Mediation
Nottingham

The Claimant (C) was an individual trading as a limited company. Who provided supported housing for vulnerable individuals in Birmingham. Birmingham City Council, the Defendant (D), administered supporting people payments for supported housing provided to vulnerable adults in Birmingham.

From 1 April 2003 the basis of payment for the housing and services which the C provided changed, prior to this it was called Transitional Housing Benefit.  From 1 April 2003 the support payment became a Supporting People Payment. 

Under the Supporting People Scheme, the D entered into contracts with service providers, such as the C, for the provision of housing related support services to vulnerable adults who had a Community Care Certificate.  The Supporting People Payment did not relate to rent. However, in addition to the Supporting People Payment, the C’s service users were entitled to Housing Benefit to assist with this. 

The fund for the D to make Supporting People Payments was set by the ODPM and therefore it was necessary for the D to know the exact value of the Supporting People Payments that it would have to make. For this reason it was made clear to the C and all other service providers that in order for a unit to receive a Supporting People Payment, it must be in receipt of Transitional Housing Benefit on 31 March 2003. 

The particulars of claim, defence and approved judgment of the District Judge set out more fully the background to this matter.  In brief, the C brought a claim against the D on 3 bases:

• That there was no contractually agreed price for her services and she was entitled to a quantum meruit payment of £450 per person per week.
• That even at the rates which the D had offered to pay her, she had been underpaid.
• She included a legal costs claim.

Following an application for summary judgment and strike out, summary judgment was entered in relation to the quantum meruit claim and the legal costs claim was struck out.  The C appealed this decision and the appeal was dismissed. 

Therefore, all that remained of the claim was the underpayment element.  This stated that “based on the Council’s proposed rate of £310.94 per individual per week from 1 April 2003 onwards, the C was entitled in quantum meruit to the sum of £893,152.94 in respect of manpower costs for supporting people services which she provided in the period from 1 April 2003 to 18 March 2005.  Following payment already made by the Council, it is averred that a balance of £302,602.33 remains due to the C in relation to manpower costs.”

Following the summary judgment/strikeout hearing, the C was asked to provide a schedule setting out details of the underpayment.  In this schedule, the C had increased her claim from £302,602.33 to £615,344.05.  There had been no explanation for this and the particulars of claim had not been amended.

The D had set out its response to the claims in the schedule in the final column on the right hand side.  This mirrors what was set out in the defence.

The D claimed that the contract between the parties was terminated on 17 January 2005 and this appeared to have been the understanding of the C. Despite this, the date of termination of the contract between the parties was in dispute and the C now asserted that it was terminated 18 April 2005. 

In the event that a court found that the relevant date was 18 April 2005 the D admitted that it owed a total sum of £30,670.84 to the C.  However, in the event that a court found that the termination dated was 17 January 2005 the D claimed that the C had been overpaid by £25,127.33. 

In order to understand the Defendant’s position, it was necessary to understand the difference between block subsidy contracts and a block gross contracts. 

A block subsidy contract was paid at an agreed amount per individual per week up to a maximum number of individuals (units) which had been approved.  Therefore, if a property had been approved for a maximum of 4 units, and there were 4 people in occupation, payment would be made at the agreed rate per individual per week multiplied by 4. 

However, if there were only 2 people in occupation payment would be made at the agreed price per individual per week multiplied by 2.  Finally, if there were 5 people in occupation payment would be made at the agreed rate per individual per week multiplied by 4 as this was the maximum amount of units approved. 

Payment for a block gross contract was calculated differently.  In block gross contracts there was an agreed price per individual per week and an agreed number of units.  However, once these figures had been agreed, the service provider was paid 90% of that amount irrespective of the number of people in occupation.  So for example, if a property was approved for 4 units at £100 per individual per week, the service provider would  receive a payment of £360 per week whether there was 1, 2, 3, 4 or 5 units occupied. 

The following issues were in dispute between the parties:

• Which properties formed part of the contract;
• The number of units agreed at each property;
• The amount payable per individual per week in relation to a particular property.

Both parties agreed that the total amount paid to the C in relation to supporting people payments was £634,030.18.  However, due to a change of computer system at the D’s, it was not in a position to break down these payments between the various properties. 

Therefore, it was necessary to look at the total amount that each party believed ought to have been paid and deduct this from the amount which it was agreed was actually paid.  This leaves the amount in dispute.

In summary, it was the D’s position that the C had been overpaid for the services provided. The D did not approve additional units on top of those listed in the defence and therefore the D had fulfilled its contractual obligations.

The D costs to date were approximately £40,000.  The C had already paid £6,656.00 of these costs in relation to the appeal and was due to pay a further £12,694.13. The D anticipated that its total costs to trial would be in the region of £80,000 and it would seek an order that the C pays these costs. The mediation took place in person, took eight hours and settled.