England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRIGHTON COUNTY COURT
(His Honour Judge Hayward)

		Royal Courts of Justice Strand, London WC2 Monday, 9th July 2001

Monday, 9th July 2001

1. LORD JUSTICE LAWS: These applications for permission to appeal arise in proceedings which concern the cost of accommodating an elderly lady at a nursing home called Sandena between 1988 and 1992. The amount involved is some £27,000 odd. The lady in question, Mrs Audrey Mitford, died on 26th July 1997. I shall refer to her as "the deceased".
2. The issues for decision arise as follows. The deceased married Mr Mitford in the early 1950s, or thereabouts. Not many years later she developed mental health problems and at some stage was diagnosed a schizophrenic. Later, she also developed a chronic heart condition. She and Mr Mitford, who (as I shall show in a moment) was to become the defendant in the proceedings, were divorced in the 1970s or thereabouts.
3. The deceased had a home in Worthing at 36 Guildford Road to which she was much attached. For many years she lived there. From time to time she was admitted to health care institutions, sometimes under compulsory powers. In April 1987 she was admitted to hospital after collapsing at home. That was due to her heart condition. She was discharged the following month, but it was thought she was not well enough to look after herself at home. So it was that she was transferred to the Sandena Nursing Home. For nearly a year the local health authority paid the fees, but that stopped in March 1988. So, on the face of it, the deceased became responsible for the fees herself. She had a solicitor, Mr Shepherd, of Messrs Green Wright Chalton Annis. They and Mr Shepherd personally were to become Part 20 defendants in the action.
4. The Sandena was owned and run by a Mr Marcus West and Dr Elizabeth West. Dr West was a psychiatrist. They rendered accounts to Mr Shepherd for the deceased's fees. They were paid out of funds held by the solicitor's firm on the deceased's behalf until about January 1989, when the money ran out. The Benefits Agency declined to take up the payments because the deceased had a realisable asset in the shape of 36 Guildford Road.
5. Time passed. Arrears of fees accrued at length. The claimants themselves, Mr West and Dr West, applied in 1991 to the Court of Protection, and on 12th February 1992 the Public Trustee was appointed the deceased's receiver. Thereafter, as I understand it, arrangements were made for appropriate State benefits out of which current fees were paid until the deceased's death.
6. Mr Mitford, who had been living in Alaska, was the deceased's personal representative, having been so appointed under the terms of a will dated 19th October 1994.
7. The Wests issued proceedings in the Brighton County Court on 18th September 1996, claiming the balance of the unpaid fees, that is to say the fees essentially due in respect of dates between 1988 and 1992. After the deceased's death, the claim was amended to name Mr Mitford as the defendant. The claim was initially put on the basis of a contract with the deceased. But in 1999 the claimants sought to amend the claim to allege, as an alternative, that if any such contract was unenforceable by virtue of the deceased's incapacity, they were nevertheless entitled to recover the arrears by way of a restitutionary claim for the cost of necessaries, that is the 24-hour residential care and medical services which they had provided.
8. The District Judge gave permission to make the amendment on 12th May 2000 on the basis that, although the relevant limitation period had expired by the time the amendment was sought, the claim for necessaries was based on the same, or substantially the same, facts as the original claim.
9. On 20th November 2000 His Honour Judge Hayward dismissed the defendant's appeal against the District Judge's order. By this time the defendant had issued Part 20 proceedings against Mr Shepherd and his firm. It was said that the solicitor had dealt with the deceased's money and purported to contract with the claimants on her behalf without her consent and so he should account to the estate, that is to the defendant, for any liabilities. It is said that, had Mr Shepherd not intermeddled, the deceased would have been discharged from the home by 1st April 1988. I have to say, it is not clear where the defendant (the deceased's ex-husband) thinks she might have gone.
10. Giving judgment in the action on 14th February 2001 Judge Hayward was to say this (transcript 3G):

"Mr. Shepherd ... always acted, I am quite satisfied, on the evidence I have heard, in the late Mrs. Mitford's best interests. There was no-one else taking an interested in her, she had few friends. Her former husband, Mr. Mitford, lived abroad in Alaska, and in my judgment, was looking to this own interests first rather than the interests of Mrs. Mitford."

11. Then at 4C:

"Mr. Shepherd was the only person who took an interest, and was able to help Mrs. Mitford, and throughout, I am quite satisfied he did what he thought was right at the time, and only in her best interests."

