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Cite as: [2018] EWHC 3002 (QB)

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		Neutral Citation Number: [2018] EWHC 3002 (QB)
		Case No: HQ17X02248

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

7 November 2018

B e f o r e :

MR JUSTICE MURRAY
____________________

Between:

	(1) MANJUL VASANT (trading as MK Vasant & Associates) (2) ANGELICA KHERA (trading as The Family Dental Practice) (3) GURSHARAN KALSI (trading as Lancaster House Dental Practice)	Claimants
	- and -
	NHS COMMISSIONING BOARD	Defendant

____________________

Ms Marie Demetriou QC and Mr Simon Butler (direct public access) for the Claimants
Mr Parishil Patel QC (instructed by Hill Dickinson LLP) for the Defendant

Hearing dates: 8, 9 and 10 October 2018
____________________

HTML VERSION OF JUDGMENT APPROVED
____________________

Mr Justice Murray :

This is a claim for declaratory and, if appropriate, injunctive relief in respect of contractual arrangements between the claimants, who are registered general dental practitioners operating in Croydon, and the defendant, the NHS Commissioning Board, commonly known as "NHS England".

The parties

The claimants are:

i) Dr Manjul Vasant, who is the principal of MK Vasant and Associates Dental Centre and who has worked in general dental practice since 1973 and at Croydon University Hospital since 1985;

ii) Dr Angelica Khera, who is the principal of The Family Dental Practice, joined the practice of Dr John Darby in 2002, became a co-principal of Dr Darby's practice on 1 April 2008 and the sole principal upon his retirement; and

iii) Dr Gursharan Kalsi, who is the principal of Lancaster House Dental Practice and who qualified as a dentist in 1990.

The defendant is NHS England. In relation to the contractual arrangements at issue in this case, it is the successor body to the Croydon Primary Care Trust ("Croydon PCT").

The principal issue

It is common ground that each claimant provides general dental services ("GDS") to NHS England under a General Dental Services Contract ("GDS Contract"), which in each case was originally entered into with Croydon PCT.

The GDS Contract for each claimant is on identical terms, entered into by Croydon PCT under a power conferred by the National Health Service Act 1977 and subject to regulations issued under that Act, in particular, the National Health Service (General Dental Services Contracts) Regulations 2005 SI 2005/3361.

For purposes of the trial, I had before me the GDS Contract entered into between Dr Vasant and Croydon PCT on 1 April 2006. Dr Kalsi's GDS Contract and, I assume, Dr Darby's GDS Contract were also entered into on 1 April 2006. When Dr Khera entered into partnership with Dr Darby on 1 April 2008, becoming at the same time the Managing Partner, Dr Darby's GDS Contract was assigned to her with the consent of the Croydon PCT.

The issue in the case is what contractual arrangements apply to intermediate minor oral surgery ("IMOS") services, such as tooth extraction, provided by the claimants to the defendant.

The answer to this question determines whether, as NHS England alleges, it has the right to determine its contract with each claimant on 28 days' notice or, as the claimants allege, the claimants have the right to provide the services indefinitely, in the absence of termination for cause. Broadly and informally speaking, if I find that IMOS services are provided under the GDS Contract, the claimants win. If I find that not to be the case, NHS England wins.

The claimants say that their case is clearly established on the face of the documents, construed in accordance with the normal principles of contractual construction. If, however, that is not correct, the claimants say that NHS England is, in any event, estopped from terminating each claimant's contract to provide IMOS services.

NHS England says that the contractual variation in 2009 purporting to bring IMOS services within the scope of the GDS Contract was ineffective and that the claimants' case on estoppel is not made out on the evidence.

Factual background

On or about 5 March 2007 Dr Vasant and Dr Siddharth Persaud, who was then and remains the principal of Purley Whites Dental Care, each entered into a contract with the Croydon PCT for the provision of minor oral surgery ("MOS") services for a fixed period of three months ending 4 June 2007, under a document headed "Contract for the provision of a [sic] advanced mandatory Minor Oral Surgery (MOS) Service" ("the MOS Contract"). (I note that Dr Vasant in his first written witness statement at paragraph 4 indicated that it was The Family Dental Practice (Dr Darby's practice) who had the other MOS Contract, however this is contradicted by a document entitled "Intermediate Minor Oral Surgery (IMOS) Service Briefing Paper for Board", undated, but which according to the trial bundle index is dated 11 December 2007. Dr Persaud does not mention entry into the MOS Contract in his own witness statement. Nonetheless, it seems that the Briefing Paper is likely to be accurate on this point.)

This was, in effect, a pilot scheme to shift certain MOS services from the Mayday Hospital ("the Hospital", which in 2010 changed its name to Croydon University Hospital) to a primary care setting in order to reduce waiting lists at the Hospital. Under the MOS Contract, the contractor was provided a fee of £120 per patient following completion of the treatment.

