England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		12/06/2014

Mr Justice Leggatt:

Introduction

1. The claimant, whom I will refer to as "ZYN", is severely disabled. She has a need for community care services, part of which is provided by the defendant local authority ("the Council").
2. ZYN has substantial capital assets, the present value of which is about £550,000, which derive from compensation paid in settlement of a personal injury claim. It is and has for many years been government policy that social care services are means tested and that people who have assets are required to contribute to the cost of services they receive from a local authority. However, there are certain exceptions to this policy.
3. The issue raised by this case is whether capital derived from a personal injury settlement which is managed by a deputy appointed by the Court of Protection must be disregarded by a local authority when deciding whether the injured person can be required to contribute to the cost of care services which he or she receives.

The Council's charging policy

4. With effect from 1 April 2011, the Council has sought to charge ZYN for the full cost of the social care services which she receives from the Council (currently £271.84 per week). The Council's published charging policy for non-residential care services, as revised on 31 July 2012, stated (in section 12):

"If a service user has over £23,250 in capital and savings, or chooses to fund their care themselves, or chooses not to disclose their financial circumstances to the council, they will pay the full cost of their care."

Although worded slightly differently, the policy applicable from 1 April 2011 until 31 July 2012 was to similar effect.

5. On 18 October 2012 the policy was again revised but an error was made in the wording of the relevant provision. The wording is about to be changed back to that quoted above. The Council has agreed that from 18 October 2012 until this happens it will not seek to recover the cost of the care services provided to ZYN. However, the Council is claiming such costs for the period from 1 April 2011 until 18 October 2012 and intends to do so again when the wording applicable during that period is reinstated.
6. There is no doubt that under the terms of the Council's charging policy quoted above the Council is entitled to charge ZYN for the full cost of the care services provided to her. It is her case, however, that the Council's policy is unlawful because in calculating the amount which ZYN has in capital the policy takes account of money derived from her personal injury settlement. ZYN maintains that, under the relevant legislation, the Council is required to disregard such capital. The Council disputes this.

The settlement

7. On 20 March 2003 the High Court approved a settlement in the sum of £500,000 of a clinical negligence claim brought on behalf of ZYN against Walsall Health Authority. After reimbursing certain costs of past care, the balance of the settlement money was transferred to the Court of Protection to be dealt with in the court's discretion.
8. The settlement was approved on the advice of eminent leading counsel, Mr Simeon Maskrey QC. A material consideration in deciding whether to accept the settlement offer, which represented only 20% of the value of the claim, was whether ZYN could be required by the local authority to contribute to the cost of her future care out of the funds received. Mr Maskrey QC advised that "on the current state of the legislation [ZYN] can expect to be cared for when the need arises without her settlement monies being touched."
9. It is agreed that (as would be expected) Mr Maskrey's advice, when given, was correct. The question which now arises, however, is whether the expectation that ZYN would be cared for without her settlement money being touched has been defeated by a subsequent change in legislation.
10. The relevant legislation is unduly complex and the path through it is convoluted. Before I can address the issues in this case, I must first chart the way through this legal maze.

The legal framework for charging for community care services

11. Local authorities have a duty to assess a disabled person's need for community care services under section 47 of the National Health Service and Community Care Act 1990. The Council has assessed ZYN under this provision and determined that she is entitled to receive such services under section 29 of the National Assistance Act 1948.
12. Section 17 of the Health and Social Services and Social Security Adjudications Act 1983 ("HASSASSA") confers on the local authority a discretion to recover charges from people to whom services under section 29 of the 1948 Act (amongst other provisions) are supplied.
13. The Secretary of State has issued guidance to assist local authorities in exercising their discretion under section 17 of HASSASSAA. This guidance, originally published in 2003, is called "Fairer Charging Policies for Home Care and other non-residential Social Services" ("the Fairer Charging Policy"). The Fairer Charging Policy deals in Section VIII with how and to what extent a local authority should take into account capital assets. The Council accepts that this is guidance under which it is required to act by section 7 of the Local Authority Social Services Act 1970.
14. The Fairer Charging Policy (June 2013 edition) states:

"61. Councils may take account of a user's savings or other capital in assessing their resources, but are not obliged to do so. …

62. Savings may be taken into account to calculate a tariff income on the same basis as set out in the Charges for Residential Accommodation Guidance (CRAG) in LAC(99)9. Users with savings of more than the upper limit may be asked to pay a full charge for the service. These savings levels will be updated automatically in line with any uplifts in CRAG. Councils may wish to set higher savings limits or more generous charging policies than those specified in CRAG for users with savings, but should not set lower limits.

63. The value of the main residence occupied by the user should not be taken into account for charges for non-residential services, but other forms of capital may be taken into account, as set out in CRAG."

15. The effect of these provisions was considered by the Court of Appeal in Crofton v NHS Litigation Authority [2007] 1 WLR 923, where Dyson LJ said at para 76:

"This wording is not happily expressed. But in our view it means that the CRAG rules for determining what capital should be taken into account are imported in their entirety, on the footing that local authorities have a discretion to treat a person's capital more generously. It follows that, if CRAG stipulates that certain items of capital are to be disregarded, then the Fairer Charging Policy requires the local authority to exercise its discretion in the same way."

