ELCAP's pleadings contain averments about the management of Mr Milne as a patient. It is averred that he became a patient of Dr Adrian Lodge. It is averred that on about 31 July 1992, Mr Milne was "discharged as a patient" by Dr Lodge, who at that time was of opinion that Mr Milne did not need continuing medical care provided, and wholly funded, by the National Health Service. It is said that Mr Milne had a moderate learning disability but was able to read, write and communicate with others. He required support to live in the community but he did not require continuing medical care.

1 August 1992 was the date on which ELCAP took over management of the Hopetoun Unit. ELCAP aver that they are a company limited by guarantee whose purposes are charitable in terms of section 505 of the Income and Corporation Taxes Act, 1988. After 1 August 1992, ELCAP ran the unit as a registered nursing home under a lease granted by the Secretary of State for Scotland. ELCAP state that they entered into an agreement with Lothian Health Board. The agreement, which is of considerable complexity, and includes a number of schedules, is incorporated into the pursuers' pleadings. The pursuers say of the agreement that:

"It was the intention of both parties to said agreement that not later than five years from 1st August 1992, the pursuers would close the Unit and replace it with a network of structured care and accommodation places in a number of ordinary dwelling houses in East Lothian (hereinafter referred to as "the replacement units"). In terms of Clause FOURTH of the agreement the parties agreed that a jointly approved assessment of all the Unit's residents required to be conducted to provide assurances that the care and support which each required could be adequately provided in the replacement units. They agreed that any residents whose needs were assessed as being properly the continuing responsibility of a National Health Service managed unit would remain the responsibility of the Board."

So far as Mr Milne was concerned, one can glean from the pursuers' admissions that he had been supported in the unit as a national health patient until the pursuers took over. Neither Mr Milne nor Mr Gilmour was a party to nor consented to the agreement between ELCAP and the Board. What is said is:

"Explained and averred that the deceased's curator bonis was made aware, through a meeting with Linda Headland of the pursuers on or about 29th August, 1991 and correspondence to him from the pursuers prior to 1st August 1992, of the changes which were to take place that would affect the status of the Unit and its residents and of the financial implications for the residents such as the deceased. He was advised by Linda Headland that the cost of care after the pursuers took over the Unit would be borne by the resident; that, if eligible for state benefits, the resident could make a claim for benefits which could be used to meet care costs; and that, if the resident was not eligible or did not claim for any reason, he would require to meet the costs from his own resources. The curator bonis was advised, in correspondence, of the date upon which the Unit was to become a registered nursing home and was also advised of the amount of the pursuers' charges for providing care for the deceased."

The substance of the implied contract claim is based on averments of the curator's actings and is set out as follows:

"By letting the deceased reside at the former Hopetoun Unit after it became a registered nursing home and subsequently at ... Musselburgh in the knowledge that the pursuers would be making a charge for the provision of care, he impliedly accepted, on behalf of the ward's estate, an obligation to meet the pursuers' charges. Having done so, the estate of the ward, now vested in the defender, is contractually responsible for the pursuers' charges."

It is admitted that Mr Gilmour required the consent of the Accountant of Court to encroach on capital to pay care charges. The pursuers aver that they do not know what permission was sought or given, but say that they believe that the Accountant indicated in 1994 that Mr Gilmour should pay the charges.

The analysis of the pursuers' contract case by Mr Peoples was that ELCAP had provided a service for as long as Mr Milne remained in their care in the expectation of payment, based on the discussions with Mr Gilmour. It was accepted that Mr Gilmour had expressed disquiet at the proposals for Mr Milne's care. He had been referred to the Health Board to take up with them their continuing responsibility for Mr Milne's care. He could not say that there was any communication between Mr Gilmour and the Health Board which would have pointed to the termination of the relationship under which Mr Milne had been maintained as a national health service patient until 31 July 1992. But it was averred that a national health consultant who had had care of Mr Milne had discharged him. He could not aver that that decision had been communicated to Mr Milne or Mr Gilmour. He accepted that the physical status quo did not change at 31 July or 1 August 1992.

For the defender it was argued that there were no relevant averments to support a case of implied contract. There had been a repudiation of liability for the charges throughout the life of Mr Milne. There had never been payment. Care had been provided by ELCAP in the face of that repudiation. The factual background was that a service had been provided by the state for a long continuous period. The relevant regulatory bodies had made a private arrangement which amended the basis on which care was provided. But the basis on which the contract case was to be supported was not made out against that background. The pursuers did not aver the statutory background to the provision of the service, nor any change in it, nor how it created a liability for payment. There was no basis averred for a typical common law case of implied contractual liability to pay for a service. One could not ignore the basic facts that one was dealing with an incapax; that the starting point was national health service care of that incapax; and that there was said to be an arrangement affecting him made between two third parties without reference to him or the consent of his curator.

