Capacity to Litigate
13th March, 2014
Judgment has been handed down by the Supreme Court in the important case of DUNHILL v BURGIN.
The issue to be determined was whether the Claimant had previously lacked the mental capacity to conduct legal proceedings on her own behalf and, if not, whether the Consent Order confirming settlement was void.
The ruling has important implications for healthcare organisations.
The Claimant had a road traffic accident in June 1999 and suffered a closed head injury. Proceedings were commenced in May 2002. A liability trial was listed in January 2003. At the doors of the court, a negotiated settlement was reached in the sum of £12,500. The Judge was informed of the settlement and a signed Consent Order was handed in. The Judge was not asked to approve the settlement but simply to order by consent that judgment be entered for the agreed sum on damages. Afterwards, doubts emerged about the Claimant’s mental capacity.
In 2006 the Claimant’s Litigation Friend issued proceedings for professional negligence against her former solicitors and counsel. She sought a declaration that the Claimant did not have mental capacity at the time of the purported settlement and that the Consent Order be set aside. The matter was set down for a hearing. The issues to be considered were whether the Claimant was a “protected party” in January 2003 pursuant to Civil Procedure Rules (CPR) Part 21 and what the consequences were if she was.
The High Court judge found that the Claimant did have capacity to enter into the compromise agreement and therefore dismissed the claim for a declaration. That matter went to the Court of Appeal which reversed the Judge’s decision. The Defendant appealed the decision to the Supreme Court.
What is the test for deciding if a person lacks mental capacity to conduct legal proceedings on their own behalf?
The judge at the Supreme Court, Lady Hale, stated that the test of capacity to conduct proceedings for the purpose of CPR Part 21 is the capacity 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.
In this case, it was decided that the Claimant did not have capacity to conduct the claim and therefore pursuant to CPR Part 21(2).1 should have had a litigation friend when the proceedings were begun.
What if legal proceedings are settled without it being recognised that a party lacked mental capacity?
The Court stated that whilst some steps of the litigation could be validated, the settlement decision could not.
CPR Part 21.10 states that where a claim is made by or on behalf of a child or protected party, no settlement, compromise or payment shall be valid, so far as it relates to the claim by, on behalf of or against the child or protected party, without the approval of the court.
In this case, since the proceedings had been compromised without the benefit of a Litigation Friend and the settlement was not approved by the court, the compromise was of no effect.
The Court ordered that the consent order must be set aside and the case proceed to trial.
It said that the normal rule of law that a contract made by a person who lacks capacity is valid, unless the other party to the contract knew or ought to have known that she lacked that capacity (in which case it is voidable) did not apply.
What does this mean for me?
The ruling in this case has important implications for healthcare organisations, particularly in the way in which they deal with claims where there are question marks over the claimant’s mental capacity.
For more information on the issues raised by this case, please get in touch.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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