Dissolving a GP partnership does not automatically terminate the practice’s GMS contract, even where the dissolution was not agreed by all the partners. That was confirmed by the High Court in Bhat v NHS Litigation Authority [2024] EWHC 375 (Admin), a judicial review decision that corrected a determination by NHS Litigation Authority (now operating as NHS Resolution) which had wrongly treated a partnership dissolution as bringing the GMS contract to an end.
We should be clear about the court that decided this: Bhat was heard in the High Court’s Administrative Court, as a judicial review of NHS Litigation Authority’s determination, not by the Court of Appeal. It is nonetheless the leading and most directly relevant authority on this specific question, and it matters to every GP partnership going through a partner’s departure without full agreement from everyone involved.
The facts behind the case
The practice at the centre of the case had a partnership consisting of two equity partners, one a registered GP, and a salaried partner who had previously worked as the practice manager but by late 2021 had no active involvement in the practice. In November 2021, a dispute arose between the equity partners and the salaried partner. The equity partners served notice of dissolution of the partnership on the salaried partner, who did not challenge the notice. Despite the dissolution notice, the equity partners continued running the practice exactly as before: the assets and liabilities stayed within the ongoing partnership, and there was no full winding up of the business.
The equity partners also gave notice of the dissolution to the local commissioner (then the CCG, now the ICB). A dispute arose over what this meant for the GMS contract, and it was referred to NHS Litigation Authority for determination under the NHS dispute resolution procedure.
What NHS Litigation Authority got wrong
It was common ground that the partnership had operated as a partnership at will, with no written agreement in place. NHS Litigation Authority accepted that earlier changes in the practice’s partnership composition had been “technical” dissolutions, where the business continues without a break, rather than “general” dissolutions involving a full winding up, and that regulation 15 of the National Health Service (General Medical Services Contracts) Regulations 2015 and Schedule 1 of the GMS contract meant those earlier changes had not disturbed the contract.
For the November 2021 dissolution, however, NHS Litigation Authority took a different view. Because the salaried partner had not agreed to leave, the authority determined that this amounted to a general dissolution by operation of law, that regulation 15 therefore did not apply, and that the GMS contract had terminated and been replaced by a fixed-term contract running only until March 2022. The equity partners applied for judicial review of that determination.
The High Court’s reasoning
The court held that NHS Litigation Authority had erred. The judgment found that the idea a partnership dissolution automatically terminates a GMS contract is inconsistent with the framework of the 2015 Regulations. Specifically, the court held:
- The distinction NHS Litigation Authority drew between a “technical” and a “general” dissolution was ill-founded as a basis for the decision. Where a partnership continues in business without a break, that is a technical dissolution, and while this will usually happen by agreement, agreement of every partner is not an essential ingredient of a technical dissolution.
- Regulation 15 provides that, on dissolution of a partnership and formation of a new one, the GMS contract subsists and is treated as made with the partnership “as it is from time to time constituted”. A change in the membership of the partnership is precisely the situation regulation 15 is designed to address.
- There is no lawful basis for reading into regulation 15 or Schedule 1 of the contract a requirement that any change in partnership composition must be agreed by all partners, that it must be a technical rather than a general dissolution, that there must be a written partnership agreement rather than a partnership at will, or that the position is different where a partner has served notice of dissolution.
In this case, the newly constituted partnership was still operating under the same name, from the same address, providing the same services to the same patients, and the court held that NHS Litigation Authority’s determination would have had the unattractive effect of automatically ending NHS contractual arrangements with a practice whenever an expelled partner simply did not challenge or formally agree to their departure, forcing practices back into open tender for their own contract in circumstances Parliament plainly had not intended.
What this means if your practice is going through a partnership change
Bhat confirms that the starting position for any GP partnership going through a partner’s departure, whether by agreement, retirement, expulsion, or a more contentious dissolution, is that the GMS contract continues with the reconstituted partnership under regulation 15, regardless of whether the departure was agreed by everyone, and regardless of whether the practice has a formal partnership deed or is operating as a partnership at will. This is a genuinely reassuring position for practices going through a difficult partner exit, but it is not unlimited.
The 2015 Regulations still allow a commissioner to terminate a GMS contract in specific, defined circumstances connected to partnership changes: where a dissolution is actually ordered by a court, tribunal or arbitrator, or where the commissioner reasonably concludes that a change in partnership membership is likely to have a serious adverse impact on the ability to deliver services under the contract, in which case the commissioner must set out its reasoning in the termination notice itself. Bhat does not remove these grounds; it corrects the much broader, and incorrect, proposition that any non-consensual dissolution automatically ends the contract. We explain how these termination grounds interact with the wider notice-based dispute process in our article on responding to an NHS contract dispute, and separately in our article on automatic contract termination, since not every ending of a GMS contract goes through the notice procedure at all.
Why this still matters even with a properly documented exit
Practices with a well-drafted partnership deed are in a stronger position generally, because expulsion, retirement and dissolution are governed by clear contractual terms rather than the Partnership Act 1890’s default rules. But Bhat is a useful reminder that even a partnership at will, the weakest possible starting position under partnership law, does not automatically put the GMS contract at risk simply because a partner’s departure was contested rather than agreed. We set out the wider legal options for managing a partnership dispute, including where it does escalate towards a genuine dissolution, in our guide to resolving a GP partnership dispute.
What This Means for Your Practice
If NHS England or your ICB suggests that a partner’s departure, agreed or contested, has terminated your GMS contract, that position should not be accepted without checking it against regulation 15 and the specific termination grounds in the 2015 Regulations. Bhat is directly on point and confirms that continuity of the contract, not automatic termination, is the correct starting assumption.
If this affects your practice and you would like to talk it through, get in touch with our healthcare team or our dispute resolution specialists, call us on +44 207 566 1188, or email info@gurvelegal.com.