In November 2007 the Croydon PCT, following an open tender exercise, selected four practices, namely, those of Dr Vasant, Dr Darby, Dr Kalsi and Dr Persaud, to participate in a 12 month pilot scheme for the provision of IMOS services, with a view not only to reducing the waiting list for treatment at the Hospital but also to reducing cost. Providing IMOS treatments in a primary care setting was less expensive. The contract ran for a fixed period of 12 months from 1 December 2007 to 30 November 2008. Dr Vasant signed his contract on 14 April 2008, Dr Kalsi on 22 April 2008 and Dr Persaud on 14 April 2008. I assume that Dr Darby, who did not provide evidence in these proceedings, signed his contract around the same time.

In relation to this 12 month pilot scheme, there was a triage system to decide which patients referred by general practitioners for an IMOS treatment should be seen at the Hospital and which should be seen by one of the four IMOS services providers ("the Providers", including Dr Khera as successor to Dr Darby). The terms of the service were set out in a contract headed "Contract for the Provision of an Intermediate Minor Oral Surgery (IMOS) Service in a Primary Care Setting" ("the IMOS Contract").

Mr James Butcher of the Croydon PCT was the principal contact of each Provider in relation to the IMOS Contract.

NHS England contends that the provisions of the IMOS Contract, including the provisions as to termination set out in clauses 50 to 52, continue in effect to govern the provision of IMOS services by the four Providers. Under those provisions, each party is entitled to terminate the contract upon the giving of one month's notice.

The claimants contend that the provision of IMOS services by each Provider is now governed by the Provider's GDS Contract, pursuant to a GDS Contract Variation Agreement Form signed by Croydon PCT on 7 April 2009 ("the VAF"). Under Part 22 of the GDS Contract, which deals with variation and termination of the GDS Contract, termination on notice of the GDS Contract or any service provided under it is only permitted in circumstances that do not apply to this case. There is no general right of termination by notice.

Under the IMOS Contract each Provider was entitled to a fee of £150 per patient upon completion of an IMOS treatment. They were also entitled to fees of £10 for periapical radiographs, £30 for orthopantomographs and £200 for triage. The triage fee was paid directly to the oral surgeon who carried out the triage. The other fees were paid directly to the practice along with a procedure fee on a monthly basis based on a log sent to the Croydon PCT.

Each of the claimants and Dr Persaud in his or her first witness statements gave evidence that following the end of the pilot period to 30 November 2008, the Croydon PCT conducted a further tender exercise to deliver IMOS services, and that each was interviewed during that exercise and appointed pursuant to that exercise, alongside the other Providers. In her evidence, given on behalf of NHS England, Ms Mervlyn Clarke, the Senior Commissioning Manager for Dental, Optometry & Pharmacy in NHS England, London Region, noted that there was no record of such an exercise having been conducted at that time.

Having seen Ms Clarke's evidence in her first witness statement dated 10 September 2018, each of the claimants and Dr Persaud acknowledged that they were probably mistaken. Ms Clarke herself suggested that perhaps they were, in fact, thinking of the 2007 exercise, when giving this evidence. This common mistake of the Providers, and the general degree of overlap between their first witness statements, demonstrates, not surprisingly, that the evidence of each of these witnesses is not independent. In this case, however, I do not read too much into that. The case for each claimant and the case for NHS England in respect of each claimant is, in substance, the same. Most, if not all, of the essential facts in this case are not in dispute. This case turns on the proper construction of the contractual arrangements between each claimant and NHS England in respect of IMOS services.

Given the full alignment of the factual basis for each claimant's case, I was given only the key contractual documents and letters from NHS England that concern Dr Vasant. In relation to those, I have assumed, unless otherwise indicated below, that there is no material difference in the corresponding document or letter relating to each other claimant or, where relevant, Dr Persaud.

The VAF

On 7 April 2009, Mr Butcher sent the following e-mail to the Providers:

"Dear all,

You will shortly be receiving two copies of a GDS contract variation form from the PCT. These make a clause change to the contract, in order for you to provide advanced mandatory services under GDS arrangements. This seems a far more sensible approach to me that [sic] re-signing the present IMOS contract. All governance arrangements now fall under the GDS contractual arrangements, rather than a contract which was originally intended for the PCT's dermatology service! Can you please sign both copies of the form, and return one to me?

Whilst I'm writing, I'm pleased to announce that the fee for a procedure as of 1/04/09 will be £157.50. All other tariffs remain the same as last year."

The e-mail concluded with an invitation to ring Mr Butcher if the recipient would like to discuss the GDS contract variation form in further detail.

About this time, each Provider received a copy of the VAF signed on behalf of Croydon PCT by Ms Alice Benton, Head of Primary Care Commissioning & Performance. Dr Vasant signed his copy of the VAF on 14 April 2009, and the other Providers did the same at or about this time.

