PERSONAL INJURY DAMAGES: COURT OF PROTECTION RELEASES CLAIMANT FROM “PETERS” UNDERTAKING

I am grateful to my colleagues Sam Karim KC and Fay Collinson for pointing out the decision of  BJB, In the Matter Of [2024] EWCOP 59 (T2). In that case  HHJ Hilder granted the claimant’s application that she be released from a “Peters” undertaking. It is, apparently, part of a growing number of applications to be released from this type of undertaking.

 

THE CASE

The claimant had settled an action against the defendants in 2009 following clinical negligence that occurred in 1994.  An order was made on terms which included

 

“a. reverse indemnity undertakings, whereby 98% of sums received by BJB in state provision are to be deducted from her periodical payments; and

b. provision for release from the reverse indemnity undertakings by the Master of the Court of Protection or his successors, if that person is satisfied that BJB does not have sufficient resources to meet her reasonable needs.”

THE CLAIMANT’S APPLICATION TO BE RELEASED FROM THE UNDERTAKINGS

The claimant applied to the Court to be released from the undertakings.   Her case, brought by her property and affairs deputy,  was that her living expenses had now vastly increased and her current income, with the Peters undertaking, was insufficient to meet her needs.

The application was prospective and the claimant did not seek to re-open past payments.

THE DECISION

The claimant argued that there had been a major change in her living circumstances which meant that the reverse undertaking was no longer appropriate.

THE JUDGMENT

The judge accepted the claimant’s argument and granted a release from the undertaking.   The consent order had left it to the Court of Protection to determine these issues and the court would do so based on the best interests of the claimant.   The defendants’ arguments as to

    1. I have noted over the last 12 months an increase in applications to the Court of Protection for discharge of Peters undertakings. When I questioned this, counsel in the present matter confirmed that there has been no change of policy by NHS Resolution to such applications as far as they are aware. If discharge applications are now being made in noticeable numbers, it was suggested that this is probably a reflection of time passed since Peters undertakings were first conceived and the natural evolution of the circumstances of persons bound by them. It is to be hoped that this judgment may be of some use if further applications are considered.

 

    1. Unlike the Reeves situation, it seems to me that there is in the matter now before me some sort of obligation on the Court of Protection to “adjudicate as between the claimant and the defendant.” That obligation comes from the High Court having made an order which incorporated the clause 5 mechanism agreed between the parties, and the Deputy’s COP1 application properly made in the light of it.

 

    1. In passing, I note the absence of any suggestion that reference was made to the Court of Protection before this obligation crystallised – unlike in Peters, where Senior Judge Lush’s recollection was that the deputy had first sought his permission to give the undertaking she proposed [Au118, page 4 of the Reeves judgment].

 

    1. Nonetheless, accepting that some sort of obligation has been placed on the Court of Protection, it is necessary to be clear about how that obligation is to be discharged.

 

    1. Mr. Karim’s position was that, by either of the jurisdictional routes he identified, the conclusion should be the same, namely that release from the undertakings should be granted. Unsurprisingly therefore, he was willing to accept that the Court of Protection’s standing might actually involve both of the jurisdictional bases he identified.

 

    1. In contrast, Mr Kennedy declined to set out a jurisdictional basis for the decision asked of the Court of Protection. His position was that there was no reason in principle, and nothing in clause 5 of the settlement approval order itself, which prevents me from making an order to give effect to his proposal. Clause 5 should be read, he said in oral submissions, as meaning release “on any terms the Master thinks is appropriate.” It must be implicit in this position that the Respondents accept that the Court of Protection does have the necessary jurisdiction, even if they have not identified the basis of it.

 

    1. I am not persuaded that s19 of the Senior Courts Act applies. I can see no grounds for concluding that Clause 5 of the settlement approval order was ever intended by the approving judge to be conferring on the Master of the Court of Protection or his successors a delegated High Court jurisdiction. Moreover, as Senior Judge of the Court of Protection, I am neither a judge of the High Court nor the beneficiary of any rule of court, as s19(3) requires.

