The Court of Appeal has dismissed an appeal by four Mater Private Group companies over payments claimed under an agreement that made private hospital capacity available to the Health Service Executive during the COVID-19 pandemic.
In a judgment delivered on 1 March 2024, Mr Justice Binchy, with whom Mr Justice Haughton and Mr Justice Allen agreed, upheld the High Court’s dismissal of claims for loan interest and depreciation. The appeal court also dismissed a challenge to the refusal of a further declaration concerning the HSE’s set-off of disputed payments.
The dispute concerned heads of terms signed on 3 April 2020 by the HSE and the appellants, along with 20 other health service providers. The agreement provided for reimbursement of operational costs on an open-book, costs-only basis. The parties did not conclude the further agreements they had anticipated, and the heads of terms remained in effect until 30 June 2020.
The companies argued that interest on loans used to acquire the hospital group was a reimbursable finance cost. The Court of Appeal accepted that the borrowing was related to the appellants’ ability to provide the contracted service: the loans enabled the acquisition of the group. But it held that acquiring the group was distinct from its ongoing operation and functioning. The agreement covered only operational costs, and the companies had not established that the disputed acquisition-related interest met that requirement.
The court also rejected the claim for €830,634 based on the hospitals’ 2020 budgeted depreciation. It agreed with the High Court that the budget figure informed initial estimates, but the agreement’s assessment and verification process applied to depreciation as it did to other cost headings. The final amount payable therefore depended on the depreciation actually recorded, rather than the budgeted figure alone.
The High Court had allowed claims for €377,072 in interest under a related-party loan and €116,695 under a syndicated loan, and entered judgment for the HSE for €673,186 after setting off the first amount against its counterclaim. It also declared that the HSE had breached the agreement by refusing to refer the dispute to an independent expert. The HSE did not cross-appeal that declaration, and it remained in place.
The Court of Appeal indicated that the HSE was entitled to its costs of the appeal. The appellants could request a short hearing within 14 days to argue for a different costs order.