By Kate McKinlay
This article is the first in a series of 2, dealing with the question of capacity in PI litigation particularly, and civil proceedings generally.
Capacity issues most commonly arise in two contexts in personal injury litigation. Firstly, where there are doubts over whether respect of either party has capacity to litigate, and secondly and often simultaneously, does the Claimant have the capacity to manage any settlement he or she may receive?
It will not come as a surprise that the most common territory for capacity issues to arise is in traumatic brain injury claims, where the claimant is likely to recover a significant amount in damages and has suffered significant cognitive damage. Do remember however that there will always be the odd case where a claimant who has pre-existing cognitive difficulties may be involved in an accident or claim and whose capacity is in doubt, common examples of which are elderly client suffering some form of dementia and passenger clients with learning difficulties and/or autism and/or other similar diagnoses.
FIRST STEPS: –
When do I need to think about capacity?
The short answer is WHENEVER there are ANY concerns about a party’s capacity to litigate.
Why? Because when a settlement has been agreed, and it subsequently emerges that a party lacked capacity at the material time, that agreement has no legal status, is not binding and can be re-opened. It is therefore in all the parties interests to clarify any doubt and/or disagreement as to at capacity as soon as it becomes an issue.
How do I go about it?
CPR Part 21 provides the formal requirements in relation to concerns about capacity. CPR r21.2 requires that “a protected party” MUST have a Litigation Friend to conduct proceedings on his/her behalf. ‘Protected party’ is code for a party who lacks capacity to conduct the proceedings. However other than that Part 21 is somewhat lacking in detail.
In order to find the test for identifying when a party is ‘a protected party’, you need to turn to the Mental Capacity Act 2005.
The Mental Capacity Act 2005
The Mental Capacity Act 2005 (“MCA”) is the authority on determining whether or not a person lacks capacity in any decision making area whether that be litigation capacity or capacity to have sexual relations.
The MCA firstly established the following guiding principles which thread through any capacity assessment and must be borne in mind when dealing with capacity issues:-
- There is a presumption of capacity (and this is decided on the balance of probabilities) (s.1 (2))
- A person is not to be treated as unable to make a decision unless all practicable steps to help him to do so have been taken without success. In practical terms this means considering alternative ways of framing the issues, what support may assist, what time of day would be best etc. (s.1 (3))
- Contrary to popular belief, capacity, or the lack of it, is subject and time specific. As such at any given time a person may have capacity to litigate but not to manage his/her property and affairs, or vice versa. s.2(1)
- And that capacity can fluctuate depending on the diagnosis that the person may have.
- An unwise decision is not an incapacitous decision (s. 1(4))
- Capacity cannot be established merely by reference to (a) a person’s age or appearance or (b) a condition or aspect of his behaviour, which might lead others to make unjustified assumptions about his behaviour (s. 1(5))
The test itself is a two stage test:-
- Does the person have an impairment of the mind or brain, or disturbance in the function of mind or brain? and IF SO, then
- Does that impairment or disturbance mean that the person is unable to make the decision in question at the time it needs to be made?
Having confirmed that there is an impairment of or disturbance in the function of the mind or brain and that there is a causal link between that impairment/disturbance, Section 3 of the MCA must then be applied to determine a person’s inability to make a decision and is as follows:-
..a person is unable to make a decision for himself if he is unable:-
a) to understand the information relevant to the decision
b) to retain that information
c) to use of weight that information as part of the process of making the decision, or
d) to communicate his decision (whether by talking, using sign language or any other means
Section 3 also includes some valuable safeguards:-
- A person is not to be disregarded as unable to understand the decision relevant to a decision if he is able to understand an explanation of it that is given to him in a way that is appropriate to his circumstances (using simple language, visual aids or any other means) (Section 3(2))
- The fact that a person is able to retain the information relevant to a decision for only a short period of time does not prevent him from being regarded as able to make the decision (Section 3(3))
- The information relevant to a decision includes information about the reasonably foreseeable consequences of (a) deciding one way or another or (b) failing to make the decision (Section 3(4))
All this of course applies as much to litigation capacity as to any other area of capacity. For the avoidance of doubt a person can be said to lack litigation capacity if he is she is unable to make those decision necessary “to conduct the claim or cause of action which the claimant in fact has, rather than to conduct the claim as formulated by her lawyers”.
Further it is an on-going responsibility of legal advisors that we are vigilant to questions as to capacity and wherever there is doubt or dispute that we progress through this checklist to reach a conclusion. If that conclusion is that the client may lack capacity to litigate and/or manage their property and affairs it is our duty to share that conclusion with the court.