The VAF is a one page form. The key provisions are as follows:

i) Under the heading "Nature of Contract Variation", the following two items are ticked: "Clause Change" and "Additional Services".

ii) Under the heading "Details of Variation (including reference to contractual clause / regulations where appropriate)", the following information is set out:

"Part 10 'Further Services'

Clause 168 changed from 'Reserved' to 'Providing an Advanced Mandatory Service in the form of an Intermediate Minor Oral Surgery (IMOS) service'"

iii) There follows a signature box for the practice, and then a signature box for the Croydon PCT.

iv) Finally there is a box headed "Agreed Action:", marked "N/A" and a box headed "Variation to be recorded in Contract File and notified to:", completed as follows:

"1. PCT Programme Management Office (PMO)

2. PCT Choice Support Team (CST)"

On 10 July 2013 Mr Butcher sent an e-mail to each of the Providers in which, among other things, he notified them of an increase in fees for IMOS treatments, the relevant passage reading as follows:

"I've also been thinking that it's time for an uplift for you guys (seeing that I'm now in charge!). It's been untouched since 2008/09. The following fees structure will apply as of 1st August 2013:

Triage session: £300

IMOS procedure: £170

I'll leave the 'first appointment' at £50, so an assessment plus procedure is clearly now £220."

By letter dated 17 October 2017 NHS England notified dental practitioners in Croydon that referral for IMOS services no longer would be subject to triage and instead referrals could be sent directly to one of the four Providers.

Purported termination of IMOS Contract by NHS England

On 1 April 2013 NHS England became the statutory successor to Croydon PCT, responsible for the commissioning of healthcare, including dental, services for Croydon. About this time, Ms Clarke joined NHS England as a Commissioning Manager for dental services, and in October 2013 she became a Senior Commissioning Manager. In that role, she is responsible for commissioning dental services across London and managing dental contracts in South London. She was asked by her employer to become involved in the procurement of IMOS services across London in 2016. As a result, she became directly involved in the circumstances leading to this dispute.

In 2016 NHS England decided it was appropriate to initiate a new procurement process for IMOS services across London. The objectives were to ensure value for money across primary care and to impose a consistent contractual framework for IMOS services, relative to what she described as the "fractured legal contractual frameworks" then governing the provision of IMOS services. She became the Project Manager responsible for managing the procurement of IMOS services under the new scheme.

When Ms Clarke became involved in this project, she realised that there were certain obstacles to starting procurement, including the existing contractual arrangements with IMOS providers in Wandsworth and Tower Hamlets as well as with the Providers in Croydon. Due to these perceived difficulties, these three areas were initially excluded from the procurement exercise, leading to queries from interested potential bidders who attended "market engagement events" held by NHS England in connection with the project.

In relation to Croydon, Mr Butcher informed Ms Clarke that with each of the Providers there had been a variation to the GDS Contracts to provide for IMOS services within clause 168 of the GDS Contract. She was also informed (although she does not recall by whom) that there was a separate short form agreement with each Provider that contained all the key terms relating to how the IMOS services should be carried out by the Provider.

After internal discussions with colleagues, NHS England reached the conclusion that it was "highly unusual" for IMOS services to fall within a GDS Contract and, according to her first witness statement:

"it was inequitable for that to happen because it would mean that those dentists would have contracts for life, with no ability for us to re-procure and seek best value from the market in those areas. That approach was not consistent with how these services should be procured."

Accordingly, on 16 September 2016 Ms Clarke sent a letter to each Provider, the essential part of the letter to Dr Vasant reading as follows:

"As you are aware, NHS England (London Region) will shortly embark on a full procurement process in respect of Tier 2 Oral Surgery services. As part of the preparation for the procurement, a programme of decommissioning of contracts with legacy arrangements from previous commissioning bodies has been undertaken.

The principle underpinning the procurement is to commission a services that delivers equality to both providers and patients across London, using the PDS agreement.

On this basis, I am writing to inform you that on the 31st August 2017, NHS England (London Region) will cease to commission the current IMOS service currently provided under the auspices of your GDS contract. The vehicle for enacting this change will be by means of a contract variation documenting the insertion of an end date in respect of the 'additional services' supplied under your GDS contract. It is important to note that this changes does not in any way prejudice your ongoing delivery of mandatory general dental services."

The next paragraph of the letter provided some information about the new procurement process and invited the recipient to email the Procurement Team if interested in bidding, and the letter concluded with an expression of gratitude for the services the recipient had provided to London patients.

The "PDS agreement" referred to in the second paragraph quoted above is a Personal Dental Services Contract ("PDS Contract"), which is a form of contract used by NHS England for certain services other than GDS, for example, orthodontics or IMOS services, in preference to older legacy contractual arrangements, such as the IMOS Contract. Unlike the GDS Contract, a PDS Contract is not granted "in perpetuity", but has a fixed term.

In response to Ms Clarke's letter of 16 September 2016, the four Providers signed a joint letter dated 28 September 2016, which I set out in full:

"Thank you kindly for your letter, of 16th September 2016, and request for us to vary the 'additional services' / IMOS element of our GDS contract.

We are writing to let you know that we will not be signing the contract variation. It would not make sense from a business perspective for us to do so.

