Watt v ABC [2016] EWCOP 2532

Neutral Citation Number: [2016] EWHC 2532 (COP)

Case No 12679881

IN THE COURT OF PROTECTION

IN THE MATTER OF THE MENTAL CAPACITY ACT 2005

IN THE MATTER OF ABC

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 2/11/2016

Before

MR JUSTICE CHARLES

Between

LOUISE URSULA WATTApplicant

ABCRespondent

(By his litigation friend DEF)Respondent

THE OFFICIAL SOLICITORInterested Party

Barbara Rich (instructed by George Ide LLP) for Applicant

Ruth Hughes (instructed by Foot Anstey LLP) for Respondent

David Rees (instructed by the Official Solictor) for Interested Party

Hearing date 6 July 2016

Judgment Approved

Charles J :

Introduction

[1]This is a public document. The hearing was held in public pursuant to the Transparency Pilot and so a Pilot Order restricting reporting has been made.

[2]As a result of a settlement of proceedings in the Queen’s Bench Division (the QB Proceedings), which I approved, ABC was awarded substantial damages for personal injury (about £1.5 million) and this application to the Court of Protection (the COP) is a result of that settlement. It concerns whether the damages awarded should be paid to and administered by ABC’s property and affairs deputy or should be held on trust.

[3]To my mind this issue raises points of some general importance, namely: i) in proceedings for damages for personal injury, namely how the award should be held and administered and so in those proceedings(a) what evidence and argument about this should be considered, and

(b) what provisions should be made for and in respect of this management issue in the sums awarded and the order made. The matters to be considered could include issues relating to the Claimant’s capacity to manage the award made as well as issues concerning how it should be managed if the Claimant lacks that capacity, and ii) in respect of the approach taken by the COP having particular regard to the decision in SM v HM [2012] COPLR 187. As will appear later in my view that case was incorrectly interpreted and applied in the QB proceedings and on this application.

[4]At the end of this judgment I list points that merit consideration in analogous cases.

Background history

[5]The QB proceedings were listed before me because issues had been raised relating to both ABC’s litigation capacity and his capacity to make decisions about the management of his property. By the time of the hearing it had become common ground that ABC lacked litigation capacity. I agreed.

[6]However, there was still a dispute about ABC’s capacity, or the extent of his capacity, to manage his financial affairs with appropriate support. These were not decided because the case settled but they were and are plainly relevant to both: i) the jurisdiction of the COP, and ii) whether the award should be held and managed by a deputy or on trust (and if so what the trusts should be).

[7]The existence of potentially fine and difficult issues relating to what decisions ABC has and does not have capacity to make in connection with the management of his financial affairs is, for example, demonstrated by the following points: i) In January 2015 ABC executed a revocable personal injury settlement (the “ABC January 2015 Settlement”). This was executed to receive interim payments of damages and to preserve ABC’s entitlement to DWP benefits (it is no longer needed for the latter purpose). I am not clear how much of the interim payments totalling £142,000 were paid to respectively that trust and to ABC’s deputy, who was appointed later. ii) The attendance note at the time that trust was executed contains the following: ABC confirmed that when the final award is received he would like to buy several buy to let properties as well as his own property (after selling his current home). --- Finally, ABC asked whether Court of Protection will be needed if the trust is in place. [The solicitor advising] confirmed that there had been mention of ending the trust after settlement of the claim if Court of Protection is in place as this would have the same effect however this very much depends on whether there is a Court of Protection order and the medical evidence at the time. ABC said he would prefer the trust framework as this allows more flexibility but allows him to manage his own affairs outside the personal injury compensation.---------------- iii) Notwithstanding the possibility of a COP order being made ABC must have executed the ABC January 2015 Settlement on the basis that it was thought he had the capacity to make the decision to do so. iv) Within about 6 months ABC’s deputy was appointed by the Court of Protection. The order doing that is dated 24 June 2015 and it contains a recital that the court was satisfied that ABC lacks capacity to make various decisions for himself in relation to a matter or matters concerning his property and affairs. But these matters are not identified in that order or in the evidence in support of the application for that order although it refers to the ABC January 2015 Settlement. v) Passages I cite later (see paragraph 13 hereof) from the evidence in the QB proceedings pre-date this appointment and show that it was recognised on the ground that capacity and best interests issues arose in respect of the management of ABC’s affairs in 2015. vi) The evidence from the proposed deputy in support of the application for her appointment included passages to the effect that:(a) a Queen’s Bench Master had requested that an application be made to the Court of Protection for a deputy to be appointed and this was the reason for the application, and

(b) the Court of Protection was invited to proceed on the basis that the question of whether ABC lacks or continues to lack capacity be considered by a Court of Protection Judge at the final trial of the Queen’s Bench proceedings. vii) That evidence also included an Assessment of Capacity made in October 2013 by a psychiatrist. This was prepared because it was then anticipated that the deputy would make an application for appointment as ABCs deputy. No such application was made at that time and that assessment contains passages to the effect that in the view of that psychiatrist it is possible that with support and rehabilitation ABC may regain capacity to manage his own affairs, that his mental capacity needs to be kept under regular review and he would recommend formally reviewing ABC’s capacity in two years (i.e. in 2015). A June 2014 report from the same psychiatrist was also exhibited to that evidence and that report is correctly described therein as a report that ABC lacks capacity to manage his property and affairs and is unlikely to regain capacity to do so in the future. That report contains the following passages: Unfortunately, in my opinion ABC has made little progress and I have not seen any evidence that leads me to wish to alter the opinion I expressed previously. In my opinion the matter nonetheless needs to be kept under appropriate review since there is a possibility that he may regain financial capacity and he is certainly likely to challenge any Court Order in the future. In my opinion the balance of probability is however that ABC is unlikely to regain the mental capacity to manage his own affairs.

[8]I did not investigate why, in the circumstances that existed in 2015 and were set out in the evidence in support of the application to appoint the deputy, either she or the authorised officer of the Court of Protection, who made the order, thought it was appropriate for that order to be made by an authorised officer. In my view, the difficulties and issues relating to capacity set out in the supporting evidence (and in the evidence in the QB proceedings) mean that it is troubling that an authorised officer made that order and the application should have been put before a judge of the COP. The COP should look at what happened to see what, if any, lessons can be learned to avoid a repetition in similar cases in the future.

