Capacity - re: personal injuries claim.
Before : |
J. A. Clyde-Smith OBE, Commissioner Esq., and Jurats Blampied and Christensen |
Between |
Advocate Zoe Blomfield |
Representor |
IN THE MATTER OF THE REPRESENTATION OF ADVOCATE ZOE BLOMFIELD AS DELEGATE FOR ZAC
Advocate S. C. Thomas for the Representor.
judgment
the commissioner:
1. On 3rd March 2021, the Court blessed the decision of the Representor to accept an offer of settlement in a personal injuries claim brought on behalf of [Redacted] ("Zac"). Zac, who is now aged 22, suffers from a severe traumatic brain injury and other related conditions as a result of a car accident in August 2010, [Redacted].
2. Legal proceedings were commenced by Zac against the estate of A on 20th January 2015 acting through his then delegate, Advocate Jean Marie Renouf. The Representor was appointed delegate on 22nd March 2019. The Act of Court is silent as to the scope of her authority as delegate, but it is clear from the application for her appointment and we confirm, for the avoidance of any doubt, that it extends to all decisions that are necessary, in accordance with the Capacity and Self-Determination (Jersey) Law 2016 ("the 2016 Capacity Law"), relating to:
(i) cash in hand;
(ii) current, savings and Co-op bank accounts;
(iii) pensions and benefits;
(iv) vehicles and valuables;
(v) stocks and shares held in an investment portfolio;
(vi) the conducting of legal proceedings on behalf of Zac, including the claim for personal injuries, and
(vii) residential and immovable or share transfer estate, including its contents.
3. We also confirm that the Representor is entitled to remuneration out of Zac's property for acting as his delegate pursuant to Article 34(7) of the 2016 Capacity Law.
4. There is a long and complex history to this claim, including a number of applications to the Court under the 2016 Capacity Law for directions, which it is not relevant for the Court to rehearse. Liability was conceded by insurers acting on behalf of the estate of A ("the Defence Insurers"), and a four-week trial over quantum was due to commence on 15th February 2021. Shortly prior to the start of the trial, a provisional agreement was reached between counsel for both parties as to quantum, which the Representor's legal advisers firmly recommended she should accept. Her legal advisers comprised Advocate Thomas of Baker and Partners, Mr Scott Rigby of Stewarts, English Solicitors, Mr William Audland QC and Ms Gemma Scott, English counsel.
5. It might be questioned as to why the Representor had continued with the retention not only a firm of Jersey lawyers who were necessary to conduct the litigation before this Court, but a firm of English solicitors, namely Stewarts. Stewarts is a litigation only law firm who specialise inter alia in this kind of claim, acting only for clients who have suffered serious life changing injury. Because of the similarity in the relevant law and practice in both jurisdictions, we think it is reasonable, in a complex case of this kind, for the Representor to have continued with the retention of Stewarts (and though it, English counsel) in addition to Jersey lawyers.
6. The Representor had the power to compromise the claim on behalf of Zac and had determined to do so, but in view of the very significant and momentous nature of the decision, the effect of which would endure for the rest of Zac's life, the Representor understandably sought the blessing of the Court to her decision before accepting the offer.
7. A similar application was made in the case of The Representation of A as delegate for B [2018] JRC 225, when the Court said this at paragraphs 19 and 20:
"19 As the delegate retains the power to make the decision, the role of the Court in such an application will be a limited one and, in our view, analogous to the role of the Court when a trustee seeks the blessing of the Court to a particular exercise of power without surrendering its discretion (see the often quoted passage at paragraph 27-079 of Lewin on Trusts 19th edition). The Court will be concerned as to whether the delegate has properly formed the view that the decision he or she proposes to make is in the best interests of P. In other words it will be concerned with the limits of rationality and honesty and will not withhold approval merely because it would not make the decision in the manner proposed. The Court will, however, act with caution, because if it approves the decision (after full and frank disclosure of everything relevant to that decision), no interested party will thereafter be able to complain that the decision was not in Ps best interests.
20. Although not canvassed with Advocate Campbell, the Court might usefully follow its approach to an application by a trustee to have a decision blessed, suitable adapted, as set out in the case of In re S Settlement [291] JLR Note 37, namely to consider firstly, whether the delegate has the power to make the decision and secondly, to be satisfied that:-
(i) the delegate's opinion has been formed in good faith;
(ii) the opinion is one of a reasonable delegate acting in accordance with his or her duties and obligations under the 2016 Capacity Law; and
(iii) it has not been vitiated by any actual or potential conflict of interest."
8. We were invited and agreed to follow the same approach. The terms of the proposed settlement are confidential and will be contained in a schedule to be attached to the proposed order in which the trial court will be asked to stay the action. Subject to what we say below, this judgment will not set out the terms of the proposed settlement or the legal advice received.
