Who pays (No 2)? Personal injury damages and after-care services under section 117 of the Mental Health Act 1983

November 18th, 2016

In R (Damien Tinsley (by his litigation friend and property and affairs deputy, Hugh Jones) v Manchester City Council and South Manchester Clinical Commissioning Group [2016] EWHC 2855 (Admin), the Administrative Court considered whether a local authority was entitled to refuse to provide after-care services under section 117 of the Mental Health Act 1983 (“the MHA”) when an applicant was in receipt of a large personal injury award, which included an element for the future cost of care. The Judge (HHJ Stephen Davies, sitting as a High Court Judge) held that it was not. A local authority cannot have regard to the claimant’s ability to fund the cost of after-care services from damages awarded to him in a personal injury claim when determining whether to provide after-care services under section 117 of the MHA.

The claimant suffered very serious head injuries in a road traffic accident which left him with an organic personality disorder. He was compulsorily detained in hospital under section 3 of the MHA. After he was discharged, he spent time in a mental health nursing home funded by the local authority and the Clinical Commissioning Group (“the CCG”) under section 117 of the MHA. While he was there, he was awarded damages in his personal injury claim of around £3.5 million, £2.89 million of which represented the costs of future care. In the personal injury proceedings, Leveson J rejected the defendant’s submission that the claimant should not be awarded costs of future care because the defendant was under a duty under section 117 of the MA to provide for his future care needs.

After the personal injury judgment, the claimant left the nursing home funded by the defendant, and his deputy had paid the cost of his accommodation and after-care services out of his damages award. However, the deputy was of the view that the Claimant could not sustain the cost of funding his existing care arrangements, and sought to require the local authority to provide social care as an after-care service under section 117. The local authority refused to do so. It considered that it was not under any duty to provide after-care services in circumstances where it had no reason to believe that the claimant could not continue to pay for his own care using funds derived from the damages he received for further care in the personal injury claim. In other words, the local authority said the Claimant did not have a need for after-care services, because he was able to fund it himself from his personal injury damages.

HHJ Stephen Davies (sitting as a Judge of the High Court) allowed the claim. The defendant argued that:

(1) On a proper interpretation of section 117, a local authority is entitled to take into account, when deciding the question of need, the claimant’s available funds represented by the personal injury damages; and

(2) The court should not permit the claimant (or the claimant’s deputy) to advance a claim for double recovery, which would offend against the law, fairness and common sense.

The judge rejected both arguments.

First, since the House of Lords decision in R v Manchester City Council ex p Stennett [2002] 2 AC 1127, it was clear that section 117 contained no express or implied power to charge for the provision of after-care services. Section 117 services must be provided free of charge regardless of resources. Under statutory regimes where means tested is permitted (e.g. the Care Act 2014), there is an express exclusion of personal injury damages from financial assessment so that they are very substantially ring-fenced from means testing.  It would be anomalous if a claimant under section 117 with personal injury damages available to him could be in a worse position than a claimant under the statutory provisions with means testing, but damages for personal injuries were excluded. Accordingly, the Judge concluded that it is not open to a local authority to refuse to make provision for a person otherwise entitled under section 117 on the basis that the claimant is in receipt of damages for personal injury including for the cost of care.

Second, a claimant otherwise entitled to services under section 117, could not be denied a remedy on the basis that their deputy ought not to be entitled to advance the claim. In Peters v East Midlands Strategic Health Authority [2010] QB 48, the Court of Appeal held that a claimant was entitled to claim the full cost of care from a defendant tortfeasor rather than rely on provision by the local authority, to which she had a statutory right. In personal injury claims, it is reasonable for the claimant to prefer self-funding to provision at public expense. It was then argued that there was a risk of double recovery if statutory funding was subsequently pursued by a deputy, who was under various duties to act in the claimant’s best interests. The Court of Appeal in Peters held that a claimant could not recover twice for the same loss. There was no duty on a deputy to seek full public funding so as to achieve double recovery. It was suggested that a deputy would need to apply to amend the order of the Court of Protection authorizing them to act, so as to obtain the authority of the Court of Protection before making an application for public funding. The deputy in Peters gave an undertaking to seek such an amendment, which the Court of Appeal was satisfied avoided the risk of double recovery.

The defendant in the current case argued that, in a claim for judicial review, the Administrative Court should dismiss the claim on the ground that a deputy seeking to obtain double recovery was acting unlawfully and in breach of duty. The Judge rejected this submission. The Court of Appeal in Peters was not seeking to lay down a general duty on deputies, enforceable by third parties such as local authorities or insurers, not to make applications for state funding unless or until that could be objectively justified by reference to a wholly unforeseen change in the financial position of the person concerned. It is not possible to deny a remedy to a claimant, otherwise entitled to after-care services under section 117, because his deputy may be offending a common law rule as to the assessment of damages in a personal injury claim. The deputy owes various duties to the person lacking capacity, and must act in his best interest. The deputy does not owe duties to the local authority or to the defendant in the personal injury action. It was not for the Administrative Court in a claim for judicial review to seek to police the actions of a deputy. It is for the deputy to decide whether to make the application for statutory services, subject to control by the Office of the Public Guardian or the Court of Protection (subject to the observations of Senior Judge Lush in Reeves that this was not for the Court of Protection to do).

Finally, the judge rejected the local authority’s somewhat ambitious submission that even if the claim succeeded, relief should be refused as a matter of discretion. The Judge held that it was contrary to principle to deny relief if the right to relief had been established  as a matter of fact and law, and none of the recognised circumstances for refusing relief applied. This was not a case where the claimant or his deputy had been guilty of an abuse of process of the court in bringing the claim.

This judgment will no doubt be difficult for cash-strapped public bodies (and no doubt insurers in personal injury claims) to accept. At first glance, there is something unpalatable about a “double recovery” situation, where an individual receives almost £3 million for the future cost of care, yet then demands that statutory services provide the very care for which the damages were awarded. However, as the judge observed, this is a consequence of the fact that section 117 is equated with NHS provision (which is free at the point of need), without creating an exception for successful personal injury claimants. If this situation is to be changed, it can be changed only by Parliament. Parliament could have re-visited this issue when it amended section 117 through the Care Act 2014, but it did not.

While the Court of Appeal in Peters was anxious to stress that deputies are not under a duty to seek full public funding so as to achieve double recovery, this is something that has always troubled me about these kind of cases. A deputy must act in P’s best interests. Surely it is always in P’s best interests to maximize the sums available to P? It seems to me that would require a deputy to apply for the maximum statutory services available, and then topping up, if need be, with the personal injury award. Yet this would lead to a large element of double recovery.

What is the solution? It seems to me there are three possibilities. First, to assume that deputies will act in this way, so that personal injury awards are limited to a “top up” element. I don’t support this, as the tortfeasor then shifts his responsibility onto public services – is that really acceptable in these times of austerity? The individual only needs these services because of the tortfeasor’s wrongdoing. Perhaps Parliament should amend the statutory provisions to allow public bodies to take into account at least the future care element of a personal injury award in assessing need for services. Yet this risks dissipating the personal injury award, and forcing the individual to rely on statutory services alone.  Is a third option perhaps for Parliament to put parameters on the duties owed by a property and affairs deputy, to identify clearly the circumstances in which he/she can properly apply for statutory services when administering a personal injury award which includes an element for the future cost of care?

Joanne Clement

joanne.clement@11kbw.com

Twitter: @joanne_clement

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