Thinking outside the box on capacity: using Coles v Perfect to protect a settlement where capacity is uncertain

Capacity issues are a familiar feature of Clinical Negligence litigation. In most cases, the position is relatively straightforward: either the Claimant has capacity to conduct proceedings and make decisions about settlement, or they do not, in which case a litigation friend is appointed, and any settlement requires court approval under CPR Part 21.

Occasionally, however, practitioners encounter a more difficult scenario. What happens when capacity is genuinely uncertain? What if medical evidence does not clearly establish a lack of capacity, yet there remains sufficient concern that a future challenge to a settlement cannot be ruled out? Whilst a settlement may be negotiated in good faith and represent an excellent outcome for all concerned, if there is a subsequent argument that the Claimant lacked the capacity to enter into the settlement, questions can arise about the validity and finality of the agreement. The prospect of a settlement being revisited years later is unattractive for Claimants, Defendants, and their representatives alike yet, the costs to be incurred in seeking formal judicial determination on capacity can be vastly disproportionate. 
 
Clyde & Co recently acted for the Defendant in a Clinical Negligence claim where the issue arose upon reaching settlement at a time when the Claimant’s capacity was not black and white, there being some uncertainty surrounding the evidence from the parties on the issue. The Claimant did not proceed as a protected person with a Litigation Friend prior to that time and so in considering how best to protect the position of all parties upon settlement being reached, the High Court decision in Coles v Perfect [2013] EWHC 1955 (QB) offered a pragmatic answer to the problem.

In Coles, the Claimant who was 14 years old at the time, suffered a severe brain injury following a marine accident. Settlement terms had been agreed and neither party asserted that the Claimant lacked capacity and so the issue arose as to the Court’s jurisdiction to approve the settlement at a time when it had not been determined that the Claimant was a protected party through lack of capacity. The evidence before the Court did not express that the Claimant lacked capacity but noted that there was a doubt as to whether she had capacity.  

The parties therefore faced a procedural dilemma. They wished to secure the settlement against any future challenge in respect of capacity, but without embarking upon potentially costly further litigation to secure a determination on the issue. The result was that, rather than asking the Court first to determine capacity, the Claimant sought approval of the settlement itself, advancing the argument that the Court could approve the agreement through its inherent jurisdiction, notwithstanding the absence of a formal finding that the Claimant was a protected party. The Court agreed and held that it possessed an inherent jurisdiction to approve the settlement, and it was reluctant to require a determination of incapacity where capacity was not truly the issue between the parties. Thus, upon approval by the Court, if it subsequently transpired that the Claimant lacked capacity, the effect of CPR Part 21 would not be that the settlement is invalid but that it is valid because it will have obtained the approval of the Court.  

The Court, and the parties, therefore found a practical solution to the issue without simply requiring strict, and likely disproportionate, additional steps to be undertaken in a claim where all parties were happy with the outcome reached. The result allowed the case to be resolved and the parties afforded certainty that no future challenge to the legitimacy of the settlement would be raised. In the instant case, Clyde & Co successfully worked with the other parties to address the potential issue through sensible discussion and collaboration as to the potential application of Coles, and the Court approved the settlement in similar circumstances. 

The issue serves as a useful reminder that when dealing with brain injury or cognitive impairment cases, similar issues can frequently occur where the evidence and opinions differ and/or where practical difficulties provide room for procedural creativeness in finding solutions that address the uncertainty, rather than simply generating further satellite litigation and significant cost. Sometimes the traditional options do not fit comfortably but with some lateral thinking and good collaboration, the parties can agree on a practical resolution and focus on the underlying objective rather than allowing uncertainties to derail settlement. 

Effective litigation is not simply about knowing the rules. Sometimes it is about recognising when a problem falls outside the usual framework and having the confidence to think outside the box to achieve the best outcome for all parties involved, and that is something which Clyde & Co effectively adopts in our everyday claims handling.