The Supreme Court decision in
Dunhill v Burgin
and its implications
The accident
• 25 June 1999 RTA in South Yorkshire
• Mr Burgin’s motor-cycle struck Mrs Dunhill crossing from the nearside
between stationary vehicles in the nearside lane
• Severe head injury
• Some pre-existing psychiatric troubles
The Legal Proceedings - Sheffield
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13 May 2002 claim issued for severe head injury
Alleging on-going symptoms but …
Claim limited to £50,000; none for future loss
Significant contributory negligence
At Court, Mrs Dunhill, a mental health advocate, counsel and trainee
solicitor but a lay witness did not attend
Decision presented to Mrs Dunhill: whether to negotiate or apply to
adjourn, but steered towards negotiation
Compromise at £12,500 - 25% of the limitation on value
Complications as to actual valuation never discussed
Consent order and mentioned in court
The Legal Proceedings - Manchester
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July 2006, Mrs Dunhill saw new solicitors
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2008 proceedings issued and stayed against solicitors and counsel
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2009 Masterman-Lister proceedings commenced
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The Defendant accepted that the case as it should have been framed and
explained by the legal advisers was complex; beyond the Claimant’s capacity to
understand and decide; worth c. £800,000 on full liability …
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but maintained that Mrs Dunhill did have capacity to make the decisions
required of her in the actual proceedings
The 1st preliminary issue defined
“In order to decide if the consent order … might be set aside on the grounds
of lack of capacity, the fundamental question is whether, in considering the
issue of capacity historically rather than prospectively, should the Court:
Confine itself to examining the decisions in fact required of the Claimant
in this action; or
Expand its considerations to include decisions which might have been
required if the litigation had been conducted differently?”
Mr Justice Silber
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Decided the pure point of law in favour of the Defendant – it was the proceedings
as brought (defined in the pleadings and the schedule of loss) which formed the
backdrop to the actual the decisions – not any other proceedings
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If not, decisions actually taken could be set aside for lack of capacity on no better
ground than that a different question might have been posed
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This result was required for consistency in other areas where capacity has to be
determined e.g. consent to medical treatment
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On the expert evidence the presumption of capacity was not rebutted in respect of
any decision(s) put in issue in evidence or on the pleadings
The capacity test appeal - CA
Court of Appeal disagreed with Silber J
Ward LJ asserted at [2012] EWCA Civ 397 [29]:
“Since capacity to conduct proceedings includes . . . the capacity to give proper
instructions for and to approve the particulars of claim, the claimant lacked that
capacity. For her to have capacity to approve a compromise she needed to know .
. . what she was giving up and, as is conceded, she did not have the faintest idea
that she was giving up a minor fortune without which her mental disabilities were
likely to increase.”
2nd preliminary issue – CPR construction point
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Does CPR 21.10 apply to catch proceedings like these where a claim is brought
without a litigation friend, contrary to CPR 21.10(2), so that, in the eyes of the
Court and the Defendant, the Claimant does not appear to lack capacity?
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Mr Justice Bean decided it does but for reasons which did not stand scrutiny in the
Supreme Court
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Leapfrog appeal to join the 1st preliminary point, for which permission had now
been granted in the Supreme Court
The capacity test appeal – the underlying issues at stake
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The Mental Capacity Act is designed to empower people, presupposing that those
to whom they turn for advice will take pretty extensive steps to explain things
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The wisdom of the actual decision is beside the point of having the capacity to
make it – it is the ability to understand the broad picture with advice and decide –
Boreham J in White v Fell, approved in Masterman-Lister
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Medical decisions – Chatterton v Gerson:
the fallacy of mistaking [1] the capacity to consent with [2] the breach of duty
going under the label of lack of informed consent
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The duty of care - emptied of its content
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Does compromise of litigation warrant a special case?
The CPR construction appeal – the stakes?
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Ordinary principles of statutory interpretation:
Primary intention
Delegates not to travel beyond the primary intent
Law not to be subject to casual change – strive to avoid adopting a
construction which involves breaching the principle
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The Rule in Imperial Loan: a person is bound by his contract unless he can show
that he lacked capacity and [1] his lack of capacity entailed that he did not know
what he was doing and [2] the other party was aware of the incapacity
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Clash between CPR 21.10 (if widely construed) and the “general law of the land”
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Read into CPR 21.10 the requirements of Imperial Loan
Make an exception for the compromise of litigation for represented parties?
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Why?
Litigation can always be run differently and made more complex – an
easy dodge? Pandora’s box?
Is economic loss in litigation any more important than economic loss by other
means?
Fry v Lane – independent advice was always an answer against granting
relief from a bad bargain before Imperial Loan toughened up the law
Expert and insured legal advisers
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In a Post-Mitchell nuclear winter, why should legal advisers take responsibility in many areas
but not in respect of poor advice in the formulation of claims?
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Many who have capacity may under-settle based on poor advice: how many personal injuries
claimants in large claims really understand the detail of the advice they receive?
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Should the remedy (whether against the lawyer or the original tortfeasor) turn on capacity
when the real cause is the poor advice?
And so to the Supreme Court …
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Lady Hale
Lord Kerr
Lord Dyson
Lord Wilson
Lord Reed
• 3-5 February 2014
Issue Specific
The general approach of the common law, now confirmed in the Mental
Capacity Act 2005, is that capacity is to be judged in relation to the
decision or activity in question and not globally. Hence it was concluded
in Masterman-Lister that capacity for this purpose meant capacity to
conduct the proceedings (which might be different from capacity to
administer a large award resulting from the proceedings).
Issue Specific
The general approach of the common law, now confirmed in the Mental
Capacity Act 2005, is that capacity is to be judged in relation to the
decision or activity in question and not globally. Hence it was concluded
in Masterman-Lister that capacity for this purpose meant capacity to
conduct the proceedings (which might be different from capacity to
administer a large award resulting from the proceedings).