9. The proposed settlement was comprised of three elements, firstly, the payment of a lump sum, net of a number of interim payments, secondly, the payment of periodical payment orders ("PPOs") and thirdly, the payment of Zac's legal costs to be taxed if not agreed.
10. The PPOs will be made under the provisions of the Damages (Jersey) Law 2019 ("the 2019 Damages Law"). Article 4(2) - (4) provides as follows:
"4 Periodical payment orders
(1) ...
(2) A court awarding damages for future pecuniary loss in respect of personal injury may make an order that the damages must wholly or partly take the form of periodical payments.
(3) A court may not make a periodical payment order unless it is satisfied that the continuity of payment under the order is reasonably secure.
(4) For the purposes of paragraph (3), the continuity of payment under a periodical payment order is reasonably secure if -
(a) the order is enforceable against a Minister;
(b) it is protected by a scheme, statutory or otherwise, established under any jurisdiction, such scheme being one which the court is satisfied gives protection equivalent to the scheme established under section 213 of the Financial Services and Market Act 2000 of the United Kingdom; or
(c) it is subject to a guarantee given under Article 5(2) by the Minister for Treasury and Resources in respect of that particular order."
11. Article 4(8) goes on to provide for the variation of PPOs:
"4 (8) A person who has an interest in the making or receipt of a payment under a periodical payment order may apply to the court for variation of the provisions of the order on the ground that there has been a material change of circumstances since the order was made."
12. Article 4(10) provides for the making of regulations determining when there has been a material change of circumstances:
"4 (10) For the purposes of paragraph (8), the States may, by Regulation, make provision for determining when there has been a material change of circumstances and when an application can be made under that paragraph including, without prejudice to the generality of the foregoing, provisions for -
(a) factors to be taken into account in determining whether there has been a material change of circumstances;
(b) any period of time that must elapse before an application or subsequent application is made, with reference to such factors as may be specified in the regulations, including the nature of any change of circumstances or otherwise;
(c) when the leave of the Royal Court is required to make an application, whether in all circumstances or in such circumstances as may be specified in the Regulations;
(d) when the provisions of a periodical payment order may or must limit the circumstances in which an application under paragraph (8) may be made."
No regulations have been made and there is no indication that the making of regulations is under active consideration.
13. The decision as to whether the continuity of payments under PPOs is reasonably secure is not a matter for this Court, but for the trial court when deciding to make the PPOs, but it is a factor that a delegate would take into account in deciding whether to accept an offer to compromise a personal injury claim. At the time the Representor's application first came before the Court on 21st January 2021, the proposed order and scheduled settlement agreement had not yet been drafted, and it was necessary for the Court to see and understand the provisions relating in particular to the PPOs. Furthermore, the offer to pay Zac's legal costs to be taxed if not agreed left open the extent to which costs that have been incurred would be met by the Defence Insurers and therefore the extent to which Zac would have to contribute to his own costs out of the lump sum. The Representor was therefore directed to use her best endeavours to agree the amount of costs Defence Insurers would pay and to ascertain the amount of costs that had been incurred by Zac so that the extent of any contribution that Zac would have to make to his own costs could be ascertained.
14. When the matter came back before the Court on 3rd March 2021, the Representor had negotiated the amount of legal costs that the Defence Insurers would pay and a helpful discount in the fees charged by the law firms that had acted for Zac over the course of the proceedings. The contribution to be made by Zac out of the lump sum was, therefore, crystalised and amounted to some 14% of the total costs, an amount which the Court agreed was reasonable.
15. The Court was also provided with a proposed draft order and scheduled settlement agreement. In outline:
(i) The PPOs would be paid for Zac's lifetime, and would be equal to their present-day value, to be adjusted annually in accordance with the Jersey Average Earnings Index.
(ii) The PPOs would cover Zac's costs of care and case management and also his delegate's fees.
(iii) Zac and/or the Defence Insurers could apply under Article 4(8) of the 2019 Damages Law for variation of the PPOs on the grounds of a material change of circumstances.
16. Although the security of the PPOs was ultimately a matter for the trial court, we noted the following:
(i) The Defence Insurers were underwriters at Lloyds of London ("Lloyds"), in this case Syndicate 510.
(ii) The Defence Insurers had agreed to be responsible for and to make the payment of all of the settlement monies including the PPOs, which it agreed could be enforced directly against it.
(iii) Although not a party to the proceedings, the Defence Insurers were a party to the settlement agreement attached to the proposed order and bound by it.