16. The reference to "CRAG" is a reference to the "Charges for Residential Accommodation Guidance" which contains detailed guidance on how charges should be calculated for the purposes of the provision of accommodation under section 21 of the 1948 Act. Although this is a different regime from the provision of services under section 29, the effect of the Fairer Charging Policy, as interpreted by the Court of Appeal, is that the CRAG rules are to be applied in both cases.
17. Paragraph 1.012 of CRAG requires the local authority to assess a person's ability to pay by using The National Assistance (Assessment of Resources) Regulations 1992 ("the 1992 Regulations"). Regulation 21 of the 1992 Regulations provides that the whole of a person's capital is to be taken into account, save that there shall be disregarded any capital, where applicable, specified in Schedule 4.
18. Schedule 4 to the 1992 Regulations sets out various categories of capital that must be disregarded. These categories include personal injury trusts and certain personal injury payments, which are not relevant in this case. They also include, in paragraph 19:

"Any amount which—

(a)   falls within paragraph 44(2)(a), and would be disregarded under paragraph 44(1)(a) or (b), of Schedule 10 to the Income Support Regulations;"

19. The reference to the "Income Support Regulations" is a reference to the Income Support (General) Regulations 1987 (as amended). Paragraph 44 of Schedule 10 to the Income Support Regulations refers to:

"(1) Any sum of capital to which sub-paragraph (2) applies and—

(a)   which is administered on behalf of a person by the High Court or the County Court under Rule 21.11(1) of the Civil Procedure Rules 1998 or by the Court of Protection; [or]

(b)   which can only be disposed of by order or direction of any such court ...

(2)     This sub-paragraph applies to a sum of capital which is derived from—

(a) an award of damages for a personal injury to that person; ..."

20. The issues in this case all turn on the meaning of this provision (which I shall refer to simply as "paragraph 44").

The Court of Protection

21. Paragraph 44(1) includes a reference to the "Court of Protection". At the time when the High Court approved the settlement of ZYN's personal injury claim, the Court of Protection was established under Part VII of the Mental Health Act 1983 ("the 1983 Act"). Section 93(2) of the 1983 Act provided:

"There shall continue to be an office of the Supreme Court, called the Court of Protection, for the protection and management, as provided by this Part of this Act, of the property and affairs of persons under disability ..."

Section 93(1) made provision for the Lord Chancellor to nominate judges to sit in the Court of Protection.

22. Under sections 95 and 96 of the 1983 Act a judge of the Court of Protection had extensive powers to administer the property and affairs of a person lacking the capacity to do so by reason of mental disorder – referred to in the Act as a "patient": see section 94(2). Section 99 gave the judge a power to appoint a receiver and stated in sub-section (2):

"A person appointed as receiver for a patient shall do all such things in relation to the property and affairs of the patient as the judge, in the exercise of the powers conferred on him by sections 95 and 96 above, orders or directs him to do and may do any such thing in relation to the property and affairs of the patient as the judge, in the exercise of those powers, authorises him to do."

23. New provision relating to people who lack capacity was made by the Mental Capacity Act 2005, which received Royal Assent on 7 April 2005. Section 45 of that Act ("the 2005 Act") states:

"(1) There is to be a superior court of record known as the Court of Protection.

…

(6) The office of the Supreme Court called the Court of Protection ceases to exist."

24. According to the Code of Practice (para 8.1) issued by the Lord Chancellor under the 2005 Act:

"Section 45 of the Act sets up a specialist court, the Court of Protection, to deal with decision-making for adults (and children in a few cases) who may lack capacity to make specific decisions for themselves. The new Court of Protection replaces the old court of the same name, which only dealt with decisions about the property and financial affairs of people lacking capacity to manage their own affairs. As well as property and affairs, the new court also deals with healthcare and personal welfare matters. These were previously dealt with by the High Court under its inherent jurisdiction."

25. The relevant provisions of the 2005 Act came into force on 1 October 2007: see article 2(1)(b) of the Mental Capacity Act 2005 (Commencement No 2) Order 2007. Accordingly, on that date the 'new' Court of Protection replaced the 'old' Court of Protection.
26. The scheme for managing the property and affairs of people who lack capacity under the 2005 Act has many similarities to the previous regime but there are also differences. The power under the 1983 Act to appoint a receiver has been replaced by a power under the 2005 Act to appoint a "deputy". According to the Code of Practice (para 8.35):

"The court will appoint a deputy to manage a person's property and affairs (including financial matters) in similar circumstances to those in which they would have appointed a receiver in the past."

27. Pursuant to the transitional provisions contained in Schedule 5 to the 2005 Act (para 1), on the commencement date (1 October 2007) anyone appointed as a receiver under the 1983 Act was automatically treated as a deputy appointed under the 2005 Act but with the same functions that the person previously had as a receiver.