12. It was also asserted in the Part 20 claim that the solicitors owed a duty of care to the deceased which should have led them to approach the Court of Protection earlier than that was in the event done.
13. In dismissing the defendant's appeal on 20th February 2000 in relation to the amendment, the judge referred to the fact that the solicitors had raised the issue whether sums were due to the claimant as payment for necessaries, and so it was an issue with which the defendant would have to deal in any event. The decision of the judge on 20th November 2000 is challenged by one of the two applications for permission before us.
14. The case duly went for trial before the same judge, his Honour Judge Hayward, who, as I have said, gave judgment in the action on 14th February 2001. He identified the first issue which he was required to decide thus:

"Has the defendant proved that Mrs. Mitford did not have the capacity to contract in or about April 1988?"

15. (See judgment transcript 16E.) He answered that question in the negative. Indeed, he found (18D) that the deceased possessed the necessary capacity to contract in April 1988. The second issue was: did Mr Shepherd have authority to agree to pay the fees on behalf of Mrs Mitford? (Transcript 18D to E) The judge held (20E) that Mr Shepherd had implied authority, alternatively that the deceased had ratified the agreement (20G).
16. In dealing with the Part 20 claim, the judge proceeded to hold that he was not persuaded that any duty owed by Mr Shepherd to the deceased obliged him to apply for benefits on behalf of the deceased or that if there were such a duty any loss had been occasioned by its breach. He gave reasons for all these findings. The passage is at 22D to 23D. Perhaps I may be forgiven on this permission application for not setting it out.
17. The next question was whether the Part 20 defendants, the solicitors, were in breach of duty in failing to apply to the Court of Protection earlier than in fact was done. The judge rejected this claim also for reasons given by him at 24A to 24B.
18. Lastly, there was a question of limitation. The proceedings had been commenced, as I have said, on 18th September 1996. The relevant limitation period was six years, taking the claim back to September 1990. But the arrears sued for went back to 1988. The judge held that there was correspondence from the Public Trustee, in particular a letter of 29th June 1992, which had acknowledged the whole outstanding debt, and so there was a fresh accrual of the cause of action under provisions contained in section 29(5) of the Limitation Act 1980. I shall return to the Public Trustee's letter in a moment.
19. The second and principal application for permission to appeal before us is directed at the judge's decision to uphold the claim in contract against the estate. I refused permission to appeal in both matters on consideration of the papers on 30th May 2001. The application is now renewed by Mr Denman on behalf of the defendant.
20. There was a point taken earlier that there was a contradiction, or inconsistency, between the judge's treatment of the application to amend to plead the necessaries claim and his treatment of the substantive claim in contract. But it is clear that those two matters were approached by him as alternatives, and it is not now said that he had in any sense contradicted himself. The judge gave his reasons for allowing the amendment at the end of his substantive judgment in the main action. I will read a short passage at 32F:

"Accordingly, the services were necessaries, and the Claimants are entitled to recover the cost of them. I do acknowledge, of course, that there is an inconsistency in my finding on the issue of necessaries, which were findings made on the assumption there was no enforceable contract between the Claimants Mrs. Mitford, and my findings on the substantive issues, having now heard all the evidence and arguments in the case, namely, that there was a contract, and Mrs. Mitford had the capacity to contract, and Mr. Shepherd had the necessary authority to contract on her behalf. As I say, on the issue of necessaries, I was invited to consider, on the assumption that there was no enforceable contract, that is what I did, and for those reasons."

21. Mr Denman's first submission before us was to the effect that the judge was not entitled on the evidence to find that the deceased had capacity in 1988, and presumably thereafter, to contract with the Wests for the provision of nursing and care services to her.
22. As I have said, the judge gave his reasons for arriving at the conclusion he did. The central passage is at 16E to 18D. I will not read the whole of it, but I take parts of it, beginning at 16E:

"... has the Defendant proved that Mrs. Mitford did not have the capacity to contract in or about April 1988? In my judgment, the Defendant has not proved this. I accept Mr. Shepherd's evidence that Mrs. Mitford was very different when she was being cared for and was taking her medication, as compared to her condition when she was neglecting herself and not taking her medication.

