Nottinghamshire County Council v Bottomley & Anor

This is an appeal against the order of His Honour Judge Inglis dated 14 May 2010 dismissing the application of Nottingham County Council (“NCC”) to be joined as an additional party to these proceedings pursuant to CPR 19.2.

After hearing the parties’ submissions, we announced our decision that the appeal would be allowed and we ordered the joinder of NCC. Since the inevitable result of its joinder was the vacation of the impending trial date, we ordered that it be vacated. We said that we should give our reasons subsequently. These are my reasons for deciding that the appeal should be allowed.

The Claimant was born on the 21 December 1993, having suffered hypoxic ischaemia, which resulted in brain damage and associated spastic quadriplegia. The breach of duty alleged against the Defendant was a failure to carry out birth earlier, by caesarean section, and the administration of sytocinon. The Defendant admitted its breach of duty in December 2006. Proceedings were issued in May 2007. On 9 May 2008, Helen Ryan, NCC’s Director of Social Care and Health was appointed litigation friend, in place of Emma’s mother, owing to the fact that the mother was not providing instructions to those acting for Emma. On 30 July 2009 judgment was entered, with damages to be assessed. The hearing of the trial as to damages was listed as a fixture, anticipated to last 7 days, starting on 10 June 2010. A further round table conference was scheduled for 28 May 2010.

Emma is in what is known as “the transition phase” of her care. She is in the care of NCC’s Children and Young People’s Department. During the next 18 months or so she will progress to being cared for by NCC’s Adult Services Department. Consideration is being given to an appropriate care package for her adult life.

NCC’s application to be joined, which was indubitably late, was brought about by discussions with her solicitor in February 2010, and his letter dated 1 March 2010, enquiring whether NCC would seek to charge Emma for her past care. In addition, when considering her future placement, consideration was given as to whether NCC would be able to take her damages into account when deciding whether to charge her for her future care.

Since NCC may be affected by the amount and form of any settlement or judgment on Emma’s claim, on 23 April it applied to be added as a party. Its application was opposed by those acting for Emma. The position of the Defendant Health Authority was neutral.

NCC based its application on three grounds. First, it contended that it could and would call evidence as to Emma’s future placement and its costs. Secondly, it sought a declaration as to whether and in what circumstances it would be able to claim reimbursement for Emma’s care from any damages awarded. Thirdly, it contended that it should be heard as to the form of any settlement or judgment, since it would significantly affect the financial liabilities and rights of the local authority.

For Emma, Mr Maskrey QC submitted that it was unnecessary for NCC to be joined for its employees and officers to give evidence. They could be called by those acting for Emma or the Defendant. Secondly, joinder would lead to the trial date being postponed. Thirdly, he submitted that the local authority had no proper status in regard to the issues as to the amount or form of any settlement or judgment.

For the Defendant, Mr de Navarro QC was neutral.

An issue was raised before the judge as to the position of Helen Ryan, arising from what might be a conflict of interests between her employer NCC and Emma. The judge did not deal with that question.

The judge held that the third ground relied on by NCC was determinative. Implicitly, therefore, he rejected the first two grounds. He accepted that the trial date would be lost if he acceded to the application, but if it was otherwise well founded he would have ordered joinder. He held that the local authority had no arguable status to influence the award of damages. He interpreted the reference in CPR Part 41.7 to “all the circumstances” as limited to the circumstances relating to the claimant and the defendant relevant to the question whether an award of damages should be by way of lump sum or periodical payments. The local authority was seeking to be joined for its own financial purposes, and that was not a relevant consideration.

It was common ground that a local authority such as NCC is affected financially by the amount and form of any order or settlement in a case such as the present. In particular, its right to charge Emma will depend on whether a lump sum settlement or judgment is obtained, or whether it is for periodical payments. Income, such as periodical payments, is taken into account and may result in a local authority recovering the cost of care wholly or in part; a lump sum is not generally taken into account, although the income from its investment may be.

