Devon and Cornwall Autistic Community Trust v The Cornwall Council

This is a claim for damages for breach of contract; alternatively restitution of benefit received. I shall set out the detail of the claim and the history of the proceedings hereafter. The case is listed for a five-day trial. It was due to commence yesterday (18^th February 2015). It did not do so because the Defendant has made an application to strike out the Claimant’s statement of case pursuant to Part 3.4 of the CPR and/or to give summary judgment against the Claimant pursuant to Part 24.2 of the CPR. This is my judgment on that application.

The Claimant provides care and residential accommodation to adults with autistic disorders (“service users”) in Cornwall and other parts of the West Country. The Defendant (and its predecessor) has a statutory duty to provide care and accommodation for disabled people within the county of Cornwall. That duty extends to those with autistic disorders. The Claimant is one of many suppliers in Cornwall used by the Defendant to fulfil its duty. The Defendant pays a fee to any supplier of such care and accommodation by reference to the needs of and care provided to each individual service user.

This claim concerns the alleged underfunding by the Defendant of services provided by the Claimant to eight named service users. The underfunding is alleged to have occurred at least from 2006 onwards. The Claimant’s case appears to be that there was underfunding prior to that date but, since proceedings were not commenced until 2012, that any earlier shortfall is statute barred. The underfunding is said to have occurred in this way. Each service user was the subject of a contractual arrangement between the Claimant and the Defendant whereby the Claimant agreed to provide the necessary care and accommodation. The agreement did not stipulate the amount of money to be paid in respect of such provision. Thus, the Claimant was entitled to be paid a reasonable price for the services provided. In fact, the Defendant did not pay a reasonable price but some lesser figure.

The proceedings were issued in July 2012. Particulars of Claim were served in November 2012. The claim at that point had three strands. First, there was a claim in respect of underfunding the eight named service users in respect of the period from 2006 to 2008 in the sum of £319,626.36. Second, there was a like claim for the period from 2008 onwards in the sum of £1,549,107.74. Third, there was a claim for underpayment in relation to a quite separate group of service users in the sum of £216,867.11. A Defence was served but the Defendant also applied to strike out the claim under Part 3.4(2) of the CPR. On the 17^th December 2013 this application came before Senior Master Leslie. The application was adjourned on the basis that the Claimant would serve Amended Particulars of Claim by the end of January 2014. The Defendant was given seven days from the date of service of the amended pleading to notify the Claimant whether it consented to the amendment. The order of Senior Master Leslie stipulated that the amended pleading had to identify each relevant service user, the dates and nature of the service provided by the Claimant in each case, the alleged need of the service user in each case, the amount claimed and the basis of the liability alleged.

The Amended Particulars of Claim were duly served. Although they were not wholly dissimilar to the original pleading, the amended pleading was drafted so as to replace the original pleading in its entirety. Whatever the similarity in terms of the alleged cause of action, the amended pleading was very different in terms of the amounts claimed. The claim in relation to the separate group of service users was not pursued at all. In relation to the eight named service users the sum claimed in relation to the period up to 2008 was reduced to £231,855.80 and in relation to the period from 2008 onwards the sum was very substantially reduced. Rather than a figure in excess of £1.5 million, the sum claimed was £549,850.10. The Defendant consented to the amendment and an Amended Defence was served. However, there were requests for further information followed by a further hearing on the 1^st August 2014 before Senior Master Leslie. The Defendant contended that the amended pleading did not meet the requirements of particularity previously specified by Senior Master Leslie. At that hearing an order (paragraph 4) was made requiring the Claimant to file and serve particulars of its case (in relation to one of the service users – PB1) in the categories then agreed by the parties. Those categories were set out in a schedule to the order. The particulars related to the weekly shortfall as alleged and five types of particulars were set out in tabular form. These were: the additional services provided by the Claimant to PB1 including references to evidence in support; the cost to the Claimant of providing those additional services with references to supporting evidence; the cost to the Claimant of providing existing services to PB1 with references to supporting evidence; what assessed needs of PB1 were met by the additional services with references to supporting evidence; the date on which those additional services were provided.