The orders appointing a receiver / deputy for ZYN

28. An order was made by the old Court of Protection on 19 March 2002 appointing a receiver (Ms Julia Lomas) to deal with any money belonging to ZYN, and the authority granted to the receiver was extended by a further order dated 24 January 2006.
29. Pursuant to the transitional provisions mentioned above, when the 2005 Act came into force on 1 October 2007, Ms Lomas became a deputy for ZYN under the 2005 Act with the same functions as she had before.
30. On 19 November 2008 an order was made by the new Court of Protection which superseded the earlier orders. This order expressly appointed Ms Lomas as a deputy under the 2005 Act and gave her a general authority to take possession or control of the property and affairs of ZYN and to exercise the same powers of management and investment as ZYN had as beneficial owner, subject to the terms of the order. Relevantly for present purposes, paragraph 2(c) of the order stated:

"The deputy may withdraw a sum not exceeding £50,000 a year from the funds of [ZYN] for her use and benefit without needing to obtain the prior approval of the Court of Protection"

The issues

31. It is common ground that all the capital derived from ZYN's personal injury settlement falls within paragraph 44(2)(a) of Schedule 10 to the Income Support Regulations, being "an award of damages for a personal injury" to ZYN. It is her case that this capital is to be disregarded because it also falls within paragraph 44(1)(a) and/or (b), being capital (a) which is administered on behalf of ZYN by the Court of Protection and/or (b) which can only be disposed of by order or direction of the Court of Protection.
32. The Council's primary case is that the reference to the "Court of Protection" in paragraph 44 is a reference to the 'old' Court of Protection constituted under the Mental Health Act 1983 and does not refer to the 'new' Court of Protection constituted under the Mental Capacity Act 2005. If this contention is correct, it follows that paragraph 44 became incapable of applying to the capital derived from the settlement of ZYN's personal injury claim when the new Court of Protection replaced the old Court of Protection on 1 October 2007.
33. Alternatively, if this contention is wrong, the Council in any event disputes that paragraph 44(1)(a) or (b) is applicable. In particular, the Council argues that where, as in this case, capital derived from an award of damages for personal injury is managed by a deputy appointed by the Court of Protection, such capital is not administered by the court so as to fall within paragraph 44(1)(a). The Council further contends that the effect of paragraph 2(c) of the order made on 19 November 2008 is that capital exceeding £23,250 in value can be disposed of by the deputy without an order or direction of the court and therefore does not fall within paragraph 44(1)(b).
34. There are accordingly three issues:

i) Does paragraph 44 apply to the 'new' Court of Protection?

ii) If so, does capital managed by a deputy appointed by that court fall within paragraph 44(1)(a)?

iii) Does all of the capital of ZYN fall within paragraph 44(1)(b)?

35. I will consider these issues in turn.

Meaning of the "Court of Protection"

36. The current version of paragraph 44 was introduced by substitution into Schedule 10 to the Income Support Regulations by regulation 5(11)(c) of the Social Security (Miscellaneous Amendments) (No 4) Regulations 2006, which were laid before Parliament on 8 September 2006. At that time, section 45 of the Mental Capacity Act 2005, which abolished the 'old' Court of Protection and created the 'new' Court of Protection, had not yet been brought into force. (As mentioned, that happened on 1 October 2007.) On behalf of the Council, Mr Lock QC has submitted that in these circumstances the reference in paragraph 44 to the "Court of Protection" can only have been a reference to the office of the Supreme Court known as the "Court of Protection" which then existed, and not to the new court of the same name which has since replaced it.
37. Mr Lock further pointed out that the transitional provisions in Schedule 5 to the 2005 Act recognise the distinction between the old Court of Protection and the new Court of Protection and include specific provisions for ensuring the continuity of arrangements made by or relating to the old Court of Protection when it was replaced by the new Court of Protection. However, there is no provision in Schedule 5 (or anywhere else) which states that references to the old Court of Protection in any subsisting legislation are to be treated as referring to the new Court of Protection. It follows, Mr Lock submitted, that since the commencement of the relevant provisions of the 2005 Act the reference to the "Court of Protection" in paragraph 44 has been to a body which no longer exists. The result is that, although no amendment has been made to delete the reference in paragraph 44 to "the Court of Protection", it is now entirely redundant and is incapable of applying in the present case.
38. On behalf of ZYN, Mr Wise QC sought to rely on the fact that the reference to the "Court of Protection" in paragraph 44 has been left unchanged since the new Court of Protection replaced the old Court of Protection on 1 October 2007. This shows, he submitted, that Parliament intends paragraph 44 to apply to the new Court of Protection. That apparently simple submission seems to me to raise a question of considerable difficulty about the nature of statutory interpretation. Put shortly, can statutory language change its meaning and, if so, when and how?

Historical and updating interpretations

39. On one view – which I will call the 'historical' approach – the meaning of legislation is fixed at the time when it is made and must be determined solely by reference to the circumstances which then existed and not to anything that happens afterwards. An example of this approach is The Longford (1889) 14 PD 34, a case where the court had to construe an Act of Parliament which provided that "no action in any of His Majesty's courts of law" should be brought against certain shipowners without a month's notice. The question was whether this provision was apt to cover an Admiralty action in rem. In holding that it was not, Lord Esher said (at pp.36-37):

"The first point to be borne in mind is that the Act must be construed as if one were interpreting it the day after it was passed. … The word 'action' mentioned in the section in question was not applicable, when the Act was passed, to the procedure of the Admiralty Court. Admiralty actions were then called 'suits' or 'causes'; moreover the Admiralty Court was not called and was not one of His Majesty's Courts of Law."

