Limitation Period for Residential & Home Care debts: An analysis of NCC v Belton [2017]

The Care Act 2014 came into force in 1 April 2015 and brought in significant changes in how adult social care and support is dealt with. Local Authorities across the country have grappled with those changes whilst dealing with increasing demand and reducing budgets.

One of the changes they did not anticipate having to overcome was the degree of confusion caused by the Care Act on the question of how long Councils had to bring a claim to recover residential and home care debts, i.e. relevant the limitation periods. Indeed debt recovery has had very limited coverage amidst the significant debates on the well being principle, assessments, deferred payment agreements, the loss of HASSASSA charges etc. However the one issue which has ruffled brows amongst practitioners has been on the question of limitation.

The case of Nottinghamshire County Council v The Estate of Belton and another [2017] appears to be the first reported case in which the courts have been given the opportunity to consider this messy issue. The result as we will see will give some solace to local authorities throughout the country and allow them to perhaps now focus on the considerable other challenges that adult social care and support continues to present.

The Limitation Problem

Before delving into the case and the detailed judgment it is useful to briefly set the scene and explain just what confusion was caused by the Care Act 2014.

It is necessary to explain the difference between Residential Care Charges and Home Care charges.

Prior to the implementation of the Care Act 2014 (“CA 2014”) pursuant to s.21(1)(a) National Assistance Act 1948 (“NAA 1948”) a local authority had a duty to provide residential accommodation to those in need of care and attention. Further under s.22 NAA 1948in respect of the provision of those services local authorities were obligated to recover charges for the residential accommodation services provided. S.56(1) NAA 1948 provides the Local Authority with the ability to recover the charges “summarily” as a civil debt.

The summary recovery mechanism is a method which allows the debt claim to be brought within the magistrates court.  S.56(2) NAA 1948 provided that the time limit for bringing such a claim as 3 years.

On its face the above created a 3 year limitation period for residential care charges. However the practical reality is that although the summary recovery mechanism was one option for recovery it was not the only option. Local Authorities rarely sought recovery of these charges in the magistrates court. The well accepted approach was to pursue these debts in the county court. As such the limitation period employed by local authorities was the traditional 6 years. The interpretation being that only the magistrates court process had a limited 3 year period and any alternative process would be governed by the general limitation period applied to statutes as detailed in s.9 of Limitation Period 1980.

Pursuant to s.17(1) Health and Social Services and Social Security Adjudications Act 1983 (“HASSASSA”) a Local Authority was entitled to charge for the provision of home care services. s.17(4) HASSASSA again allowed the Local Authority to recover those charges as a civil debt, summarily in the magistrates court. There was however no time limit expressly provided for the recovery action. As with residential care debts Local Authorities rarely used the magistrates court to recover these debts as such again when taking action in the county court  the established view was that the 6 year period provided by s.9 of Limitation Act 1980 applied.

Those drafting the Care Act 2014 sought to embody within that legislation the charging and recovery mechanisms for residential and home care services which had previously been spread across a number of acts of parliament. The key section in respect of debt recovery is s.69 CA 2014.

s.69(1) Care Act 2014 provides local authorities with the ability to charge for the care services they provide.

s.69(3) dealt with the applicable limitation periods that apply to the recovery of charges that become due. The act seeks to draw a distinction between those debts which fell due on or after the commencement of the act i.e. on or after 1 April 2015, and any other debts i.e. those debts that fell due prior to 1 April 2015.

It seemed that  notwithstanding the established approach of applying a 6 year limitation period to residential and home care debts those drafting the act when considering what was the current limitation period, presumably after reviewing  s.56 NAA 1948 concluded the applicable limitation period was 3 years. In seeking to maintain what they perceived to be the position they created a two tier approach creating a 6 year limitation period for debts due on or after 1 April 2015 whilst seemingly reducing the period for those debts created prior to 1 April 2015 to 3 years.

What appeared to be a genuine attempt to reflect the applicable historic limitation period had resulted in the potential halving of what was the well established 6 year period. There ensued considerable debate about just want the intention of parliament was. The statutory guidance to the act appeared to only compound the issue Annex D to the guidance expressly confirmed:

“For any debts that have accrued prior to the commencement of the Care Act 2014 the time period for recovering that debt continues to be three years as previously set out under Section 56 of the National Assistance Act 1948 as any change to this would be retrospective and unfair.”

The question of just what the intention of parliament was has been a hotly contested one with some arguing that clearly a 3 year period applies to historic debts whilst others vehemently maintaining parliament cannot have intended to so drastically reduce the existing limitation period and with a single pen render irrecoverable on 1 April 2015 hundreds of thousands if not millions of pounds of debt which was recoverable on 31 March 2015.

The result, those of us practicing in this area have been waiting with almost batted breath for a case to go before the courts in which the question of limitation was raised and for the courts to provide their interpretation of the relevant legislation. That wait appears, at least for now to be over.

The Case: Nottinghamshire County Council v The Estate of Belton and another [2017]

Summary of the Facts

The matter concerned a claim brought by Nottinghamshire County Council seeking recovery of residential care costs in respect of services provided to Mr Wilfred Belton. By the time the claim was issued, 17 September 2015, Wilfred Belton had passed away. The claim was brought against his estate along and Wilfred Belton’s son, Ian Belton, on the basis that Ian Belton had been transferred assets from the estate.

The sum claimed by Nottinghamshire County Council was £37,184.22. The care costs had accrued from 22 February 2010 until 13 January 2014. Ian Belton represented the estate and defended both claims primarily on the basis that the care costs should have been paid by the NHS.

