Defendant Caught In Compromising Position

Setting aside Compromise Agreements where the Claimant is a protected party

Dunhill v Burgin (2014) UKSC18

Background

The Claimant suffered a severe closed-head injury and soft tissue injuries to her leg when she stepped out from between parked cars on a dual carriageway and was struck by a motorcycle driven by the Defendant.

The Claimant obtained a report from an expert in Accident & Emergency medicine. There was no psychiatric evidence, despite reference in the documentation to various psychiatric issues.

The case was listed for trial on the issue of liability. When one of the Claimant's witnesses did not arrive at Court, the claim was compromised for GBP 12,500, plus costs. This settlement was recorded in a Consent Order and sealed by the Court.

The settlement was a gross undervaluation of the Claimant's claim which the Defendant and Claimant later estimated as being worth (on a full liability basis) around GBP 800,000 or over GBP 2 million respectively. There was no suggestion that at the time of original settlement the Defendant either knew or ought to have known of the Claimant's lack of capacity however.

Nearly six years after the Consent Order was made, the Claimant commenced professional negligence proceedings against her former solicitors.

That action was stayed pending the hearing of an application made in the original proceedings seeking a declaration that the Claimant did not have capacity at the time of settlement, so that the Consent Order should be set aside.

The Supreme Court was required to answer two questions, namely:

What is the test for deciding whether a person lacks the mental capacity to conduct legal proceedings on his/her own behalf (so that a litigation friend is required)? What happens if legal proceedings are compromised without it being recognised that one of the parties lacks capacity? Findings

On the first question the parties agreed that the issue of capacity was to be decided by asking if the Claimant had capacity to make decisions likely to be required of her in the course of "the proceedings" - Mastermann Lister v Brutton & Co [2003] 1 WLR 1511 applied.

However, the Claimant and Defendant disagreed as to whether or not "the proceedings" were those which the Claimant had actually brought, or whether the test should be the proceedings that should have been brought had her lawyers given her correct advice. If it was the latter, the parties agreed that the Claimant did not have capacity to conduct the larger...