It was also common ground that if the appeal were to be allowed, the trial date would have to be vacated. In large part, this is because of the position of the litigation friend, to which I refer below. However, it was not suggested that an adjournment would cause any significant prejudice to Emma, who continues to be cared for by NCC, provided it was liable for the costs thrown away, as it accepted it would be.

For NCC, Mr Bright QC advanced the three grounds referred to above. The principal focus, however, was on the third: the impact of the form of any settlement on the financial rights and liabilities of the local authority.

For the Claimant, Mr Maskrey submitted that, following the decision of this Court in Peters v East Midlands SHA [2009] EWCA Civ 145, in a case such as the present, a defendant cannot contend that the damages for which it is liable must be reduced on account of the statutory liabilities of a local authority. A claimant is entitled to damages on the basis that she will fund her care out of those damages. It follows that it is unnecessary for a local authority to be a party to the claim, and it is not entitled to be heard as to the form of any settlement or award of damages.

For the Defendant, as below, Mr de Navarro QC was broadly neutral.

At the beginning of the hearing, we raised the question of the position of Helen Ryan as litigation friend. My provisional view was that she was subject to a clear conflict of interests. Her duty as litigation friend is to seek the best outcome for Emma. The interest of her employer, and indeed of the department of which she is head, is that the outcome should favour the financial interests of NCC. In the circumstances, NCC would like to see an award in the form of periodical payments, out of which it could be wholly or partly reimbursed to the extent that it becomes or remains liable for the costs of her care following the making of the award and her transfer to an adult placement. If it is necessary for her to be replaced as litigation friend, the trial would have to go off, since application would have to be made to the Official Solicitor for someone to act in Ms Ryan’s place.

Mr Maskrey submitted that it was unnecessary to replace Ms Ryan. She had acted conscientiously to date, and had accepted the advice she had been given on Emma’s behalf. NCC had made it clear that she must act in Emma’s best interests, and she accepted that that was her duty. It would become necessary to replace her if she declined to accept advice, but that had not occurred. However, he accepted that if NCC was joined as a party, Ms Ryan could not continue as litigation friend: her conflict of interests would be manifest.

The fact that Emma’s legal team would like Ms Ryan to remain as her litigation friend is a tribute to her integrity and to the fairness of NCC in dealing with this case. However, I have no doubt that Ms Ryan is subject to a conflict of interests that disqualifies her from continuing in that position. That this is so is made clear by Mr Maskey’s acceptance that if NCC is joined she would have to be replaced. Joinder of NCC would merely make the conflict of interests more obvious. The conflict is already there, as the application below and the appeal to this Court demonstrate. A litigation friend must be able to exercise some independent judgment on the advice she receives from those acting for a claimant, and it was explicit in Mr Maskey’s submissions that she would be expected to accept all the advice she is given. Moreover, it cannot be excluded that the advice given to her on the crucial question as to the form of settlement may be balanced. If so, it would be unfair to expect her to choose that form of settlement that is most unfavourable to NCC. Moreover, the principle that justice must be seen to be done requires that the litigation friend should not be seen as having any such conflict of interests. For this reason alone, therefore, I think that the hearing date of the trial would have to be vacated.

Turning to the question of joinder, I consider that the powers of the Court should be interpreted broadly. Unmeritorious applications to intervene in claims may be refused in the exercise of the court’s undoubted discretion. There has been no agreement as to the amount or the form of any award. There is therefore an issue as to whether it should be a lump sum award or an award of periodical payments. CPR Part 19.2 provides:

The court may order a person to be added as a new party if –

(a)

it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

(b)

there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.

CPR Part 41.7 is concerned with the decision whether to order periodical payments or a lump sum:

Factors to be taken into account

41.7

When considering –

(a)

its indication as to whether periodical payments or a lump sum is likely to be the more appropriate form for all or part of an award of damages under rule 41.6; or

(b)

whether to make an order under section 2(1)(a) of the 1996 Act,

the court shall have regard to all the circumstances of the case and in particular the form of award which best meets the claimant's needs, having regard to the factors set out in Practice Direction 41B.

“All the circumstances of the case” include the effect of the decision as to the form of award on a local authority which may bear wholly or in part immediately or in the future the costs of caring for the claimant.