Our respective GDS contracts cover both general mandatory dental services and minor oral surgery. When we signed the contract, it was signed in good faith and made an agreement to work to the terms and conditions set out in that contract. The contract is a binding contract without a fixed term. Any variation to the contract needs to be agreed in writing by both parties as stated in the variation provisions of the GDS contract.

As we were led to believe that this contract was without term for both the GDS and IMOS services, we have established policies, procedures, infrastructure and recruited staff members to fulfil the contract requirements.

We have invested into the business to ensure the best quality care for our patients and to ensure we can deliver both GDS and IMOS services to the high standard expected. As it was always understood that the contract was to deliver ongoing GDS and IMOS services, we are therefore, in line with our contract and GDS Regulations, unable to agree to any variation to the terms and conditions under the contract.

We have been providing IMOS services successfully for over 8 years which has been to both the benefit of patients and the NHS. We would be happy to meet you to discuss scoping of future dental services. Thank you kindly for your time in this matter. We look forward to hearing from you."

One reason I have quoted the contents of this letter in full is that it is a fair statement of the position taken by the claimants on both the contractual and reliance-based estoppel issues from the beginning of this dispute and maintained consistently at trial.

NHS England's response to this letter was set out in Ms Clarke's letter dated 3 November 2016 sent to each of the Providers. This letter was, in fact, dated "3 November October 2016", although Ms Clarke concluded in her witness statement that this must have been a reference to 3 November 2016, as there would not have been sufficient time by 3 October 2016 to locate the relevant contracts and undertake the further investigations that she undertook after she received the Providers' letter of 28 September 2016. I accept that.

The relevant part of Ms Clarke's letter of 3 November 2016 to Dr Vasant reads as follows:

"As previously advised, NHS England (London Region) is in the process of procuring a restructured IMOS service for the London area. The principle underpinning the procurement is to commission IMOS services which deliver equality to both providers and patients across London. Therefore we cannot continue to commission IMOS services from you on the current basis, as doing so would be inequitable and be incongruous to our commissioning intentions.

As you will be aware, the contractual mechanism by which you presently provide IMOS services is captured by a combination of your General Dental Services ('GDS') contract and a separate agreement, 'Contract for the provision of an advanced mandatory Minor Oral Surgery (MOS) Service (dated 7th April 2009 between NHS England (London Region) (formerly Croydon PCT) and Dr M K Vasant), which sets out the terms on which the IMOS service will be provided ('MOS Contract').

In order to enable you to provide IMOS services, your GDS contract has previously been varied at clause 168 to remove the word 'Reserved' and replace it with a provision stating, 'Providing an Advanced Mandatory Service in the form of an Intermediate Minor Oral Surgery (IMOS) service'. No other variations in relation to the IMOS service have been made to your GDS contract, as the terms on which IMOS services are provided is contained in the MOS Contract.

Whilst we acknowledge that we cannot vary clause 168 of your GDS contract without your agreement, we can vary the terms on which the IMOS service is delivered. We have therefore decided to terminate the MOS Contract, and in accordance with clauses 47, 48 and 49 of the MOS Contract we attach a termination notice.

Should you wish to continue to provide the IMOS service in accordance with clause 168 of your GDS contract, the new terms on which the service is to be provided are set out in annex 1 to this letter. We would be grateful if you could sign and return a copy of the terms set out in annex 1 to evidence your agreement to the revised terms and your intention to continue to provide the IMOS services in accordance with them.

Please note, should you continue to provide IMOS services following termination of the MOS Contract you will be doing so in accordance with the terms set out in Annex 1 to this letter.

If you no longer wish to provide the IMOS services, we suggest that your GDS contract is varied to remove clause 168 and to reinstate the original word 'reserved'." (italics and bold type as in the original)

The letter concluded with an invitation to participate in bidding to provide IMOS services in the new procurement exercise.

The term 'MOS Contract' in the letter appears to be defined by reference to the same document as I have defined as "MOS Contract" at [11] above. The document has the same title (more or less) and the reference to paragraphs 47, 48 and 49 corresponds to the termination provisions of the MOS Contract, rather than the termination provisions of the IMOS Contract. It is not clear why Ms Clarke considered then that the MOS Contract governed the IMOS services rather than the IMOS Contract (to which she also refers in the part of the letter set out above), but it is clear that NHS England's case now is that the IMOS Contract governs the IMOS services, including paragraphs 50, 51 and 52, which govern termination. This makes sense as it is later in time than the MOS Contract, and also two of the Providers, Dr Kalsi and Dr Khera, did not enter into a MOS Contract with Croydon PCT.

I note that in her first witness statement at paragraph 50 Ms Clarke refers to the IMOS Contract and the VAF as the key documents, consistently with NHS England's current case, and she notes that the MOS Contracts (referred to as "AMOS Contracts" in her witness statement) were "not a consideration at the time". While that seems right, her letter of 3 November 2016, for the reasons I have given, is clearly relying on the MOS Contract as giving rise to a right of termination rather than the IMOS Contract.

