PJV v The Assistant Director Adult Social Care Newcastle City Council & Anor [2015] EWCOP 87

Whether in respect of compensation paid under the CICA the Court of Protection must be involved in the setting up of the trust on the basis that the applicant lacks capacity and is also the settlor, and whether it is an application under section 18(1)(h) MCA 2005 for an order settling the property as argued by the CICA.
​
Or whether a Deputy appointed by the Court of Protection can be authorised to negotiate and finalise terms of any such award or setting up the required Trust, but with the ability to apply for directions from the Court of Protection at any time. This was the position argued by the Official Solicitor, it being administratively the easiest and least expensive option and one which would equate with the position of an applicant who lacks capacity to pursue and agree an award with one who has capacity.

Background
P, now 23 years old, suffered non-accidental inflicted head injuries as a baby – these included frontal subarachnoid haemorrhage and bilateral retinal haemorrhages consistent with a violent shaking injury. This has resulted in him suffering significant intellectual cognitive and behavioural problems such that the current neuropsychological deficits relate to and can be explained by the injuries inflicted when a baby in 1993. No one was ever charged with any offence. In the “pool of perpetrators” for the causation of the injuries this included the mother, uncle and the partner at the time. It appeared on the papers before Charles J that the Applicant was removed from the care of his family but then returned to the mother in 1994 – a year after the injuries occurred – and the mother had been the applicant’s main carer ever since. P still resides with the mother.

Charles J recorded at paragraph 25 that the relevant authority charged with making decisions on whether an application for a care order should be made and where the Applicant should reside were content for the then child to reside in the care of his mother and so “concluded that the possibility that she might have been the perpetrator or complicit in the injuries did not warrant her child being removed from her care”. 

On 19 March 1990 the Applicant’s mother made a claim to CICA which was initially rejected on the basis that she may benefit from any award and that such a benefit would be contrary to paragraph 7 of the 1990 scheme (that is to say compensation will not be payable unless CICA is satisfied there is no possibility that a person responsible for causing the injury will benefit from the award). This decision was reviewed in January 1999 and a panel decided that an award should be made but no part should benefit the applicant’s father, mother, brother or any other family member and that an award should be put into trust for the applicant. It directed that CICA and the local authority should liaise to produce a trust deed.

In April 2002 an order was made by the Court of Protection that the Director of Social Services was authorised to make a claim for criminal injury compensation subject to approval of the court as to the quantum and was directed to apply to the Court for certain directions as to receiving and giving discharge of any award and for directions as to dealing therewith. The application was heard by Senior Judge Lush.

In June 2002 the Court of Protection appointed the Officer of Director of Social Services to be a receiver in respect of the applicant. A Receiver was authorised in the name and on behalf of the applicant to receive, give discharge and accept compensation awarded by CICA in respect of a personal injury claim and to sign any necessary documents and to request CICA to pay the compensation into court. The first part was complied with but not the second. In 2004 an interim award of £5,000 was paid to the trustees. The trust was established by the Director of Social Services and then the claim was stayed during the applicant’s minority.

In October 2007 the receiver became the deputy for property and affairs of P pursuant to the MCA as P had attained his majority in August 2010. Around 2012 another interim award was made in the sum of £500,000 which was to be paid into a trust. The money has not been paid. On 24 July 2012 the first tier tribunal ordered a total award of £3,000,856.07 be paid, less the sum of £166,014.42 for state benefits. The tribunal directed the interim award of £500,000 should now be paid “into the trust that has been set up to receive the compensation payment in this case” (paragraph 34). No such payment was made. Charles J commented: “I understand that this may be because it was thought that the terms of the 2005 interim trust did not make appropriate provision in respect of the exclusion of possible perpetrators  from benefits“. In June 2013 CICA told the deputy that a new trust deed was required because the 2005 Interim Trust did not comply with directions given in 1999 concerning the exclusion of benefit to the Appellant's father, mother, brother or other family member. The order made on 24 July 2012 provided that CICA would have to make a final payment of £2,329,841.65 “into the trust which is the net figure payable after deducting the two interim payments of £505,000 (sic)and the net sum of £166,014.42 in respect of state benefits.”

The court looked at the trust deed provided and noted that the recitals mirrored those of the 2005 interim trust and are effectively the same as all those in respect of CICA’s current practice for capacitious applicants.

In April 2014 the deputy for P made the application before Senior Judge Lush and the applicant P was joined as a party to it and the official solicitor agreed to act as litigation friend. CICA was also joined as a party but P’s mother was not. The order of Senior Judge Lush dated 26th of March 2015 provided that the deputy was authorised to accept the award from CICA on P’s behalf and give a Peters undertaking. It also contained provisions as to the content of the trusts to which the award was to be paid which reflect the point made in the judgment that other terms of the trust could be negotiated and when finalised the relevant document would be initialled by Senior Judge Lush to identify it as the settlement of the Appellant's (P's) property that was the subject of the order under ss. 16 and 18(1)(h) of the MCA made by Senior Judge Lush.