[9]However, any issue relating to: i) ABC’s capacity to make the ABC January 2015 Settlement is now water under the bridge because the small amount left in the settlement has been paid to his deputy as ABC’s money, which through his absolute interest under that settlement has always been the case, and ii) whether the COP should have made the order it did or an order in different terms appointing a deputy are now subsumed in the present application relating to the choice between a deputy and a trust if the COP has jurisdiction because ABC lacks relevant capacity.

[10]Although the contested issues relating to the extent of ABC’s capacity to make his own decisions with appropriate support on the management of his property and affairs were not determined in the QB proceedings the approach of ABC’s litigation friend and the deputy on this application has been based on the premise or assumption that ABC lacked all relevant capacity and so effectively that their position in the QB proceedings on this issue was right and would be accepted by me now sitting in the COP. In my view that approach was not justified.

[11]However, as appears later: i) I agree and conclude that as a result of his brain injury ABC lacks the capacity to make decisions on the management and so investment and application of his substantial damages award and assets representing it from time to time and so the COP has jurisdiction. ii) In my view, the medical and lay evidence that founds that conclusion also substantiates the common ground in the QB proceedings and on this application that with, and in some circumstances without, support ABC does have the capacity to make a number of decisions relating to his property and affairs and so, for example, his day to day expenditure from income.

[12]In addition, it seemed and seems to me, leaving aside the jurisdictional issues, that parts of the lay evidence in the QB proceedings (read alone and with the medical evidence) introduced matters that needed to be, but had not been, taken into account in determining whether it would be in ABC’s best interests for his damages award to be settled on irrevocable trusts for his benefit to protect capital expenditure but give ABC autonomy over income expenditure. I drew attention to the trusts created for very different reasons and set out in the schedule to my decision in Director of Social Care Newcastle v V

[2016] 2 WLR 1327

;

[2016] EWCOP 27

(Re PJV).

[13]Examples of these passages are: i) From DEF’s statement dated 26 June 2014: ABC is extremely easily influenced. I have seen it so many times. ABC displays utterly fixed thinking. He has a fixation upon his personal injury solicitor who he believes is not on his side and whom he blames for not “allowing” him to accept an offer made by the Defence insurance company. It doesn’t matter how many times I tell ABC that his solicitor is working hard for his best interests, ABC just cannot and will not see it. He thinks his solicitor is working against him and he tends to launch something of a rant or tirade, aimed at his solicitor. It has actually got to the point now where ABC blames his personal injury solicitor for causing his accident. ------------- He has tended to see his solicitor as a block to him making progress in his life. Thinking back, I think ABC’s attitude to his solicitor did change when the offer was made by the Defence team. From various discussions I have had with ABC over time about the legal process and what [ his solicitor ] is trying to do for him, ABC doesn’t seem to understand or take it in. However, within the last couple of days for the first time ABC said:

“I am pleased I didn’t accept the offer”

. This was in the same conversation as when ABC said for the first time that he would accept professional support. So far as the Court of Protection is concerned, ABC has said in the past that he is willing to go along with this, but only, I sense for the sake of the legal case. ii) From DEF’s statement dated 13 March 2015: All in all, sad though it is to say, I regard ABC as broken, confused, a lost soul in a crowd, generally quiet but sometimes angry and ranting. He still seems to see his solicitor [ -- ] as the cause of all of his problems. I perceive in ABC a dreadful sense of loneliness, he is beginning to admit that life is not the same, and that things are not as they used to be. --------------- ABC has grand ideas of buying and selling houses. He says that his home is “nearly finished”, that he will sell it, buy properties in Southampton ("it has the University there”) and he talks of a property development business essentially i.e. to make money. He says this even though, frankly, progress on his own house is pretty much stalled. ---------------- ABC has recently told me that has been talking to a friend about property development. He seems to get ideas from friends (I am not sure who). From everything I know about ABC, were he to receive a large award of compensation in his hand (say over £1 million), I just cannot see him taking professional advice. In my experience, he tends to think he knows better than professionals, I agree with [ E ---- ABC’s case manager and an occupational therapist ] that ABC lacks trust in, and respect for, professionals. He tends to be angry, at various points in time, with all who help and support him me included. He complains to me about [ E ]:

“[ E ] does not do anything ---- anyone can buy files for paperwork ---- the amounts he gets paid!”

ABC still rants about the same things, on and on, getting angrier and angrier. I cannot pacify him or get a word in ---- it is horrible. It is like this on the way to appointments. From everything I have seen and heard, my perception is that ABC thinks that when the case is finished, all his problems will be gone. He seems to blame his poor situation on the legal case. I worry that ABC will realise all too late that it is the accident/brain injury that has changed his life and that the legal case was/has been processed to try to rebuild his life for the future. However, as he is, ABC’s mindset is that the legal case is responsible for the situation he is in. He thinks the case holds him back. I know that this perception is completely wrong. I know that ABC really needs support and I know there are times when he does appreciate support (such as when I take him to appointments) and I think he can see the benefit of [ E ] going through his paperwork with him dealing with debts, fines, reminders etc ----------------------- So far as the Court of Protection is concerned, I am not convinced that ABC truly understands or remembers what the Court of Protection will mean for the future. As I’ve mentioned previously, he has thought that he is already under the Court of Protection, but I know from what he says he doesn’t want outside management of his money or property. I hope that we will come to accept it, given time, but in the short term I suspect that he will oppose any application or continuation of Court of Protection/appointment of the Deputy. As with everything else, I just hope that ABC will have a dawning realisation when the case is over and learn to accept things as positives, and learn to recognise friends from enemies. It worries me that he is so vulnerable and that he could so easily be “taken for a ride”. -------------- as to property development, I just have a mental image of absolute disaster if he is not helped and supported with this. I can see that ABC is still easily influenced. ------------ The biggest problem I can see at the moment is that ABC cannot recognise his own lack of insight into his lifelong needs. ABC can rant on that [ his solicitor ] has not implemented [ Dr S’s ] recommendations, but I’m not convinced that ABC has understood what [ Dr S ] and others have really said (about enabling support to improve quality of life). He has not embraced it or allowed it to be put in place for his benefit. iii) From ABC’s statement dated 7 April 2015: I have spent the interim payments I have received on daily living, house renovations at the start, my vehicle costs, and gym membership which is on direct debit. I don’t spend much on clothes and I am not extravagant. I have agreed to the Court of Protection helping me as I accept it is the best thing for me as it would reduce the worry for me and make sure I am protected. I know I need help making major decisions. iv) From a statement of a cousin of ABC dated 9 April 2015: On some levels, ABC is clearly capable of involvement in sorting things out, for instance he is clearly involved (at some level) in arrangements for his holiday with friends in May. However, I am not sure exactly what level of involvement ABC has. ABC says he wants to make money from selling the house, but I can see that it is in no state to be sold. It does not resemble the finished “product”. ---------- As to the question of ABC accepting that he needs professional help and support, again I suspect it is for the experts to form views as to ABCs levels of perception/denial, ability to rationalise and come to terms with his level of need. I suspect that he may sometimes believe that he needs help, but if something is presented as a “support buddy” I suspect this would always be resented. I suspect that this is linked in with ABCs perception of need and also of “value for money”. He clearly resents what he thinks his lawyer and case manager and others are paid. ABC will say:

“I don’t want that person taking my money”

. Sometimes, one may think that ABC has been persuaded of a certain line of argument, or at least one has managed to change the subject and move him from his fixed focus. However, invariably, when it comes to the next discussion, ABC will have returned to his original line, with a sort of de-ja-vu quality. ABC doesn’t see his professionals as professionals who are worthy of respect or that they are people who are working on his behalf to help ensure his quality of life for the future. ------------- v) From a statement of [ E ] dated 13 April 2015: ABC remains very angry, aggressive and vitriolic in his tirades/rants against his solicitor, [ ----- ] ------------------ --------------- He says that [ -- his solicitor -- ] needs to be punished. He said that he will pick his moment. I am concerned that one cannot dismiss these threats. ----------------- I do believe that my professional input continues to make a positive difference to ABC’s life, albeit in a limited way, particularly whilst he remains so apparently fixated on the legal process and on his solicitor [ ---- ]. I have managed to keep a bond in trust and rapport with ABC. However, I sense that the legal case has rather been all-consuming for him he has felt for many months now that his life is on hold until the case is out of the way. ABC is very fixed on money. He talks about getting £100,000 from property development. I sense that he has agreed to a trust fund on a purely short-term basis because this was the only way of receiving the latest interim payment whilst maintaining his means tested benefits (ESA). In the long term, I cannot see ABC “sticking with” a trust fund if it is a voluntary thing i.e. I see him sacking the trustees and trying to take control of the money himself or property development, if he is not within the ambit of the Court of Protection. Without this protection, were ABC to have a cheque for say £1.5 million in his hand, I have to say that I’m not convinced that he would seek professional advice. He has a tendency in my experience to think that he knows best and he tends to have little regard for professionals/advice. If ABC were within the Court of Protection, I see it as inevitable that he would make a challenge to try to get free of what he would call its restrictions. --------------- As I recall, ABC became angry, launched into a fixed monologue and discussions had to be brought to a close. As the note records, ABC concluded by saying:

“you are all in cahoots - you are all getting paid. It is all about everyone getting money”

. I have to say, that I am really worried that ABC would use this approach/thinking to instinctively reject sound investment advice from good trustworthy professionals, consequently that he would not even seek such advice and that he would think that he knows best, maybe listen to friends or acquaintances and just press on with his own (property development or other) venture in his own way I regard ABC is a highly vulnerable man who, tragically, does not recognise friend from foe. In summary, I have been able to maintain a professional rapport with ABC and have been able to help him manage important tasks. I hope that, when the legal case is over, and he no longer has a fixation on his legal advice and his solicitor [ ---- ] , that he will be able to accept or even embrace more professional support, perhaps including an (ex) builder, maybe someone of similar age to ABC, someone whom he likes, respects and that they can work together on projects, helping ABC to succeed, boost his confidence and live a happy and fulfilling life.

[14]It was obvious that the solicitor acting for ABC in the QB proceedings was acting in what he thought were, and a reasonable outside observer would think were, in ABC’s best interests.

[15]At the hearing of the QB proceedings I explained that in my view the lay evidence read alone and with the medical evidence showed that there were real risks that could not sensibly be ignored (the Breakdown Risks) that: i) ABC would want his damages award to be used in property development of his choosing, ii) if his choices and wishes were not agreed to by a deputy or trustees their relationship with ABC would mirror that set out in those passages between ABC and his solicitor, and whether or not that serious discord arose, iii) ABC would regularly challenge the view that he did not have capacity to make decisions relating to the expenditure and management of money and property of substantial value, and iv) if he was found to have capacity and so left (with support) to make his own decisions he would lose significant parts of his capital and so be left in a difficult if not a disastrous situation.

[16]I also explained that, leaving aside issues of capacity, the lay and professional evidence showed that it was almost inevitable that ABC would always be vulnerable to influence from others who may well not have his best interests at heart and so may cause him to waste the award. To my mind, as I explained, this means that another factor that needs consideration is the effective inevitability that in the unlikely event that ABC does have capacity in the future to manage large sums of capital and so, for example, engage in property development relating to “buy to let” schemes ABC will be vulnerable and there will be a real risk that cannot sensibly be ignored (the Vulnerability Risk) that he will (alone or under inappropriate influence) make disastrous or bad decisions that deprive him of the use of the damages awarded to meet his needs caused by his brain injury.