Another anomaly picked up by the Providers in their first witness statements is the fact that neither the MOS Contract nor the IMOS Contract are dated 7 April 2009, which Ms Clarke gives as the date of the MOS Contract in the letter quoted above. The only document bearing that date is the VAF, it having been signed on behalf of the Croydon PCT on that date.

Perhaps not surprisingly, none of the Providers took up the invitation by Ms Clarke to agree new terms for the IMOS services in accordance with Annex 1 to the letter dated 3 November 2016.

At or about this time Ms Clarke also sent a termination notice dated 3 November 2016 to each Provider:

i) referring in the subject heading to the MOS Contract "dated 7th April 2009"; and

ii) purporting to terminate the MOS Contract in reliance on clauses 47, 48 and 49 of the MOS Contract, with 31 December 2016 as the stipulated termination date.

Ms Clarke apparently sent a further termination notice in identical terms to each Provider dated 21 December 2016, except that 29 November 2017 is substituted as the stipulated termination date. Each of the termination notices refers to the right of the recipient to invoke the NHS dispute resolution process by reference to the NHS Litigation Authority within 28 days of the notice.

In response to the termination notices, the Providers issued a letter before action dated 18 January 2017. This claim was issued on behalf of the claimants on 28 June 2017. Dr Persaud took the view that he was obliged to resolve any dispute with NHS England by making a referral to the NHS Litigation Authority, and therefore he has not joined these proceedings as a claimant.

It is common ground that apart from this dispute regarding purported termination of the IMOS services, there has never been a dispute between any of the claimants and NHS England as to the quality of the IMOS services provided by the claimants, as to fees payable in respect of those services or any other aspect of the performance of the IMOS services by the claimants.

The witnesses

I had witness evidence from each of the claimants and from Dr Persaud. I have already mentioned that it is clear that their evidence is not independent of each other, but that, in my view, does not present any particular difficulty for the claimants' case. I found their evidence to be consistent and reliable as far as it went, and I am satisfied that each was doing his or her best to give truthful evidence. I found their evidence on factual matters reliable.

Ms Clarke also gave evidence, and I found her, too, to be a truthful witness. Her direct involvement with the claimants began after the contractual arrangements in this case were put in place, so she was not able to assist with direct evidence of the circumstances that applied during the period 2007 to 2009 when the GDS Contract with each Provider, the MOS Contract with each of Dr Vasant and Dr Persaud, the IMOS Contract with each Provider and the VAF with each Provider were agreed. I found her evidence on factual matters reliable.

That brings me to the evidence of Mr Butcher. An unusual feature of this case is that Mr Butcher, although he currently works for NHS England and he worked during the period 2007 to 2009 for Croydon PCT, has given evidence for the claimants. He provided a witness statement quite late, namely, less than a week before trial. I gave permission to the claimants to rely on it on the first day of trial, along with supplemental witness statements from the claimants. I also allowed a second witness statement from Ms Clarke dealing with additional disclosure requests from the claimants arising from Mr Butcher's evidence.

Mr Butcher's current role is as London Regional Head (Dental, Optometry & Pharmacy Commissioning) at NHS England. As I have already mentioned, he was the principal interlocutor on behalf of Croydon PCT with the Providers at the time of the tendering exercise for IMOS services in September 2007.

In his witness statement and in his oral evidence, Mr Butcher gave clear evidence that it was agreed with the Providers that the IMOS services should be provided permanently under the governance of the GDS Contracts and that this was the purpose of the VAF. He also gave evidence that this purpose was known to and approved by Ms Sue Arnold, who was then the Director of Primary Care. As already noted, the VAF was signed on behalf of Croydon PCT by Ms Benton, who was then Head of Primary Care Commission Performance.

In response to Mr Butcher's witness statement, NHS England applied for permission to rely on a witness statement by Mr Christopher Tyrrell, a partner at the firm Hill Dickinson LLP, NHS England's solicitors, addressing his discussions with Mr Butcher during the course of this matter. After hearing submissions from counsel regarding the extent to which Mr Butcher's comments to Hill Dickinson LLP were subject to privilege and/or privilege had been waived, I allowed Mr Tyrrell's evidence in relation to Mr Butcher's alleged prior inconsistent statements. There is no need to summarise those in detail. Broadly, according to Mr Tyrrell at a meeting on 8 September 2017 and, more clearly, during a telephone conversation on 17 August 2018 Mr Butcher indicated that he had given no thought to the duration point at the time of the VAF and that it had not necessarily been the intention at that time that the IMOS services be provided on a permanent basis.

When these prior inconsistent statements were put to Mr Butcher, he said that he did not recall them. I accept that this may well be the case in relation to the conversation in September 2017, but I find that harder to accept in relation to the conversation in August 2018, with trial drawing closer. It may be that his witness statement represents his true and best evidence and that his comments to Mr Tyrrell reflected what he thought Mr Tyrrell wished to hear. Either way, however, I do not feel that I can place significant reliance on Mr Butcher's evidence, other than to the extent that it is consistent with the documentary evidence. I do believe, however, that he was attempting to be helpful and, in view of his dealings with the claimants during the period in question, fair to the claimants.