Decision
CICAs practice concerning capacitious applicants reveals that the award is to be paid to trustees on trusts that contain certain provisions and thus the applicant never becomes entitled to the monies representing the award i.e. the specified sum and so to the trust property. Accordingly, it is never his property to settle or deal with in another way. The award must be paid to trustees on trust. The court considered it was clearly sensible and a matter of risk management and of good administration for CICA not to pay directly and it has decided the money must be held on trust to the applicant. However, the question is whether the awards and the money representing it is ever the applicant’s property and this can be tested by asking: if CICA did pay the sum awarded to the applicant, could he lawfully do what he wants with it? Charles J said at paragraph 66 the answer is no - the award and the money is impressed with an obligation which can be described as a constructive or purpose trust. This means that the applicant never becomes entitled to or holds the award and the money representing it absolutely, or in a way that enables him to deal with it as he wishes, because his claim under the statutory scheme (and so by analogy his cause of action) is finalised by the acceptance of a condition decided on by the decision maker under and applying that scheme that the award and the money representing it is not to be paid to the applicant, and so become his property, but is to be held on trust and so paid to the trustees and becomes the trust property. Accordingly, Senior Judge Lush was wrong when he concluded that the applicant (the person to whom the award is made) is always the settler.

The starting point is that the Court of Protection, a deputy or attorney acts on behalf of P. A court making a welfare order under section 16 of the MCA or a deputy or attorney under their powers would accept and finalise the CICA award on behalf of P on the basis that it was to be paid to trustees to be held by them on identified trusts that had been declared or would be finalised and declared (Paragraph 71). The question is therefore whether the CICA was right and a deputy is precluded from doing so by section 20(3)(a) or further or alternatively section 20(3)(c) of the MCA - that is to say that a deputy may not be given powers with respect to:
 
  (a) the settlement of any of P’s property, whether for P’s benefit or for the benefit of others;
  (b)… or:
  (c) the exercise of any power (including a power to consent).

Section 20 (3) (c) is in the same terms as section 18 (1) (j). Charles J was clear in paragraph 73 that CICA was wrong and agreed with Senior Judge Lush that the deputy can accept an award on behalf of P. 

Charles J’s view was that s. 20(3)(c) (and so s. 18(1)(j)) is not directed to abilities and so powers that anyone has and so, for example, a power to make and accept a claim for compensation made under a statutory scheme or on some other basis. When the applicant does not have capacity to make the decision to accept the award, and so that choice, someone else, whether the court, a deputy or an attorney, can do it for him just as they can make a range of decisions relating to P’s property and affairs on behalf of P.

Charles J’s clear view was that P’s property had not been settled – he did not agree with CICA that on acceptance and so finalisation of an award that CICA has decided that (and so offered on the basis that) it should be placed in a trust, the applicant obtains title to the award and so to the money representing it. Charles J was clear paragraph 78: “in my view the process by which such an award is decided on, offered, accepted and so finalised and then paid means that the award and the money representing it has never been the applicant's property; it has always been the trust property”.

Accordingly, in paragraph 81 Charles J concluded that there is no need for an application to the Court of Protection to finalise an award that CICA, in the proper exercise of its powers under the relevant scheme, decides should be held on trust and so requires to be paid to trustees on trusts that include and do not conflict with terms that CICA is so entitled to require. A deputy appointed by the Court of Protection can be authorised to negotiate and finalise terms of such an award and enter into an “acceptance of final award” or equivalent document for an interim award on behalf of P and thereby finalise the claim. In paragraph 83 Charles J said: ”A convenient and sensible way is that adopted in practice by CICA when the applicant has capacity (i.e. a declaration of trust by original trustees setting out the trusts over the award which will start to operate on payment). No doubt trust lawyers could set up other ways to give effect to the terms and so the trust created by the finalisation of the process of an application for compensation to CICA under the relevant scheme.”

Charles J noted the ability of a deputy to seek further directions or that he should negotiate further. An applicant and so the Court of Protection, a deputy or attorney does not simply have to accept CICA's decision and can challenge quantum and the terms that CICA seeks to require (paragraph 88).

Discussion
A pragmatic decision in this matter given that if the court had followed the position of the CICA (namely that the Court of  Protection must be involved), as the trust required by the CICA  under the relevant scheme is the settlement of “P’s property”,  section 20(3 )(a) and/or section 20(3 )(c) MCA preclude a deputy from creating a trust of P’s property and/or from agreeing that the CICA award should be subject to trusts and so paid to trustees on those trusts and so this must be done by court order under ss. 16 and 18(1)(j) of the MCA.

If Charles J had followed the argument advocated by the CICA it would mean that the award by the CICA which is capped would lead to additional costs as there is no provision that enables costs to be paid by the CICA over and above the award. Thus the best interests argument of P was invoked and the court adopted the stance taken by the Official Solicitor.
​
This case will be of note for family practitioners and lay persons alike where a person or child has suffered, as in this case, significant injuries which have never been before a criminal court, or indeed in this case the family court, for findings as to culpability. The award was substantial and practitioners and lay persons alike should take note of the availability of the CICA and the resultant effect of any award and how it is to be administered.

Read the full text of the judgment on Bailii