40. It is clear, however, that this historical approach is not of general application. There are many cases in which courts have interpreted statutory provisions so as to take account of developments after they were enacted. For example, in A-G v Edison Telephone Co (1880) 6 QBD 244, the term "telegraph" in the Telegraph Act 1869 was held to include a telephone, although the telephone had not yet been invented when the Act was passed. Another example is a line of cases in which provisions of the Rent Acts giving rights to a "member of the tenant's family" have been interpreted so as to reflect changes in social attitudes. Thus, in 1950 the Court of Appeal held that, where a man and woman had lived together for many years without marrying, the tenant's partner was not a "member of the tenant's family" for the purposes of the Rent and Mortgage Interest Restriction Act 1920: see Gammans v Ekins [1950] 2 KB 328. 25 years later the Court of Appeal on similar facts reached a different view in Dyson Holdings Ltd v Fox [1976] QB 503. Bridge LJ said (at p.513):

"If the language can change its meaning to accord with changing social attitudes, then a decision on the meaning of a word in a statute before such a change should not continue to bind thereafter, at all events in a case where the courts have constantly affirmed that the word is to be understood in its ordinary accepted meaning."

Another 25 years on, the House of Lords held in Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27 that a tenant's homosexual partner was a member of his "family" within the meaning of the equivalent provision of the Rent Act 1977.

41. Both Cross on Statutory Interpretation (3^rd Edn, 1995) and Bennion on Statutory Interpretation (6^th Edn, 2013) take the view that there is a general rule in favour of an 'updating' approach to statutory interpretation rather than a 'historical' one. According to Bennion (section 288, p.797):

"It is presumed that Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wording to allow for changes since the Act was initially framed (an updating construction). While it remains law, it is to be treated as always speaking. This means that in its application on any date, the language of the act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law."

A number of authorities have affirmed this principle: see e.g. R v Ireland [1998] AC 147, 158 (per Lord Steyn); and Yemshaw v London Borough of Hounslow [2011] 1 WLR 433, 442, paras 25-26.

42. On analysis, however, the conflict between the historical approach and the updating approach to statutory interpretation is not as deep as may at first appear. Treating legislation as "always speaking" can still be seen as an exercise in identifying the meaning of the legislation at the time when it was made. It is just that this meaning is one which allows the relevant statutory language to have a changing application. Lord Bingham put the point with typical lucidity when he said in R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687, 695, para 8:

"There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking. If Parliament, however long ago, passed an Act applicable to dogs, it could not properly be interpreted to apply to cats; but it could properly be held to apply to animals which were not regarded as dogs when the Act was passed but are so regarded now. The meaning of 'cruel and unusual punishments' has not changed over the years since 1689, but many punishments which were not then thought to fall within that category would now be held to do so."

43. Thus, the provisions of the Rent Acts giving rights to a "member of the tenant's family" could in principle have been interpreted in two different ways. On a 'historical' interpretation that phrase would denote only whoever would count as a member of the tenant's "family" as that concept was understood at the time when the legislation was enacted. The alternative interpretation is that the phrase was intended to refer to whoever would be understood to be a member of the tenant's family at the time when the legislation is applied. Both interpretations are interpretations of what Parliament meant when it enacted the statute. The difference is that the latter 'updating' interpretation assumes that Parliament intended the legislation to be applied in the light of social attitudes concerning who can constitute a "family" which are current at the time of its application.
44. An 'updating' approach – if appropriate in this case – would therefore permit the court to interpret the term "Court of Protection" in paragraph 44 as applying to the new Court of Protection created by the 2005 Act, even though the new Court of Protection was not yet in existence at the time when that provision (in its current form) was introduced. It would not, however, justify an inference of the kind which Mr Wise invited the court to draw from a later event, namely, the fact that paragraph 44 was left unchanged when the legislation creating the new Court of Protection was brought into effect.
45. It is not difficult to see why an updating construction of legislation is generally to be preferred. Legislation is not and could not be constantly re-enacted and is generally expected to remain in place indefinitely, until it is repealed, for what may be a long period of time. An inevitable corollary of this is that the circumstances in which a law has to be applied may differ significantly from those which existed when the law was made – as a result of changes in technology or in society or in other conditions. This is something which the legislature may be taken to have had in contemplation when the law was made. If the question is asked "is it reasonable to suppose that the legislature intended a court applying the law in the future to ignore such changes and to act as if the world had remained static since the legislation was enacted?", the answer must generally be "no". A 'historical' approach of that kind would usually be perverse and would defeat the purpose of the legislation.
46. The generality of language used by the legislature may also support the implication that it was intended to accommodate change. The concept of a "family", for example, is a fluid one which evolves over time. Hence the fact that Parliament used this term in the Rent Act provisions referred to earlier, rather than defining more specifically the persons who could acquire rights by reason of their relationship with the tenant, reinforces the conclusion that those provisions should be given an 'updating' construction.
47. Likewise, the definition of the term "telegraph" in the Telegraph Act 1869, which the court construed in A-G v Edison Telephone Co (1880) 6 QBD 244, was couched in terms wide enough to allow for subsequent technological innovation. As Stephen J (giving the judgment of the Court) said at p.254:

"Of course, no one supposes that the legislature intended to refer specifically to telephones many years before they were invented, but it is highly probable that they would, and it seems to us clear that they actually did, use language embracing future discoveries as to the use of electricity for the purpose of conveying intelligence."

