Watt v ABC [2016] EWHC 2532 (COP)

Analysis

This was an application to the Court of Protection concerning whether substantial damages awarded to ABC in a personal injury claim should be paid to and administered by ABC’s property and affairs deputy or should be held on revocable trust.

In prior litigation it had been common ground that ABC lacked litigation capacity but his capacity or the extent of his capacity to manage his financial affairs with appropriate support had been in dispute. This dispute was not decided due to the matter being settled. Subsequently a deputy was appointed by the Court of Protection upon the court being satisfied that ABC lacked capacity to make various decisions for himself in relation to a matter or matters concerning his property and affairs. Potentially fine and difficult issues relating to what decisions ABC had and did not have capacity to make in connection with the management of his financial affairs existed.

Further, in the prior proceedings, there was evidence which showed that there were real risks that (i) ABC would want his damages award to be used in property development of his choosing, (ii) if his choices and wishes were not agreed to by a deputy or trustees there could be serious discord in their relationship, (iii) ABC would regularly challenge the view that he did not have capacity to make decisions relating to the expenditure and management of money and property of substantial value, and (iv) if he was found to have capacity and so left to make his own decisions he would lose significant parts of his capital and so be left in a difficult if not disastrous situation (the breakdown risks). Further, it was almost inevitable that ABC would always be vulnerable to influence from others who may not have his best interests at heart and so may cause him to waste the award (the vulnerability risks). Therefore there was a real risk that he would make disastrous or bad decisions that deprived him of the use of the damages awarded to meet his needs caused by his brain injury. Consequently the judge had raised the additional possibility of whether it would be in ABC’s best interests for his damages award to be settled on irrevocable trust for his benefit to protect capital expenditure but give ABC autonomy over income expenditure.

Held, approving the appointment of the deputy:

1. 1) As a result of his brain injury ABC lacked the capacity to make decisions on the management of his substantial damages award and assets representing it from time to time. Accordingly the COP had jurisdiction to make an order that gives the management of the capital of the award to a deputy or trustees.
2. 2) The purpose of the application to the COP was to enable it to carry out a properly informed analysis of ABC’s best interests that took account of the breakdown and vulnerability risks and to consider argument on the effect and application of SM v HM. SM v HM was not authority that there was a strong presumption in favour of appointing a deputy so as to make it rare for the COP to order a person’s property should be held on trust. Such an approach ran counter to the underlying rationale and purpose of the MCA and, in particular, of its decision and fact-sensitive approach to the application of its best interests test in all the circumstances of a given case. The weighing or balancing of competing factors was at the heart of decision-making under the MCA and did not fit with presumptions, starting points or a bias that had to be displaced.
3. 3) The breakdown and vulnerability risks needed to be taken into account in deciding between a deputyship and an irrevocable trust. However even if at an earlier stage the factors in favour of an irrevocable trust would have won, such a trust was no longer a viable alternative. The discharge of the deputy now and the creation of such a trust would be highly likely to undo progress by ABC and so undo the improvement in his approach to assistance and support that had taken place and was being well supported by professionals (and in particular the deputy and her manager) and his family and so exacerbate rather than reduce the breakdown risks.
4. 4) The breakdown risks and vulnerability risks existed under both the proposed revocable trust and deputyship and did not point in favour of either. Under the revocable trust if ABC had the relevant capacity he could demand the trustees pay him or someone else the capital of the trust. The same demand could be made of a deputy who, in any event, would not have the power to make a decision on behalf of ABC if he had reasonable grounds to believe he had capacity in relation to that matter. The consequence of this was that if ABC had the relevant capacity he could take control of his property so there was little difference between the two if ABC were to regain capacity and neither protected him from making bad decisions in respect of the application of his capital if he had the relevant capacity.
5. 5) With, and in some circumstances without, support ABC had capacity to make a number of decisions relating to his property and affairs and so, for example, his day to day expenditure from income. Given the ability of ABC there were some advantages to deputyship due to the need for the deputy to promote autonomy and flexibility to let ABC make decisions which he could and make decisions where he lacked capacity. In contrast the authority of trustees was granted and governed by the trust deed and trust law. This was particularly relevant to the breakdown risks.
6. 6) The following points were made and should be considered in analogous cases
7. 6.1. The management regime for a substantial award of damages should be considered as soon as is practicable.
8. 6.2. This will involve a careful consideration of what the claimant (P) has and does not have the capacity to do and of his or her likely capacity and/or vulnerability issues in the future. This is relevant to both jurisdictional and best interest issues.
9. 6.3. It will also involve the identification of all relevant competing factors and should not proceed on the basis that there is a strong presumption that the COP would appoint a deputy and would not make an order that a trust be created of the award. Rather, it would balance the factors that favour the use of the statutory scheme relating to deputies (that often found the appointment of a deputy in P’s best interests) against the relevant competing factors in that case.
10. 6.4. It will also involve the identification of the terms and effects (including taxation) and the costs of those rival possibilities.
11. 6.5. It was troubling that an authorised officer had made the order appointing a deputy. The difficulties and issues relating to capacity meant that the application to appoint a deputy should have been put before a judge of the COP. Care should be taken to ensure that applications that are not straightforward are not decided by case officers in the COP but are put before judges of the COP.
12. 6.6. The possibility of listing case management hearings or the final hearing of QB proceedings before a judge who is also nominated as a COP judge should be considered. However the potential for conflict arising from a consideration of without prejudice communication in respect of the QB proceedings concerning its settlements that is not agreed or approved by the COP judge and the respective jurisdictions of the two courts need to be carefully considered.

JUDGMENT CHARLES J: Introduction [1] This is a public document. The hearing was held in public pursuant to the Transparency Pilot and so a Pilot Order restricting reporting has been made. [2] As a result of a settlement of proceedings in the Queen’s Bench Division (the QB proceedings), which I approved, ABC was awarded substantial …

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