Penningtons welcomes pragmatic approach to settlements where claimants may lack capacity

Posted: 22/07/2013

Mr Justice Teare has recently handed down judgment in the High Court in the case of Rebecca Coles v David Perfect & Others and provided a pragmatic answer to a question that has troubled many parties involved in cases where claimants suffer brain injury and make a good recovery but remain with residual effects and a question mark over their ability to manage their own affairs, finances and litigation.

In this case, the claimant suffered a head injury in a boating accident on the River Orwell. Settlement was agreed between the parties. For various reasons, including issues relating to the level of insurance indemnity, the matter came before the High Court for approval of a settlement agreed between the parties. At this hearing it was clear that whilst the claimant had made a good recovery in many respects, she remained with ongoing effects of the brain injury she had suffered. At no stage had she been assessed as lacking capacity to conduct the litigation although there were concerns raised as to whether she did indeed have capacity. It therefore fell to Mr Justice Teare to determine whether, if he approved the settlement in circumstances where the claimant was felt to have capacity but there was potential for argument that she did not, the settlement would still be valid if she was later found to lack capacity given that it was not made in circumstances where the claimant was deemed to lack capacity.

In his judgment Mr Justice Teare concluded that the approval of the court to the settlement would be binding, even if the claimant was later held to lack capacity: “I am satisfied, firstly, that the court has an inherent jurisdiction to approve the settlement. ….. It seems to me that if the court approves the settlement and if hereafter it should be determined that the claimant lacks capacity, that the effect of CPR 21 rule 10 will not be that the settlement is invalid but that it is valid because it will have obtained the approval of the court. For those reasons, the court will approve the settlement.”

Philippa Luscombe, head of the personal injury team at Penningtons, said: “This seems to me to be a very sensible approach by both the parties and the court. It is often the case that individuals make a good but incomplete recovery from a brain injury and are felt largely to have capacity to manage their affairs – specifically the litigation - but some concerns exist about their remaining cognitive deficits. In circumstances where a claimant obviously lacks capacity, there are a number of steps which have to be followed to ensure that settlements are appropriate and funds are protected, but for someone with borderline capacity, there is little protection. From a defendant’s perspective, the possibility of a settlement being challenged years down the line because of an allegation then that the claimant lacked capacity at the time, is not appealing. This route therefore of obtaining court approval to the settlement, with it being acknowledged that there is a possibility that the claimant lacks capacity, seems a very sensible way forward to protect both sides.”

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