[17]So, I raised the issue whether the Breakdown Risks would be lessened by the creation of an irrevocable trust that gives ABC effective autonomy over income (i.e. an absolute entitlement or its equivalent) but prevents him from being able to direct how his capital is used and managed other than by a power of appointment as to who should have it after his death and possibly by a power of appointment in favour of a limited class (excluding ABC) exercisable during his lifetime. I say “possibly” because the question whether such a power in favour of a limited class (e.g. children) would create a different vulnerability risk would need consideration.

[18]Factors favouring such a trust include: i) Its recognition of ABC’s capacity to make decisions concerning his income and so the promotion of his autonomy in respect of that expenditure. ii) The need to restrict what he can do with the capital. iii) The provision of flexibility through the exercise of a power or powers of appointment (that also preserve and promote his autonomy because he could exercise them if and when he has capacity to do so). iv) The provision of flexibility through a wide power of investment and a power of advancement, and v) the prospect that this combination of freedom and restriction would reduce the risk of fall out with professionals and costs and time being spent on disputes relating to capacity. As pointed out by the Official Solicitor it would also be sensible to include a power that P can remove trustess to avoid the need for proceedings in the Chancery Division to do that in which P’s litigation friend may have to provide a costs indemnity

[19]Such a trust would also provide protection against the Vulnerability Risk and so promote ABC’s best interests in that way.

[20]In the QB proceedings, ABC through the litigation friend and their legal advisers did not support the making of an irrevocable trust and sought, but failed, to persuade me to proceed on the basis that the award was paid to his existing deputy. The essential theme of their reasoning in favour of the award being paid to the deputy, and so against further consideration of the issues I have described, was mirrored in the arguments advanced by them and the deputy on this application.

[21]I return to these arguments below. But I now record that the suggestion I advanced was not that the award should be held on revocable trusts such as those in the ABC January 2015 Settlement, or on a discretionary trust. I do so because this did not seem to be recognised in the evidence and argument advanced then or later (although it did address the tax consequences of an interest in possession trust). I tried to explain that: i) I did not accept that the interpretation and approach being taken thatthe effect of the approach in SM v HM was that there was a strong presumption in favour of appointing a deputy, and so it would be very unlikely that the COP would make an order creating a trust over ABC’s substantial award of damages, was correct. ii) In my view, the risks I have described above needed to be taken into account in deciding between a deputyship and the type of trust I was suggesting. iii) The purpose of the application to the COP was to enable that court to carry out a properly informed analysis of ABC’s best interests that took account of those risks and so of the Breakdown Risks and the Vulnerability Risk and to consider argument on the effect and application of SM v HM. iv) In other words, the purpose of the COP application was to enable the reasoning and approach of the litigation friend and the deputy on the correct approach to be taken in law to be further considered having regard to risks and a possibility (namely an irrevocable trust) that had not been taken into account or given any weight.

[22]Another issue in the QB proceedings related to the difference of £281,059 in the capitalised costs of the rival options relating to who should hold and manage the substantial damages award namely: i) Capitalised cost of deputy £462,618 ii) Capitalised costs of a professional trustee and case manager £181,559

[23]I did not have to examine the force of the evidence in support of those rival estimates. Also, there was no discussion before me concerning the terms of the trusts used for making that estimate and so, for example, whether the estimate was based on the continuation of the existing revocable trust, or whether there should be a new trust and if so whether ABC was to be the settlor or the COP would have to be involved and what its terms should be. However, the evidence indicated that the comparison was between what has been described by some as a bare personal injury trust and so one in similar terms to those of the ABC January 2015 Settlement.

[24]The determination and manner in which the reasoning in favour of the award being paid to the deputy was advanced, its content and the significant difference in the estimated costs caused me to wonder what, if any, financial advantages there might be for a deputy in contrast to a trustee. Unlike the points raised above in connection between the choice between deputyship and a trust I did not raise this speculation during the QB proceedings. So, I addressed it when giving directions in the COP proceedings by a recital in the following terms: AND UPON IT FURTHER APPEARING TO THE COURT that it is likely that it would be assisted by evident that(a) explains why, as the evidence in the High Court Claim indicates is the case, the cost of a Deputy exceed or are likely to exceed those of trustees, and

(b) provides the Court with information as to the way in which professional Deputies hold and manage funds held by them as such and in particular what steps are taken to ensure that no interest, commissions, payments or other benefits relating to P’s assets and their application (e.g. in the purchase of assets or the payment of expenses) are retained by the deputy personally or by his firm

[25]Unfortunately, it seems that those instructed for the COP proceedings thought that this was my major or only concern. It was not and I am happy to record that the evidence before me shows that the arguments advanced in favour of the damages being paid to the deputy were not based on any financial advantages but on strong and entrenched views as to the application of the MCA to best promote ABC’s best interests. Also, as appears below the deputy and her manager are to be congratulated for developing and maintaining a good and constructive relationship with ABC and thereby reducing the Breakdown Risks.

[26]I apologise for any misunderstanding but I thought that it was unnecessary for me to repeat the issues I had raised in the QB proceedings relating to whether the Breakdown Risks and the Vulnerability Risk and the effect of SM v HM which were my major concerns.

[27]By the same directions order I confirmed the view I had expressed that the nature, general importance and application of the points I had raised meant that the Official Solicitor, by virtue of his Office, the Public Guardian and professional deputies might wish to express views or provide evidence.

[28]The Official Solicitor instructed the same counsel who had appeared on his behalf in SM v HM to advance general argument on the principles, and so the approach, to be applied in choosing between a deputyship and a trust. I am grateful. The argument repeated that advanced in that case but did not include any submissions on how the principles so advanced should be applied in this case. Accordingly, it only addressed indirectly the factors I had raised and was concerned with in connection with the Breakdown Risks and the Vulnerability Risk which did not arise in the SM v HM case.

[29]The Public Guardian and some professional deputies provided information directly and through the deputy’s firm, who sent out a list of questions, for which I am also grateful.

Jurisdiction of the COP

[30]As I have mentioned, this was not disputed before me but in my view it cannot be ignored. However, it can be dealt with shortly and without the need for updating evidence.

[31]Having regard to the lay evidence I prefer the medical evidence advanced in the QB proceedings on behalf of ABC and in my view the combination of that lay and medical evidence founds the conclusions set out in paragraph 11 hereof.

