equation and that sum could properly be computed he said. There was a choice as to which sum to do and "have regard to the cost of care" was to have regard to this and the court should not step in and question the manner in which the arithmetic had been performed. Even if the court chose to go there and delve into the arithmetic process he maintained the Claimant's evidence showed the equal weighting point to be wrong and did not mean what the Claimant's expert evidence said it did. Here the weighted average was delivering a weighted average for a number of hours per bed and was quite close, in fact, to the Claimant's own calculations. There was here no clear or reliable verdict on where the Defendant had gone wrong and the court should not intervene in a case of such nature. No clear case was advanced to say the sums were wrong here and the numbers as computed by the Defendant gave rise to the calculation of a weighted mean. The choice of one weighted mean over another was a matter of merit within the decision not something in the process of decision making which the court should be interfering with.
53. On the second ground Mr Bourne QC submitted that the cross-subsidy which occurred according to the Defendant's approach gave some discount to a responsible care provider. The market approach taken here gave an example of the distinction between having regard to the cost of care and tethering the cost of care to the "usual cost". The duty here was to consider a matter and just that, and the Defendant did not have to go further than giving consideration to things.
54. Mr Bourne QC submitted there was no irrationality in the Defendant's approach and this could be seen if a care provider might still pitch in the market without going out of business. He submitted that if public funding is ignored absurdity occurs and according to his example thousands of pounds might easily be paid to a care home provider that were unnecessary. That he said provided the answer to the point on the Circular. The Circular itself refers to best value requirements and the possibility of paying more than necessary to a care home provider was required to be taken into account. The specific reference in paragraph 3.3 of the Circular was only to top-up fees and not to other streams of income. HHJ Belcher had been wrong in South Tyneside and her determination should not affect the reassessment of this matter on the facts of the current case. He stressed that paragraph 3.3 was entirely consistent with the approach taken by the Defendant. The meaning was simple in that residents must be able to obtain care at the rate paid by local authorities. If, in fact, a resident will be charged at least £350 a local authority cannot set a rate of £325 in the hope that the resident or their relatives will pay the difference. If people get the care they need then the local authority's duty is discharged. The functional market is one in which a care home place can be secured. There is nothing wrong with the local authority's approach to this and their attempts to satisfy best value requirements. The effect otherwise, he submitted, was that the local authority would end up subsidising an oversupply of accommodation. They should not do so nor should they be required by the court to do so. The model which was developed gave the best picture that could be achieved for an average care home and the local authority had reasonably acted on that.

Submissions on Remedy if Judicial Review Granted:

Claimant

55. Mr Purchase submitted that there was no undue delay in this case such as any grant of relief should be refused. He submitted that even if there were a detriment to good administration the court is still imbued with a discretion. The general exercise of that discretion would normally lead to an inappropriate decision being quashed if judicial review was appropriate. He cited R (on the application of Edwards) v Environment Agency [2009] 1 All ER 57 at paragraph 63 showing that this is a question to refuse to quash a relevant order where judicial review was appropriate would be a very narrow one. In Edwards it was stated at paragraph 63:

"It is well settled that 'the grant or refusal of the remedy sought by way of judicial review is, in the ultimate analysis, discretionary' (Lord Roskill in Inland Revenue Commissioners v National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617, 656.) But the discretion must be exercised judicially and in most cases in which a decision has been found to be flawed, it would not be a proper exercise of the discretion to refuse to quash it. So in Berkeley v Secretary of State for the Environment [2001] 2 AC 603 it was conceded, and the House decided, that the Court of Appeal had been wrong to refuse to quash a planning permission granted without the impact assessment required by the EIA directive on the ground only that the outcome was bound to have been the same. The relevant domestic legislation provided that in such a case the grant of permission was to be treated as not within the powers of the Town and Country Planning Act 1990. Lord Bingham of Cornhill said (at p.608) that even in a domestic context, the discretion of the court to do other than quash the relevant order 'where such excessive exercise of power is shown' is very narrow. The Treaty obligation to give effect to European law reinforces this conclusion. I made similar observations at p. 616. But I agree with the observation of Carnwath LJ in Bown v Secretary of State for Transport, Local Government and the Regions [2004] Env LR 26, 526, that the speeches in Berkeley need to be read in context. Both the nature of the flaw in the decision and the ground for exercise of the discretion have to be considered. In Berkeley, the flaw was the complete absence of an EIA and the sole ground for the exercise of the discretion was that the result was bound to have been the same."

