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Articles | Wed 18th Nov, 2020
The necessary mechanism to manage an award of damages secured on behalf of a protected party can give rise to a number of practical difficulties, particularly where the damages have been reduced due to contributory negligence or litigation risk. Further difficulties can also arise in cases where capacity is contested.
In Re: T, HHJ Harrison considered these issues in the context of a request to approve settlement in a claim arising out of a brain injury suffered by a 61 year old man following a serious RTA. As is often the case there was a dispute between the parties as to whether the Claimant had capacity to manage his finances or not. The Claimant’s evidence suggested that if the jurisdiction of the Court of Protection was invoked the management costs would be in the region of £270,000. The Defendant’s counter schedule suggested that the correct level of award for this head of loss was nil.
It was, however, accepted that the Claimant had capacity to, and had in fact invoked, a Lasting Power of Attorney in favour of his wife. This was not inconsistent with the suggestion that he lacked capacity to manage his finances since capacity is issue specific and the test to determine whether someone is able to understand the purpose and scope of an LPA is lower that the test to determine whether an individual has capacity to manage their affairs. The LPA provided the authority to manage the award (without the involvement of the Court of Protection) unless it was revoked or all attorneys retired. The settlement proposal was for the award to be managed via this mechanism with the Attorney instructing an accountant to produce the annual tax return and also taking legal and financial advice from time to time, for example if they wished to invest the damages into accommodation or similar. The award therefore consisted of a claim for gratuitous and professional assistance.
Prior to the approval hearing the Attorney had taken independent legal advice on her responsibilities under the LPA. She was therefore able to demonstrate to the Judge an appreciation of her obligations such as the need to carry out the donor’s instructions where he had capacity to provide them, maintain accounts and keep funds separate to her own. Two suitable ‘back up’ attorneys were in place in the event the Claimant’s wife was unable to fulfil this role. Evidence had also been obtained confirming that whilst there was limited need to protect benefits, the Claimant’s wife in her capacity as Attorney, could (providing steps were taken to avoid the mixing of personal injury funds and other assets) apply to the Court of Protection for permission to set up a Trust following the conclusion of proceedings, if (given the contested capacity evidence) it transpired that the Claimant did not in fact have capacity to self-settle the funds.
The Judge concluded that settlement on the basis that the award would be managed using the LPA, whilst unusual, was reasonable. He took particular note of the fact that: (i) the Litigation Friend was already managing a portfolio of pre-existing assets, (ii) both her and her husband wanted to manage the damages using the LPA, (iii) the award whilst substantial was not at the maximum end of the spectrum, and (iv) the concessions made in respect of contributory negligence would lead to a shortfall in any Court of Protection charges which would have to be made up from other heads of loss. It was acknowledged that whilst there was a theoretical risk that the Claimant could revoke the LPA (assuming he had capacity to do so), this appeared unlikely on the evidence. Most importantly it was accepted that the use of an LPA best achieved the core objectives of the MCA 2005 in that it accorded with the protected parties’ wishes and feelings and represented the least restrictive option. In this case a sensible and intelligent Litigation Friend had been very clear that she did not regard her role under the LPA as a burden whereas both her and her husband considered that the intervention of a Deputy would be. As such the proposed approach was reasonable on the facts of this case.
It should be remembered that the use of an LPA may be a possibility in borderline capacity cases, particularly where it is anticipated that the costs of managing the award could represent a drain on other heads of damages. It is, however, recommended that where such an approach is considered:
o sets out the safeguards in place to ensure the course of action is safe and sustainable
o explains why the use of an LPA could be expected to maximise the support available and promote the ability of the injured party to make his own decisions where possible
o details the injured parties wishes and feelings as to the preferred mechanism of financial support
o articulates why the use of an LPA represents the least restrictive option.
Abigail Stamp acted as Counsel for the Claimant, instructed by Glyn Maddocks of Gabb & Co.