PropCo sues GPs in landmark legal battle

NHS Property Services, which owns around 10 per cent of the NHS estate, has launched a legal action against the GPs after claiming they each owe the company increased rent and service charges totalling £1.3m.

The company’s counter-claim was made last year, during a legal case brought by the British Medical Association which argued the fees demanded by NHS Property Services were “unlawful”.

Both the BMA’s case, and NHS Property Services’s counter-claim, could set a precedent which affects more than 800 GP practices — more than one in 10 of England’s total.

Background

NHS Property Services’s legal action is the latest in an increasingly bitter dispute between the agency and the BMA over rent and service charges incurred by GPs who occupy PropCo-owned property.

Since its inception — following the Health and Social Care Act 2012 — NHS Property Services has been the landlord for more than 3,600 buildings, many of which are used by GPs.

But, due to the hugely varied nature of leases in place across the properties, NHS Property Services, which is owned by the Department of Health and Social Care, has struggled to agree financial terms with as many as two thirds of its tenants. In some cases, no written leases for the properties exist.

The dispute intensified when NHS Property Services launched its “consolidated charging policy” in 2015-16, which claims around £160m in total from tenants - according to court documents.

The BMA’s legal case

In November 2019, after several years of dispute, the BMA announced it was taking NHS Property Services to court over the “unlawful” fees charged. The legal action was brought by five GP practices, but all costs were borne by the BMA.

The BMA sought legal confirmation that NHS Property Services’s charging policy was not lawful or applicable to the practices concerned, and that the High Court should issue “declarations” to that effect. However, the BMA’s challenge did not deal with the overall issue of liability for the charges. 

The BMA claimed NHS Property Services, during the case, had conceded that its charging policy does not automatically alter practices’ tenancy terms to justify increasing the service charges. And, in a letter updating GPs on the legal process in August, the union claimed the policy therefore had no legal status without the prior agreement of each GP tenant.

But, in his High Court judgment in December 2020, Chief Master Marsh of the High Court’s Property, Trusts and Probate List dismissed the BMA’s request to issue the declarations. He also said he had “real concerns” about the BMA’s letter to GPs, which showed the “difficulties in communicating both sides of PropCo’s case”.

The BMA, whose five GP practices have not withdrawn their legal case, told HSJ it continues to maintain that the onus must be on NHS Property Services to fully explain, with reference to individual agreements with tenants, any changes to the charges.

Gaurav Gupta, the BMA’s GP committee premises policy lead, said NHS Property Services had — in its defence to the BMA’s legal challenge — “accepted that its charging policy did not impliedly retrospectively vary the existing occupancy arrangements of the five practices”.

“Although the BMA’s request… was ultimately declined, the legal proceedings had served their purpose of confirming this crucial point.”

PropCo’s counterclaim

Prior to December’s verdict in its favour, NHS Property Services decided to launch a counter-claim against the five practices. The organisation has taken this action in an attempt to recover the £1.3m it says it was owed by the five practices.

If successful, the case could have major implications for other GPs and tenants with whom NHS Property Services is in dispute. For example, one of the five GP practices involved in the legal battle — Coleford Medical Practice in Gloucestershire — is facing a service charge increase from £14,000 to £242,000 (including arrears).

The full trial for the BMA’s case and NHS Property Services’s counterclaim is scheduled for March 2022.

The BMA’s Dr Gupta said he was “appalled at NHSPS’ decision to sue the five practices, adding it was “in the midst of a pandemic when surgeries are streched to their limits”. 

A spokeswoman for NHS Property Services said the organisation was “seeking to recuperate the debts owed by the claimants, which are still unpaid”. 

“The claims brought against [NHS Property Services] do not themselves deal with the overall issue of liability for the charges, and so [NHS Property Services] has counterclaimed to clarify this issue.”

The spokeswoman added NHS Property Services hoped the matter could be settled “without a further court hearing”.