The National Health Service and Community Care Act, 1990, so far as material, was brought into effect on 1 April 1993. None of its provisions were relied on to support the pursuers' contractual case. As averred that case depends on the proposition that arising from discussions with Mr Milne's curator bonis in 1991, there was an implied obligation to pay for care for the rest of Mr Milne's life, as events happened, despite Mr Gilmour's refusal to pay. The case remains on the same basis throughout, and the implied consent therefore had to subsist after Mr Gilmour's refused payment. The claim was founded on the general rules entitling the professional supplier of a service to remuneration when that service is supplied: Gloag on Contract second edition page 291. There are, however, a number of difficulties with that approach. In the first place, ELCAP claims, in averment, to be a charitable company. Whatever might be the ordinary implication in the case of a professional person supplying a service within the scope of his professions, or a trader supplying a service in the ordinary course of commercial trade, it is not obvious that a charitable company is in the same position. The supply of care services for reward would be a trade generally within the scope of Schedule D. Since the work of the trade in question could not be carried out by the beneficiaries of the charity, the elderly infirm and sick people cared for, the pursuers could qualify as a charity in respect of trade profits only if the trade were exercised in the course of carrying out a primary purpose of the charity. That might be the case of the sick. But it is the pursuers' position that Mr Milne was not sick at the material time. However, if one accepts as well founded the averments that ELCAP is a charity, the basic position is in distinct contrast to ordinary commercial relationships. Further, if the pursuers were in ordinary contractual relationships with individuals such as Mr Milne, that would involve an innovation on the pre-existing relationship with the Board such that one would require clear averments of acceptance of the change from the free provision of the service to provision on a commercial basis if there were to be consensus. The pursuers' averments are not apt to support contract. There is no reference to consensus. On the contrary there are averments of unilateral assertion of a right to payment, taking the averments at their highest, with a suggestion that if Mr Gilmour did not like it he could complain to the Board. So long as consensus remains of the essence of contract one requires more than a unilateral assertion of claim as a basis for implied contract. There are other problems. The service was supplied for years without litigation. The pursuers' demands for payment were never met. There is no suggestion that the pursuers were ever prepared to eject Mr Milne, or otherwise change his care regime apart from moving him into a residential home outside of the unit. On the contrary they continued to supply the service he had previously enjoyed.

Mr Peoples was unable to point to any parallel in the authorities. The pursuers' contract case is an attempt to imply an obligation to pay in the teeth of refusal to pay for the service when it was being supplied. If there is the basis of a case in the wider context of the statutory and regulatory system under which the National Health Service operated at the time, it is not apparent from the pleadings. Mr Peoples was given an opportunity to consider whether he could strengthen the case by amendment. He declined on the basis that the pursuers were a charitable company, and that that presented difficulties in relation to expense. Whatever the merits of that explanation, the deficiencies in the contract case were clearly focused and the opportunity to consider amendment was declined after careful thought.

The alternative case is expressed as follows:

"Alternatively, in the event that the pursuers have no right based on implied agreement to recover their charges, they are entitled to seek recovery on the basis of recompense. The pursuers incurred substantial expense in providing accommodation, lighting, heating, food and support for the deceased without any intention on their part to benefit the deceased free of charge. They did so, at all times, upon the basis that they were entitled to make a charge upon the deceased's curator bonis as the person managing the affairs and estate of the deceased."

The defenders attacked this approach on an analysis of the agreement incorporated into the pleadings. They were clearly entitled so to do. There must be considerable doubt about the legitimacy of the pursuers' approach to introducing this agreement into the pleadings without focusing on any of its provisions or otherwise indicating its relevance to the issues between the parties. It is singularly unhelpful to put in issue the whole of the contents of such an agreement in a wholly unstructured way without indication of what parts might be relevant, how they might be relevant, and what point is sought to be made. However, having done so, they can have no legitimate complaint if the defenders analyse the agreement and seek to show that it is incompatible with the case they seek to make.

The narrative of the agreement set out that the Board was charged by the Secretary of State for Scotland with responsibility for making provision for the health needs of its constituents, that ELCAP was established to provide services for persons with mental handicap, and that the agreement was entered into. Provision was made for the transfer or secondment of staff. Clause FOURTH of the agreement narrated the basis on which care would be taken over from the Board. It set out, inter alia:

"It is agreed between the parties to this Agreement that a jointly approved assessment of all Hopetoun Unit residents will require to be conducted to provide assurances that the care and support which each requires can be adequately provided in the replacement units ..."