The need for those particulars arose in part from the way in which the case was pleaded, namely that the needs of the service users had been reassessed in 2008 which meant that the shortfall in funding became much more substantial from that point onwards. In any event the particulars requested would have provided the Defendant with a clear understanding of the Claimant’s case of alleged underfunding prior to 2008. The particulars in relation to PB1 were ordered to be served by the 17 October 2014. In relation to the other service users the order (paragraph 6) was: “Any schedule of particulars relied on by the Claimant (other than for PB1) is to be filed and served by 19 December 2014”. This part of the order did not refer specifically to the schedule to the order which set out the five types of particulars to be addressed.

The timetable was extended by consent on the 13 November 2014. When the particulars in relation to PB1 were served by the Claimant is not clear on the material I have. However, they were served and the Defendant (as had been required by the order of Senior Master Leslie) responded with a counter schedule. The material set out in the particulars as served by the Claimant did not, according the Defendant, deal fully with the matters required by the order of the court. That was set out in the counter-schedule. However, the material did appear to be consistent with the financial claim as put in the Amended Particulars of Claim.

On the 12 December 2014 the parties were due by reference to the order of Senior Master Leslie (as extended) to serve witness statements. The Claimant did not do so. As a result the Defendant made an application for an order that the Claimant should not be permitted to rely on any witness evidence. The Claimant in turn applied for relief from sanctions, for additional time to prepare and serve witness statements and for an adjournment of the trial. The applications were heard on the 16 January 2015 by Mr Justice Green. In due course he handed down a judgment with particular reference to the Claimant’s applications: see [2015] EWHC 129 (QB). I do not propose to set out any part of that judgment herein. However, it forms an important part of the backdrop to the application under consideration now. In particular, I adopt the analysis of Mr Justice Green at paragraph 21 et seq of his judgment in relation to the relevance and impact of a change in legal representation in respect of relief from sanctions. As is clear from that judgment, those who now represent the Claimant have done so only since about the middle of December 2014.

Mr Justice Green refused the application to adjourn the trial; rather he fixed the trial for the 18 February 2015. He required service of the Claimant’s witness statements by the close of business on the 2 February 2015 failing which the Claimant was to be debarred from relying on witness evidence at trial. He made an order in relation to particulars other than those already served in relation to PB1. It was in these terms: “The Claimant do provide the particulars it relies upon (other than for PB1) by filing and serving schedules containing such particulars by 4 p.m. on 2 February 2015”.

Witness statements and schedules were served on the 2 February 2015. The witness statements did not descend to any particularity in the body of the statements as to the cost of additional services or existing services or as to how the need for any such services arose. The schedules as produced by Neil Harris, by now the Claimant’s finance manager, were not in the same form as the schedule produced previously in relation to PB1. They did not set out the particulars as specified in the schedule to the order of Senior Master Leslie. They referred to sums far in excess of the pleaded case. Indeed, the sums set out in the schedules were close to those pleaded in the original Particulars of Claim. The Defendant considered the served materials. On the 6 February 2015 the Defendant wrote to the Claimant’s solicitors. The Defendant argued as follows: the schedules did not comply with the order made by Mr Justice Green and/or the earlier orders of Senior Master Leslie; the schedules in any event were not validated by any witness evidence, Mr Harris’s evidence being simply a rehearsal of the retrieval of the documents supposedly supporting the schedules; the evidence and the schedules asserted a claim some two-and-half times the value of the claim pleaded and no proposed re-amended pleading had been served. Other matters were put forward which are of no relevance to my consideration of this application. The Defendant invited the Claimant to discontinue the claim.