[32]Those conclusions found the jurisdiction of the COP to make an order that gives the management of the capital of the award to a deputy or to trustees. They also confirm and found the significant problems relating to ABC’s capacity to make a range of decisions about the day to day expenditure of his money with and without support.

The course of the COP hearing

[33]Shortly before the hearing I indicated that further material should be added to the papers before the court. At the same time, I indicated that it was likely that I would want(a) to hear oral evidence from the litigation friend and the deputy, and

(b) to hear from ABC directly if he wanted to say anything to me.

[34]The main reasons for this were: i) The evidence failed to set out discussions with ABC. ii) The evidence contained unreasoned assertion and argument. iii) In particular, much of the evidence of the litigation friend was written in terms that I suspected reflected the thinking of the lawyer who drafted it and reasoning which I doubted the litigation friend would use or understood. iv) The evidence and the written argument failed to address ABC’s capacity as a jurisdictional issue or in the context of the best interests decision to be made. v) The evidence and written submissions failed to address many of the factors relating in particular to the Breakdown Risks and the Vulnerability Risk I had raised in the QB proceedings and which had led to the application in the COP.

[35]Firstly, I heard evidence from the litigation friend (DEF) and then I heard directly from both ABC and his case manager who, when addressing me, remained sitting at the back of the court.

[36]It was apparent from the oral evidence of the litigation friend that: i) My suspicion mentioned in paragraph 34(iii) hereof was correct. ii) She had not had my concerns relating to the Breakdown Risks or the Vulnerability Risk explained to her or had not understood them. When I explained them to her and so why an irrevocable trust might be appropriate she acknowledged that the risks raised difficult issues that were not addressed in her evidence. iii) She was concerned that if ABC did not have the hope that he might gain control of his assets and affairs this would be detrimental to his progress and long term well-being, albeit that she did not think that he would ever have the capacity to manage his capital. This approach could be said to be fostering a false hope but I accept and agree that this hope, and so ABC’s wish and aim, is very understandable. And, to my mind, the central issue relating to it is whether and if so how it should be kept open (e.g. through the exercise of powers of appointment under a trust or an application to discharge or alter the powers of a deputy). iv) She confirmed that the problems between ABC and his solicitor in the QB proceedings had not been replicated in his relationship between ABC and either his deputy or her manager who dealt with ABC more regularly. Rather, those relationships were good and constructive.

[37]I would like to pay tribute to ABC’s litigation friend and aunt for her efforts to promote ABC’s best interests and for the support she has given to him both before and after his accident during what has been a life marked by distressing incidents. ABC should be, and I hope is, grateful to her.

[38]ABC asserted and his case manager confirmed that ABC had made progress, had good relationships with the deputy and her manager and that ABC was at present accepting his need for help and advice from them.

[39]However, what they told me also confirmed my conclusions on: i) ABC’s capacity, ii) ABC’s vulnerability in respect of any matters which, with appropriate and properly directed support, he could now or in the future make his own decisions, and so iii) the existence of the Breakdown Risks and the Vulnerability Risk,

[40]Having heard that evidence and those accounts I indicated that I no longer needed to hear oral evidence from the deputy but would hear argument.

Basis for that approach

[41]Having heard the oral evidence and had the oral exchanges referred to above it was clear that even if at an earlier stage the factors in favour of a trust of the type I had suggested would have won the day, and I have reached no conclusion on whether they would or would not have done, such a trust was no longer a viable alternative.

[42]The reason for this was not that I was persuaded that the approach taken by those advising the litigation friend and by the deputy was correct. Rather it was that the consequence of their approach which in my view wrongly, before and after the settlement of the QB proceedings, had effectively ignored the possibility that an irrevocable trust would be in ABC’s best interests having regard to the Breakdown Risks and the Vulnerability Risk was that the discharge of the deputy now and the creation of such a trust would be highly likely to: i) undo the progress made by ABC and so undo the improvement in his approach to assistance and support that had taken place and was being well supported by professionals (and in particular the deputy and her manager) and his family including a girlfriend who was expecting a baby, and so ii) exacerbate, rather than reduce, the Breakdown Risks.

[43]So I accepted that although in my view unfortunately a possible alternative had been ignored “we are where we are”. However, I remained troubled by the approach being taken in argument and evidence in the QB proceedings and the COP proceedings to the application of SM v HM, and so heard argument on this and more generally, the approach to be taken in determining whether the assets of a P should be held and managed by a deputy appointed by the COP or trustees of a trust or trusts executed pursuant to an order of the COP.

Deputyship or trust – preliminary comments

[44]At that time of the hearing in the QB proceedings I did not know what trusts were under consideration in SM v HM. They are not mentioned in the judgment which is an indication that they were not important to the choice to be made in that case, and enquiry has shown that this was the case.

[45]Clearly it is vital to identify the relevant choices and so, for example: i) what trust or trusts are being suggested, and ii) what restrictions, powers or directions should be given to or imposed on the deputy.

[46]In considering those choices it is also vital to consider what the relevant P has the capacity to do with support. I fail to understand the submission made to me that capacity issues were not relevant on the best interests aspect of this case.

[47]At my request counsel for the Official Solicitor has provided me with a copy of the trust created in SM v HM. It is a personal injury settlement in very similar terms to the ABC January 2015 Settlement save that it was made pursuant to an order of the COP. Both are revocable and both contain the trusts set out in the schedule hereto. As can be seen therefrom those trusts give an absolute interest in capital to ABC and HM respectively (and so to the relevant P) who is defined therein as the Beneficiary. Also, under both P is absolutely entitled to the income (the use of the word “may” in the trust of income does not alter this and effectively introduces a power to apply income in ways that do not involve paying it to P directly or to retain income for P). So they are both trusts of the type referred to in the evidence and argument as a bare personal injury trust.

[48]Under such a trust, if P has the relevant capacity he or she can demand that the trustees pay him or her, or someone else, the capital of the trust. The same result could be achieved by revocation of the trust but it would not be necessary to take that course. So whether revocable or irrevocable such a trust can be brought to an end by P when he or she has the capacity to make that decision.