(iv) The statement of William O'Connor, a qualified solicitor and manager of the litigation and enforcement team at Lloyds, showed that in the unlikely event of the members of Syndicate 510 being unable to meet their liabilities out of their own capital resources, Lloyds held "Funds at Lloyds" in the name of each member as an additional layer of security for policyholders. If all of those funds were exhausted, with the Syndicate thus being in default, the Lloyds Central Fund would form the third line of security for policyholder protection. Payments out of this fund would be made on a discretionary basis, but the default position would generally be that Central Fund would respond if called upon. It currently holds assets in excess of £2.4 billion. If that failed, the obligation to pay the PPOs would be covered under the Financial Services Compensation Scheme ("FSCS"), which would satisfy any liability to the level of 90% of the PPOs, because the liability in this case is not a liability "subject to compulsory insurance" as defined by the PRA Insurance Rules governing that Scheme. In the event that the FSCS paid 90% of the PPOs, the remaining unsatisfied portion of 10% could be enforced against the Motor Insurance Bureau, pursuant to the MIB agreement with Jersey dated 20th September 2000.
In the light of this and from the perspective of the Representor it was reasonable for her to regard the payment of the PPO's as reasonably secure, subject of course to the trial court that will make the order also being satisfied.
17. The Court noted that in the case of The Representation of Dionne Gilbert, [2019] JRC 158 at paragraph 9, counsel advising on the facts of that case had advised against PPOs, because in their view, a lump sum would give the plaintiff in that case more certainty. It was noted that no regulations had been made under Article 4(10) and they felt there was considerable uncertainty about PPOs, with a risk of a downward variation if the plaintiff's position improved.
18. In this case, both counsel saw considerable advantage to Zac with PPOs under the 2019 Damages Law. In England, the relevant statute restricted the grounds upon which variation could be ordered, namely in the event of a serious deterioration or amelioration in the person's medical condition. Article 4(8) of the 2019 Damages Law gives this Court a much wider discretion, providing for variation on the grounds of any material change in circumstances which could extend, for example, to economic, as well as medical changes. In their view, any regulations drawn up under Article 4(10) would be unlikely to follow the English statutory provisions. Furthermore, if regulations were proposed, they would expect Zac's delegate to be consulted, and would not expect any restrictions being imposed with retrospective effect.
19. As counsel observed, the coming into force of the 2019 Damages Law took away with one hand but gave back with the other. Under Article 2, it imposed a statutory discount rate of 1.8%, which resulted in a huge fall in the multipliers applicable to Zac's claim, significantly reducing its value. However, the enactment of a discretionary power to vary PPOs upon any material changes in circumstances since the order was made, in their view provided a much fairer mechanism to see that Zac's compensation is no more and no less than he will require to meet his needs. There are two principal reasons why this was so and why their preference was always for a compromise which provided for PPOs:
(i) The first was life expectancy; the evidence was that Zac's life has probably been shortened by a few years, but if Zac outlives those expectations, then he will continue to have an income stream to pay for his ongoing needs.
(ii) The second was the uncertainty surrounding any assessment of Zac's future needs and the difficulty in attempting to predict future fluctuations in those needs and then to capitalise the same in monetary terms.
20. Furthermore, the costs of Zac's delegate were linked to fluctuations in his life. If there were significant increases in his care regime, then increases in the delegate's fees in dealing with the same were inevitable.
21. Under Article 3(1)(c) of the 2016 Capacity Law, decisions taken by the Representor as delegate have to be made in Zac's best interests. Pursuant to Article 6(3), that includes ascertaining his wishes and feelings. Whilst the Representor did not believe that Zac had the capacity to understand or weigh up the information relevant to the decision to be made regarding the proposed offer, she and another member of her firm had attended upon Zac with Zac's case manager, when the issues were explained to him in a simplified manner. He agreed that the offer should be accepted and, whilst in the Representor's opinion, he had sufficient capacity to understand that a settlement needed to be reached, he was not able to understand the issues involved. He does not have any family or close friends who have had an involvement in his claim with whom it would be suitable to consult with about the decision.
22. There was no question in this case as to the good faith of the Representor and we were satisfied that her decision had not been vitiated by any conflict of interest. As to whether the decision to accept the offer was one of a reasonable delegate acting in accordance with her duties and obligations under the 2016 Capacity Law, the Representor had the benefit of careful and detailed advice on the proposed settlement from Mr Audland QC and Ms Scott, dated 18th January 2020 (together with a copy of an earlier advice on quantum from Mr Audland dated 4th March 2019) in which they recommended the proposed terms of settlement. The Representor also had a letter recommending acceptance from Mr Rigby dated 18th January 2021 and from Advocate Thomas, also dated 18th January 2021. A number of relevant documents were also appended to the application.
23. In our view, the Representor had retained appropriate legal advice in the conduct of this complex litigation and the offer of settlement of quantum had been recommended by all of the advisers concerned. The Representor's duty was to act in Zac's best interests. and we were satisfied that she had properly and with advice formed the view that the offer should be accepted.
24. The Court therefore blessed her decision to accept the offer and to enter into the proposed order and scheduled settlement agreement in substantially the same terms as those filed with the Court.
Authorities
Capacity and Self-Determination (Jersey) Law 2016.
The Representation of A as delegate for B [2018] JRC 225.
Damages (Jersey) Law 2019.
The Representation of Dionne Gilbert, [2019] JRC 169A