56. Mr Purchase submitted the decision of the local authority should be quashed because substantive errors had been made and where this has occurred elsewhere they had proceeded to correct them. The impact here was significant and practical this not being a consultation case but a decision-making case with a substantial and substantive outcome.
57. As to any delay Mr Purchase submitted the claim had been brought promptly. The decision impugned was that of 5 February 2014. The Claimant was informed of the decision on 12 February 2014 but without reasons. He said there were many other important issues involved in the case, those had fallen by the wayside or been resolved but there could not be said to be undue delay. The Defendant themselves needed a further month to draft detailed grounds of residence and this had added to the timetable which did not evidence any undue delay on the part of the Claimant nor any evidence of any detriment to good administration. This was not a case where the narrow discretion remaining to refuse a remedy in the form of a quashing order was available to the court.

Defendant

58. Mr Bourne QC drew my attention to important aspects of the timing in relation to the subject matter of the case, these are:

Date Event

27/3/12 Defendant's proposals for fees made.

14/5/12 Letter threatening judicial review.

22/5/12 Undertaking to perform review by Defendant, review takes place.

11/10/12 Fresh proposals.

25/10/12 Meeting with care home providers.

30/10/12 Defendant wrote to providers with result of review.

30/10/12 Effect of model given to providers. Weighted average shown as being used. Return on capital provided for and private income built into model.

11/12/12 Claimant's response, cross-subsidy raised but not staffing ratios.

6/2/13 Decision taken – protocol letter later sent but judicial review not pursued.

59. Mr Bourne QC makes the point that the Claimants did not proceed with their original threatened judicial review and that all the elements now under challenge were present then. He says that in the following year the model was adopted using the previous approach with a modest inflationary increase being allowed. By December 2013 all the Claimant's thinking had been done and staff ratio workings were never requested until too late in the day. He submits there is significant undue delay and also detriment to good administration such that remedy should be refused save for a declaration if that is appropriate. He suggests that the points now raised could have been known in late 2013 and bearing in mind the chronology he gives the 6 February 2014 decision meant the Claimant needed to move quickly. He points to 47 days before the first protocol letter and 39 days until the claim form was issued. He says we are now close to the end of the calendar year and although the remaining discretion to refuse remedy is a narrow one it exists and I should avoid the very significant detriment to good administration which a quashing order would involve.

