SENIOR COURTS COSTS OFFICE
B e f o r e :
| CHAD BRIAN JAMES MOLE
(a protected person by his litigation friend the Official Solicitor) (1)
WENDY LOUISE MOLE (2)
- and –
PARKDEAN HOLIDAY PARKS LIMITED (1)
UPPER BAY LIMITED (2)
Robert Marven (instructed by Reynolds Porter Chamberlain LLP) for the Defendants
Hearing dates: 2 March 2017
Crown Copyright ©
The parties' contentions
"37. Applying the established test and the other above principles it is clear, in my judgement, that termination of a solicitor's authority by reason of mental incapacity does not, in itself and in the usual case, frustrate the underlying contract of retainer. It is even clearer, in my view, that a retainer such as the CFA in this case, entered with a person known to have fluctuating capacity, is not frustrated by the loss of such capacity.
38. First, whilst the giving of instructions and the consequent authority of a solicitor to act on behalf of a client according to those instructions is certainly central to the contract in question, the manner and capacity in which those instructions is given is not. This supervening inability of a party to give instructions personally, with the likelihood (if not the certainty) that a deputy will be appointed, does not change the nature of the contract of retainer, radically or even significantly. The position would seem no different to a company providing instructions to its solicitors through its board of directors. If the entire board resigned, there might be no individual capable of giving instructions until a new director was appointed, that would not in itself change the nature of the contract of retainer so as to frustrate it."
"It is undeniable that the habit of the court has been to encourage persons to come forward as next friend for the purposes of obtaining aid on behalf of the parties who are incapacitated to sue for themselves" [for 'next friend' now, of course, read 'litigation friend']
With that in mind, he held that an infant was required to indemnify a next friend in respect of the expenses incurred by the next friend in litigation.
"…Thus for the purposes of this case the litigation cost of Mr. B fell to be funded by the Official Solicitor. Thus, putting it into legal language the Official Solicitor bore out his own monies the costs of his principal, namely Mr. B."
"30. For the defendant, Mr Smith accepted that, whilst a client's loss of mental capacity has the legal effect of terminating the existing authority of his solicitor, such loss of capacity does not, in itself, have the legal effect of terminating the underlying contract of retainer. That concession was entirely realistic. The normal rule (often referred to as the rule in Imperial Loan Co. v Stone  1 QB 599) is that contracts entered into by a mentally incapacitated person are not void but only voidable, and only then if that person can show he was, at the time of contracting, incapable of knowing what he was doing, and that the other party was aware of the incapacity: see Bowstead & Reynolds on Agency 19th edition, paragraph 2-009. As a contract is not void even if one party lacked mental capacity when it was made, it cannot be the case that subsequent mental incapacity would automatically terminate the contract."