[49]The same demand can be made on the same basis of a deputy and, in any event, a deputy does not have power to make a decision on behalf of P in relation to a matter if the deputy believes or has reasonable grounds for believing that P has capacity in relation to that matter (see s. 20(1) of the MCA 2005). Also the deputy could be discharged by the COP on the basis that P has capacity to manage his or her capital.

[50]This ability to dictate how the assets are applied under both regimes of management has the consequence that as and when the relevant P has the capacity to do so he or she can take control of their property and means that: i) if and when the relevant P regains capacity there is little or no real difference between deputyship and a bare trust (whether it is revocable or irrevocable), and ii) neither provide a structure that protects a vulnerable P when he or she has the relevant capacity to do so from making bad or disastrous decisions in respect of the application of their capital.

[51]It follows that the Breakdown Risks and the Vulnerability Risk exist under both management regimes and do not point in favour of either of them. Hence, my suggestion of an irrevocable trust with powers of appointment that address these risks, and recognise that ABC may regain capacity and the underlying rationale of the MCA to promote autonomy and supported decision making.

[52]During the period that the relevant P lacks capacity to give any directions on the payment of income and capital (and so in the situation in SM v HM (where P was a child to whom s. 18(3) of the MCA 2005 applied and who was never likely to have that capacity) under both a deputyship and a bare (revocable or irrevocable) trust someone is making decisions on the management and application of the income and capital of property to which P is absolutely entitled.

[53]In SM v HM points relating to the ability of P, with appropriate support, to make relevant decisions did not arise. They do here and in my view in such a situation and so here the statutory scheme provides advantages over a trust because: i) the restriction placed on the power of the deputy by s. 20(1) of the MCA 2005 and so the need, for example, for the deputy to apply s. 1(5) (best interests) and 4(4) (participation by P) of the MCA 2005 promotes autonomy and flexibility and provides a statutory decision making structure for the performance of the duty and ability of the deputy(a) to let P make the decisions he or she can, and

(b) to make decisions for P when he or she lacks the capacity to do so, ii) it gives protection to the deputy and third parties in respect of dealings with P’s property, and iii) it provides a statutory decision making structure that is directed to persons (P) who lack or may lack capacity to make relevant decisions with appropriate support.

[54]In contrast the authority of trustees is granted and governed by the trust deed and trust law.

[55]This contrast is relevant to the best management of the Breakdown Risks (see, in particular paragraphs 15 to 18 hereof). Factors being on the one hand: i) the flexibility of the deputyship regime and so the structure it provides for dealing with issues, discussions and potential disputes relating to the making of day to day decisions about income and more long lasting ones about capital, and on the other hand ii) a structure that gives ABC effective day to day autonomy over income (i.e. an absolute entitlement or its equivalent) but prevents him from being able to direct how his capital is used and managed other than by powers of appointment (which promote flexibility and autonomy as to what should happen to the trust fund after P no longer needs it, or as P’s family circumstances change) and contains wide powers of investment and a power of advancement.

A co-existing deputyship and trust

[56]I mention this because it was raised and I accept that if there had been a need for a deputy in addition to the trust I was suggesting as a possibility because, for example, either: i) ABC did not have or was likely to lose capacity with appropriate support to make decisions on the day to day application of his income, or ii) to manage ABC’s absolute interest in the house left to him by his mother this would have been a factor against creating such a trust.

[57]Although it was not gone into the former does not appear to be the case. The latter was relied on but as in my view ABC does not have capacity to manage the capital value of that house it seems to me that it could be added to the trust fund comprising the damages award, or made the subject of a trust on the same terms and with the same trustees if there was a problem about adding it to the trust fund of a trust of the damages award.

The evidence on the cost of the rival solutions

[58]Before turning to the other arguments I should address this issue.

[59]I am grateful for the efforts of the deputy in gathering evidence about it. The deputy’s firm sent a list of 16 questions to all of the seventy one panel deputies and received responses from seven. The Public Guardian visited the deputy’s firm and reported that he had no concerns about their management of funds.

[60]The evidence shows that all those who have provided information do not charge any commissions, or receive any interest on funds, during a period that they are, for example, in the firm’s account. Some raised a point about the charging for internal advice or services. One of them indicated that clarification on whether internal instructions are always subject to costs assessments, or whether they can be treated as a separate retainer, would be helpful from the Public Guardian or in case law. The Public Guardian may wish to consider this.

[61]I agree with a point made by an experienced solicitor that in any given case there will be a host of factors that are relevant to determining whether a trust or a deputyship will be more expensive. (I add, although he did not recognise it, that the same point can be made as to which is in the best interests of a P).

[62]None of the evidence was directed to what would or might be the difference in the costs of the existing deputyship and a trust along the lines I suggested in the QB proceedings. Rather, and as asked, the non-parties directed their attention to general charging rates. Unfortunately, so did the parties.

[63]The evidence indicates that the difference is not as large as that based on the rival contentions in the QB proceedings but that, as a generalisation, the total costs of a deputyship will exceed those of a bare personal injury trust, albeit that the hourly charging rates for the former are a little lower. This was put down to the extra tasks of a deputy related to their statutory duties. The evidence also indicates that in some cases the costs of a trust will be higher. This is unsurprising and goes back to the point that although there are some general points that are common to most cases there may well be specific factors in a number of cases that will affect the time that has to be spent carrying out the relevant duties and tasks and the level of fee earner who will be doing them.

[64]If a cost comparison had been relevant in this case the evidence in the QB proceedings and the COP did not provide a particularised or reasoned comparison between deputyship and a trust that addressed the factors I had suggested should be taken into account.

[65]Conclusion. In my view, both in QB proceedings and the COP the parties should provide a reasoned or particularised comparison between the rival options and so they need to be identified with appropriate particularity.

[66]I acknowledge that in the QB proceedings this comparison had probably been done by reference to a bare trust. Sadly, this was also the approach taken in the COP because none of the parties addressed the costs of managing a trust on the terms I had suggested might be possible and should be considered.

