Newcastle City Council v PV & Anor [2015] EWCOP 22

IMPORTANT NOTICE

This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the incapacitated person and members of their family must be strictly preserved. All persons, including representatives of the media must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.

Case No 11020846

[2015] EWCOP 22

COURT OF PROTECTION

Date 26 March 2015

MENTAL CAPACITY ACT 2005

IN THE MATTER OF PV

First Avenue House

42-49 High Holborn

London WC1V 6NP

Before

SENIOR JUDGE LUSH

Between

NEWCASTLE CITY COUNCILApplicant

(1) PV (BY HIS LITIGATION FRIEND,Respondents

THE OFFICIAL SOLICITOR)Respondent

(2) THE CRIMINAL INJURIES COMPENSATION AUTHORITYRespondent

Simon Stevenson for Applicant

David Rees for First Respondent

Nicola Greaney for Second Respondent

Hearing Hearing date: 12 November 2014

JUDGMENT

Senior Judge Lush:

[1]This judgment considers the role of the Court of Protection in connection with applications to the Criminal Injuries Compensation Authority (‘CICA’). In particular, it looks at cases in which the CICA requires a trust to be created in order to exclude any possibility that the assailant may benefit from the compensation award. These cases arise almost exclusively in the context of domestic violence, where the assailant is a family member.

Preliminary comments

[2]Before the Mental Capacity Act 2005 (‘MCA’) came into force, any proposed compromise of a personal injury claim involving a patient of the Court of Protection had to be approved by the Master of the Court of Protection before it was approved by the civil judge. Where the parties were unable to reach a settlement out of court, and the matter went to trial, the Master’s involvement was unnecessary, and the civil judge’s decision was final. This practice had developed during the nineteenth century and was confirmed by the Court of Appeal in Re E (Mental Health Patient)

[1985] 1 All ER 609

[3]When the MCA came into force on 1 October 2007, the Civil Procedure Rules Committee decided that the practice of referring damages settlements to the Master of the Court of Protection should cease because it was incompatible with the changes introduced by the MCA.

[4]It was also traditionally the practice for the Court of Protection to approve an award made by the CICA to a patient under the Mental Health Acts 1959 and 1983 and, although the CICA was not affected by the decision of the Civil Procedure Rules Committee in 2007, this practice also gradually ceased following the implementation of the MCA.

[5]The High Court has no inherent power to create a trust of an award to which a protected party is absolutely entitled: Allen v Distillers Co. (Biochemicals) Ltd.

[1974] QB 384

[6]The Court of Protection does, however, have the power to authorise the creation of a trust or settlement of a protected beneficiary’s assets, whether for their benefit or the benefit of others, pursuant to section 18(1)(h) of the MCA. It also has powers to make ancillary vesting orders, and orders varying or revoking a trust in certain circumstances: MCA Schedule 2, paragraphs 5 and 6. The court must exercise these functions itself and cannot delegate them to a deputy: MCA, section 20(3). For similar reasons, but essentially because it is a decision that the donor must make personally, I very much doubt that the creation of a trust is something that the donor of an Enduring Power of Attorney or Lasting Power of Attorney for property and financial affairs can lawfully do by an attorney.

[7]The CICA has power under its various Schemes to require the compensation award to be paid to trustees to hold on such terms as the CICA shall think fit. For example, paragraph 9 of the CICA’s 1990 Scheme, which applies in this case, states that:

“If in the opinion of the Board it is in the interests of the applicant (whether or not a minor or a person under an incapacity) so to do, the Board may pay the amount of any award to any trustee or trustees to hold on such trusts for the benefit of all or any of the following persons, namely the applicant and any spouse, widow or widower, relatives and dependants of the applicant and with such provisions for their respective maintenance, education and benefit and with such powers and provisions for the investment and management of the fund and for the remuneration of the trustees as the Board shall think fit. Subject to this the Board will have a general discretion in any case in which they have awarded compensation to make special arrangements for its administration.”

[8]Similar provisions have been included in subsequent Schemes and paragraph 106 of the latest (2012) Scheme provides as follows:

“A claims officer may give directions, impose conditions and make such other arrangements as the claims officer considers appropriate in connection with the acceptance, payment or administration of an award including for the purposes of: (a) making one or more interim payment; (b) establishing a trust to administer the award, on such terms or in accordance with such arrangements as the claims officer may specify; (c) retaining the award until the applicant’s 18th birthday; (d) providing that an award is to consist in whole or in part of an annuity; (e) requiring the appointment of a deputy or guardian; (f) repaying the award in full or in part in the event that it is no longer required by the applicant, including by means of a trust on terms which provide for unused funds to revert to the Authority.”