48. By contrast, in The Longford (1889) 14 PD 34 there were good reasons for inferring that the relevant legislation was not intended to apply to proceedings in rem in the Admiralty Court, and those reasons had not changed when the court had to apply the legislation, even though Admiralty proceedings could by then be called "actions". The fact that the usage of a word has changed may well not be a matter which should result in the word being given its new meaning. In each case where a relevant circumstance has changed since the legislation was enacted, it is a question of interpretation whether it is reasonable to attribute to the legislature the intention that the words used should be interpreted and applied in a way which takes account of that change.

Is an updating interpretation appropriate in this case?

49. Looked at in this way, the question in the present case is whether Parliament in approving paragraph 44 intended the term "Court of Protection" to refer only to the court which was then known as the "Court of Protection" or to the court of that name existing on the date as at which it relevant to decide whether a capital sum falls within paragraph 44 ("the relevant date"). The term is capable of bearing either of these meanings. If required to decide between them, however, without reference to any later events, I prefer the second 'updating' interpretation. In reaching that conclusion, I think it significant that, at the time when paragraph 44 was introduced into Schedule 10 to the Income Support Regulations, Parliament had already enacted the 2005 Act. It was therefore in contemplation that, as soon as a commencement order was made and the relevant provisions of the 2005 Act were brought into force, the old Court of Protection would cease to exist and would be replaced by a new court which would exercise substantially similar (albeit not identical) functions and would also be called the "Court of Protection".
50. I see no reason to attribute to Parliament an intention that, when the 2005 Act came into force, there should be a change in policy regarding whether capital administered by the Court of Protection (or which can only be disposed of by order or direction of that court) is to be taken into account in the means testing of benefits. In saying that, I express no view about the desirability or otherwise of taking into account such capital sums. It is simply that I can see no difference between the regime for administering the property and affairs of people lacking in capacity under the 1983 Act and the regime under the 2005 Act which would betoken or justify a change in policy. If it was considered appropriate by Parliament to disregard capital administered by the Court of Protection under the 1983 Act – as it evidently was, I cannot identify any change made by the 2005 Act which made it any less appropriate to disregard capital administered by the (new) Court of Protection when the 2005 Act came into force. Nor has the Council sought to argue that the 2005 Act made any such material change.
51. In these circumstances, I do not think it reasonable to suppose that Parliament intended the reference in paragraph 44 to the "Court of Protection" to be, in effect, self-limiting or self-repealing on whatever date sections 45 and 66 of the new Act were brought into effect, so that thereafter – unless the words were redefined or re-enacted – the term "Court of Protection" would not refer to any existing body. It seems to me to make better sense to suppose that Parliament intended paragraph 44 to remain applicable to capital funds administered by the new Court of Protection. I would therefore interpret the term "Court of Protection" as meaning the body of that name which is in existence and has statutory responsibility for administering the property and affairs of persons lacking capacity at the relevant date.

Inferences from subsequent legislation

52. So far I have been assuming that the meaning of legislation must be ascertained by reference only to circumstances existing at the time of its enactment and cannot be affected by later events – albeit that the meaning may be one which allows for the possibility of future developments. This follows, as I see it, from the nature of the interpretation and the constitutional principle of Parliamentary sovereignty.
53. Consistently with that principle, however, Parliament can change the meaning of an existing statutory provision. There are various ways in which this can occur. The most obvious is that Parliament can legislate expressly that a particular term in existing legislation shall be given a particular meaning. An example of this can be seen in the case of A-G v Edison Telephone Co (1880) 6 QBD 244, mentioned earlier. The term "telegraph" was originally defined in the Telegraph Act 1863. However, section 3 of the Telegraph Act 1869 provided:

"The term 'telegraph' shall, in addition to the meaning assigned to it in the Telegraph Act 1863, mean and include any apparatus for transmitting messages or other communications by means of electric signals."

It is clear that the enactment of this provision required the courts to give a different meaning to the term "telegraph" in the 1863 Act to that which it previously had.