[67]If the costs issue had remained live it is likely that further consideration of it by reference to the rival possibilities would have been necessary. But if the relevant choice had been between a deputyship and a bare personal injury trust (as in SM v HM) I doubt that the difference would have founded the creation of a trust.

[68]I repeat what I say in paragraph 25 hereof and express the hope that the good relationship between the deputy and her manager and ABC will continue. The interpretation and reliance on SM v HM before me to support for the continuation of the deputyship and opposition to a trust

[69]In my view: i) on a proper analysis SM v HM is not authority for the approach taken before me which was effectively that there is a strong presumption in favour of the appointment of a deputy which must be, and only rarely will be, displaced if the COP is to order that P’s property should be held on trust, and in any event ii) if and to the extent SM v HM is authority for the existence of a presumption or starting point that must be displaced I do not agree with it.

[70]A rebuttable presumption founds an approach to a balancing or weighing exercise under which a result needs to be displaced. It is therefore a starting point to a reasoning process that must be displaced. Naturally, reasoning processes must start somewhere but this does not mean that the chosen start (e.g. the existence of a statutory scheme) provides the result unless it is displaced. So there is a real difference between a starting point for a process of reasoning and a starting point that gives the result unless it is be displaced or rebutted.

[71]In my view, an approach based on a presumption, or a starting point that must be displaced, as to the result that is in P’s best interests runs counter to the underlying rationale and purpose of the MCA and, in particular, of its decision and fact sensitive approach to the application of its best interests test in all the circumstances of a given case.

[72]Further, in my view an approach such as that which exists under the Freedom of Information Act 2000 of there being a bias in favour of a particular result, there disclosure of the requested information in the case of a draw (see Lord Wilson – the single minority in Sugar v BBC and Another)

[2012] UKSC 4

[2012] 1 WLR 439

at para 25) does not exist under the MCA in determining what order in a given case should be made to best promote the best interests of the relevant P. In the context of the making of orders that the COP has jurisdiction to make, there is nothing in the MCA that says or has the effect that the result will be “X” unless the factors in favour of another result outweigh those in favour of “X”.

[73]It might be said that the principles that s. 16(4) of the MCA requires the COP to have regard to, in addition to those set out in s. 4 (the best interests test), when deciding whether it is in P’s best interests to appoint a deputy, namely: i) a decision by the court is to be preferred to the appointment of a deputy to make a decision, and ii) the powers conferred on a deputy should be as limited in scope and duration as is reasonably practicable in the circumstances create a presumption or bias against (rather than for) the appointment of a deputy. However, in my view this is not the case and all that this sub-section does is to add factors that the COP is to take into account and weigh in reaching its decision. So those particularised factors have to be weighed against factors that would favour the appointment of a deputy rather than the COP making a series of orders. To my mind this applies whether or not the deputy is appointed to make decisions relating to property and affairs or welfare or both. In both property and affairs cases and welfare cases there will be important one off decisions and in such cases the principles and so factors set out in s. 16(4) would be likely to point in favour of the COP making the decisions. But in both a need to make a number of decisions on a single matter (e.g. selling a house or a course of treatment), or on a number of day to day matters over a long period (e.g. management of a person’s day to day affairs relating to expenditure and/or their care and support plan) will often arise that will clearly outweigh the principles identified in s. 16(4). In many such cases regular return to the COP would be unnecessarily time consuming, emotionally stressful and expensive and so contrary to P’s best interests. I add that it seems to me that a refusal or reluctance based on s. 16(4), or a general approach, to appoint a deputy in welfare cases simply because they are welfare cases and s. 5 applies is not justified.

[74]Additionally, the principles particularised in s. 16(4) cannot in my view be said to favour an order of the COP creating a trust rather than the appointment of a deputy because both hand over decision making to others.

[75]In short, the weighing or balancing of competing factors is at the heart of decision making under the MCA and it does not fit with presumptions, starting points or a bias that have to be displaced.

[76]Rather, it introduces a reasoning process that can, for example, start with all of the factors that favour the appointment of a deputy over other results and so points that deputies are appointed and regulated under a statutory scheme(a) which is directed to persons who lack capacity and so need someone to make decisions for them, and

(b) which has statutory tests for decision making, access to the COP, checks and balances and provisions that provide security (and so the points made in paragraphs 32 to 34 of SM v HM and paragraph 53 hereof).

[77]I fully accept and acknowledge that the weight of those factors in many cases (and perhaps the great majority of cases) will outweigh factors in favour of the COP making an order that empowers persons other than a deputy (and so trustees) to make decisions about P’s property and affairs, and so the appointment of a deputy can be said to be the norm.

[78]But I repeat that in my view the normality of the appointment of a deputy does not create a presumption, starting point or bias that needs to be displaced.

[79]I accept that in many circumstances only fine or pedantic differences can be said to exist between a rebuttable presumption and a starting point that recognises the existence of a normal arrangement. However, in my view, an approach based on a strong presumption that has to be displaced has been at the heart of the result in this case that factors against the appointment of a deputy, and so the Breakdown Risks and the Vulnerability Risk, were effectively ignored until it was too late to assess whether they founded the result that the weight of competing factors favoured the creation of an irrevocable trust.

[80]I acknowledge that there are passages in SM v HM that can be said to favour a presumptive approach being taken. For example, HHJ Marshall QC’s acceptance of the common ground before her that deputyship could be taken as the norm (see paragraph 31) and what she says in paragraphs 137 and 145. But to my mind on a proper reading of her judgment as a whole, and see for example: It cannot, therefore, be overemphasised that any actual decision is completely fact sensitive to the individual case, and that the weight of superficially similar factors may be very different in different cases (para 30) --- the ultimate test is: what is in P’s best interests in the individual case? (para 34) ----- deputy ship is properly treated as the normal arrangement, and as the benchmark against which to compare any other proposed method of administering P’s assets and it is therefore the starting point in any case ------------- The point is that this is only a starting point. Deputy ship is a means to an end, and not an end in itself. The end is doing what is in P’s interests, not promoting the use of the statutory scheme, however highly it may be regarded. ---------------- the key is that the test is a relative one, namely, in all the particular circumstances, are P’s best interests better served by taking that course? (para 35) the judge is making it clear that there is no presumption or default result unless it is displaced and that what matters in each case is the result of the detailed weighing exercise.