[9]The published guidance on the 2012 Scheme, under the heading ‘Special Expenses’, states that:

“We may pay the cost of setting up a trust where we have directed this under paragraph 106 of the Scheme, but not any costs associated with administering that.”

The facts and procedural history of this case

[10]PV was born on 17 August 1992 and lives with his mother in Newcastle upon Tyne.

[11]On 21 January 1993, when he was five months’ old, he suffered a non-accidental brain injury, as a result of which he has significant intellectual, cognitive and behavioural problems.

[12]Although no one was charged with causing his injuries, it is alleged that three people were present at the time of the incident. They were:(a) his mother,

(b) her brother, and

[13]PV was the subject of child protection proceedings instituted by Newcastle City Council on 29 January 1993, and was subsequently returned to his mother’s care in July 1994.

[14]On 19 March 1996, a few days before the introduction of a new CICA scheme, which imposed a ceiling of £500,000 on all awards, a claim was made on PV’s behalf to the CICA for an ex gratia payment under its 1990 Scheme.

[15]On 21 April 1998 the CICA decided not to make an award to PV because his mother, who may have caused the injury, could potentially benefit. Newcastle City Council appealed and, at a hearing before the CICA on 13 January 1999, the judge directed that any award should be held in a trust.

[16]On 10 June 2002 the Court of Protection made a first general order appointing the Director of Social Services for the City of Newcastle upon Tyne as PV’s receiver under the Mental Health Act 1983, and by a further order dated 30 April 2003 the receiver was appointed to act as his litigation friend in respect of the claim to the CICA.

[17]In 2004 the CICA made an interim award of £5,000, which was subsequently paid into a trust pursuant to a declaration of trust dated 25 January 2005. The claim was then stayed during PV’s minority. He attained the age of eighteen on 17 August 2010.

[18]On 24 July 2012 a further hearing took place before the First Tier Tribunal (Criminal Injuries Compensation) (‘the Tribunal’), in which compensation of £2,829,841.65 was awarded. Of this sum, £2,462,020.06 was earmarked for PV’s future care, in respect of which the Tribunal required a Peters undertaking to be given to avoid the possibility of double recovery (see paragraphs 60 to 73 below). The Tribunal also confirmed the earlier direction that the award should be paid into a trust.

[19]On 23 April 2014 Newcastle City Council applied to the Court of Protection for the following provisions:(a) A declaration that the quantum of the award is in PV’s best interests and, accordingly, the applicant further invites the court to make an order authorising the deputy to accept the award on PV’s behalf.

(b) A declaration that the award shall be settled on such terms as the court shall declare.

(d) Directions for the court’s determination of:- (i) PV’s capacity to accept the award and consent to the settlement of the award, including the terms of that settlement. (ii) Whether PV should be joined as a party to these proceedings and his litigation capacity for that purpose assessed. (iii) Whether PV’s mother and/or the CICA should be joined as a party to the proceedings. (iv) The desirability of the Peters undertaking. (v) The continuing role of the deputy and the expansion of the deputy’s authority, if necessary. (vi) The appointment of trustees.

(e) Payment of the deputy’s costs from the CICA award.

[20]On 12 May 2014 the court made an order joining PV as a party to the proceedings and, subject to his consent, appointed the Official Solicitor to act as his litigation friend.

[21]There were further interlocutory orders and the final hearing took place before me on Wednesday 12 November 2014. It was attended by:(a) Simon Stevenson, counsel for Newcastle City Council,

(b) David Rees, counsel for the Official Solicitor, and

Questions for the court to consider

[22]In his position statement on behalf of the Official Solicitor, Mr Rees said that: “The application raises a number of questions specific to PV’s case. Related to these are some broader issues as to the role of the Court of Protection in CICA applications. Having regard to all of these matters, the Official Solicitor would invite guidance from the court on the following matters:(1) Who can conduct an application to the CICA on behalf of a person who lacks capacity to do so for themselves?

(2) Is permission needed from the Court of Protection before a CICA award can be accepted on behalf of a person who lacks capacity? Specifically: (a) does the Court of Protection need to approve the quantum of an award before it is accepted? (b) if the CICA propose that the award should be subject to a trust, should that trust be set up by the CICA or the Court of Protection? (c) if the former, is approval of its terms required by the Court of Protection?

(3) Where the bulk of P’s funds is held in a settlement imposed by the CICA, is there any need for an ongoing deputyship? Is there any objection to a property and affairs deputy also being a trustee of a settlement imposed by the CICA?

(4) If the CICA propose that a Peters undertaking is provided as a condition of an award, does that need to be approved by the Court of Protection? Who should give the undertaking and in what terms?” (a) does the Court of Protection need to approve the quantum of an award before it is accepted? (b) if the CICA propose that the award should be subject to a trust, should that trust be set up by the CICA or the Court of Protection? (c) if the former, is approval of its terms required by the Court of Protection?

