Administering personal injury damages: deputyship or trust?

The Court of Protection (COP) recently considered in Watt v ABC [2016] EWHC 2532 (COP) whether it would be more appropriate for personal injury damages to be held and administered through a deputyship or a trust. Whilst such issues have been explored in previous cases, Charles J’s judgement provides a few useful pointers.

The facts 

ABC had been awarded personal injury damages of around £1.5 million following proceedings which had called into question his capacity to manage his own property and financial affairs. However the issue of ABC’s capacity was not determined during those proceedings as ABC had been represented by a litigation friend (ABC also had a deputy) who it seems had taken the view that ABC simply lacked all relevant capacity. When the matter subsequently came before the COP to consider whether the personal injury compensation would be better administered by way of a deputyship or a trust, it was noted that the litigation friend’s assumption that ABC lacked all relevant capacity had not necessarily been justified.

Charles J sitting in the COP made it clear that the issue of capacity is very much time and task specific and whilst, on the whole, ABC lacked the capacity to make decisions in respect of his property and finances, he may from time to time have some capacity to make such decisions himself with (and even sometimes without) appropriate support. It was also highlighted that there was a possibility that ABC might regain capacity at some point in the future however this was unlikely to be the case.

Following on from that, Charles J referred to the case of SM v HM [2012] Med LR 449 which is widely regarded as the leading authority that a deputyship is always the starting point when deciding how best to administer personal injury damages where the claimant lacks capacity. However Charles J rejected this and stated that he did not agree with this premise.

Instead, he noted that it is important to consider all of the relevant factors before choosing between a deputyship and a trust. In particular, litigating parties need to properly evaluate the advantages and disadvantages of both a deputyship and a trust in the context of the claimant’s specific circumstances, to include an assessment of what the claimant has and does not have the capacity to decide for themselves and any factors to which they may be particularly vulnerable.

Commentary 

The judgement in this case makes it clear that, despite the comments made in SM v HM there is no “one size fits all” approach when dealing with capacity issues and the administration of personal injury damages. As such, a deputyship should not necessarily be regarded as the starting point in every case.

Rather, decisions as to whether a deputyship or a trust should be used will need to be determined on a case by case basis following a holistic assessment of all relevant factors, to include an assessment of which mechanism is likely to work better in P’s best interests. The key therefore is to weigh up and balance the pros and cons of each mechanism in all the circumstances of the case.