The Defendant received no response to that letter. Mr Justice Green had ordered an exchange of skeleton arguments by the 13 February 2015. No skeleton argument from the Claimant was forthcoming at this point. Rather, it was served during the day on the 16 February 2015. In it the intention to apply for permission to re-amend the Particulars of Claim was flagged and the reasons why such permission should be given were set out. The proposed Re-Amended Particulars of Claim were served on the afternoon of the 17 February 2015. The re-amendment principally concerned the sum claimed in respect of services provided from 2008 onwards. In relation to the period 2006 to 2008 the figure was just over £1,000 more than that claimed in the January 2014 pleading. However, what had been £549,850.10 for the period from 2008 onwards was now £1,697,517.86.

So it was that on the morning of the trial I was asked to give leave to re-amend the Particulars of Claim. Having heard substantial submissions from both sides I refused to give such leave. In the course of argument in relation to this application Mr Pepperall Q.C. on behalf of the Claimant realistically accepted that he had faced an uphill task in making the application to re-amend and that I had been entitled to take the view I did. In part because of that concession I shall not repeat in any detail my reasons. In essence they were threefold. First, the argument for the Claimant was that there had been some kind of error in the arithmetic when the pleading had been amended in January 2014. I had no evidence of how or why such an error had arisen if that was the explanation. As Mr Justice Green had said in his judgment (albeit in a different context) if the explanation for some default lay with the previous legal representatives, there was a feasible process by which the explanation could be placed before the court. Second, the reasoning behind the amended pleading as served in January 2014 had been set out in clear terms in the Reply to the Amended Defence. The Reply made clear that there had been a deliberate and considered decision to reduce the claim from that originally pleaded. This assertion was said to be true by the CEO of the Claimant. She signed the statement of truth appended to the Reply. Yet she is a witness whose statement was served on the 2 February 2015 apparently to support the hugely inflated figure. Third, the state of the evidence as a whole was such that it was impossible to show the strength of the new case i.e. the sums now put forward as the supposed loss.

It is against that background that I turn to consider the Defendant’s application. Mr Ramsden on behalf of the Defendant submits as follows:

Mr Pepperall Q.C. on behalf of the Claimant argues as follows:

Mr Pepperall Q.C. cited the following authorities to support a series of propositions: Royal Brompton Hospital NHS Trust v Hammond and others [2001] EWCA Civ 550; National Westminster Bank v Rabobank Nederland [2006] EWHC 2959 (Comm Ct); Whittaker v Soper [2001] EWCA Civ 1462; Miller v Cawley [2002] EWCA Civ 1100; Richards v Hughes [2004] EWCA Civ 266; Reckitt Benkiser v Home Pairfum [2004] EWHC 302 (Pat); Asiansky Television v Bayer-Rosin [2001] EWCA Civ 1792.

The propositions he put forward were as follows:

None of these propositions is controversial. Equally, the context in which they arose in the case in question must be borne in mind. None of the cases cited bears any ready comparison to the facts in this case. For instance, in Royal Brompton Hospital the case had been opened when the judge, after a break in the case when he had been reading the papers, of his own motion reached a view about the evidence which on proper analysis was misconceived. It is doubtful whether there ever could be summary disposal where there is conflicting factual and expert evidence – yet the judge in that case considered such a disposal possible in just those circumstances. The second proposition from that case as identified by Mr Pepperall forms the basis of his submission that I should not be beguiled into assessing the evidence as part of a balancing exercise. Clearly I should not be so beguiled and I shall not fall into the trap of conducting a trial on the papers i.e. deciding whether the Claimant on balance will fail.

As a general proposition it is very unusual for an application for summary disposal to be made at the commencement of a trial. As Mr Justice Turner drily put it in a case where just such a course had been ordered as part of pre-trial case management: “I pause merely to remark upon the novelty of the timing of a summary judgment application listed to be heard on the morning of the first day of trial”: Bijlani v Unum [2014] EWHC 27(QB). However, I am quite satisfied that the very unusual circumstances of this case mean that the Defendant’s application should not be rejected simply because of its timing.