54. Parliament can achieve a similar result by enacting a general rule of interpretation. The Interpretation Act 1978 contains such rules. Another example is section 3(1) of the Human Rights Act 1998, which requires that, "so far as it is possible to do so", legislation "must be read and given effect in a way which is compatible with the Convention rights". This rule may require a court to interpret legislation enacted before the Human Rights Act differently from how the legislation would have been interpreted the day after it was passed. The rule may in that way indirectly have the effect of changing the meaning of a statute.
55. Even without explicitly requiring the courts to give a term in existing legislation a particular meaning, or to apply a specified rule when interpreting the term, Parliament may act in a way which treats the term as having a particular meaning and signals its approval of that meaning. A line of cases illustrates that this is a matter to which a court may properly have regard to resolve an ambiguity in the statutory language.
56. In A-G v Clarkson [1900] 1 QB 156 the Court of Appeal had to decide whether property which was only contingently settled was "settled property" on which estate duty was payable under section 5 of the Finance Act 1894. In an earlier case a Divisional Court had decided that it was. The Court of Appeal was asked to overrule that decision. Lindley MR regarded the point as "an exceedingly nice one" but thought the question concluded by the fact that a subsequent statutory provision (section 14 of the Finance Act 1898) proceeded on the basis that estate duty was payable on contingently settled property. Lindley MR (with whom the other members of the court agreed) regarded this as "a parliamentary adoption" of the interpretation which the Divisional Court had put on section 5 of the 1894 Act.
57. A similar point arose in Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 2 KB 403, where Lord Sterndale MR said (at p.414):

"I think it is clearly established in A-G v Clarkson that subsequent legislation on the same subject may be looked to in order to see what is the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier."

In Ormond Investment Co Ltd. v Betts [1928] AC 143 at 156, Lord Buckmaster approved this statement as "an accurate expression of the law, if by 'any ambiguity' is meant a phrase fairly and equally open to diverse meanings". See also In re Macmanaway [1951] AC 161, 177; and Motala v A-G [1992] 1 AC 281, 291.

58. A similar principle was endorsed in Re Billson's Settlement Trusts [1984] Ch 409, where the Court of Appeal thought it legitimate, if there was a doubt as to the true construction of the Legitimacy Act 1926, to take into account the fact that an Act of Parliament passed in 1969 was plainly drafted on the basis that the 1926 Act had a particular meaning. Browne-Wilkinson LJ said (at p.418):

"Although Parliament may, in 1969, have been mistaken as to the existing law, one should assume that it was not so mistaken; in the absence of clear words, one should seek to construe the earlier Act so as to accord with Parliament's understanding of its effect."

59. This approach seems to me to respect the constitutional principle of Parliamentary sovereignty. Bennion (at p.801) quotes a statement of Thomas Hobbes in Leviathan (chapter 26) that "the legislator is not he by whose authority the laws were first made, but by whose authority they now continue to be laws." If Parliament has proceeded on the basis that an existing law has a particular meaning at a time when, if Parliament had understood the law to have a different meaning, it is reasonable to infer it that would have acted differently, that may properly be treated as an implied directive as to how a previously ambiguous law should be interpreted.

Is such an inference appropriate in this case?

60. Applying this approach to the present case, I accept the submission made on behalf of ZYN that it is permissible to have regard in interpreting paragraph 44 to the fact that the reference to the "Court of Protection" was left unchanged when the 2005 Act was brought into force.
61. As discussed, at the time when the current version of paragraph 44 was included in Schedule 10 to the Income Support Regulations, the term "Court of Protection" was capable of bearing either of two meanings. It could have referred exclusively to the office of the Supreme Court which was then known as the Court of Protection; or it could have referred to the body which is known as and exercising the functions of the Court of Protection at the relevant date. However, when the 2005 Act was brought into force on 1 October 2007, I think it inconceivable that the Minister and Parliament would have left paragraph 44 as it was and done nothing to update it if they had understood it to bear the first of these meanings and to refer to a body which had now ceased to exist.
62. That would not merely have left the Income Support Regulations containing a redundant provision: it would render them positively misleading because anyone who reads paragraph 44 without investigating the legislative history would naturally understand it to refer to the Court of Protection currently in existence as constituted by the 2005 Act.
63. It would also have the result that paragraph 44 is a wholly irrational provision because it still on any view applies to capital derived from an award of damages for personal injury which is administered on behalf of a person by the High Court under CPR r.21.11(1). That rule applies where in any proceedings (a) money is recovered by or on behalf of or for the benefit of a protected party, or (b) money paid into court is accepted by or on behalf of a protected party. For these purposes, a "protected party" means someone who lacks capacity to conduct the proceedings and the term "lacks capacity" has the same meaning as in the 2005 Act: see CPR r.21.1(2)(d). It would be arbitrary and illogical to apply a different treatment to capital administered or controlled by a court on behalf of a person lacking the capacity to manage their own affairs depending on whether the court in question is the Court of Protection or is the High Court or a county court operating under r.21.11(1) of the Civil Procedure Rules.
64. It might be suggested that Parliament when bringing into force the 2005 Act may simply have overlooked the reference to the "Court of Protection" in paragraph 44, and that in these circumstances no inference should be drawn from the omission to amend or update paragraph 44.
65. That suggestion might have force if ascertaining the intention of Parliament involved a sociological inquiry into what was actually in the minds of individual legislators. However, that would be to mistake the nature of the interpreter's task. When courts identify the intention of Parliament, they do so assuming Parliament to be a rational and informed body pursuing the identifiable purposes of the legislation it enacts in a coherent and principled manner. That assumption shows appropriate respect for Parliament, enables Parliament most effectively to achieve its purposes and promotes the integrity of the law. In essence, the courts interpret the language of a statute or statutory instrument as having the meaning which best explains why a rational and informed legislature would have acted as Parliament has. Attributing to Parliament an error or oversight is therefore an interpretation to be adopted only as a last resort.
66. In the absence of any compelling indication to the contrary, it must therefore be assumed that when the 2005 Act was brought into force Parliament left paragraph 44 unchanged advisedly. That could only be because Parliament was proceeding on the basis that the term "Court of Protection" in paragraph 44 remained apposite when the office of the Supreme Court with that name ceased to exist and was replaced by the new Court of Protection. In these circumstances, any ambiguity in paragraph 44 should be resolved by construing it in a way which accords with Parliament's presumed understanding of its meaning and which treats it as having current effect rather than as an empty legacy of an earlier regime which has been left uselessly on the statute book.