 

    1. Nor am I persuaded that section 47(1) of the Mental Capacity Act 2005 assists. That section provides for the Court of Protection to have “the same powers, rights, privileges and authority” as the High Court, but only “in connection with its jurisdiction” – that is, the jurisdiction of the Court of Protection, not the wider jurisdiction of the High Court.

 

    1. So, where does my jurisdiction lie?

 

    1. Capacitous disputants may agree to accept the determination of any third party if they so wish – a qualified arbitrator, an elder of their community, even the milkman. The authority of that third party comes from the agreement of the disputants to accept what they decide. In this matter, where BJB herself lacked capacity to take such an approach, the High Court has approved an agreement between her proper representatives and the defendant to her claim to accept the determination of the Senior Judge of the Court of Protection. I conclude that my jurisdiction is this matter is a jurisdiction by approved consent.

 

    1. How do I exercise that jurisdiction?

 

    1. The matter has come to me via usual Court of Protection procedures and therefore within the framework of the Mental Capacity Act 2005. It is a principle of that Act that an act done or a decision made under it for or on behalf of a person who lacks capacity must be done or made in their best interests.

 

    1. There is an obvious tension between a jurisdiction based in best interest decision making, and an adjudication between claimant and defendant. Clause 5 of BJB’s settlement was approved before that tension was spelled out either by Senior Judge Lush in Reeves or by Lord Justice Longmore in Tinsley, but I proceed on the basis that the High Court must have intended, and the parties in the High Court proceedings must have agreed to, the incorporation of the best interest principle into the determination of the clause 5 release mechanism.

 

    1. So, I approach this matter:

 

a. first, by asking myself if I am satisfied that BJB does not have sufficient resources to meet her reasonable needs (the factual issue as spelled out in clause 5 of the settlement approval order);

b. and then, in the light of that conclusion, by asking myself whether it is in the best interests of BJB that her Deputy should be released from the reverse indemnity undertaking.

    1. It should be clear from that approach that I am not determining any issue of ‘double recovery.’ If that is a deficiency, then in my judgment it is a deficiency to which the defendant in the damages claim consented and which the High Court approved. The place for addressing such deficiency is the court considering the damages claim, not the Court of Protection.

 

Does BJB have sufficient resources to meet her reasonable needs?

    1. BJB’s reasonable needs are clear. There is no evidence before the Court other than that supplied by the Deputy. Her expenditure budget is supported by the local authority’s Care Act assessment in so far as it relates to care needs, and by the independent consideration of Suzanne Froggett in so far as it goes beyond that. The Respondents do not challenge, and I accept, that she has reasonable expenditure needs of approximately £7 600 per month / £91000 per year in addition to what is currently met by the direct payments.

 

    1. Periodical payments to BJB are mandated by paragraph 1(c) of the settlement approval order. It is not entirely clear to me why the Respondents import the word “solely” into that paragraph – it is a gloss on the wording of the order. Perhaps it is imported from WNA v. NDP, as quoted at paragraph 47 above. If it is intended to suggest somehow that BJB’s care needs should be considered “capped” to the level of the periodical payments, I do not accept that suggestion. It is an entirely standard aspect of damages awards that, once paid, it is up to the recipient how the sums are actually applied. There is nothing in the wording of paragraph 1(c) or otherwise which does or could prevent BJB or her deputy on her behalf from using funds received by way of periodical payment to meet an expense other than for care or case management. Equally, nothing in the order or the actual payment limits the care and case management costs which may in fact be incurred. If authority for that is required, then it is set out in the WNA quote above. Moreover, the Respondents accept this in their assertion (as set out in paragraph 32 above) that the reverse indemnity is no disadvantage to BJB because it imports no obligation to repay any excess of direct payments over periodical payments. The periodical payment as approved in the order, including at section 1(c), is simply what was agreed by the parties and approved by the Court as a settlement of particular heads of claim. I do not see that adding the word “solely” takes this matter any further.