I am not satisfied that it would be appropriate to strike out the claim on the basis that the statement of case discloses no reasonable grounds for bringing the claim. The Defendant’s argument is that the particulars required by the various orders of Senior Master Leslie and Mr Justice Green form part of the statement of case. Since the schedules provided in relation to all but one of the service users are inadequate, it is proper to conclude that there is no coherent statement of facts. That argument has force. It is not sufficient to say as Mr Pepperall Q.C. does that the pleaded case must disclose reasonable grounds for bringing the claim since no suggestion to the contrary has been made since the service of the Amended Particulars of Claim. However, I am just persuaded that the pleaded case is sufficient to satisfy the requirement of bare coherence.

The same does not apply to the Defendant’s submissions in relation to Part 3.4(2)(b) and (c). There is no doubt that the particulars provided by the Claimant on the 2 ^nd February 2015 by way of schedules do not comply with the requirements of the order of Senior Master Leslie as made initially on the 1 ^st August 2014 i.e. the matters set out in the schedule to that order. Mr Pepperall Q.C. argues that the order in relation to all service users other than PB1 did not refer to the schedule to the order. Therefore, there was no need to provide particulars of the same kind in respect of the seven other service users. He submits that the schedules now served are sufficient to meet any order of Senior Master Leslie. I reject that argument without hesitation. First, the order made by Senior Master Leslie on the 17 ^th December 2013 as to what had to be particularised in the proposed amended claim is not met by the schedules now served. Those schedules do not provide details of the nature of the service provided by the Claimant to the service user and they do not set out the alleged need of the service user. Second, the greater particularity required by the order of the 1 ^st August 2014 (and the schedule to that order) was not restricted to PB1. It is inconceivable that it should have been so restricted. The purpose of the order was to enable the Defendant and the court properly to understand the Claimant’s case in relation to underfunding. That could be achieved only by provision of the particulars within the schedule to the order. For the Claimant to be required to provide sufficient particulars in relation to only one out of eight service users would be a nonsense. Implicit in paragraph 6 of the order of the 1 ^st August 2014 was a requirement that the schedules would set out the particulars as specified in the schedule to the order. Third, the scheme of the order is clear. The Claimant was required to provide particulars in relation to one service user with the Defendant to respond thereto. That process would enable the Claimant to adjust the particulars provided in relation to the other service users to take account of any legitimate general objection raised by the Defendant.

Mr Pepperall Q.C. argues in the alternative that the order of Senior Master Leslie was substituted by the order of Mr Justice Green. That order is free standing and should not be read in conjunction with the orders of Senior Master Leslie. I disagree. The orders of Senior Master Leslie formed the backdrop to the proceedings before Mr Justice Green. Mr Justice Green plainly had them clearly in mind since the relevant part of his order is in almost identical terms to the order made on the 1 ^st August 2014 by Senior Master Leslie. No sensible or reasonable litigant would have concluded that Mr Justice Green did not intend that the Claimant’s case should not be properly particularised – which is the logical consequence of the submission made by Mr Pepperall Q.C.

It follows that the Claimant has failed to comply with a court order – or to be precise three successive court orders. In addition I consider that the statement of the Claimant’s case – the particulars as provided by way of schedules – is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings. Clearly the circumstances of this case are not comparable to the extreme cases of abuse such as Raja v Hoogstraten [2006] EWHC 1315 (Ch). However, the categories of abuse are many and are not closed. In this case the schedules served simply set out a bald statement of four alleged heads of cost for each week and each service user: accommodation; activity log; hours delivered; contingency and reinvestment. A column headed “justification for work undertaken” has only occasional entries. Where they do appear the entry is simply a reference to a document without any explanation as to which part of the document is relied on or is relevant. The essence of the Claimant’s case is quantum meruit i.e. the contract by which the Defendant contracted out its duty to provide care and accommodation to service users did not specify a price and the Claimant is entitled to a reasonable price for the services provided. To expect the Defendant to meet this case – still less to expect the court to try the case fairly – on the basis of the particulars provided is an abuse of the court’s process. It renders just disposal of the proceedings highly problematic.