The GDS Contract

NHS England's case on construction of the contractual arrangements relating to IMOS services relies, in part, on differences in the contractual terms applicable to provision of GDS under the GDS Contract compared with the provision of IMOS services, particularly in relation to:

i) accounting for services provided and payment mechanics;

ii) reporting of GDS treatment provided versus invoicing per patient for IMOS treatments provided; and

iii) referral versus registration of patients.

The GDS Contract is the form of contract that was used by Croydon PCT with each Provider to document the provision of GDS. GDS are defined in the GDS Contract as "mandatory services", being services that the relevant Provider must provide to its patients under the GDS Contract. Mandatory services under the GDS Contract are primary care dental services and are described in clauses 74 to 76 of the GDS Contract, being "all proper and necessary dental care and treatment", including "the care which a dental practitioner usually undertakes for a patient and which the patient is willing to undergo". This includes referring a patient, where necessary, for other services that go beyond basic primary care.

The term "mandatory services" is defined to exclude "additional services", which are defined in clause 1 of the GDS Contract as follows:

"'additional services' means one or more of –

(a) advanced mandatory services,

(b) dental public health services,

(c) domiciliary services,

(d) orthodontic services, and

(e) sedation services."

Although, as I have already mentioned, NHS England prefers to use a PDS Contract for other services, such as orthodontic services, the GDS Contract does contemplate the possibility of additional services being provided under its terms. The basis on which such additional services would be included under the GDS Contract are set out in clauses 101 to 167 of the GDS Contract.

The term "advanced mandatory services" is defined as follows:

"'advanced mandatory services' means any primary dental service that would fall within the services described in clauses 74 and 75, but by virtue of the high level of facilities, experience or expertise required in respect of a particular patient, the service is provided as a referral service;"

Under clauses 17 and 18 of the GDS Contract, additional services are said to include "Minor Oral Surgery", without specifying which sub-clause of the definition of "additional services" applies. It is common ground, however, that IMOS services fall within sub-clause (a) of that definition, namely advanced mandatory services.

The term "referral service" is defined as follows:

"'referral service' means one or more of advanced mandatory services, domiciliary services or sedation services provided by the Contractor to a patient who has, during a course of treatment, been referred to the Contractor by –

(a) another contractor, or

(b) another provider of primary dental services under Part 1 of the [National Health Service Act 1977],

for the provision of one or more of those services as part of that course of treatment."

In addition, the GDS Contract contemplates the possibility of "further services" being provided under its terms by inclusion of a Part 10 headed "Further Services", comprised of clauses 168 to 172, each of which in the GDS Contracts relevant to this case was simply marked "Reserved" when the GDS Contract was first entered into. The VAF amends clause 168 as set out in [24] above. NHS England says that this language is inadequate to bring the IMOS services under the terms of the GDS Contract.

Clauses 77 to 100 in Part 8 of the GDS Contract set out the basic mechanism by which the Provider accounts and is compensated for mandatory services provided to patients, namely, using "units of dental activity" ("UDAs"). Schedule 4 to the GDS Contract stipulates a number of UDAs that must be provided during the course of a year and the sum to be paid to the Provider in respect of that number of UDAs for that year.

Under a GDS Contract, the UDA value is subject to annual adjustment based on demand for services in a particular area and can vary from practice to practice. The Provider is entitled to a monthly payment of one twelfth of the annual amount specified in Schedule 4, less any charges the Provider has taken directly from patients. If at the end of the year it is less than 96% of the amount stipulated for that year, then a reconciliation is undertaken and sums are clawed back by NHS England. Anything between 96% and 100% gets carried forward into the new financial year. There is also a mid-year review, which may result in certain adjustments. Different types and levels of treatment within the scope of mandatory services have a different number of UDAs allocated to them. For example, a simple check-up is one UDA, and a normal extraction is three UDAs.

In order to demonstrate the performance of a UDA requirement, the Provider must file with a branch of the Department of Health a form with the designation "FP17", identifying the type of treatment undertaken along with the date and the patient's details. This needs to be done within two months of completion of the treatment, otherwise the relevant UDAs are lost.

Under the GDS Contract, GDS are provided by the Provider to patients who have registered with and attend at the practice. GDS are not referral services. It is up to the Provider to enrol sufficient patients to be able to perform sufficient UDAs during the course of a year to meet the annual UDA requirement. NHS England provides no guarantee in that regard.