 

    1. Equally, BJB’s income over and above the direct payments is clear. There is no challenge to the Deputy’s evidence that, with the reverse indemnity in effect, it is approximately £2600 per month / £31 200 per year. I accept that evidence.

 

    1. Mathematically then, it follows that there is an insufficiency in BJB’s income of approximately £60 000 per year. That brings me to consideration of issues relating to her capital.

 

    1. I accept Mr. Kennedy’s description of BJB’s lump sum award as “the capitalised value of all heads of loss other than future care and case management”. I also accept Mr. Kennedy’s description of the assumption underlying lump sum awards. However, I depart from Mr. Kennedy’s reasoning in so far as he asserts (as set out at paragraph 32 above) that, because direct payments address the same needs as those for which periodical payments were approved, I should conclude that the periodical payment “is no longer required.” It seems to me that:

 

a. Mr. Kennedy’s descriptions of the lump sum and the assumption underlying it go no further than explaining the civil litigation process. Civil litigation has to conclude but it does so without a crystal ball. In subsequent real life, expenditures may arise which are in fact different to what was calculated and approved. Nothing in the calculation or the approval prohibits BJB from actually having expenditure needs higher than were calculated. In reality there would be no way to do so: life happens, irrespective of what plans people make. The question to be answered is merely how the cost of actual needs is to be met.

b. whether periodical payments are required or not depends on the overall levels of BJB’s needs and resources. I must look to the full picture, not just one part of the two-part settlement structure. In fact Mr. Kennedy’s own argument accepts as much in that he says I should look to BJB’s capital at all.

c. the settlement approval order includes recognition that periodical payments may still be required even in circumstances of state provision both in the inclusion of a mechanism for release from the reverse indemnity, and also in the 30+ recital.

    1. It is necessary to consider that 30+ recital further. It is clear from the wording before the parenthesis both that the parties and the High Court recognised that there may be an upward shift in BJB’s needs after the age of 30 (ie around now), and that the approved sums made no allowance for that. Thereafter the meaning of the recital is more opaque. I am not persuaded by Mr. Kennedy’s argument, as set out in paragraph 33 above, that the recital is a record that “any enhanced care need from 17 June 2024 were always intended to be drawn from the Claimant’s other financial resources.” In my view, that interpretation overlooks the concluding part of the recital, namely the “undertaking to perform their respective obligations under Schedule 2 annexed to this order.” In other words, rather than indicating agreement to pay for any enhanced needs post-30 from capital, I interpret the 30+ recital as very clearly pointing to the mechanism for release from the reverse undertaking, found in Schedule 2 of the settlement approval order.

 

    1. The Respondents have also suggested (although not in Mr. Kennedy’s submissions) that I should consider whether BJB’s funds have been effectively managed. Being made without any specific allegation or supporting evidence, I am unimpressed by this suggestion (and consider that Mr. Kennedy was right not to advance it.) It is nothing more than a ‘wild card’ allegation. Throughout her deputyship appointment Ms. Knight will have been subject to supervision by the Office of the Public Guardian. There is nothing before me to suggest that the Public Guardian has ever had any concerns. Moreover, both the local authority assessment of BJB’s needs and the report by Ms. Froggett effectively corroborate the reasonableness of the Deputy’s approach.

 

    1. So, even accepting that all of BJB’s expenditure except contribution to direct payments was in contemplation when the lump sum was agreed, when asking myself if I am satisfied that BJB has sufficient resources to meet her reasonable needs, what I consider is:

 

a. all of her resources, including both capital awarded and other mechanisms in the settlement order; and

b. her reasonable needs as I have found them to be, not as capitalised in the approved award.

    1. There is only one piece of evidence before me as to how long BJB’s funds will be able to sustain the needs which I have found to be reasonable, and that is the ABRDN report which indicates that they will be extinguished within 10-12 years, in the context of a life expectancy of a further 70+ years. That report was provided to the Respondents exhibited to the Deputy’s statement of May 2023. They had plenty of time to consider it but chose not even to put questions to the author. The criticisms of the conclusions set out in the report came only in Mr. Kennedy’s Note the day before the hearing. That is not sufficient for the Court to come to any conclusion other than acceptance of the evidence in the ABRDN report.