The assessment was to be carried out not later than thirty months after the pursuers took over the premises. The parties were to agree the necessary mechanism for settling financial adjustments to be made within twelve months. It was contended by the defender that the structure anticipated a proper system of assessment to ensure that the Board would continue to carry out its continuing statutory obligations towards those with continuing medical problems which meant that they could not simply be put out into the community. The review arrangements were to be made in the future after the pursuers had taken over. Clause FIFTH provided for constant review of the financial situation. Clause SIXTH provided that ELCAP should collect all charges. Clause SEVENTH provided that the residents of the Hopetoun Unit at the transfer date:

"will be considered to permanently reside in Hopetoun until such times as the service which they require is relocated in the replacement units or they individually either elect to change their place of residence or until their General Practitioner considers it in the best interests of the resident that they be removed from the Hopetoun Unit."

This provision was relied on as showing that the continued residence of the person in the unit at the transfer date was not dependent on consent but was a matter of regulation affecting the individual, but determined between the Board and ELCAP. Clause TWELFTH appeared to provide for the financing of the pursuers' operations by financial assistance under a specified National Health Service circular, with provision for fluctuations to reflect increases in salaries and other costs. The Board undertook to make payment of a sum equal to the rent payable to the Secretary of State. ELCAP were obliged to maximise income from residents, and to apply any surplus to the development of the service. The fourth schedule, on operational policy, provided for the application of residents' finances to finance the running of the unit, and the development of the replacement units. Residents with independent means were to be identified before registration of the unit as a residential home, and interviews were to be conducted inter alia to consider financial implications for them. Reading the documents as a whole it appeared that the Board had made arrangements for the discharge of its statutory function for a period, with the application of its finances for that purpose, with the view to generating a surplus which could be used to provide the replacement units. Further the schedule provided for contracts of residence. It appeared that the pursuers were established as the Board's agents for the provision of a statutory service. There might be a partial explanation of these complex arrangements in the decision in White and Others v. Chief Adjudication Officer and Others [1993] TLR 439.

Counsel for the defender referred to Gloag on Contract pages 291, 320-1, 328- 9; the Stair Encyclopaedia volume 15, paragraphs 59-63; and Gloag & Henderson paragraphs 29.12 to 29.15. A claim for recompense could not hope to succeed. The pursuers' operation were for their own benefit and the benefit of the Board. There were no averments of loss. There was nothing in the averments which supported the exercise of an equitable jurisdiction in favour of the pursuers. They were not said to have carried out any of the procedures anticipated in the agreement with the Board.

The pursuers' response involved listing twelve areas of factual dispute between the parties. The submission was that if there were such disputes there had to be proof. It is clear that there are factual differences between the parties. Whether proof is appropriate or necessary must depend on whether the pursuers should be permitted to lead evidence in support of the averments they make, given the fundamental attack mounted by the defender.

Mr Peoples' answer to the attack was that if the pursuers could not succeed on contract, they could on recompense. If the pursuers could prove that Mr Milne had been discharged in fact, even though there was no communication of that fact to him or his curator, then the basis for the curator's refusal to pay was undermined, and the door was opened to an equitable remedy. There was no reasoned objection to the pursuers' claim. One could instruct a loss in the relevant sense in respect that the provision of the service cost money. And there was a measure of the extent to which the deceased was lucratus in the pursuers' usual tariff. The agreement properly understood did not oblige the pursuers to take people in without payment.

In my view it is not possible to dispose of this aspect of the case without proof. I reach that view with some regret. There will be considerable difficulties in the conduct of the proof due to the overburden of irrelevancies introduced by the pursuers through the incorporation of extraneous material. But fundamentally there may be a case on a very simple basis, namely that the curator was made well aware that the pursuers intended to charge for the service; that he refused consent to that situation, but nevertheless permitted the deceased to enjoy the service provided; that there was and was known to be no gratuitous intent; that the provision of service involved expense; and that the estate was thereby lucratus to the extent of the pursuers' ordinary charges. The defender may be able to demonstrate on the terms of the agreement with the Board that the pursuers' case is without foundation in fact. It is my impression that the agreement may indeed be more favourable to the defender than to the pursuers in this respect. In particular it may be possible to demonstrate that until 1 April 1993 there was no loss. But that does not make the pursuers' case so irrelevant that it would be appropriate to dismiss it. Mr Peoples' response to the opportunity to amend to make the pursuers' case more clear and concise was as before: the pursuers could not volunteer to amend. Since this case is not governed by chapter 47 of the Rules of Court, there is no power to require the pursuers to focus their case more precisely.

I was referred to Lord Maxwell's views in Lawrence Building Co Ltd v. Lanark County Council 1978 SC 30 in support of the proposition that if proof were allowed at all, it should be allowed on both aspects of the case. I am not prepared to adopt that course in this case since I am of the view that the contract case is plainly irrelevant. I shall sustain the defender's first plea-in-law to the extent of repelling the second plea-in-law for the pursuers, and otherwise allow proof before answer.