In April 1988, Mrs Mitford had been either in hospital or in the Sandena Nursing Home for twelve months. She had, therefore, had a year of being well cared for and being given the appropriate medication. ... The medical records show that she was in good health at this time, she was regularly going out for walks and go to the shops, and I accept his evidence" [Mr Shepherd] "that at the time, she was aware of her financial position, and was aware of her obligations to pay bills relating to her home and was aware of the sources of her income. At that time, no-one was suggesting that Mrs. Mitford should have a Receiver appointed by the Court of Protection to manage her affairs."

23. I go to 17G:

"Mr Denman, on behalf the Defendant, submitted that Mrs. Mitford would have lacked the relevant capacity to contract if she was not capable of understanding the commitment that she was taking on, and how that commitment put at risk her home and all her capital. I do not accept that submission. ... What is necessary is that there should be an understanding of the general nature of the commitments. There is always a danger to consider issues with the benefit of hindsight. In April 1988, Mrs. Mitford would not necessarily have been thinking that she was going to remain at the nursing home indefinitely. Indeed, no-one would have necessarily thought that; she had been in and out of hospitals and nursing homes before on many occasions over the years."

24. The focus of Mr Denman's submission upon this point is that the evidence showed that this lady would not, or could not, face the dilemma that arose in the circumstances which confronted her. That was this: either she was to remain in the nursing home, but that would involve selling the house of which she was so fond, or she could leave the home and keep the house. But, in that case, where was she to go? Mr Denman says she could not grasp those realities. If she was confronted with them her mental condition deteriorated. It seems to me that the judge provided the right answer to that submission. What is necessary, as he said, is that there should be an understanding of the general nature of the contractual commitment being entered into. I cannot see that the judge's conclusion on this part of the case can sensibly be impeached.
25. Then it is said that the judge should have found that the Part 20 defendants were in breach of a duty owed to the deceased. In particular, they should have approached the Court of Protection sooner than they did. I hope I might be forgiven if in relation to that I simply say that, as it seems to me, the judge was perfectly entitled to find, as he did, on the facts and evidence. Those passages are reflected at 21F to 23D and 23D to 24H.
26. The only point in the case that has troubled me and upon which I would grant permission to appeal is the point as to the Limitation Act. The letter from the Public Trustee, dated, as I said, 29th June 1992, was written to the claimants and was in these terms:

"I am in receipt of your account ... currently standing at £38,776.06.

The Receiver is doing everything possible to obtain funds on behalf of Mrs Mitford but unfortunately the Department of Social Security have been dragging their heels concerning the Income Support claim which has been registered. I enclose a copy of my latest letter to them for your convenience."

27. Then the judge quotes the enclosed letter:

"The debt to the nursing home in respect of Mrs Mitford's accommodation charges has now increased to £38,776, and I am sure you will appreciate the difficulty that both the Receiver and the nursing home owner are in."

28. Mr Denman takes two points. First of all, he says that this is not in any event truly an acknowledgement of the debt. The quantum of the debt has not been properly ascertained. The sum referred to, £38,776, in fact included an element of interest to which there was, as was acknowledged at length by the Wests, no contractual entitlement. Secondly, and perhaps more substantially, Mr Denman submits that the public trustee appointed by the court as Mrs Mitford's receiver was not liable or accountable for the debt within the terms of section 29(5) of the Limitation Act 1980, which provides in part:

"... where any right of action has accrued to recover- (a)any debt or other liquidated pecuniary claim; or

(b)any claim to the personal estate of a deceased person or to any share or interest in any such estate;

and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgement or payment."

29. Mr Denman submits, and the proposition is supported in the text of Halsbury's Laws, that the receiver appointed by the court is not an agent of the person in question. There is no basis upon which it could be said that the receiver was liable or accountable in respect of the debt to the nursing home arising at any period before his, the receiver's, appointment in 1992.
30. It is enough if I say that that seems to me to be arguable. For my part, I would grant permission to appeal only in relation to what may be called the limitation point. If my Lord agrees, Mr Denman would be free to argue both aspects of that point, that is to say that the letter in question was not in any event an acknowledgement, as well as the second point relating to the status of the receiver. I would not give leave on any other matters, nor in relation to the judge's decision to allow the amendment to plead necessaries.
31. My Lord is indicating to me, and I should have mentioned it, that we should formally grant you an extension of time for appealing and, assuming my Lord agrees with my decision in substance, we would do so.
32. LORD JUSTICE NOURSE: I agree with everything which has fallen from my Lord and have nothing that I wish to add.
Order: Application allowed in part.