The GDS Contract is lengthy, comprised of 24 parts, containing a total of 384 numbered clauses and six schedules. Having said that, being a standard form contract and contemplating future amendment, numerous clauses throughout the document are marked simply "Reserved". In addition to the provisions to which I have already referred, the GDS Contract includes:

i) a provision that the contractor shall carry out its obligations under the contract with reasonable care and skill (clause 40),

ii) clauses setting out contractual requirements relating to records, information, notification and rights of entry (clauses 202 to 238),

iii) clauses dealing with clinical governance and quality assurance (clauses 245 to 250),

iv) insurance (clauses 251 to 254),

v) gifts (clauses 255 to 260),

vi) compliance with legislation and guidance (clause 261),

vii) complaints (clauses 262 to 278),

viii) dispute resolution (clauses 279 to 286),

ix) variation (clauses 287 to 304) and termination (clauses 305 to 362) of the GDS Contract, and

x) various "boilerplate" terms (Part 23), including an "Entire Agreement" provision (clauses 366 and 367).

Clause 287 provides as follows:

"Subject to clause 200, no amendment or variation shall have effect unless it is in writing and signed by or on behalf of the PCT and the Contractor."

Clause 200 provides an exception in relation to the use of a sub-contractor by the Provider, which is not relevant for present purposes. Clause 287 is an example of what was described by Lord Sumption JSC in his judgment in MWB Business Exchange Ltd v Rock Advertising Ltd [2018] UKSC 24, [2018] 2 WLR 1603 (SC(E)) at [1] as a "no oral modification" clause ("NOM clause").

The termination provisions set out in clauses 305 to 362 are highly detailed, but do not include a general right for either party to terminate the Contract, in whole or in part, simply on notice.

Clause 366 provides as follows:

"Subject to clause 200 and any variations made in accordance with Part 22, this Contract constitutes the entire agreement between the parties with respect to its subject matter."

I have already explained the reference to clause 200 in relation to clause 287. Part 22 encompasses clauses 287 to 362, which are the specific clauses dealing with variation and termination, as noted at [64] above at sub-paragraph (ix).

The IMOS Contract

Key aspects of the IMOS Contract, as in effect from 1 December 2007 to 30 November 2008, include the following:

i) Under the IMOS Contract, there was no reference to or use of UDAs. Instead, under clauses 26 to 28 the Provider was paid a fixed fee of £150 for each IMOS treatment given to a patient. The Provider also had the right to recover certainly ancillary costs, as I have already described.

ii) Instead of filing FP17s, the Provider, under clauses 36 to 38 of the IMOS Contract, was required to send invoices, one for each IMOS treatment for a patient, along with supporting activity reports. This was to be done on a monthly basis. Payment was to be made to the Provider on receipt of invoices on a monthly basis for activity not exceeding the agreed service volume.

iii) IMOS services were provided only to patients who have been referred to the Provider following the triage already described.

As to the terms I have just described, these remain part of the contractual basis on which the Providers currently provide IMOS services, subject to the increase in price per IMOS treatment and the ending of the triage process, which I have already described.

The IMOS Contract is relatively short, the principal part of the document comprised of eight pages, setting out 62 numbered clauses. Details of the specifications for provision of IMOS services are set out in a short appendix to the contract, which itself has four short annexes. The IMOS Contract includes provisions relating to service quality (clauses 10 to 13), compliance with statutory and national guidance (clause 14), policies and procedures (clause 15), incident management (clause 16), monitoring and information requirements (clauses 19 to 24)

In contrast to the GDS Contract, there is no provision of the IMOS Contract that requires variations or amendments to be in writing. Clauses 50 to 52 deal with termination of the Contract. As already noted, the IMOS Contract was a fixed term contract expiring on 30 November 2008. Clause 52 provides for termination upon the giving of one month's notice.

Relevant legal principles

A useful brief summary of the principles that apply to the interpretation of a commercial contract can be taken from Lord Clarke's judgment in Rainy Sky SA v Kookmin Bank [2011] UKSC 50 at [21]:

"The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other."

Lord Clarke went on in [23] to note, however, that:

"Where the parties have used unambiguous language, the court must apply it."

This latter point was reinforced by the judgment of Lord Neuberger in Arnold v Britton [2015] UKSC 36, at [17]:

"[T]he reliance placed in some cases on commercial common sense and surrounding circumstances (eg in [Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101], paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision."

I will make reference to other relevant authority as necessary when discussing the issues in more detail.

Analysis

The claimants say that the VAF had the effect of bringing the provision of IMOS services within the GDS Contract. That certainly seems prima facie to be the case. The VAF states that clause 168 of the GDS Contract was amended to replace the word "Reserved" with the words "Providing an Advanced Mandatory Service in the form of an Intermediate Minor Oral Surgery (IMOS) service".

NHS England says that the VAF was wholly inadequate to achieve this effect, in light of clause 287 and clause 366. On behalf of NHS England, Mr Parishil Patel QC submitted that it was not sufficient simply to provide that IMOS services would be "further services" under the GDS Contract by reference in clause 168. It was also necessary to set out the essential terms applicable to IMOS services as to how and what payment was to be made to the Claimants for the provision of IMOS services, what the actual services to be provided were and who they could be provided to. This is because, by virtue of the clause 366, the GDS Contract is an "entire code" containing all the provisions applicable to services provided under the GDS Contract. This, in turn, is reinforced by clause 287, which provides that no amendment or variation shall have effect unless it is in writing.