As was accepted by the Defendant, the complexities of the rules governing the liabilities and rights of local authorities in the present context has led the Court to favour their joinder, with a view to issues as to their position in relation to the claimant being resolved before an award or compromise is made. The line of authorities begins with Bell v Todd [2002] P.I.Q.R. P11, in which there was agreement between the parties that the local authority should be a party so that the difficult issues under the National Assistance Act 1948 and the National Assistance (Assessment of Resources) Regulations 1992 could be resolved so as to enable the claimant and the defendant to agree, in particular, the form of a settlement. Sitting at first instance, in deciding to make appropriate declarations, I said, at paragraph 9, that although no binding settlement had been concluded, the issues were “of immediate and practical importance to the parties” and that “In these circumstances, in my judgment, the Court should assist [the parties] by determining the issues between them and giving them the guidance they seek”.

In Ryan and Liverpool City Council v Liverpool Health Authority [2002] Lloyd's Rep. Med. 23, in circumstances similar to the present, the local authority successfully made an application to be joined so that its rights and liabilities vis-à-vis the claimant could be determined in the context of the claimant’s claim against the defendant health authority. Munby J (as he then was) made the order joining the local authority. He followed Bell v Todd and made a declaration that it was not entitled to take into account payments of income from capital administered by the Court of Protection in consequence of the claimant’s settlement of his claim for personal injury when assessing his liability to contribute to the cost of his residential accommodation.

In Croftonv National Health Service Litigation Authority [2007] EWCA Civ 71 [2007] 1 W.L.R. 923, Dyson LJ, giving the judgment of the Court, said:

109 We therefore allow this appeal. … We now consider that the whole of the direct payments issue should be remitted to the judge for further consideration in the light of this judgment. In view of the difficulty of the relevant legislation and guidance, the size of the care costs and the fact that the claimant will need care for the rest of his life, we think that it would be highly desirable if the council were joined as a party to the proceedings.

Most recently, in Peters v East Midlands SHA [2009] EWCA Civ 145; [2010] Q.B. 48, this Court considered the risk of double recovery if those acting for the claimant, having recovered damages on the basis that the local authority would have no financial liability for her care, might subsequently seek to make a claim against it. Dyson LJ, again giving the judgment of the Court said, at paragraph 64:

64 Mrs Miles has offered an undertaking to this court in her capacity as deputy for the claimant that she would (i) notify the senior judge of the Court of Protection of the outcome of these proceedings and supply to him copies of the judgment of this court and that of Butterfield J; and (ii) seek from the Court of Protection (a) a limit on the authority of the claimant's deputy whereby no application [to the local authority] for public funding of the claimant's care under section 21 of the 1948 Act can be made without further order, direction or authority from the Court of Protection and (b) provision for the defendants to be notified of any application to obtain authority to apply for public finding of the claimant's care under section 21 of the 1948 Act and be given the opportunity to make representations in relation thereto.

The Court concluded that such an undertaking sufficiently removed the risk of double recovery. In my judgment, the fact that such an undertaking was offered demonstrates that the local authority has an interest in the decision of the court as to the award. It seems to me that a local authority is entitled to be heard as to whether an undertaking should be given and as to the content of any undertaking, and to be given notice of any application to the Court of Protection for authority to apply for public funding of the claimant’s care.

In my judgment, the judge erred in deciding that NCC’s concerns as to its financial liabilities are irrelevant. Claims such as the present necessarily are concerned with finance: who is to finance the care needed by the Claimant for the remainder of her life. It follows that this Court must exercise the discretion afresh. The authorities to which I have referred support the proposition that it is desirable for NCC to be joined in these proceedings, and for the reasons I have given I concluded that it should be joined.

As I have already indicated, in the circumstances of this case no real prejudice was caused by the local authority’s late joinder and the vacation of the trial date. The local authority continues to care for her. Lastly, my provisional but strongly held view is that assuming the reasonable conduct of the claim on behalf of the Claimant she should not have any liability for the local authority’s costs.

I agree.

I also agree.