[23]I shall attempt to answer each of these questions in turn before considering their applicability in PV’s circumstances. In accordance with the Mental Capacity Act 2005 and the Court of Protection Rules 2007, I shall refer in general terms to a person who lacks capacity to make a particular decision as ‘P’. (1). Who can conduct an application to the CICA on behalf of a person who lacks capacity to do so for themselves?

[24]Neither the CICA Schemes nor the relevant Tribunal Rules contain any provisions for the representation of a person who lacks capacity. There is no equivalent to Part 21 of the Civil Procedure Rules 1998 (‘CPR Part 21’), which contains special provisions for proceedings involving children and protected parties.

[25]CPR Part 21:(a) makes it a requirement that a litigation friend should conduct proceedings brought by or against a child or protected party;

(b) sets out how a person can become a litigation friend;

(c) provides that a deputy appointed by the Court of Protection under the MCA with authority to conduct proceedings on the protected party’s behalf is entitled to be the litigation friend in any proceedings to which that authority extends; and

(d) provides that 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 or on behalf of or against a child or protected party, without the approval of the court.

[26]Even though there is no specific rule to this effect, it has been the CICA’s practice to permit a person with parental responsibility to act on behalf of a child in making and conducting a claim and accepting the award.

[27]As regards protected parties, I agree with Mr Rees’s and Miss Greaney’s submissions on behalf of the Official Solicitor and the CICA respectively that, where victims of a criminal injury lack capacity to make an application to the CICA for compensation, they will not be bound by any application that purports to have been made on their behalf, unless it is made by:(a) an attorney acting under a registered Enduring Power of Attorney or a Lasting Power of Attorney for property and financial affairs; or

(b) a person authorised by the Court of Protection to conduct the application. This could either be a deputy for property and affairs or, if the court considers that there is no need for an ongoing deputyship, a person authorised by a one-off order under sections 16 and 18 of the Mental Capacity Act 2005.

[28]Miss Greaney mentioned that the CICA has concerns about situations in which no suitable person is willing or able to apply to the Court of Protection for authority to make and conduct a CICA claim on the applicant’s behalf. She suggested that the CICA would expect the Official Solicitor to apply to the court for authority to act in such a situation, and that his costs would be met by the applicant either out of any compensation awarded (in the event that the claim was successful) or from other funds belonging to him.

[29]I should record that the Official Solicitor did not concur with the CICA’s view that he has an obligation to act in these circumstances. (2). Is permission needed from the Court of Protection before a CICA award can be accepted on behalf of a person who lacks capacity?

[30]Unless expressly required by an order of the Court of Protection (which, for the reason I mentioned in paragraph 4 above, may have been made before 1 October 2007, when the MCA came into force, but is unlikely to have been made after that date), the court’s permission is not required in order to accept a CICA award. (2)(a) Does the Court of Protection need to approve the quantum of an award before it is accepted?

[31]It is clear from the terms of the various CICA Schemes that the amount of compensation to be awarded and the terms and conditions upon which the award is made are entirely in the discretion of:(a) the CICA, or

(b) the Tribunal under the 1990 Scheme, or

[32]Because the amount of the award is entirely in the discretion of the CICA or the Tribunal, there is no need for the Court of Protection to approve either the amount of compensation to be received or the terms or conditions upon which it is awarded.

[33]Mr Rees submitted that the Court of Protection’s role in CICA cases (if any) is limited to giving directions to the person conducting the application as to what is in P’s best interests. He suggested that this is likely to arise in the following circumstances:(a) whether to accept a CICA award (whether or not it is to be held on trust or subject to any other terms or conditions);

(b) whether to apply for a review;

(d) where the CICA or the Tribunal are prepared to consider alternative options for the terms of a trust, to decide which option would be in P’s best interests; or

(e) whether to bring proceedings in the administrative court for a judicial review of the Tribunal’s decision.

[34]Although I agree with Mr Rees that the court may have a role in these circumstances, for reasons that will become apparent in my response to the next question, I consider that the court has more extensive powers and responsibilities than he envisages. (2)(b) If the CICA proposes that an award should be subject to a trust, should that trust be set up by the CICA or the Court of Protection?

[35]The Official Solicitor and the CICA disagree on the response to this question. The Official Solicitor says that the trust should be set up by the CICA. The CICA says that the trust should be authorised by the Court of Protection.

The Official Solicitor’s submissions

[36]In his position statement on behalf of the Official Solicitor, Mr Rees said as follows:

“There has, in the past, been some confusion as to the roles of the Court of Protection and CICA. The Official Solicitor would submit that a clear distinction exists between cases: (1) where CICA have determined to pay the award to P absolutely and a proposal is subsequently made (by the deputy or some other person) to settle it on trusts; and (2) where CICA propose to impose a trust as a condition of acceptance of an award.”

