Capacity to litigate: a step toward clarity?

Capacity to litigate is a subject under reform and for good reason. Uncertainty arises from gaps within the existing CPR regime, which is likely to become a greater problem with an ageing population. This article aims to provide practical guidance for practitioners acting in civil proceedings and to note some of the issues that are likely to be addressed by the Civil Justice Council (CJC) in the near future.

CPR 21: Introduction and Implications

Under CPR 21.1(2), a ‘protected party’ is a party who lacks capacity under the Mental Capacity Act 2005 (MCA 2005) to conduct the proceedings. Under section 1(2) of the MCA 2005, a person must be assumed to have capacity unless it is established that they lack capacity.

Under section 2(1), a “person lacks capacity in relation to a matter if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain”.

Under section 3(1), a “person is unable to make a decision for himself if he is unable:

• to understand the information relevant to the decision.
• to retain that information.
• to use or weigh that information as part of the process of making the decision.
• to communicate his decision (whether by talking, using sign language or any other means).

Common law principles remain helpful in applying that statutory test. In Masterman-Lister v Brutton & Co [2002] EWCA Civ 1889, Chadwick LJ stated (at paragraph 75): “…the test to be applied…is whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers and experts in other disciplines as the case may require, the issues on which his consent or decision is likely to be necessary in the course of those proceedings.”

Despite predating the statute, the approach broadly reflects the MCA 2005 framework, including the need to be able to understand and weigh up advice. The test for capacity is time and task specific – capacity to litigate concerns the ability to engage with the particular litigation involving the party.

A party’s capacity to litigate is important to all parties. Under CPR 21.3(3), a party cannot take any further step (beyond issuing and serving the claim and applying to appoint a litigation friend) until the protected party has a litigation friend.

Under CPR 21.10(1), no settlement (including any pre-action settlement) by, on behalf of or against a protected party “shall be valid” without the approval of the court (even if the lack of capacity was unknown, as in Dunhill v Burgin [2012] EWHC 3163 (QB) where a judgment based on a pre-trial compromise was overturned).

CPR 21 provides helpful guidance where a party definitely lacks capacity. The regime does not cater for circumstances that are less black and white; for example, how to identify, investigate and resolve issues where a party’s capacity is uncertain. The article tackles these points below.

Your Client

As noted in the Law Society’s Guide (‘Working with clients who may lack mental capacity’ dated 27 June 2023), it is for solicitors “to decide whether a client has capacity to instruct you and whether you can accept and act on the client’s instructions”.

There is further professional and regulatory guidance to bear in mind, including to act in the client’s best interests (the SRA’s Principle 7) and to consider your client’s attributes, needs and circumstances (paragraph 3.4 of the SRA’s Code of Conduct).

Where a legal representative thinks their litigating client may lack capacity to litigate, it is “their professional duty to have the question resolved as quickly as possible” (RP v Nottingham CC [2008] EWCA Civ 462, paragraph 47). In Masterman-Lister, paragraph 17 referred to the court investigate capacity at the “first convenient opportunity”.

In practice, this means investigating and assessing indicators demonstrated by your client, such as past and present physical and mental health and the client’s ability to understand information and advice given. If there are concerns, “a responsible solicitor…seeks a medical opinion” (according to paragraph 30 of Masterman-Lister).

If your client consents, an expert can be instructed (assuming a suitable expert is willing and able to act, and there are funds to do so).

An expert’s opinion is only as informed as their instructions. Practitioners should inform the expert of: relevant case law, the circumstances that give rise to concerns about capacity, what a client needs to be able to do in order to conduct proceedings (namely understand advice, weigh up options and supply instructions) and medical records.

Practitioners may find it helpful to know that the Official Solicitor has a standard form of report (Certificate: Capacity to Conduct Proceedings) for recording the assessment of an adult’s capacity to litigate. The certificate has guidance notes and can be sent with the instructions to the expert.

If your client does not consent or even if a capacity assessment is ordered, a party cannot be compelled to comply. It may be helpful to explain why the assessment is needed and identify the consequences of no assessment (paragraph 4.57 of the Mental Capacity Code of Guidance).

A solicitor can apply to the court for a determination of whether their client lacks capacity to litigate. Indeed, the “solicitors owed an independent duty to assist in the administration of justice and not to mislead the court” and were obliged to “put this concern [about mental capacity] before the court if it could not otherwise be resolved” (McFaddens (A Firm) v Platford [2009] EWHC 126 (TCC), paragraph 379 and 380).

Ultimately, the court decides whether a party has capacity to litigate (paragraph 16 of the first instance High Court decision in Masterman-Lister v Jewell [2002] EWHC 417 (QB)). The court may decide this without an assessment, but “should be most cautious” in doing so (paragraph 15 of Baker Tilly v Makar[2013] EWHC 759 (QB)).

Another Party

Practice Direction 1A (which came into force in 2022) concerns the participation of vulnerable parties and witnesses. Vulnerability and capacity are not identical, but may overlap - an incapacitated party is likely to be vulnerable. Under paragraph 6 of PD1A, the “court, with the assistance of the parties, should try to identify vulnerability of parties or witnesses at the earliest possible” [emphasis added]. As officers of the court, legal representatives should assist in this process too.

In practice, concerns about another party’s capacity should be addressed in inter-partes correspondence. Mindful of the pitfalls of CPR 21.3(3) above, an adjournment as soon as possible would provide time to assess capacity. If capacity is disputed, a hearing may be needed to determine the issue. The burden of proof is on the person who asserts a lack of capacity, with the issue decided on the balance of probabilities (section 2(4) MCA 2005).

Reform

A legal representative’s and their client’s obligations in relation to another party’s capacity is a useful microcosm of ambiguities within the existing regime. For example, what does ‘should’ mean in the context of PD1A? There do not appear to be any automatic sanctions for non-compliance.

What threshold must be reached before the duty to report (if any exists) is engaged? In Masterman-Lister, the Court of Appeal stated (at paragraph 30): “Sometimes the doubts may arise in relation to an opponent acting in person, and then it may be appropriate to bring the issue of capacity before the court.”

What precisely would amount to ‘doubts?’ Does the reference to ‘may’ mean that there is no definitive duty? In any event, a solicitor faces inherent difficulties in assessing another party’s capacity (on a properly informed basis) when their contact is limited to adversarial communications – the value to be placed on such a view will inevitably be fact-specific.

The CJC is considering these ambiguities. In July 2022, the CJC approved the creation of a working group to consider the procedure for determining mental capacity in civil proceedings, and make recommendations. In December 2023, the working group published a consultation paper, which was discussed at a seminar in March 2024, with the consultation ending shortly thereafter. It remains early days, as the CJC’s awaited recommendations would still need to be considered for incorporation into the CPR, but it is hoped that some of the grey areas facing litigators can be clarified in due course.