Conclusion

67. I conclude that the term "Court of Protection" in paragraph 44 of Schedule 10 to the Income Support Regulations is apt to refer to the current Court of Protection. On that basis I turn to consider whether capital managed by a deputy appointed by that court falls within paragraph 44(1)(a) and/or (b).

Is ZYN's capital administered by the Court?

68. On behalf of the Council, Mr Lock accepted that capital funds administered by a receiver appointed by a judge of the Court of Protection under section 99 of the 1983 Act were "administered by … the Court of Protection" within the meaning of paragraph 44(1)(a). However, Mr Lock submitted that this is not the case when funds are administered by a deputy appointed under the 2005 Act. He argued that a receiver appointed by the old Court of Protection was an agent of the court and accountable to the court. By contrast, he submitted that a deputy appointed under the 2005 Act does not administer property on behalf of the court but on behalf of the person lacking capacity. Mr Lock reinforced this argument by pointing out that under the 2005 Act supervision of a deputy is undertaken, not by the Court of Protection, but by the Public Guardian, to whom the deputy may be required under section 19(9) of the Act to submit reports. Pursuant to section 57, the Public Guardian is appointed by the Lord Chancellor and the functions of the Public Guardian, as defined in section 58, include "supervising deputies appointed by the court".
69. Although there clearly are differences between the old and new regimes, I have not been persuaded that the differences between the role of a receiver under the 1983 Act and the role of a deputy under the 2005 Act are material for present purposes.
70. Section 16(2) of the 2005 Act provides that, where a person ("P") lacks capacity in relation to a matter or matters concerning P's property and affairs, the court may:

"(a) by making an order, make the decision or decisions on P's behalf in relation to the matter or matters, or

(b) appoint a person (a "deputy") to make decisions on P's behalf in relation to the matter or matters."

71. In addition, section 19(6) states:

"A deputy is to be treated as P's agent in relation to anything done or decided by him within the scope of his appointment and in accordance with this Part."

It appears, however, that this provision merely makes express in relation to a deputy what was already regarded as implicit in relation to a receiver. Thus, the Explanatory Notes to the 2005 Act (at paragraph 73) say in relation this provision:

"Case law has established that receivers appointed by the original Court of Protection under Part 7 of the Mental Health Act 1983 are agents but it is considered helpful to make statutory provision to that effect in relation to deputies."

There is therefore no difference between the two regimes in terms of whether the receiver / deputy is to be treated as the agent of the person who lacks capacity.

72. It is a false dichotomy to suppose that acting as the agent of the person who lacks capacity is incompatible with acting as the agent of the court. Where the court itself administers the capital of someone who lacks capacity, it clearly acts as the agent of that person. Indeed, it is a prerequisite for paragraph 44(1)(a) to apply that the relevant sum of capital is administered by the court "on behalf of a person". As an alternative to the court performing this function itself, the 1983 Act gave the court power (in section 99) to appoint a receiver to carry out the administration for it. As mentioned, the Council accepts that a receiver appointed by the old Court of Protection to perform this delegated function was an agent of the court and, as I have also indicated, the receiver was also treated as the agent (or, strictly, the sub-agent) of the person lacking capacity.
73. I see no reason why a different analysis should apply to the role of a deputy appointed under the 2005 Act. Just as under the 1983 Act the court could administer the property of a patient itself or delegate the task to a receiver, likewise under the 2005 Act the court may administer the property itself or delegate the task to a deputy. I see no relevant difference between the structure of the two schemes or between the wording of section 99(2) of the 1983 Act (quoted in paragraph 22 above) and section 16(5) of the 2005 Act, which states:

"The court may make such further orders or give such directions, and confer on a deputy such powers or impose on him such duties, as it thinks necessary or expedient for giving effect to, or otherwise in connection with, an order or appointment made by it under subsection (2)."

74. The fact that the deputy is exercising a delegated responsibility is further confirmed by the ability of the court at any time to vary the powers conferred on the deputy or to withdraw the powers by revoking the deputy's appointment.
75. While I accept that under the 2005 Act the Public Guardian has a role in supervising deputies which did not exist under the 1983 Act, I cannot see that this difference is material in the present context. In particular, it does not seem to me to detract from the fundamental point that, in administering a person's property and affairs, a deputy is exercising powers delegated by the court.
76. Moreover, it makes sense to interpret paragraph 44(1)(a) as applying to a situation where capital is administered for the court by a receiver or deputy, as I can think of no logical reason why the question whether capital is to be disregarded should depend on whether the court administers the funds directly or by using an agent.
77. I therefore conclude that capital managed by a deputy appointed by the Court of Protection under the 2005 Act is "administered on behalf of a person by the Court of Protection" within the meaning of paragraph 44(1)(a).