In the former case, the award belongs to P absolutely and may only be settled pursuant to a specific order of the Court of Protection under section 18(1)(h) MCA 2005. It is difficult to envisage a case where it would be appropriate for CICA to be joined as a party to such an application, and the decision to place the award in trust would be a matter for the Court of Protection to be determined having regard to P’s best interests under the principles set out in the MCA 2005. Under current practice, the Official Solicitor would envisage that he would be invited to act as P’s litigation friend in respect of such an application. In the latter case, the Official Solicitor would submit that the terms of the trust are purely a matter for CICA/the Tribunal, and it is those bodies (and not the Court of Protection) which must establish the settlement and execute any relevant instruments pursuant to its powers under the Schemes. However, in the present case, the precise terms of the settlement appear to have been left by the Tribunal to be negotiated between CICA and Newcastle City Council. Where the possibility for further negotiation as to the terms of the trust remains, then there may be scope for the Court of Protection to determine which of the available options would be in P’s best interests. However, the final decision as to the terms of the trust must lie with CICA/the Tribunal. The Official Solicitor would submit that the acceptance of a CICA award which is to be placed on CICA imposed trusts is not the settlement of property belonging to P. … The property that is being placed into the settlement does not belong (and has never belonged) absolutely to P. P’s compensation under the Scheme is merely the beneficial interest under the trusts imposed by CICA.” (1) where CICA have determined to pay the award to P absolutely and a proposal is subsequently made (by the deputy or some other person) to settle it on trusts; and (2) where CICA propose to impose a trust as a condition of acceptance of an award.”

The CICA’s submissions

[37]In her position statement on behalf of the CICA, Miss Greaney said:

“The CICA does not consider that there is a clear distinction to be drawn between the two situations described in the Official Solicitor’s position statement. The CICA agrees that it is a matter for the discretion of the CICA (or the Tribunal under the 1990 Scheme or on an appeal under the 1996 and subsequent schemes) as to the amount of compensation to be awarded and whether to impose a condition in relation to acceptance or settlement on trust of the award sum. However, that does not mean that the CICA is the settlor of the trust in circumstances where the CICA or the Tribunal imposes a condition and/or stipulates that the award sum can be paid into a trust on particular terms. Frequently, the Tribunal will require the inclusion of an excluded person’s clause to avoid a person responsible for the injury from benefitting from the award. The structure of the Schemes is broadly as follows: (a) An award is offered by the CICA or, under the 1990 Scheme, the Tribunal (which may be subject to conditions including the requirement that a trust be set up on certain terms). There will typically be a process of negotiation between the applicant (or his representative) and the CICA as to the terms of the trust. (b) It falls to the applicant (or the person authorised on his behalf) to decide whether to accept the award and, in the event of acceptance, notification must be provided to the CICA in writing of such acceptance. (c) By accepting, the applicant (or person authorised on his behalf) will agree not only to the amount of the award but to any conditions set by the CICA which apply to the acceptance of the award (including any condition that the award amount is placed in a trust on such terms as are set by the CICA). (d) No title vests in the applicant until such written notification is provided (see para. 22 of the 1990 Scheme, para. 50 of the 1996, 2001 and 2008 Schemes, and para. 108 of the 2012 Scheme). (e) It then falls to the applicant to set up a trust in accordance with the terms agreed with the applicant (or person authorised on his behalf). What is clear is that the Schemes involve a bilateral process. There must be acceptance on the part of the applicant to the award offered. The situation differs from the usual one where a person can unilaterally decide to settle his property on trust and make a transfer to trustees on terms he or she considers appropriate, without having to agree the terms of the settlement with another person (although agreement of the trustees to act in that capacity would, of course, have to be obtained). The requirement for agreement from the applicant means that the process is not one that can be described as unilateral action on the part of the CICA, such that the CICA is properly regarded as the settlor. The CICA is not imposing a trust on the applicant. Indeed, the applicant’s agreement to the amount of the award and the payment into trust including the specific provisions required by the CICA is required. Once written acceptance has been provided, the applicant has an entitlement to the award (albeit title that is subject to conditions and at least in respect of the 1990 ex gratia scheme, not legal title in the ordinary sense because there is no contractual or statutory right to payment). Paragraph 9 of the 1990 Scheme sets out rules which govern what happens to an award once it has been accepted and is concerned with administration of award monies. Furthermore, the CICA cannot and does not take responsibility for ensuring that the trust deed satisfies the applicant’s needs from the point of view of taxation or advising the applicant as to whether or not a disabled person’s trust is a suitable vehicle. These are matters that an applicant (or his representative) has to decide and if necessary, take appropriate advice. The CICA’s role under all Schemes is to determine whether compensation is payable and the appropriate amount of such compensation while ensuring that particular public policy requirements of the CICA regime are satisfied (such as the excluded persons rule). The CICA has no wider role or responsibility to ensure that an applicant, having accepted an award and agreed to a trust, is provided with a trust deed which best meets his individual circumstances, there will be situations where the taxation implications of such a trust are extremely complicated and the CICA has no role to play in determining the best option in relation to such matters. It follows that the CICA’s position is that neither it nor the Tribunal is the settlor of the trust in cases where the CICA or the Tribunal requires that the award sum be paid into a trust and requires specific terms are included in the trust. The applicant has an entitlement to the award following written acceptance of the award pursuant to all the rules of the Schemes. There is a distinction drawn in the various schemes between the acceptance of the award and the settlement of that award on trust or the administration of the award. The applicant is, accordingly, the settlor. There is, therefore, settlement of property belonging to P and the property must be settled pursuant to an order of the Court of Protection under section 18(1)(h) MCA 2005. Further or alternatively, the Official Solicitor notes in his position statement that there is a role for the Court of Protection to play in circumstances where the terms of the trust are left for negotiation between the CICA and the applicant or his representative. As explained above, this is the typical process adopted for agreeing a trust. Neither the CICA nor the Tribunal imposes a trust on the applicant, albeit that certain terms, such as an excluded persons’ clause, will not be negotiable. The person authorised on behalf of the applicant to conduct the claim has responsibility to agree the trust terms on behalf of the applicant. Appropriate recourse should be made to the Court of Protection in cases where there is doubt as to which form of trust or which trust terms would be in the applicant’s best interests. In those circumstances, the Court of Protection has a role in making a decision in the applicant’s best interests.”