The matter proceeded to trial and Mr Ian Belton dealt with the hearing himself arguing against Counsel for Nottinghamshire County Council. The Defence to the claim did not plead the issue of limitation however during Mr Belton’s closing argument he raised the point that the council should be limited to recovering debt for the proceeding 3 years. Referring to the Care Act 2014 and the 3 year period specified therein for debts which had accrued prior to 1 April 2015.

Counsel for Nottinghamshire County Council made the point that although the claim had made reference to the Care Act 2014 the Council were not claiming the debt under the Care Act rather they were claiming under s.56 of National Assistance Act 1948 i.e. under the historic provisions. Further that under that provision there was a 6 year limitation period.  Mr Belton’s view was that s.56 referred to recovery in the magistrates court and as such he sought to challenge the county courts jurisdiction to deal with the matter.

At the conclusion of the matter having heard the rather off the cuff arguments on limitation and jurisdiction the Recorder hearing the matter ruled in favour of Nottinghamshire County Council. Mr Belton appealed and was provided permission to do so on two issues. The appeal court had to consider the following issues:

  1. Did the court have jurisdiction to deal with the matter given the claim was brought under s.56 of National Assistance Act 1948 ?
  2. What was the appropriate limitation period which applied to the recovery of the debts claimed ?

The Appeal Judgment

The appeal was dealt with in the High Court by His Honour Judge Godsmark QC. The Judge provides a detailed and interesting analysis of the relevant legislation to include the historic provisions, the care act 2014 and the transitional provisions.

The Jurisdiction Point

On the question of whether the county court had jurisdiction to deal with the matter brought under s.56 of National Assistance Act 1948 the Judge clearly concluded the court did have jurisdiction. The suggestion that  s.56 obligated the Council to take recovery action in the magistrates court was dismissed. The Judge analysed the words used in the section which he concluded to be permissive rather than prescriptive. As a result it recovery action could be taken in the county court which did have jurisdiction.  

The Limitation Point

The Judge provides his interpretation of s.56 of National Assistance Act 1948 which supports the approach that had been taken prior to the Care Act 2014 coming into force.  The reference to the 3 year limitation period related solely to action taken to recover the debt summarily in the Magistrates court.  The section provides for alternative recovery using “any other method” and recovery action within the county court is included. The limitation period covering any other method of recovery is 6 years.

Importantly the Judge also analyses the impact of the Transitional Provisions and particularly the Care Act 2014 (Transitional Provisions) Order 2015, Article 3. The argument during the trial had been that the Care Act 2014 did not in fact apply to the case because the debts had accrued prior to 1 April 2015. However Counsel for the Nottinghamshire County Council conceded that he was incorrect in this argument. On reflection he took the view the transitional provisions meant that even though the debt had accrued prior to 1 April 2015 the debts were still recoverable under the Care Act. The original basis for insisting the Care Act did not apply had presumably been because of a fear that if it did apply s.69(b) CA 2014 would apply i.e. because these debts had accrued prior to 1 April 2015 the reduced 3 year limitation period would apply.

The Judge explains in detail why however notwithstanding the fact that these debts were due under s.69 CA 2014 the reduced limitation period did not apply. The transitional provisions at article 3(4) preserves the limitation period that applied to the charges under s.56 of the National Assistance Act 1948. As he had already concluded in respect of county court actions that period was 6 years.  As such in this case the reduced limit provided by s.69(3)(b) does not apply.

As a result of the above the appeal was dismissed.

What does this decision mean?

There is no doubt that this result is a significant one for local authorities. The well reasoned judgment has provided much needed clarity on the issue of limitation. Although the case dealt specifically with residential care costs the Judge’s comments and rationale leads to the clear argument that the limitation period for both residential care debts due under s.56 National Assistance Act 1948 and home care debts under s.17 Health and Social Services and Social Security Adjudications Act 1983 is 6 years.

The decision will be binding on the County Court and should serve to dissuade all but the most committed of debtors from trying to run an argument that the limitation period should be 3 years.

Notwithstanding the above this argument may not yet be completely settled, this particular case was run by Mr Belton himself without it seems the benefit of legal representation. It seems unlikely that a further appeal will follow however the same cannot be ruled out.  If Mr Belton does not pursue the point others seeking to avoid payment of care charges and perhaps with a willingness to risk a substantial adverse cost order  may try their hand at seeking to argue that parliament did in fact intend to limit the recovery of pre-care act 2014 debt by imposing a 3 year limitation period. This decision for now however provides a useful shield for local authorities.

Debt Busters!

Even though the decision in this case is welcome it is vital that Local Authorities seek to avoid getting into a position where they risk having to deal with any form of limitation argument. Taking quick and effective action to recover debts owed is the best way to avoid contentious litigation such as this case. Further implementing a strategy which prevents debts from accruing for years without action  will ensure the Local Authority maximises recovery of the sums it is owed. In the current climate this has never been more important.

At Judge & Priestley we can help you to ensure you are taking the right strategic approach. Our expert litigation team lead by Rachel Addai offer a range of services to assist recovering this very difficult debt type. Rachel has been involved in this niche area of debt recovery for a number of years and provides advice and guidance to local authorities across the country. Rachel has been involved in a number of key seminars provided in respect of this area to include last month the firms seminar at the Law Society which dealt with the difficult debt recovery post Care Act challenges. A highly successful innovation developed by Rachel and her team are debt buster review days aimed at considering your portfolio of adult social care debt recovery cases and identifying high risk cases where limitation and other issues require quick action.

To arrange a free 1-hour consultation meeting, please contact Rachel Addai on 020 8290 7356.

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