The appellant had been severely injured in a road traffic accident. He settled his claim for damages before action, but his solicitors failed to make proper arrangements to allow for his lack of mental capacity. A claim for damages was then brought by the claimant without a litigation friend and judgment was entered in accordance with the compromise for damages to be assessed subject to the 50% reduction for contributory negligence. The issue then arose whether the claimant had been a patient at any material time. The trial judge found that the claimant was a patient as at the date when judgment was entered giving effect to that compromise but that he was not a patient when the agreement was made. It was now sought to re-open the settment reached.
Held: The test of mental capacity was issue-specific and that it had to be applied in relation to the particular transaction in respect of which the question falls to be decided.
Hallett LJ said: ‘the issue was the issue of liability and the piece of business done was the compromise of the issue of liability not the conduct of the whole of the litigation.’
Arden LJ said: ‘It seems to me that the right approach must be to ask as a matter of common sense whether the individual steps formed part of a larger sequence of events which should be seen as one, or whether they were in fact self-contained steps which were not connected with each other.
the relevant transaction for the purposes of a compromise made at a time when legal proceedings are in contemplation should be treated in the same way as a compromise made in the course of those proceedings . . The logical time for solicitors to consider the capacity of their client to litigate must surely be before the letter before action is sent not after it is sent and immediately before the proceedings are issued. In that event they could find that the client had no capacity to bring the proceedings that he had threatened without the intervention of a litigation friend . . an individual can only properly evaluate an offer to settle a claim if he has some idea of what would follow from his rejection. So the individual must therefore have some capacity to understand what might happen in the course of the contemplated litigation. So some at least of the issues involved in the decision to litigate are also involved in the decision to compromise a claim which would otherwise have to be litigated . . there is no doubt that where a compromise is made in the course of litigation the test is whether the individual has capacity to conduct those proceedings . . I prefer the conclusion that the appropriate test in this case is whether the client had capacity to start proceedings. That would include the question whether he would have capacity for the purposes of an offer of compromise. I would add that, in my judgment, where a client seeks damages for personal injury because he has suffered a brain injury, capacity is a question that ought in general routinely to be considered by those representing him.
The assessment of capacity to conduct proceedings depends to some extent on the nature of the proceedings in contemplation. I can only indicate some of the matters to be considered in accessing a client’s capacity. The client would need to understand how the proceedings were to be funded. He would need to know about the chances of not succeeding and about the risk of an adverse order as to costs. He would need to have capacity to make the sort of decisions that are likely to arise in litigation. Capacity to conduct such proceedings would include the capacity to give proper instructions for and to approve the particulars of claim, and to approve a compromise. For a client to have capacity to approve a compromise, he would need insight into the compromise, an ability to instruct his solicitors to advise him on it, and an understanding of their advice and an ability to weigh their advice. So far as Mr Bailey was concerned, the receipt of damages could have a substantial impact upon him. He would need to know what he was giving up and what would happen if he refused to accept the offer of compromise.’
Ward LJ said: ‘I consider that the answer is provided by the terms of Part 21 itself and the several references in the rules . . to the purpose to be served by having a litigation friend, namely having someone able properly to conduct the proceedings on behalf of the patient. That is the capacity which the patient lacks. Thus the enquiry should be focused on the capacity to conduct the proceedings as Arden L.J. describes in paragraph 126. This it seems to me is totally consistent with Masterman-Lister.
If, as it seems to me, the relevant capacity is capacity to conduct proceedings, then the client must be able to understand all aspects of those proceedings and take an informed decision, with the help of such explanation as he is given, which bears upon them. It cannot be judged piecemeal. If he has the ability to understand what is meant by a 50/50 split of liability but lacks the capacity to understand the concept of damages which results from that division of liability, then he lacks true capacity to conduct the proceedings . . all of this makes much more sense . . where one is considering the capacity to conduct the proceedings at the moment when they are instituted and thereafter during their continuance and it makes less sense to consider the matter in the run up to the litigation even if litigation is a possible outcome in default of a fully successful settlement of the claim.’
Ward, Arden, Hallett LJJ
[2006] EWCA Civ 51, [2006] CP Rep 26
Bailii
England and Wales
Citing:
Cited – Masterman-Lister v Brutton and Co, Jewell and Home Counties Dairies (No 1) CA 19-Dec-2002
Capacity for Litigation
The claimant appealed against dismissal of his claims. He had earlier settled a claim for damages, but now sought to re-open it, and to claim in negligence against his former solicitors, saying that he had not had sufficient mental capacity at the . .
Cited by:
Cited – Dunhill v Burgin CA 3-Apr-2012
The claimant had been severely injured in a road traffic accident, and had settled her claim for damages. It was not appreciated at the time that she lacked capacity to make such a decision. The court was now asked what it should consider on . .
Cited – Dunhill v Burgin SC 12-Mar-2014
Lack of Capacity – Effect on Proceedings
The Court was asked ‘First, what is the test for deciding whether a person lacks the mental capacity to conduct legal proceedings on her own behalf (in which case the Civil Procedure Rules require that she has a litigation friend to conduct the . .
Lists of cited by and citing cases may be incomplete.
Updated: 05 August 2021; Ref: scu.525975