Mr Pepperall Q.C. submits that striking out a claim under Part 3.4(2)(b) and/or (c) should be an order of last resort. He argues that I must consider what the just course in all of the circumstances is and that I should try to identify a sanction short of the draconian step of striking out the claim. I accept both of those arguments. The problem with identifying some step short of striking out is that this case has had a sorry litigation history as outlined in his judgment by Mr Justice Green. He considered the possibility of adjourning the trial. He rejected that possibility in unequivocal terms. Insofar as he gave the Claimant one last chance to get its house in order, the Claimant has had that last chance. I also have in mind the state of the evidence generally (to which I shall come in a moment in my consideration of the application for summary judgment). I am driven to the conclusion that the only proper step I can take is to strike out the Claimant’s statement of case for the reasons set out above.

I turn to the application for summary judgment. As Mr Pepperall Q.C. notes in his written submission this requires a focus on the evidence rather than the pleadings. In that written submission he noted that the Defendant did not give the requisite notice of the application and he submitted that time should not be abridged. He did not raise that issue in the course of his oral submissions. He was right not to do so. The basis for the application really only became apparent when on the 2 ^nd February 2015 the Claimant served its witness evidence and the schedules. The application was lodged on the 11 ^th February 2015. I am quite satisfied that it is appropriate to abridge time to permit the application to be heard.

I have to consider whether the Claimant has no real prospect of success on its claim. I also must consider whether there is any other compelling reason why the case should not be disposed of at a trial. The burden is on the Defendant to persuade me of both matters. The issue here is whether the Claimant has no real prospect of success. It is not for me to conduct a mini-trial (as it was described in Swain v Hillman [2001] 1 All E.R. 91). The proper approach is as set out in the speech of Lord Hope in Three Rivers DC v Bank of England (No 3) [2001] 2 All E.R. 513:

“89.

CPR rule 24.2 provides:

"The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if -

(a)

it considers that -

(i)

that claimant has no real prospect of succeeding on the claim or issue; or

(ii)

that defendant has no real prospect of successfully defending the claim or issue; and

(b)

there is no other reason why the case or issue should be disposed of at a trial."

The relevant evidence served by the Claimant comes from two witnesses; Mary Simpson and Neil Harris. I can dispose of the other evidence briefly. The witnesses Sharon Groves and Darren Moyle set out the general condition of the service users who are the subject of the proceedings. Their evidence gives no basis on which to found a particular level of care needed, still less the cost of such care. The witness Thomas Tripp sets out the way in which the Claimant accounts for each service user in its care. He does not descend to any detail relating to the service users in issue. The witness Michael Faulds gives no substantive evidence of any consequence; his witness statement consists largely of comment upon the witness evidence served by the Defendant.