The structure of the Schemes is broadly as follows:

Decision on whether the trust should be set up by the Court of Protection

[38]I agree with Miss Greaney that neither the CICA nor the Tribunal is the settlor of the trust. The applicant (the person to whom the award is made) is always the settlor. If the applicant has capacity to create a trust, he can create it himself. If he lacks capacity, then someone else must be formally authorised to make that decision and do that act on his behalf.

[39]In my judgment, having regard to the ordinary meaning of the language used in the various Schemes, although they may pay the amount of any award to trustees and give directions and impose conditions for establishing a trust to administer an award, neither the CICA nor the Tribunal has the power to establish a settlement and to execute the relevant instruments for that purpose or to authorise an individual to do these things on behalf of a person who lacks capacity.

[40]Similarly, the CICA and the Tribunal can give directions and make arrangements for the appointment of a deputy or guardian as a condition of making an award, but neither of them can actually appoint a deputy. Only the Court of Protection has that power, which is conferred on it by sections 16 to 20 of the MCA. The territorial application of the CICA Schemes extends throughout Great Britain and the reference to a ‘guardian’ in paragraph 106(e) of the 2012 Scheme is to an appointment under Part 6 of the Adults with Incapacity (Scotland) Act 2000. The CICA and the Tribunal cannot appoint a guardian. Only a sheriff can.

[41]It follows that, where the CICA or the Tribunal requires the establishment of a trust by a person who lacks capacity to create a trust himself, an application must be made to the Court of Protection for an order under section 18(1)(h) of the MCA. (2)(c) If the trust is set up by the CICA, is approval of its terms required by the Court of Protection?

[42]In view of my finding in the previous paragraph, this question needs to be recast to enquire whether, in authorising the trust, the court would do so on terms other than those specified by the CICA or the Tribunal.

[43]As the Court of Protection alone has jurisdiction to create the trust on P’s behalf, it is obliged to act in P’s best interests having regard to sections 1 and 4 of the MCA and “must consider all the relevant circumstances” (MCA, section 4(2)). This would include approving the terms required by the CICA or the Tribunal.

[44]I doubt whether the court could do other than approve the terms stipulated by the CICA or the Tribunal and I cannot envisage a situation in which the court would not approve terms which, for policy reasons, are so fundamental as to be non-negotiable, for example:(a) an excluded persons’ clause to ensure that the assailant does not benefit from his crime;

(b) terms that provide for unused funds to revert to the CICA; or

(c) terms designed to prevent the possibility of double recovery of care costs. (3). Where the bulk of P’s funds is held in a settlement imposed by the CICA, is there any need for an ongoing deputyship?

[45]This depends on the extent of P’s other assets. If P has no other significant assets or income, then there is unlikely to be any need for an ongoing deputyship in addition to the trust.

[46]If, however, P has significant property and assets in addition to the CICA award, these will need to be managed by someone else on his behalf, and a property and affairs deputyship is likely to be required.

