Court of Appeal rejects challenge to decision by council to transfer care homes

In Brenda Hughes, R (on the application of) v Kirklees Council [2026] EWCA Civ 308, Lord Justice Zacaroli, with whom Lady Justice May and Lord Justice Dove agreed, dismissed the first ground of appeal and found it “unnecessary” to consider the second ground.

The claimant, a resident at Castle Grange care home, challenged Cabinet decisions taken at Kirklees Council between late 2023 and early 2025 relating to reports and consultations about the future of Castle Grange and Claremont House.

The claim concerned the legality of the council’s process in deciding to transfer, rather than close or continue operating, the residential dementia care homes, which the council said were operating at a substantial cost.

In December 2025, Upper Tribunal Judge Ward, sitting as a judge of the High Court, found in Hughes, R (On the Application Of) v Kirklees Council [2025] EWHC 3136 (Admin) that the only ground in which the claim “potentially” stood to succeed was in the council's failure to update the figures used for the projected cost of purchasing the services from a private sector provider.

He concluded, however, that it was “highly likely” that the outcome for the claimant would not have been substantially different if the conduct complained of had not occurred.

Outlining the appeal, Lord Justice Zacaroli said: “Various grounds were advanced before the judge, of which the following two grounds remain relevant on appeal.

“The first of these relates to the fact the council did not explore an alternative, unformulated proposal that it would continue to run the homes itself. This was said to be irrational in circumstances where, in an officers’ report to the Cabinet dated 10 December 2024, it was recognised that some savings could potentially be made in running the homes. The judge rejected that contention, and the claimant appeals on the basis that he was wrong to do so.

“The second of the grounds that remains relevant on appeal relates to the fact that, in calculating the difference between the cost of continuing to run the homes in council ownership and the cost of providing alternative provision for the residents in the independent sector, the council used a figure for the per-unit weekly cost of the latter that was two financial years out of date, which overstated the potential savings by a factor of about 40%. The claimant contends that the council acted irrationally in basing its decision on that outdated figure. The judge agreed with the claimant. He nevertheless refused permission on this ground because he concluded (applying the test in s.31(2A) and (3C) of the Senior Courts Act 1981) that it was highly likely that the outcome would not have been substantially different.

“The appellant contends that he was wrong to do so. The respondent, by a respondent’s notice, seeks to uphold the judge’s order on this point by a different route: namely that he was wrong to conclude in the first place that the council acted irrationally in relying on the outdated figure of the cost of alternative provision.”

In the decision under appeal, the High Court judge concluded that an appropriate figure for the council to use as a comparison for 2025-26 was one which was 10.7% higher - which would have resulted in a per-unit weekly cost for alternative provision of £943.93.

He said, (at para 52), that even though the exact amount of the increase in the rate for 2025-26 was not ratified by the council until after the date of the decision, “a report presenting the comparison fairly would have needed to draw attention to the fact that the £852.69 figure was two financial years old, referred to the 2024-2025 increase [of 4%] and said whatever could be said in February 2025 about the projected increase for 2025-26.”

He noted that by adopting a per-unit weekly cost that was 10.7% higher, the annual costs savings would reduce from £867,295 to £524,000. He concluded that adoption of a figure that was two years out of date “without addressing it” did constitute “a logical error or critical gap”.

However, the High Court judge also observed that the council had regard to broader factors beyond the saving in budgeted costs. He noted that even when the figure of £852.69 was increased by 10.7%, there was still a saving “which let it not be forgotten is an annual figure” of in excess of £500,000 against budget.

Considering the appeal against this conclusion, Lord Justice Zacaroli said: “In my judgment, for the following reasons, the continued reliance on the figure of £852.69 is not misleading, at least not materially so having regard to the nature of the decision and the overall context in which it was made.

“First, the officers’ reports did not purport to identify the figure of £852.69 as an up-to-date figure. The Cabinet knew that it dated from early 2024, because members had seen it used in earlier reports, and they had before them the March 2024 report.

“Second, the Cabinet was expressly told, in the December 2024 report, that the information used to inform the analysis as to likely cost savings was based on outdated values, and that actual values for 2025/26 might change, although this was unlikely to be material. The officers had taken the view that it would be confusing to update the precise figure for the cost of external provision in each report. That was a perfectly rational view to take.

“[…] Third, taking a realistic view, the Cabinet must have been aware of the possibility, at the very least, that the figure of £852.69 was likely to be out of date. The amount the council pays to independent providers, although based on a decision reached by the council itself, will inevitably increase as the cost to the independent providers of running a care home increases. The Cabinet was aware – from the detailed 5-year financial information, that the cost of running the Homes was increasing year-on-year.

“Fourth, the extent of the costs savings to be made must be seen in the context of the council’s overall strategy, namely that, in circumstances where it was under severe financial constraints and was struggling to balance its budget, it wished to focus its limited resources away from residential care, which was well catered for by the private sector, and towards areas where it was needed because there were fewer providers and fewer options for people.

“Fifth, and having regard to that wider strategy, the important point was that substantial amounts would be saved by selling the Homes. It is unrealistic to think that savings of more than £500,000 every year against budgeted income, plus the avoidance of unbudgeted overspend and substantial capital costs over the coming years did not count in that context as “substantial” or (as it was put in the December 2024 report, “an attractive option financially”). As to Mr Mant’s submission that the members of the Council had to weigh the financial benefit of the proposal against the risks and disbenefits, and this meant that a reduction in budgeted savings from £867,000 to £524,000 was material, I disagree that the decision for the Council can be viewed as a simple balance between those two factors. It was a decision based on broader considerations.”

Lord Justice Zacaroli observed that whether or not the reference in the February 2025 report to “potential revenue cost savings of more than £0.8 million each year”, if taken in isolation, could be said to be inaccurate, viewed in context it could not be said that the use in the report of an outdated figure of £852.69 for the per-unit weekly cost of external provision was “materially misleading”, or that it was irrational for the council to rely on it in making the decision in question.

He added: “Given my conclusion on the issue raised by the respondent’s notice, it is unnecessary, if the other members of the Court are in agreement, to consider the second ground of appeal.”

Lady Justice May and Lord Justice Dove agreed.

Lottie Winson