Mary Simpson’s evidence seeks to establish that there was a contract by which the Claimant supplied services to the Defendant for which the Claimant was entitled to reasonable recompense and that the Defendant was in breach of that contract. In relation to the period up to 2008 she produces correspondence exhibited as MS6 dating from 2004. That correspondence plainly shows that the Claimant had service users in its care for which the Defendant was responsible. However, the correspondence equally plainly shows on its face that the fees for particular service users were the subject of concluded negotiation. That correspondence provides no evidence to show that the Claimant was not being provided with reasonable recompense, rather the reverse. Mary Simpson goes on to say this in relation to the pre-2008 period: “The Council well knew that from Spectrum’s long standing provision of residential care services to such individuals as Spectrum reasonably assessed their needs, subject to any guidance or direction given by the Council and that in return the Spectrum would expect the Council to pay Spectrum an amount that covered its reasonable cost of the provision of those residential care services.” Whatever this assertion might be taken to mean, it does not provide any evidence that the Defendant was not meeting its contractual liability. The evidence of Mary Simpson read as a whole (and in conjunction with the documents she produces) provides no real prospect of showing that the Defendant failed in its obligations in the period up to 2008. For the period from 2008 onwards Mary Simpson produces an exhibit (MS1) which consists of a lever arch file containing nearly 350 pages of documents. Most of these documents are irrelevant to the issue of the contractual liability of the Defendant. However, there are a number of documents – correspondence, e-mails, notes of meetings – which are relevant to the issue of fees. These documents are to be found at the following tabs of MS1: 13 to 18; 20; 36; 43; 46; 53; 62; 63. It is quite clear from that material that the issue of fees was considered on a regular basis over the period from the middle of 2008. From time to time the Claimant put forward proposals in relation to particular items of expenditure and the Defendant would consider those proposals. At no point was there any agreement that the Defendant was failing to fund services or care which reasonably were being provided or that the Claimant should provide services additional to those previously agreed. By the middle of 2009 the discussion between the parties was in relation to promptness of payment rather than the amount of the payments. In 2011 there was a meeting between the parties in which it was noted that “the total amount paid to Spectrum would not increase”. Despite the evidence exhibited by Mary Simpson she then repeats word for word the passage set out above asserting that the Defendant knew what assessment the Claimant had made of the needs of service users and that the Defendant could be expected to meet the costs incurred. As with the period up to 2008 there is no realistic prospect of this evidence demonstrating that the Defendant failed in any obligation it owed to the Claimant.

The high water mark of the evidence of Mary Simpson could be said to be the content of paragraph 6 of her witness statement which is headed Basis of Claim. This asserts that the eight named service users were treated differently to other service users because they were long term residents. It states that the fees payable in respect of the majority of the service users in 2012 were increased “to what is required”. Mary Simpson asks “why wasn’t this done years ago?” These bald assertions provide no evidential basis for the claim notwithstanding the heading to the relevant paragraph.

Neil Harris is the finance manager of the Claimant. He only has been in that position since March 2013 so he has no personal knowledge of the subject matter of these proceedings. After an introductory passage setting out his responsibilities with the Claimant (which have no bearing on this case) he sets out what he did in order to prepare the schedules served on the 2^nd February 2015. His task was clearly very substantial and involved tracking down a huge amount of documentary material. However, he does not explain the needs of the service users and how they are reflected in the schedule – which is hardly surprising given the nature of his occupation. His role was and is simply to produce the schedules without any detailed explanation or validation. The schedules are not made satisfactory by his evidence.

One matter on which Neil Harris is qualified to speak is the invoicing practice of the Claimant. One of the issues he was required to address by reference to a disclosure order made by Mr Justice Green was invoicing for alleged additional provision of services to service users. Mr Harris’s evidence on that topic is as follows:

“We never raised invoices for additional provision of services because all the funding was being supplied by Spectrum. There was no point in invoicing the defendant Council because all they were paying for was the basic expenses. It made no sense to keep invoicing a Council who were refusing to pay…..there was no point in raising invoices when we knew that we were never or likely to get paid for them.”

How this passage is to be reconciled with the passage already quoted from the statement of Mary Simpson is not explained. The mere fact that two witnesses give evidence that is apparently inconsistent is not sufficient to render the prospects of success of the party calling those witnesses so slight as to justify summary judgment against that party. That would be to undertake the exercise deprecated in Swain v Hillman (supra). But the evidence of Mr Harris of itself appears fatally to undermine the basis of the Claimant’s case. It certainly renders the proposition put forward by Mary Simpson entirely fanciful.

Given the witness evidence and the accompanying documents served by the Claimant I am quite satisfied that the prospects of success for this claim are illusory. Although it is very late in the day for the court to reach that conclusion, I am sure that it is a proper use of the court’s power to exercise its summary jurisdiction even at this late stage. It follows that, irrespective of the striking out of the statement of case, I would give summary judgment against the Claimant.