Notably, one does not always need medical evidence for the court to make an initial and interim finding in relation to capacity. For example I recently successfully persuaded the court to make provisional findings in relation to a severely paranoid party’s capacity on the basis of her behaviour in court alone, which was then sufficient for the Court of Protection to appoint a deputy on an interim basis notwithstanding that the party was asserting capacity.
If you determine your client does or may lack capacity to litigate and to manage and control any money recovered by or for him/her in the proceedings within the definition of the MCA 2005, then
- The question of capacity may need to be determined by a court (this will be discussed further in Part 2)
- A Litigation Friend will need to be appointed to conduct proceedings on behalf of your client
- A deputy may also need to be appointed (CPR r21 PD para 10 requires that, wherever the sum exceeds £50k; a deputy must be appointed (unless a person with a Lasting Power of Attorney in relation to property and affairs exists)).
In order for someone to act as a litigation friend in civil proceeding he/she must demonstrate that
- He can fairly and competently conduct proceedings on behalf of the protected party
- He has no interest adverse to that of the protected party and
- Where the protected party is a claimant, undertakes to pay any costs which the protected party may be ordered to pay, subject to any right he may have to be repaid.
In order to become a Litigation Friend the person must usually file and serve a certificate of suitability (CPR r21.5). If a deputy appointed by the Court of Protection he/she will need to file an official copy of the appointing court order. The court also has the power to appoint a Litigation Friend to so subsequently vary or revoke that appointment (r21.6 and 21.7)
The LF then acts as the Claimant’s statutory agent so to speak, and can take all the decisions (save for those which require court approval e.g. compromises) in the litigation process that the Claimant would otherwise make him or herself.
The Official Solicitor (Official solicitors office) will act as a litigation friend of last resort i.e. where no other person is willing and able to do so. Bear in mind that the Official Solicitor will always require confirmation that he is indemnified as to the protected party’s costs of legal representation, which will usually be via the estate of the incapacitated party in personal injury claims.
In contrast, the deputy has the power to make decisions in relation to the Claimant’s property and affairs, for example, to buy or adapt a property or spend money on rehabilitation. Which means the deputy may need to be more closely involved in the case than you might initially think.
A common example is the application for an interim payment in a substantial brain injury case. In such a case the deputy would act first in making the decision on a ‘best interests’ basis as to the merits of buying a property. He/she would then, so far as necessary obtain COPs approval of the proposed purchase. It would then be for the LF to handle decisions in relation to making an application to court for the interim payment and assessing the prospects of success.
How/When Is A Deputy Appointed?
In the absence of a pre-existing Power of Attorney, it falls to the Court of Protection to appoint a deputy to manage the Claimant’s property and affairs. This is normally done on the papers in response to a specific allocation with the costs limited to the issue fee of £400 and can usually be done as urgently as is required. In fact the Court of Protection is very responsive to urgent application provided that they are clearly marked so and can be done as soon as a substantial award is contemplated and/or there is evidence that the protected party has assets/income which need to be managed. Please note there does usually need to be some property and affairs to be managed (e.g. the imminent compensation award). If there is an issue as to future residence, the Court of Protection may also be invited to make a ‘best interests’ welfare decision on behalf of the protected party before leaving the Deputy to administer the award accordingly.
The rules are non-specific about the when that deputy needs to be appointed however it is recommended that where the sum is substantial he/she ought to be appointed BEFORE litigation is commenced. As stated above this brings the advantage that he may be able to act as Litigation Friend without further court order (see CPR r21.4 (2)) as well as the obvious benefit of early professional advice on financial matters and decision-making power in respect of investing /disposing of any interim awards which in turn is likely to increase the merits of any interim application.
If however, the deputy is appointed during the course of the proceedings, the Litigation Friend will necessarily be different (having already been appointed) and is usually a family member. In these circumstances is recommended that, if the fund is substantial, a professional deputy is appointed, albeit there will be annual charges to be paid by the estate and additional charges based on hourly rates in relation to any bespoke pieces of work.
SUMMARY / PRACTICE POINTS:-
- Don’t shy away from concerns about capacity – they may come back to bite you
- If there is doubt/disagreement be prepared to obtain a report from a relevant expert
- Consider at an early stage whether the level of likely compensation will need/merit the appointment of a deputy and if so, act early.
- Be aware that you may need a Litigation Friend to be appointed pending a final determination about capacity.
- The Court of Protection is a specialist jurisdiction established to both safeguard those who lack capacity and to provide expertise in capacity issues and best interests decision for protected parties and should be used accordingly.
 Dunhill v Burgin  UKSC 18
 Dunhill v Burgin  UKSC 18 para 18
Watch out for Part 2 next month (February) when I will deal with recent case law and tricky decisions…
Disclaimer: Nothing that I say in this article represents legal advice, and I cannot accept any liability for any negative consequences (of any kind) that may arise if you take action (or do not take action) upon anything that I say here.