Mental capacity – Litigation

Summary

This case, a full transcript of the judgment of which is not available, bears brief mention as it adds another piece to the puzzle relating to the provisions in CPR Part 21 relating to the settlement of proceedings where the Claimant lacks litigation capacity. It is therefore to be read alongside the judgments in Dunhill v Burgin (the most recent being [2012] EWHC 3163 (QB)), on its way to the Supreme Court. In summary, Ms Coles (by her father as litigation friend) applied for the Court’s approval of a personal injury settlement reached with the defendant. In light of the Dunhill v Burgin decisions, in which retrospective doubt had arisen as to the claimant’s capacity to enter into a binding agreement, she sought the approval of the court. As at the point of seeking such approval, there was no determination by the court that she was a protected party for purposes of CPR Part 21, and the question therefore arose whether the court had jurisdiction to approve the settlement. The Claimant submitted that the court could approve the settlement in the exercise of its inherent jurisdiction. The Defendant did not dispute that proposition, but submitted that on a proper construction of CPR r.21.10, a court’s approval of a settlement agreement could only be valid and effective if it had made a prior determination that the claimant was a protected party. It would appear from the Lawtel summary that neither party in fact alleged that the claimant lacked the capacity to enter into the agreement.

Teare J held that the court could approve the settlement in the exercise of its inherent jurisdiction (and would do so for reasons which need not concern us). He was further reluctant to order that there should be a determination of incapacity where capacity was not in issue, since such a trial would be disproportionate and immensely costly. He found that the concern expressed by the Defendant’s insurers as to the effectiveness of seeking court approval of a settlement agreement where a Claimant had not been declared to lack capacity was unfounded: on a proper construction of CPR r.21.10, the rule simply required that there had to be court approval in order that a settlement of a claim by a protected party be valid. If the court approved a settlement and it were later determined that the Claimant lacked capacity, the effect of r.21.10 would not be that the settlement would be invalid, but rather that it was in fact valid as it had been court-approved.

Comment

This case is of some significance to those involved in personal injury proceedings involving claimants who (potentially) lack litigation capacity and, specifically, capacity to enter into a settlement. Whilst we await the ruling of the Supreme Court upon the components of such capacity and the precise retrospective effect of CPR r.21.10, this judgment provides a pragmatic solution in positions of potential doubt, by confirming that approval of a settlement will serve to protect the Claimant (and indeed the Defendant) in the event of a later question as to the Claimant’s capacity, and that it is not necessary for the potentially expensive and time-consuming exercise of determining that capacity be undertaken prior to such approval.