[47]Mr Rees suggested, and I agree with him, that, as an alternative to a property and affairs deputyship in such cases, the Court of Protection could authorise the creation of a settlement of P’s other assets with the same trustees as the CICA settlement. There may be savings in terms of costs, though it is doubtful because of the need to keep the two funds separate and to prepare two sets of trust accounts.

[48]In determining whether to allow P’s other assets to be held on trust, the court would have regard to a number of criteria, many of which were considered by Her Honour Judge Hazel Marshall QC in SM v HM [2012] COPLR 187. (3). Is there any objection to a property and affairs deputy also being a trustee of a settlement imposed by the CICA?

[49]In his position statement filed on behalf of the Official Solicitor, Mr Rees said that:

“In the usual course of events the Official Solicitor can see no difficulty with P’s property and affairs deputy also acting as a trustee of a settlement imposed by the CICA.”

[50]He then proceeded to add that:

“The identity of such trustees will be a matter for the CICA in the first instance. However, where a proposed trustee (whether or not P’s deputy) is themselves also a possible beneficiary under the trust fund, it is suggested that it would usually be desirable for an independent trustee to be appointed as well.”

[51]In her position statement filed on behalf of the CICA, Miss Greaney stated that:

“The CICA does not agree that the identity of the trustees is a matter for the CICA. The CICA will be interested to ensure that an excluded person does not benefit and may have concerns about particular individuals acting as trustees if there is a risk of an excluded person thereby benefitting from the award. The court will note that paragraph 7 of the 1990 Scheme provides that there must be no possibility of an excluded person benefitting. However, beyond considerations that fall within the ambit of the CICA Schemes, the CICA does not consider that it has responsibility to determine the identity of trustees. The CICA would expect an applicant’s representative to make proposals as regards the identity of trustees.”

[52]If the Court of Protection is authorising someone to create a settlement on P’s behalf pursuant to section 18(1)(h) of the MCA, the identity of the trustees is one of the relevant circumstances it must consider when determining what is in P’s best interests.

[53]Mr Rees also submitted on behalf of the Official Solicitor that:

“In cases where there is little or no prospect of P recovering capacity to make decisions about the trusteeship in future, consideration should also be given to vesting in P a power to remove and appoint new trustees. Such a power would, of course, be exercisable on his behalf by the court. In considering whether to include these provisions in the trust, the proportionality of the costs of requiring court applications for change of trusteeships (having regard to the value of the trust fund) would need to be taken into account.”

[54]Miss Greaney disagreed:

“As to the proposal that consideration should be given to vesting a power in P to remove and appoint new trustees, the CICA does not understand the rationale for the OS’s proposal. This is not a power that P, lacking capacity, could exercise on his own behalf. The CICA is not clear as to why the OS considers such a provision to be of benefit to the applicant. It is likely to require further expense in terms of applications to the Court of Protection.”

[55]In response to the question itself, the court would generally have no objection to a deputy for property and affairs also acting as a trustee of a trust required by the CICA. Indeed, it may even be necessary or expedient in order to deal with the totality of P’s affairs.

[56]I agree with Mr Rees’s submissions that:(a) where a proposed trustee (whether or not he or she is the deputy) is also a possible beneficiary under the trust fund, then it would be desirable that there be at least one independent trustee; and

(b) consideration should be given to vesting in P a power to appoint and remove trustees.

[57]Although P may lack the capacity to appoint or remove trustees, the Court of Protection can “exercise any power (including a power to consent) vested in P whether beneficially or as trustee or otherwise”: Mental Capacity Act 2005, section 18(1)(j).

[58]This point was considered by Judge Marshall QC in SM v HM [2012] COPLR 187. At paragraph 78 of her judgment she said:

“In the final event, P can be protected by the Court of Protection in either case, in that the court can remove the deputy pursuant to s 16(8) of the 2005 Act and, provided that the power to remove a trustee is vested in P by the trust instrument (as it should be in a well-drawn instrument), the court will also be able to exercise that power on P’s behalf.”

[59]In my own experience, it has been useful for the court to have been able to remove trustees and appoint new trustees on P’s behalf, where the relationship between the trustees, or the relationship between P or P’s family and the trustees, has reached an impasse or broken down entirely. (4). If the CICA proposes that a Peters undertaking is provided as a condition of an award, does that need to be approved by the Court of Protection?

[60]A ‘Peters undertaking’ is an undertaking of the kind given by the deputy in the case of Peters v East Midland Strategic Health Authority

[2009] EWCA Civ 145

; 2010] QB 48, namely:(a) not to apply for public funding of the claimant’s care under various statutory provisions without further order, direction or authority from the Court of Protection; and

(b) to notify the defendant in the personal injury or clinical negligence proceedings of any application made to the Court of Protection for permission to apply for public funding of the claimant’s care, so that the defendant may be given the opportunity to respond to the application.

