Court of Appeal finds contractual dispute resolution process amenable to judicial review

In R (on the application of Shashikanth) v NHS Litigation Authority & Anor [2024] EWCA Civ 1477 the Court of Appeal held that an adjudicator's decision determining a contract dispute was subject to judicial review where the broader context and ultimate source of power was statutory. In doing so the court gave helpful guidance on the availability of judicial review in situations involving both public law and contractual rights.

Key Points

• The question of when a decision is amenable to judicial review is context specific and requires consideration of several factors to determine whether there is a sufficient "public element".
• Looking at the ultimate source of the power being exercised may give a strong indication of whether a public function is involved, but is not necessarily determinative.
• Although private law contractual rights should be enforced through civil claims rather than judicial review, where the ultimate context behind a contract is statutory, judicial review may still be available.

Background

The appellant, a general practitioner, entered into two contracts with the NHS Hillingdon Clinical Commissioning Group ("CCG") for the delivery of primary medical services. They did not fall within the statutory definition of NHS contracts, and were therefore described as non-NHS contracts, giving rise to contractual rights and liabilities capable of being enforced in private law proceedings.

A dispute arose when the CCG terminated these contracts, alleging that the appellant had breached a contractual obligation to cooperate with a primary care network. The appellant did not accept that the contracts had been effectively varied to include this obligation, following Regulations in 2019 requiring general medical services contracts to contain a duty to cooperate with primary care networks.

The appellant exercised his right under the contracts to refer the dispute to the Secretary of State ("SoS"), who appointed an adjudicator to determine the dispute. The adjudicator upheld the termination of the contracts by the CCG.

The appellant sought to judicially review the determination of the adjudicator. The High Court did not consider the decision of the adjudicator amenable to judicial review, despite concluding that the contracts had not been varied to include the relevant obligation and therefore the adjudicator's decision did contain an error of law. The High Court emphasised that the appellant had chosen to refer the dispute for determination by an adjudicator appointed by the SoS, rather than simply suing under the contract, and that choice did not introduce a public law element so as to make the adjudicator's decision subject to judicial review. It also considered the caselaw to establish that a public or statutory context does not mean that the private law rights of a contractor are supplemented by rights in public law, at least in the absence of fraud or bad faith.

Court of Appeal judgment

Lewis LJ summarised the established principles on amenability, noting that the position is not straightforward even where the exercise of statutory or prerogative powers is concerned. Whether there is a public function depends on the context and numerous indicative factors, including the extent of government or other public authority involvement in the function, whether and to what extent the exercise of the function is performed against a background of statutory powers, and the nature and importance of the function. The consideration of whether there is a sufficient public element takes place against the backdrop that purely private rights should be enforced in civil claims, not by a judicial review in the Administrative Court.

The Court of Appeal concluded that the source of the SoS' power to determine the dispute in this case was statutory. The SoS was not a party to the contract between the CCG and the appellant and had no power or jurisdiction by virtue of that contract. Although there was an element of choice in that the appellant unilaterally chose to refer the dispute to the SoS, the ability to make that choice itself came from the statutory context. Once that choice had been made, the procedure for determining the dispute was also prescribed by statute. Therefore the SoS, or the adjudicator appointed by him, acquired jurisdiction by statute and was regulated by statutory provisions. This gave rise to a presumption of a public function amenable to judicial review.

The presumption was not rebutted by the fact that the adjudicator was determining issues involving private law rights. Lewis LJ referred to other examples where judicial review is available in relation to a decision that itself involves private law rights. Importantly, the private law rights in the present case arose in a statutory context. The court emphasised that any "suggestion that the Secretary of State or adjudicator is simply determining questions of private law contractual rights ignores how those rights came into being and how they may be enforced. It seeks to divorce those rights from the statutory framework within which rights are created and operate and disputes determined."

The Court of Appeal distinguished another leading case on amenability, Holmcroft, pointing out that this was the opposite factual context in that the source of power here was statutory rather than contractual as in Holmcroft.

The Court of Appeal therefore allowed the appeal, concluding that the adjudicator’s decision was amenable to judicial review. Substantively, the court also found that the contracts had not been effectively varied and therefore the adjudicator erred in law in determining that the CCG were entitled to terminate the contracts by reason of a breach of a contractual obligation to cooperate with the primary care network.

Comment

Although this judgment is set in the context of NHS contracts, the principles of amenability can be applied across any sector and will be of broader relevance given the number of areas where public functions and duties involve a contractual element. This decision highlights the need to look at the reality of a situation, including the broader context and source of power, rather than simply focusing on one aspect that may involve private law rights and obligations