 

 

    1. Since the report concludes that BJB’s resources will meet her needs for another decade or so, I invited Mr. Karim to consider if the application had not been made prematurely – things may look different in the later stages of that decade. Mr. Karim’s response was to the effect that, having already reached the point where resort to capital was needed, it would not be acceptable for the Deputy to wait any longer to make the application because, if it were to be refused, she would need to make adjustments to BJB’s expenditure (and therefore lifestyle) now to ensure that BJB’s resources went as far as they possibly could. I accept that this is a reasonable conclusion to have come to at this point in the development of BJB’s life. I do not consider that it implies any complacency in approaches to expenditure at present. I do not criticise the Deputy for having made the application at this point.

 

 

    1. I have considered carefully the “extreme result” which Mr. Kennedy says (as set out at paragraph 36 above) would follow if the Deputy’s application is granted. Whilst the figures quoted are indeed startling, I note that they are not based on any evidence before me. Ultimately, as set out in paragraph 63 above, I conclude that – “extreme” or not – any outcome of double recovery is not a matter for me to adjudicate. If double recovery is a possible effect of the approved settlement terms, then I must and do accept that the High Court approved the settlement “warts and all.” In so far as Mr. Kennedy asserts that the outcome of the Deputy’s application to the Court of Protection may amount to a “re-evaluation of the claim”, it seems to me that this offence would rather occur if I went beyond determination of the question posed in clause 5 of the settlement approval order by considering the effect of that determination. Accordingly, I decline to take into account the Respondents’ submissions as to what may happen to BJB’s capital.

 

 

    1. In so far as the Respondents have made a proposal for specific terms of a new undertaking (as set out in paragraph 37 above), it seems to me that the proposal may have had merit if it had been considered by the parties and by the High Court when considering settlement of the claim. (I infer from its absence from the settlement approval order, that it was not. Indeed it seems only to have come from Mr. Kennedy in his Note, dated the day before the hearing in this application.) However, things being as they are I agree with Mr. Karim that the proposal goes beyond the meaning to be gleaned from a straightforward reading of clause 5 of the settlement approval order. The approved mechanism for release from the reverse indemnity undertaking is binary only (release or not), on the single threshold of sufficiency of resources to meet reasonable needs. For the same reasons that I have declined to take into account submissions as to effect of exercising that mechanism, I also decline to read into it any more sophistication than a binary option.

 

 

    1. So, accepting the Deputy’s evidence of income and expenditure and the only evidence before me in respect of how far BJB’s capital will stretch, it follows that I am satisfied that BJB does not have sufficient resources to meet her reasonable needs. It is therefore open to me pursuant to clause 5 of Schedule 2 of the settlement approval order to release the Deputy from the reverse undertakings of that Schedule. To consider that, I look to the best interests of BJB.

 

 

Best interests

 

    1. It seems to me obvious to the point of there being no sustainable contrary argument, that BJB’s interests are best served by access to the widest possible resources to meet her needs. If the Deputy is released from the reverse indemnity undertaking, there is no obligation to account for whatever state provision she receives and therefore no deduction from the periodical payments she will receive. I am satisfied that this outcome is in BJB’s best interests, and I should release the Deputy from the undertaking.

 

 

 

 

H. Conclusions

 

    1. I am satisfied on the evidence before me that BJB does not have sufficient resources to meet her reasonable needs if the reverse indemnity undertakings in her settlement approval order stand. I am further satisfied that it is in BJB’s best interests for her property and affairs deputy to be released from those undertakings. I invite the parties to agree the terms of an order to give effect to these conclusions.

 

  1. Along with Senior Judge Lush in Reeves and with Lord Justice Longmore in Tinsley, I too doubt that it is right for issues which arise in civil litigation to be transferred to the Court of Protection in the way that they were, some time ago, in this matter. When I asked counsel before me they confirmed that, to the best of their knowledge, orders with a Peters undertaking are no longer being made. I welcome that development.