[61]In paragraph 65 of his judgment in Peters,Lord

Justice Dyson (as he then was) held that:

“In our judgment, this is an effective way of dealing with the risk of double recovery in cases where the affairs of the claimant are being administered by the Court of Protection. It places control over the deputy’s ability to make an application for the provision of the claimant’s care and accommodation at public expense in the hands of a court. If a deputy wishes to apply for public provision, even where damages have been awarded on the basis that no public provision will be sought, the requirement that the defendant is to be notified of any such application will enable a defendant who wishes to do so to seek to persuade that the Court of Protection should not allow the application to be made because it is unnecessary and contrary to the intendment of the assessment of damages.”

[62]Unlike civil litigation, there is no defendant in a claim under the CICA Schemes and, in the context of a Peters undertaking, the CICA itself, as the payer of the compensation, assumes a similar role to that of the defendant in civil proceedings.

[63]The undertaking sought by the CICA in this case is as follows:

“I [name and address of deputy] deputy for PV of [address] am duly authorised by virtue of the Court of Protection order dated [date] to accept on behalf of PV the award made by the Criminal Injuries Compensation Authority pursuant to and under the terms of the Criminal Injuries Compensation Scheme on [date] with the exception of the amount awarded for PV’s future care. Pursuant to paragraph 9 of the Criminal Injuries Compensation Scheme 1990 the payment by the Criminal Injuries Compensation Authority of the specific award for future care of £2,462,020.06 is dependent on my giving the following undertaking and so is in the best interests of PV as defined by sections 1(5), 4 and 16 of the Mental Capacity Act 2005. The undertaking sought by the Criminal Injuries Compensation Authority is that:- (1) I shall notify the Senior Judge of the Court of Protection of the outcome of the Applicant’s application for Criminal Injuries Compensation and supply him with a copy of the decision of the First Tier Tribunal (the successor to the Criminal Injuries Compensation Board under the 1990 Criminal Injuries Compensation Scheme); and (2) I shall seek from the Court of Protection a limit on my authority as PV’s deputy whereby no application for public funding of PV’s care under sections 21 or 29 of the National Assistance Act 1948 or section 2 of the Chronically Sick and Disabled Persons Act 1970 can be made unless it is in his best interests either because the funds provided by the Criminal Injuries Compensation Authority for his future care no longer provide for his reasonable care needs or because the restriction is contrary to his best interests for some other reason. (3) Before making any application for public funding of PV’s care under section 21 or 29 of the National Assistance Act 1948 or under section 2 of the Chronically Sick and Disabled Persons Act 1970 I shall seek a declaration from the Court of Protection that such an application is in his best interests either because the funds provided by the Criminal Injuries Compensation Authority for his future care no longer provides for his reasonable care needs or because the restriction is contrary to his best interests for some other reason and shall not make the application unless the Court of Protection makes such a declaration. (4) I shall notify the Criminal Injuries Compensation Authority of any application to seek such a declaration from the Court of Protection or to otherwise vary this undertaking and/or any order consequent upon it. I will not object to the Criminal Injuries Compensation Authority making submissions to the Court of Protection in respect of any such application.”

The undertaking sought by the Criminal Injuries Compensation Authority is that:-

[64]On behalf of the Official Solicitor, Mr Rees suggested that:

“There may even be an issue as to the power of the Tribunal under the 1990 Scheme to impose a Peters undertaking as a condition of making a compensation award, unlike the position under the later tariff schemes, there is no general power under the 1990 Scheme to impose conditions on an award of compensation. However, if the person making the application on behalf of P declines to give a Peters undertaking, the consequence may be that P will receive a significantly lower award of compensation (or potentially no award at all). The Official Solicitor, of course, acts as PV’s litigation friend, and this role must take priority over any wider assistance that he is able to give the court on broader points of law. In the circumstances the Official Solicitor would not wish to make submissions on the powers of the CICA/the Tribunal to impose a Peters undertaking.”

[65]In response, Miss Greaney said that the CICA’s view is that it does have a power to impose a Peters undertaking by virtue of paragraphs 9 and 19 of the1990 Scheme. I agree. The wording of paragraph 9 (which is set out in paragraph 7 of this judgment) is sufficiently broad as to authorise the applicant, or someone lawfully acting on his behalf, not to apply for public funding for his care without seeking first an order or authorisation from the Court of Protection.

[66]Mr Rees proceeded to state that “the Official Solicitor would, nevertheless, make the following observations.(1) The undertaking requested by the CICA in the present case, like that given in Peters, is limited in form. It is simply a promise given by the person conducting the criminal injury compensation claim of PV’s behalf that they will apply to the Court of Protection to place limits on the future powers of PV’s deputy to apply for community care services on his behalf. The undertaking sought by the CICA does not (and cannot) restrict the jurisdiction of the Court of Protection and the court would remain free to decline to impose such limitations on the deputy’ powers if it is considered that it was in P’s best interests to do so.