Can the capital of ZYN only be disposed of by an order of the court?

78. It is ZYN's case that her capital in any event falls within paragraph 44(1)(b), as it "can only be disposed of by order or direction of" the Court of Protection.
79. Subject to the point I have already decided regarding the identity of the Court of Protection, the Council accepts that the bulk of the capital of ZYN falls within paragraph 44(1)(b). However, the Council contends that a significant part of her capital does not fall within that provision as a result of paragraph 2(a) of the order of the Court of Protection dated 19 November 2008, which authorises the deputy to withdraw a sum not exceeding £50,000 a year from the funds of ZYN for her use and benefit without needing to obtain the prior approval of the Court of Protection.
80. The Council maintains that it follows from this order that the sum of £50,000 a year is not a sum which "can only be disposed of by order or direction of" the court and is therefore not to be disregarded when calculating contributions which ZYN can be required to make towards the cost of social care services provided to her.
81. As mentioned earlier, under the Council's charging policy the amount of capital that a person must have before they can be required to pay for the cost of their care is £23,250. In argument Mr Lock accepted that if during any given year the deputy withdraws and applies for the use and benefit of ZYN sums exceeding £26,750, so that there remains less than £23,250 available to be withdrawn without needing to obtain the prior approval of the Court of Protection, ZYN can at that point no longer be required to pay for the cost of her care. That will remain the position, on the Council's case, until the start of the next year – at which point there will again be capital of £50,000 which falls outside the scope of paragraph 44(1)(b). Mr Lock also accepted that any liability to pay for the cost of care services could be avoided altogether if, for example, the order dated 19 November 2008 were to be amended to permit the deputy to withdraw a sum not exceeding £20,000 every four months. There would then never be a time when a sum greater than the threshold amount of £23,250 could be disposed of without an order or direction of the court.
82. These are logical consequences of the Council's position. They are also, in my view, consequences which demonstrate that the Council's interpretation of paragraph 44(1)(b) leads to absurdity and should not be accepted unless there is no other reasonable interpretation of that provision which avoids these consequences.
83. A rational policy maker could decide that capital funds derived from a personal injury settlement which are managed on behalf of a person lacking capacity by the Court of Protection or by a deputy whom it appoints shall be brought into account for the purpose of assessing the person's ability to pay for the cost of care services. Alternatively, a rational policy maker could decide that such funds should be entirely disregarded. However, I cannot see how any rational policy maker could make the right of a local authority to charge for the cost of care services dependent on the size of the amount which a deputy is permitted to withdraw and spend without the prior approval of the court at any given time.
84. I also asked Mr Lock what the position would be if the Court of Protection were to make an order authorising the deputy to withdraw a sum of £50,000 to purchase a particular item of equipment. He did not seek to argue that such a sum would still fall within paragraph 44(1)(b) during the period from the date when the order was made until the date when the item of equipment was purchased. In my view, Mr Lock was again right to take this position because it would be absurd if the making of such an order rendered a person who was not otherwise liable to pay for the cost of care services liable to do so during that period. I am unable, however, to see any material distinction between this hypothetical case and the present, actual case. Thus, the order made by the Court of Protection in this case does not give the deputy an unfettered discretion as to how the sum of up to £50,000 a year may be spent. In particular, paragraph 1(b) of the order expressly requires the deputy to apply the principles set out in section 1 of the 2005 Act and to have regard to the guidance in the Code of Practice to the Act. Equally, an order permitting the deputy to withdraw £50,000 to purchase a particular item of equipment might still leave the deputy with a discretion to choose, for example, between different models or suppliers of the relevant equipment. The only difference between the two cases is one of degree and the extent of the deputy's discretion. I am unable to see how paragraph 44(1)(b) can as a matter of language be interpreted in a way which distinguishes between the two cases – let alone any rhyme or reason for seeking to draw such a distinction when deciding whether capital should be disregarded.
85. In my view, the only interpretation of paragraph 44(1)(b) which makes rational sense is an interpretation which treats the whole of the capital of ZYN as falling within its scope even after an order has been made which permits a deputy to withdraw a sum of money either for a particular purpose or for the general use and benefit of ZYN. There is no difficulty as a matter of language in saying that, until the money is actually spent, it remains part of a fund which can only be disposed of by an order or direction of the court: it does not cease to be part of such a fund simply because the court has made the requisite order. Moreover, for the reasons indicated, an interpretation which treats a sum as falling outside the scope of the provision when an order permitting disposal is made just because no further order of the court is now needed leads to absurd consequences and is not in my view a result which any rational legislator could have intended.
86. I therefore conclude that the whole of the capital of ZYN falls within paragraph 44(1)(b) of Schedule 10 to the Income Support Regulations.

Conclusion

87. For the reasons given, I find that the Council's policy on charging for the cost of social care services is unlawful insofar as it takes account of any of the capital derived from the claimant's personal injury settlement.