A court has dismissed an appeal over a dispute related to an alleged €6.6 million shortfall out of €53.7 million paid by the HSE for the Mater private hospital group to make its facilities publicly available during the Covid-19 pandemic.
The Court of Appeal upheld a decision by the High Court that Oval Topco Ltd and its operating firms had to repay €673,000 to the HSE for interest on loans held by the private hospital company.
The court also ruled they were not entitled to €830,600 for depreciation and also dismissed the remainder of Oval Topco's monetary claim.
Oval Topco, whose parent is Luxemburg firm Oval Healthcare Infrastructure Sarl, acquired the hospitals in the Mater group for €603 million in 2018. Oval Healthcare is majority owned by InfraVia IV Invest Sarl and by Oval Co-Investment Fund SCSp.
Oval Topco, along with its subsidiary companies Mater Private Hospital, Mater Private Cork Ltd and Spireview Equipment Unlimited Co, which operates the Limerick Radiotherapy Centre, sued the HSE in 2020.
The HSE had entered into an agreement with Oval Topco that the group would make their hospitals' "full capacity and services" available to HSE for the treatment of public patients, both those suffering from Covid-19 and otherwise.
Pandemic
While €53.7 million was paid, Oval Topco claimed a failure to pay €6.6 million was a breach of a legally binding agreement in which its facilities were made available in the early months of the pandemic. This had meant none of its normal private work was available, it was claimed.
The HSE denied the claims and counterclaimed for the return of just over €1 million it had paid towards interest costs which Oval Topco claimed for on its financing arrangements to buy the hospital group.
The HSE claimed the finance costs were "a mechanism for value extraction for Mater Private's shareholders or represent a distribution to shareholders". Oval Topco denied that claim.
The arrangement with the HSE was for the first three months of the pandemic, extendable at the option of the HSE, with the plaintiffs providing monthly detailed cost statements.
The HSE failed to make payment in 2020 relating to €4.6 million for June along with a balancing payment of just over €2 million for May, it was claimed. High Court proceedings followed.
In September 2022, the High Court dismissed most of Oval Topco's claims. It did find in favour of the company in relation to one claim that the HSE breached another clause in the agreement by refusing to agree to refer the dispute for expert determination.
Oval Topco and its co-plaintiffs appealed on some 50 grounds. They included that the High Court judge erred in failing to address the expert evidence, in his interpretation of the word "service" in the agreement, in failing to allow interest on a loan in the context of the acquisition of a business, and in his interpretation of "operational costs".
Upheld
On behalf of the three-judge Court of Appeal, Mr Justice Donal Binchy upheld the High Court judge's decision.
Oval Topco had argued the High Court judge erred in relation to his decision about the "use of infrastructure" or an allowance for normal wear and tear.
The Court of Appeal said the exercise undertaken by the High Court judge in his analysis of this issue was undertaken in a manner entirely consistent with the well established principles of contractual interpretation and with the guidance of a 2017 Supreme Court decision.
Oval Topco had also disputed the High Court decision in relation to interest payments.
The Court of Appeal said the Oval Topco plaintiffs failed to establish that the interest costs incurred by them under their acquisition loans were related to “the ongoing provision and operation of the service”.
It followed that the High Court judge was correct in his conclusion that those interest costs were not operational costs within the meaning of the agreement with the HSE, it said. They were therefore not entitled to reimbursement for them.
