Litigation capacity - an introductory guide
Gareth Ledsham considers how litigators may navigate capacity issues in litigation.
Issues of mental capacity may not feature heavily in the caseload of the average litigator, but many of us will have had reason at one time or another to question our own client’s instructions, or those being provided by the opposing party.
Capacity issues can arise unexpectedly in any case, and when they do, a number of different considerations come into play: what about representation? What about settlement? Costs? Does the Court of Protection need to be involved? It is therefore something all litigators (indeed all lawyers) should be alive to.
The aim of this article is to be a ‘rough and ready’ guide to capacity issues in litigation and a starting point in how to navigate them.
What is meant by lack of capacity?
Before moving onto practicalities, it is necessary to have a brief look at what is meant by lacking capacity.
Since 2007, what constitutes a lack of capacity is defined by the Mental Capacity Act 2005 (MCA 2005), and the definition has been incorporated into CPR 21 which deals with protected parties.
The starting point under MCA 2005 is that everyone is presumed to have capacity unless it is established otherwise, on the balance of probabilities. A person must be assisted to make decisions themselves where possible. Further, they must not be presumed to lack capacity because they make an unwise decision.
To establish a lack of capacity, there is a two-stage test:
· First is a diagnostic test: is there an impairment of, or a disturbance in the functioning of, the mind or brain (whether permanent or temporary)?
· Second is a functional test: a person must (i) understand the information relevant to the decision; (ii) retain that information; (iii) use or weigh the information as part of the process of making the decision; and (iv) be able to communicate their decision (whether by talking, using sign language or any other means).
A person’s capacity is time and issue specific. A person can have capacity to make some decisions, but not others, and may have periods when they are better placed to make decisions (e.g. in the morning).
In terms of the information a client needs to understand, retain and weigh up, this will depend of course on the case, but will include aspects such as: the value of the claim; the cost / benefit analysis of a given course of action and what the implications are of losing (including costs consequences).
This was the approach adopted in the first case to consider the question of litigation capacity: Masterman-Lister v Brutton & Co [2002] EWCA Civ 1889. While the case is pre-MCA 2005, the court adopted an approach broadly consistent with that taken under the MCA 2005. Regard must be had to the legal advice the person may be receiving, but note that the person must be able to understand and weigh up the advice received.
Practicalities
An incapacitated client (or opposing party) can throw a spanner in the works of a straightforward case. It is often far easier to deal with when identified at the outset, but this is not always possible: a person may suffer an accident (such as a stroke) mid-proceedings, or may develop dementia.
Checking capacity
This might seem obvious, but it can be overlooked. A person may be cognitively impaired, but still have the ability to understand the subject matter of a claim and the ability to conduct the litigation. As noted above, a person’s capacity is time and issue specific.
Consideration should be given to whether, despite a cognitive impairment, the client is able to continue with the claim with appropriate support, for example explanations in simple language/communicating in alternative ways. However, advisers should also be alive to the fact those with cognitive impairments will often attempt to hide them. Careful questioning may be needed to get past this.
In cases of doubt, it would be wise to obtain an assessment of the person’s capacity from an expert. Needless to say, the conversations around this topic can be difficult and need to be handled with sensitivity. Framed in the correct way, however, most will understand the need to follow this course.
Representation
If a lack of capacity is established, sorting out representation is the next important step. If proceedings are on foot, no further steps will be able to be taken until a litigation friend is appointed, and steps taken will be effective unless approved by the court – which is not necessarily a given; the court will only approve a step taken where it is appropriate to so and will not unfairly prejudice the incapacitated party.
The identity of a suitable litigation friend will depend on circumstances. If the client lacks capacity at the outset of a case, then a Court of Protection deputy for property and financial affairs might be appointed. This person may not have authority to litigate on the incapacitated person’s behalf. If they do so without authority from the Court of Protection, they may be at risk as to recovery of their costs.
If a person becomes incapacitated mid-proceedings, it is unlikely a deputy will be in place. However, an attorney under an enduring or lasting power of attorney might. Again, this person may not have authority to litigate, and it may be appropriate to seek authority from the Court of Protection to do so.
Absent (or indeed in lieu of) an attorney or deputy, any person can be appointed by the court to act as a litigation friend if they satisfy the three conditions specified in CPR r.21.4(3), i.e.: (i) they can fairly and competently conduct proceedings on behalf of the protected party; (ii) they have no adverse interest to them; and (iii) where the protected party is a claimant, they undertake to pay any costs ordered to be made.
A litigation friend can be appointed by court order or by filing a certificate of suitability. In either scenario, evidence in support will be required.
The appointment will last until further order. This can be useful where a client has fluctuating capacity in that a person can be appointed who can provide support as necessary, but will not hold up proceedings where the client is unable to provide instructions directly.
Compromise of proceedings
This can trap the unwary. Where a person lacks capacity, any compromise made on their behalf will only be effective if approved by the court. If proceedings are on foot, an application will need to be made pursuant to CPR Pt 23, with a supporting opinion of counsel on the merits (not seen by the other side).
Even where proceedings are not on foot, court approval is still required using the CPR Pt 8 procedure (for the protection of both parties – the incapacitated person so there is a check on whether the compromise is in their best interest, and the other party so they can rely on the agreement.
The importance of this was highlighted in the Supreme Court case of Dunhill v Burgin [2014] UKSC 18 in which a compromise entered into was set aside on the basis one of the parties lacked capacity and the agreement had not been approved by the court – notwithstanding the parties were unaware of the incapacity at the time.
The Court of Protection need not be involved in the approval process, although thought ought to be given by advisers to how any award will be managed following the conclusion of proceedings, and whether a deputy is required for this purpose.
Gareth Ledsham is a partner at Russell-Cooke LLP specialising in mental capacity law russell-cooke.co.uk