[81]This view is reinforced by the facts which, except from the absence of any discussion of advantages or disadvantages flowing from the terms of the trust, is not apparent from the judgment in SM v HM that the trust in question was a bare personal injury trust and so there was a considerable overlap between the effects of the rival possibilities (see paragraphs 49 and 50 hereof).

[82]That overlap also means that it is not easy to see why the advantages of the trust satisfied the “more than marginal” approach referred to in paragraph 145 of SM v HM and make it clear that the approach taken before me that the presumption in favour of a deputy, and so against a trust, is so strong that it will only rarely be displaced is not supported by the facts and result of SM v HM.

[83]Further, and in any event theBreakdown Risks and theVulnerability Risk were not in play in SM v HM and so on any view it is not a parallel case.

The Vulnerability Risk

[84]During argument an issue arose as to whether, in the exercise of its inherent jurisdiction, a court (other than the COP whose jurisdiction is limited to those who lack capacity) could order a vulnerable person to execute, or authorise or approve the making by a vulnerable person of, a revocable or irrevocable settlement.

[85]This raises issues for another day on the exercise by a court of its inherent jurisdiction over vulnerable adults in a facilitative, rather than dictatorial way (see DL v A Local Authority and Others

[2012] EWCA Civ 253

) and of its jurisdiction to approve a settlement of a claim by a protected party (see Allen v Distillers Co (Biochemicals) Ltd

[1974] QB 384

[86]The Allen case related to a child and so did not raise issues as to whether a claimant who lacks capacity to litigate has capacity (with appropriate support) to settle the claim on the basis that the damages are to be held on trust. In such a case a belt and braces may (I stress may) be appropriate under which the settlement of the claim (and so the trusts) is approved on behalf of the claimant by the civil court and, so far as it may be necessary, the creation of the trust is authorised by the COP to cover the possibilities that the claimant has or lacks capacity to declare a trust. This may (again I stress may) entail the damages being paid to trusts declared by the trustees with appropriate recitals (see Re PJV). All QB High Court judges are or should have been nominated to sit as judges of the COP. Both the respective jurisdictions and roles of the QB judge and the COP judge and the detail of the creation of the regime for the management of the damages award need to be carefully considered.

Autonomy, participation and empowerment

[87]It was argued that the creation of a trust would not promote autonomy and would reduce P’s participation and so run counter to the underlying purpose of the MCA to encourage P’s participation in, and so to empower P to take as much part as possible in, decision making about his or her property.

[88]As mentioned in paragraphs 48 to 52 hereof these points have only limited force when made, as they were, in respect of the choice between the appointment of a deputy and the creation of a bare personal injury trust.

[89]I acknowledge that they would have been points to be taken into account in making the choice I was suggesting should be considered and so points that the COP application was intended to address (see paragraphs 17, 18 and 55 hereof). In my view, counsel for the Official Solicitor was correct to accept in oral argument that the COP has power to make an order that creates an irrevocable settlement if that was in P’s best interests.

[90]Whether this should be done having regard to the vulnerability of a P if he or she regained capacity, and other risks and factors, will depend on the circumstances of the given case.

Directions to the deputy

[91]When I hand down this judgment I will deal with any issue that is not incorporated in an agreed order that I have approved concerning the terms of the order that approves the appointment and any changes that are necessary to the original order (e.g. paragraph 2(e) concerning the provision of a budget and paragraph 5(a) concerning security) and to my order dated 6 June 2016 relating to the preparation of an investment scheme for the damages awarded as a result of the settlement.

Summary of points made herein and which should be considered in analogous cases

[92]I make the following points:(1) The management regime for a substantial award of damages should be considered as soon as is practicable.

(2) This will involve a careful consideration of what the claimant (P) has and does not have the capacity to do and of his or her likely capacity and/or vulnerability in the future. This is relevant to both jurisdictional and best interests issues.

(3) It will also involve the identification of all relevant competing factors and should not proceed on the basis that there is a strong presumption that the COP would appoint a deputy and would not make an order that a trust be created of the award. Rather, it would balance the factors that favour the use of the statutory scheme relating to deputies (that often found the appointment of a deputy in P’s best interests) against the relevant competing factors in that case.

(4) It will also involve the identification of the terms and effects (including taxation) and the costs of those rival possibilities.

(5) Care should be taken to ensure that applications that are not straightforward are not decided by case officers in the COP but are put before judges of the COP.

(6) The possibility of listing case management hearings or the final hearing of QB proceedings before a judge who is also nominated as a COP judge should be considered. However, the potential for conflict between the respective roles of the judge in the two courts (e.g. one arising from a consideration of without prejudice communication in respect of the QB proceedings concerning its settlement that is not agreed or not approved by the COP judge) and the respective jurisdictions of the two courts need to be carefully considered. SCHEDULE TO JUDGMENT The trusts referred to in paragraph 47 of the judgment Absolute interest of the Beneficiary in all income of the Trust Fund The Trustees may pay all or part of the income from the Trust Fund to or for the education maintenance and otherwise for the benefit of the Beneficiary and any undistributed income shall be held as an accretion to the Trust Fund for the Beneficiary absolutely Absolute interest of the Beneficiary in all capital of the Trust Fund The Trustee shall hold the capital of the Trust Fund upon trust for the Beneficiary absolutely Death of the Beneficiary For the avoidance of any doubt on the death of the Beneficiary the Trust Fund as to both income and capital shall be transferred to the Beneficiary's personal representatives to be held by them in accordance with the trusts powers and provisions relating to the Beneficiary’s estate Maintenance and Advancement

SCHEDULE TO JUDGMENT

[1]Section 31 of the Trustee Act 1925 shall not apply to this Settlement

[2]Section 32 of the Trustee Act 1925 shall apply to this Settlement with the exception of proviso (a) which shall not apply to it