Contract – Construction – Implied term – Rectification – Claimant NHS Contract – Implied term – Rectification – Claimant seeking repayment of alleged overpayment in respect of defendant GPs’ cost of purchasing premises – Payments being based on fixed interest rate originally payable for mortgage in respect of premises – Claimant arguing implied term that defendants paid according to GMS premises directions – Whether payments being based on fixed amount as provided by contract – Whether contract being rectified for mistake – Defendants applying for summary judgment – Application granted
The claimant took over the role of the Suffolk County Primary Care Trust from the body which commissioned NHS primary care services in Suffolk. The defendants were general practitioners who ran a GP practice in Felixstowe. The practice borrowed money through a mortgage to purchase the premises from which it operated. Under their contract with the claimant’s predecessor, the defendants were entitled to certain payments to compensate them for the cost of providing their premises. Under the National Health Service Act 2006, the secretary of state had the power, under general medical services (GMS) contracts, to make directions providing for such payments.
The claimant argued that it had mistakenly paid to the defendants larger sums in relation to their premises than they were entitled to receive under contract. Alternatively, if that was not so, it was because the contract did not accurately record the agreement of the parties so that the contract ought to be rectified. The claimant brought proceedings contending that, on either of those bases, it ought to be repaid sums totalling £428,000 plus interest.
The defendants applied for summary judgment arguing that the claim had no real prospect of success and should be summarily dismissed. The contract between the parties, on its plain meaning, provided for premises payments to be made in the sum of £77,238 each year, which was a fixed amount and not one which might vary in accordance with the regime of the GMS Premises Directions since it did not incorporate that regime. Furthermore the claimant had failed to establish its claim for rectification.
Held: The application was granted.
(1) In the absence of an express term incorporating the GMS Premises Directions, the burden of persuasion was on the claimant to show that that was what the parties had agreed. The starting presumption was that, if the parties had intended premises payments to be calculated on the basis of the directions, they would have included words to say so. In the absence of any express term, the burden of persuasion was on the claimant to show that it was nevertheless what the parties had agreed. That presumption was all the stringer in relation to what was a detailed, professionally drafted agreement negotiated between the claimant’s predecessor and the local medical committee, where it was reasonable to expect that the financial terms, including payments to be made in respect of GP premises, would be a focus of considerable interest and attention for those involved in preparation and negotiation of the contract.
The question was whether reasonable people, who had entered into a contract in the terms that the present parties had done, would have thought it so obvious that the sum specified to be payable for premises costs was intended to be subject to alteration by reference to the GMS premises directions that there was no need to say so in the present detailed and complex agreement, and it could be simply taken as read. The clear answer to that question was no and it was not possible by some process of creative interpretation to make up for the deficiency in the drafting. Accordingly, on its proper construction, the contract between the parties provided that the amount payable annually for premises costs was a fixed sum of £77,238 and there was no implied term that that sum was to change to reflect whatever sum the defendants would be entitled at any given time to receive if their entitlement were determined in accordance with the GMS premises directions: Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101; [2009] PLSCS 197 and Arnold v Britton [2015] EGLR 53 considered.
(2) The case of rectification for common mistake was lacking in any evidential basis and had no prospect of success. Moreover, the claim for rectification based on unilateral mistake also had no real prospect of success. The mistake which the claimant’s predecessor, in all probability, had made in agreeing to make payments on the fixed rate originally payable for their loan once that rate ceased to be payable, was not a mistake of a kind which enabled the terms of the contract to be altered by the court pursuant to the doctrine of rectification. Therefore, the defendants were entitled to summary judgment: Swainland Builders Ltd v Freehold Properties Ltd [2002] 2 EGLR 71 applied. George Wimpey UK Ltd v VIC Construction Ltd [2005] EWCA Civ 77; [2005] PLSCS 15 considered.
Simon Butler (instructed by Hempsons) appeared for the claimant; David Lock QC (instructed by Lockharts) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read the transcript of NHS Commissioning Board v Silovsky and another