This was also the test adopted by the majority of the Court of Appeal in
Bailey v Warren [2006] EWCA Civ 51, [2006] CP Rep 26, where Arden LJ
specifically related it to the capacity to commence the proceedings (para
112).
Patient Defined
Under the Rules as amended when the Mental Capacity Act 2005
came into force (the Civil Procedure (Amendment) Rules 2007 (SI
2007/2204 (L20)), “patients” in rule 21.1(1)(a) has been replaced
by “protected parties”, and in rule 21.1(2)(d) a “protected party” is
defined as “a party, or intended party, who lacks capacity to
conduct the proceedings”. Thus the current test is stated in the
same terms as that which was applicable to these proceedings.
Proceedings Defined
What is meant by the “proceedings” which the party must have the
capacity to conduct?
This is a question of construing the Rules … The proceedings themselves
may take many twists and turns, they may develop and change as the
evidence is gathered and the arguments refined. But a party whose
capacity does not fluctuate either should or should not require a litigation
friend throughout the proceedings. It would make no sense to apply a
capacity test to each individual decision required in the course of the
proceedings, nor, to be fair, did the defendant argue for that.
Proceedings Defined
‘But on the defendant’s argument, the claimant’s capacity would depend
upon whether she had received good advice, bad advice or no advice at
all. If she had received good advice or if she had received no advice at all
but brought her claim as a litigant in person, then she would lack the
capacity to make the decisions which her claim required of her. But if, as
in this case, she received bad advice, she possessed the capacity to make
the decisions required of her as a result of that bad advice. This cannot be
right.’
‘I would hold, therefore, 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. Judged by that test, it is common
ground that Mrs Dunhill did not have the capacity to conduct this claim.’
Retrospective Validation
CPR r 21.3(4) does suggest a solution. It provides:
‘Any step taken before a child or patient has a
litigation friend, shall be of no effect, unless the
court otherwise orders’”.
Not an option here where value was many times
that of settlement
CPR 21.10(1)
“Where a claim is made – (a) by or on behalf of a child or
patient [now protected party] (b) against a child or . . . patient
[now protected party], no settlement, compromise or
payment and no acceptance of money paid into court shall be
valid, so far as it relates to the claim, by, on behalf of or
against the child or patient [now protected party], without
the approval of the court.”
And so
Were the settlement and court order automatically
of no effect?
The First Argument
In Imperial Loan Co Ltd v Stone [1892] 1 QB 599, the Court of Appeal held
that a contract made by a person who lacked the capacity to make it was
not void, but could be avoided by that person provided that the other
party to the contract knew (or ought to have known) of his incapacity.
This rule is consistent with the objective theory of contract, that a party is
bound, not by what he actually intended, but by what objectively he was
understood to intend.
This rule, it was argued, applies just as much to the settlement of civil
claims as it does to any other sort of contract. Once the parties to
ordinary civil litigation have reached agreement, it is not for the court to
interfere in their bargain.
And so for consistency
The compromise rule applies only when litigation
friend in place
Only then is the other party on notice of incapacity.
No
Because that involves writing words into the rule
which are not there.
The words “having a litigation friend” would have to
be written into the rule.
Or the nuclear option
Neither the Rules of the Supreme Court nor the Civil Procedure
Rules can change the substantive law unless expressly permitted
so to do by statute: see In re Grosvenor Hotel Ltd (No 2) [1965]
Ch 1210.
Thus, the Rule Committee power to make rules governing “the
practice and procedure” to be followed in the civil courts and as
further provided in Schedule 1 to the Act did not empower it to
change the common law
Dietz v Lennig Chemicals Ltd [1969] 1 AC 170
This argument was dealt with by Lord Pearson (with whom
Lord Reid and Lord Pearce certainly agreed) as follows, at p
189:
“In my view, the making and re-making of the Compromise
Rule were valid exercises of the rule-making power under the
Judicature Acts, which is now contained in section 99 of the
Act of 1925.”
Nevertheless, we are bound by Dietz unless there is a very
good reason to depart from it.
Para 1 Schedule 1 : Civil Procedure Act 1997
“Among the matters which Civil Procedure Rules may be
made about are any matters which were governed by the
former Rules of the Supreme Court or the former county
court rules . . . ” This could certainly be read as conferring an
express power to make rules of court modifying the
substantive law to the extent that the previous rules did so,
whether or not those rules were within the powers which the
previous rule-making bodies had been given.
Policy
Mr Rowley emphasised
• the need for finality in litigation,
• the stresses and strains which prolonged litigation places
upon both litigants and the courts,
• the difficulty of re-opening cases such as this so long
after the event,
• and the alternative protection given to the parties by
their legal advisers, who should bear the consequences
of their own mistakes.
Policy
Against this Mr Melton emphasised
• the disadvantages of claims for professional negligence when
compared with claims for personal injuries, principally the discount
for the chance that the claim might not have succeeded and the
inability to make a periodical payments order
• that lack of insight is a common feature in head injury cases, so that
the parties should be encouraged to investigate capacity at the
outset.
• That a litigant in person would have no legal advisers against whom
to make a claim, but the legal position cannot differ according to
whether or not a party is, or is not, represented by lawyers.
• the policy underlying the Civil Procedure Rules is clear: that children
and protected parties require and deserve protection, not only
from themselves but also from their legal advisers.
Lessons
Investigate the issue carefully
Take good witness statements
What does the claim involve
Is capacity likely to fluctuate
Involve C as much as possible anyway
From whom do you take instructions pre-issue
With whom do you sign a retainer – Blankley
Dunhill v Burgin