(2) Where the court has imposed a restriction on the deputy’s powers to apply for community care services for P then, if at some stage in the future a replacement deputy is appointed, the court would need to consider whether it was in P’s best interests for the powers of the replacement deputy to be subject to similar limitations.

(3) In the circumstances, there should be little difficulty with a person charged with conducting criminal injury compensation claim on behalf of P giving a Peters undertaking in the form sought by the CICA. It merely ensures that the matter is brought to the Court of Protection for consideration. It does not prejudice the outcome of such an application, which will remain to be determined on the usual ‘best interests’ criteria.

(4) In most cases where an award is to be made conditional upon the giving of a Peters undertaking, it is likely to be in P’s best interest for an award to be accepted and for the person with the conduct of the claim to give the undertaking sought.”

[67]I agree with Mr Rees’s submissions.

Who should give the undertaking and in what terms?

[68]The terms should essentially be the same as those approved by the Court of Appeal in Peters v East Midland Strategic Health Authority

[2010] QB 48

, as indeed they are in the undertaking sought by the CICA in this case, as set out in paragraph 63 above, though the wording needs to be amended slightly in order to refer to the Care Act 2014.

[69]In its usual form a Peters undertaking is a promise by a deputy to make an application to the Court of Protection to place restrictions on his power to seek public funding of P’s care.

[70]Where the CICA or the Tribunal has imposed a requirement that the person with conduct of the application (whether or not he is also the deputy) should give a Peters undertaking, that person should give the undertaking, and there is no need to apply to the Court of Protection for permission to give such an undertaking.

[71]In her position statement on behalf of the CICA Miss Greaney said that in PV’s case:

“The Tribunal has imposed a requirement that the applicant provide a suitably worded Peters undertaking. If the deputyship is discharged, there is no effective Peters undertaking in place. This would circumvent the requirement imposed by the Tribunal, if that is the position, then in accordance with paragraph 13 of the decision of the Tribunal on 25 July 2012, the matter would have to be remitted to the Tribunal for further consideration of how to ensure that paragraph 19 of the 1990 Scheme is complied with (which provides that compensation will be reduced by the amount of entitlement to present or future social security benefits). A possible alternative is to arrange for a trustee to sign the Peters undertaking.”

[72]I agree. Where there is no deputyship in place and the award is to be managed by trustees, the trust deed itself should contain provisions restricting the trustees’ powers to apply for public funding of P’s care without first obtaining the permission of the Court of Protection.

[73]I do, however, wonder whether the involvement of the Court of Protection is really necessary. The whole point of a Peters undertaking, as Lord Dyson said, is that “it places control over the [claimant’s] ability to make an application for the provision of the claimant’s care and accommodation at public expense in the hands of a court.” The Tribunal itself has powers under paragraph 19 of the 1990 Scheme to deal effectively with the risk of double recovery.

Orders sought in the application

[74]I now turn to the orders, directions and declarations sought by Newcastle City Council in its application, which are set out in paragraph 19 above, or, at least, to those that are still outstanding and have not already been dealt with in interlocutory orders made during the course of these proceedings.

[75]For the reasons given in paragraphs 31 to 34 above, the court cannot make any determination of the quantum payable in respect of PV’s application to the CICA. However, it can and shall declare that (subject to any further amendments that can be negotiated in the terms of the trust) it is in PV’s best interests to accept the award of £2,829,841.65 awarded by the Tribunal, and it shall authorise Newcastle City Council, as deputy, to accept the award from the CICA and to give a valid receipt.

[76]When the application for a trust has been finalised, the court shall make an order pursuant to section 18(1)(h) of the MCA for the settlement of PV’s property, whereupon the existing deputyship can be discharged.

[77]Given that there is to be an independent solicitor acting as trustee of the proposed CICA trust, the court does not consider that there is any conflict of interest in the Director of Social Services of Newcastle City Council acting as a second trustee.

[78]Pursuant to sections 16 and 18 of the Mental Capacity Act 2005, an order shall be made authorising the trustees, on PV’s behalf, to:(a) file tax returns; and

(b) make any elections that are necessary for the trust to qualify as a disabled person’s trust.

[79]Any funds remaining in the 2005 trust, which was established for the purpose of managing the interim payment of £5,000, may be applied by the current trustees for PV’s benefit.

[80]The court confirms that it is in PV’s best interests to accept the award subject to the Peters undertaking and, as PV’s deputy, Newcastle City Council shall be authorised to give the undertaking in the terms sought by the CICA.

[81]The costs of Newcastle City Council and the Official Solicitor shall be assessed on the standard basis and paid from PV’s estate.