Mr Patel submitted that on the claimants' own case, the VAF is not effective since it did not set out the essential terms referred to above. Instead, "notwithstanding the VAF" the parties continued to operate in accordance with the terms of the IMOS Contract. The process that governed the provision of IMOS services was that set out in Appendix 1 to the IMOS Contract. Each Provider continued to provide invoices and reports in accordance with the terms of the IMOS Contract, with payment against the invoices received on a monthly basis. This is in contrast to the payment and reporting mechanism of the GDS Contract, which relies on the allocation of UDAs to specific treatments and reporting of treatments performed on FP17s.

Mr Patel further submitted that other differences that had been noted during the presentation of the evidence between the operation of the GDS Contract and the IMOS Contract (for example, as to the registration of patients under the former as opposed to the triage and referral process under the latter) were relevant to show that Providers were continuing to operate under the IMOS Contract and not the GDS Contract.

Of course, the IMOS Contract was expressly time limited, but the Providers continued to provide IMOS services and to be paid by Croydon PCT during the period 1 December 2008 to April 2009, when the VAF was signed. Accordingly, by conduct the IMOS Contract was continued during that period. According to NHS England, because of the inadequacy of the VAF, in light of the effect of clauses 287 and 366, the IMOS Contract has continued by conduct to this day, amended as to price and, most recently by the ending of triage in 2017, but otherwise on the terms set out in the IMOS Contract, leaving aside the purported termination of the IMOS Contract in 2016.

Some of the evidence of the Providers was intended to elicit whether the witness considered that some aspect of the contractual arrangement relating to IMOS services, for example, dispute resolution, was governed by the GDS Contract or the IMOS Contract. This was of limited assistance. None of the Providers are lawyers. Not surprisingly, each was sufficiently aware of the nature of their case as to give evidence to the effect that he or she considered issues such as clinical governance, quality assurance, insurance, complaints and dispute resolution to be governed by the GDS Contract following the VAF. Each Provider also confirmed in his or her evidence that the operative terms of the IMOS Contract as to payment, invoicing, triage and referral continued to operate after the signing of the VAF, incorporated within the framework of the GDS Contract, so that, from his or her point of view, it was "business as usual" as far as the operation of the IMOS services were concerned.

Mr Patel relied on the following passages from Lord Sumption JSC's judgment in the MWB Business Exchange case, which are set out in his skeleton argument:

"10. In my opinion the law should and does give effect to a contractual provision requiring specified formalities to be observed for a variation.

11. The starting point is that the effect of the rule applied by the Court of Appeal in the present case is to override the parties' intentions. They cannot validly bind themselves as to the manner in which future changes in their legal relations are to be achieved, however clearly they express their intention to do so. In the Court of Appeal, Kitchin LJ observed that the most powerful consideration in favour of this view is "party autonomy": [2017] QB 604, para 34. I think that this is a fallacy. Party autonomy operates up to the point when the contract is made, but thereafter only to the extent that the contract allows. Nearly all contracts bind the parties to some course of action, and to that extent restrict their autonomy. The real offence against party autonomy is the suggestion that they cannot bind themselves as to the form of any variation, even if that is what they have agreed. …

12. …

13. …

14. … The true position is that if the collateral agreement is capable of operating as an independent agreement, and is supported by its own consideration, then most standard forms of entire agreement clause will not prevent its enforcement: see Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2007] L & TR 26, para 43 (CA) and North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715, paras 57 (Briggs J), 82—83 (Longmore LJ). But if the clause is relied upon as modifying what would otherwise be the effect of the agreement which contains it, the courts will apply it according to its terms and decline to give effect to the collateral agreement. As Longmore LJ observed in the North Eastern Properties Ltd case, at para 82:

'If the parties agree that the written contract is to be the entire contract, it is no business of the courts to tell them that they do not mean what they have said.'

…

15. If, as I conclude, there is no conceptual inconsistency between a general rule allowing contracts to be made informally and a specific rule that effect will be given to a contract requiring writing for a variation, then what of the theory that parties who agree an oral variation in spite of a No Oral Modification clause must have intended to dispense with the clause? This does not seem to me to follow. What the parties to such a clause have agreed is not that oral variations are forbidden, but that they will be invalid. The mere fact of agreeing to an oral variation is not therefore a contravention of the clause. It is simply the situation to which the clause applies. It is not difficult to record a variation in writing, except perhaps in cases where the variation is so complex that no sensible businessman would do anything else. The natural inference from the parties' failure to observe the formal requirements of a No Oral Modification clause is not that they intended to dispense with it but that they overlooked it. If, on the other hand, they had it in mind, then they were courting invalidity with their eyes open."

Mr Patel highlighted the following sentence in [14] as directly applicable to this case:

"But if the clause is relied upon as modifying what would otherwise be the effect of the agreement which contains it, the courts will apply it according to its terms and decline to give effect to the collateral agreement."