Discussion and Determination

60. R (Bevan and Clarke) v Neath [2012] LGR 728 contains the sage lesson that although amenable to judicial review decisions in relation to the particular statutory duty here involved are generally to be left to the decision maker and the decision maker alone is to decide on the manner and intensity of the inquiry to be undertaken into any relevant factor. The second lesson is that the weight to be given to a relevant factor is for the decision maker and not for the court in the absence of irrationality. This approach is endorsed by the Court of Appeal in R (Members of the Committee of Care North East Northumberland) v Northumberland County Council [2014] PTSR 758 where it is stressed that the Circular contains guidance and is not to be equated with a statutory duty and as would be expected in a case of guidance it does not prescribe any particular methodology which local authorities must adopt in order to have due regard to the actual costs of providing care. When considering the force of a submission that a local authority has taken either insufficient steps to equip itself with relevant information or has generated incorrect information for itself it is plainly important to remember as was stressed by the Court of Appeal that provided some inquiry into the relevant factor to which due regard has to be paid is made by the decision maker then "it is generally for the decision maker to decide on the manner and intensity of the inquiry to be undertaken into the relevant factor": see per Beatson J in R (Bevan and Clarke) v Neath [2012] LGR 728 at paragraph 56. Previous decisions in different statutory contexts will not support the need for any particular form of analysis in the current situation. Some authorities will produce an arithmetical calculation; others may look at a number of comparables. I accept, of course, from Northumberland that carrying out an arithmetical calculation is but one way of having "due regard for the actual cost of providing care" but is not the only legally permissible way. The extent to which judges in other cases have been prepared to delve in great detail into the facts is something which I approach with great caution in this case. The paradigm notion I have adopted is that of Beatson J in Bevan and Clarke as endorsed by Sullivan LJ and Aikens LJ in their specific comments in Northumberland. Borrowing further from Bevan and Clarke I remind myself that in judicial review the court will be particularly circumspect in engaging with the conclusions of the primary decision maker in relation to complex economic and technical questions. The normal setting of fee rates is a matter involving economic and financial assessment and a degree of expertise in how this sector operates. There is also a judgment to be made about the proper allocation of scarce resources: see Supperstone J in R (Care North East) v Northumberland [2013] PTSR 1130 at paragraph 58. It seems to me that this is the type of case where traditional judicial review principles in relation to administrative decisions must be honoured scrupulously. It is not the type of case where the boundaries of judicial review should be rolled back at all, particularly not by a judge at first instance. In the course of assessing the facts in this case I have tried very hard to reach a conclusion which would allow me to say that the intensity of the inquiry here being dealt with by the decision maker was a matter for them and that I should leave well alone. With regret for the consequences, but with no real hesitation as to the principle I must honour I consider that the Claimant's first ground is well made out. If the decision maker treads the path of economic modelling then it seems to me it cannot proceed with a model that is significantly flawed. I was careful to take into account the fact that one person's flawed mathematical model might be another person's best estimate. I took heavily into account the fact that the intensity and nature of the inquiry which is required of the local authority is primarily a matter for the decision maker. But if the local authority chooses to adopt a mathematical model some scrutiny of this is available on general public law principles. Those principles require, it seems to me, that wherever possible the merits of the decision remain with the decision maker. But here the merits of the decision are so fundamentally flawed by adopting the unnecessary weighting which no-one can explain as being necessary that the decision to employ this falls fairly and squarely within the scope of judicial review as being a decision which no reasonable decision taker properly directing themselves on the facts could take. In the end no matter what epithet is used to describe the decision, whether it not adding up or being beyond the bounds of logic or all reasonableness the decision does, it seems to me, fall within that narrow band of decisions which can properly be the subject of judicial review. The deployment of the weighted average makes no sense in the first place and has no reasonable application in the model. There may, perhaps, have been some explanation for this but there is none which I can now scrutinise. The presence of an inexplicable weighting within the mathematical model shows it to be a matter of fact which no reasonable decision taker could properly take into account.
61. I find ground 2 to be made out also. Adopting all the cautions I have applied to my decision on ground 1 I cannot, with the best will in the world, see that the Defendant provides any justification for departing from the plain wording of the Circular. Guidance is, of course, just that and a decision maker is free to depart from it if there is a good reason to do so and if the decision maker articulates that particular reason. What the decision maker, it seems to me, cannot do is to say "I shan't comply with the guidance because I don't agree with it." Nor can the decision maker fail to take into account the guidance because it considers its duty lies elsewhere. Whilst referring to best value principles the guidance is utterly explicit as to what can and cannot properly be taken into account. The local authority's approach here failed to take any proper account of the guidance concerned and therefore fails to take into account a highly relevant matter. On the facts of this case I am convinced, as HHJ Belcher was in similar facts, that taking these fees into account in the cost analysis does not pay due regard to actual cost and amounts to a significant error in the decision making process.
62. I do not consider that this is an exceptional case where I should refuse to grant relief under Section 31(6) of the Senior Courts Act 1981. It will be difficult and inconvenient for the local authority that the decision should be quashed but I do not identify such exceptional detriment to good administration that I ought in my discretion to refuse normal relief of a quashing order. I do not consider the delay in this case to have been undue bearing in mind the fiendish complexity of matters and the large number of other issues which were raised between the parties, some being resolved in favour of one, some in favour of the other. On the subject of relief I bore heavily in mind other similar cases where relief was granted in spite of the very serious disruption and inconvenience this will be bound to cause. I had in mind too, of course, R (on the application of Edwards) v Environment Agency [2009] 1 All ER 57 at paragraph 63.
63. For the reasons given the Defendant's original decision which is impugned must be quashed and the matter remitted to the Defendant for further consideration and redetermination of the rate to be applied.
64. I request that Counsel agree an appropriate order and submit it to the Administrative Court Office at Cardiff by 4pm 31 December 2014. The parties shall by the same time seek to agree the question of costs, in default of agreement the parties shall apply to restore the matter for hearing before me. Such application to be filed by 4pm 31 December 2014 with a hearing on the first open date thereafter.
65. Editorial corrections were filed but not forwarded to me on time. I recalled the judgment on 23 December 2014. The judgment is deemed final at 10 AM on 2 January 2015.

Note 1   The size of the home should not and does not make any difference to the number of staff hours required per resident, because the ratios apply consistently to homes of all sizes. However, for the sake of convenience, this example proceeds on the Defendant’s assumption of a care home with 50 beds.    [Back]