Dr Nicholas Bevan

Dr Nicholas Bevan
www.nicholasbevan.com

Monday, 17 March 2014

SUPREME COURT SETS ASIDE CONSENT ORDER

Dunhill vBurgin [2014] UKSC 18


The Undersettlement

The Supreme Court has set aside a settlement of a personal injury claim by a woman who was knocked down and injured by a driver.  The Claimant was represented by a barrister and a trainee solicitor at court when her claim was settled in 2003 for £12,500.  Unfortunately no one realised that the Claimant lacked the mental capacity to conduct her claim.  Furthermore, her advisers did not appreciate certain factors that made the claim potentially a lot more valuable.  As it was, the terms of compromise were set out in a consent order signed by both parties’ counsel.

Later she consulted new solicitors who saw things very differently.  They realised that this was not a straight forward claim and, more to the point, they assessed quantum at a very different order of magnitude: of up to £2 million.  

In 2006 the new solicitors applied to set aside the consent order on the ground that (i) at the time the settlement was agreed, the Claimant had lacked sufficient mental capacity to conduct her claim so that she should have been a protected party, and (ii) the settlement was invalid because, being a protected party, the consent order agreed on her behalf required court approval under CPR Rule 21 for it to be valid. 

Civil Procedure Rules r21.10

CPR 'Rule (1) Where a claim is made –(a) by or on behalf of a child or protected party; or(b) against a child or protected party,no settlement, compromise or payment (including any voluntary interim payment) and no acceptance of money paid into court shall be valid, so far as it relates to the claim by, on behalf of or against the child or protected party, without the approval of the court.'


Decisions of the lower courts

The Defendant succeeded initially before Mr Justice Silber who held that the Claimant’s capacity was to be judged by reference to the (less complicated) decisions that she was actually required to take in the action as formulated by the original solicitors.  He found that as the Claimant could not rebut the presumption that she had that capacity, she was not a protected party.  The Claimant’s appeal to Silber J in the High Court succeeded and the Defendant appealed that decision.

When the matter was considered by the Court of Appeal, Lord Justice Ward held that the Claimant’s capacity was not to be assessed in the light of what was required of her in 2003, as presented by her lawyers but by taking into account her ability to comprehend and to conduct the proceedings as they should have been framed.  The case was then remitted back to the High Court but, given the important issues involved, the case was leapfrogged to the Supreme Court.


The SC Ruling

In the Supreme Court Lady Hale upheld the Court of Appeal’s approach.  She held that the correct test was to ask whether the Claimant had been able to conduct the claim or cause of action that she actually had, as distinct to the case as understood or pleaded by her lawyers. 

Applying this standard, she found that the Claimant had lacked the requisite capacity to conduct her case at the time her claim was settled.  She should have had a litigation friend appointed.  As the consent order had not been approved by the court under CPR Rule 2, it was invalid and should be set aside.

In delivering her judgment Lady Hale stated:

‘….the policy underlying the Civil Procedure Rules is clear: that children and protected parties require and deserve protection, not only from themselves but also from their legal advisers. …[Approving an earlier commentary on a previous version of the relevant rules[1]]…. the objects of the compromise rule was "to protect minors and patients from any lack of skill or experience of their legal advisers which might lead to a settlement of a money claim for far less than it is worth", a sentiment which has been carried forward into the current edition of Civil Procedure.’

The consent order being rescinded, she remitted the case back for a trial.

Implications

I will comment on the wider implications flowing from this decision separately.  Suffice it to say that the key point to take away from this ruling is that the CPR 21 applies whenever a party lacks mental capacity to conduct a claim; regardless of whether a party’s lack of capacity is known to anyone.

Court approval of settlements on behalf of children and protected parties is an absolute requirement: one that is imposed as a condition precedent to its validity.  It applies to all actions governed by the CPR, not just personal injury claims. 

Whilst is relatively easy to discern whether a client is a child, it is not always so obvious to discern that they have cognitive or other mental incapacity, particularly in the case of the elderly or where a claimant appears to be merely mildly eccentric or forgetful and disorganised; the mental capacity test is a fact specific one.  This presents legal practitioners, and in particular defendants, with something of a risk management issue.  They should incept appropriate measures to ensure where a party lacks the requisite mental capacity that it is spotted: in appropriate cases this may involve obtaining an expert medical opinion.  It is already best practice to routinely address the issue of mental capacity when instructing medical experts where there has been a head injury.





[1] The words in the square brackets are the author’s.

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