Masterman-Lister v Brutton & Co (Masterman-Lister v Jewell)

Mental capacity to conduct litigation is issue-specific. The question is whether the person can understand, with appropriate explanation and advice, the matters on which a decision or consent will be required during the proceedings.

Capacity may change with time and context. A person may be capable of conducting and settling a claim while lacking capacity to manage a substantial award. Vulnerability, unwise decisions or the need for advice do not themselves establish incapacity.

Every adult is presumed competent. The person alleging incapacity bears the burden of proof. Actual decisions and their outcomes may provide important evidence, but they are not conclusive. Courts should investigate capacity promptly where there is reason for concern and will usually require medical evidence.

Masterman-Lister v Brutton & Co (Masterman-Lister v Jewell) concerned two actions arising from serious head injuries sustained by the claimant in 1980. His original personal injury proceedings were compromised in 1987 for £76,000 without court approval. He later sued his former solicitors and sought to reopen the original settlement.

The claimant alleged that his cognitive impairments had made him a patient within RSC Order 80 and subsequently CPR Part 21. If so, questions arose about the validity of the settlement and the limitation defence to his solicitors' negligence claim.

Wright J tried the common preliminary issue and found that, since 1983 at the latest, the claimant had been capable of managing and administering his property and affairs. The claimant appealed. The central issue was the proper test for litigation capacity and whether the judge had correctly applied it to the medical, documentary and lay evidence.

1. Appeals dismissed unanimously. Kennedy LJ delivered the leading judgment. Potter LJ agreed and also agreed with Chadwick LJ's additional analysis. Chadwick LJ agreed that the appeals should be dismissed.

2. Capacity is presumed in every adult, and the burden remains on the person alleging incapacity. Earlier incapacity does not generate a presumption that incapacity continued. Treating a person as a patient restricts important civil rights, including the rights to litigate personally and to compromise proceedings without court approval.

3. The test is issue-specific and must be applied to the nature and complexity of the particular transaction. For litigation, the inquiry is whether the party can understand, with appropriate explanations from legal advisers and other experts, the issues on which the party's decision or consent is likely to be required. Relevant abilities include recognising a problem, obtaining and instructing an adviser, understanding and retaining material information, weighing that information, and communicating or giving effect to a decision.

4. A person may possess capacity to conduct and compromise litigation while lacking capacity to administer a large award. Capacity to compromise requires an understanding that compensation must be managed for the future. It does not require the claimant personally to understand or perform every investment decision. The reasoning in White v Fell and Kirby v Leather was consistent with that approach.

5. Capacity concerns ability rather than the wisdom of an actual decision. Rational outcomes do not prove capacity, and rash or imprudent decisions do not prove incapacity. Vulnerability to exploitation and a need for advice are also insufficient where the person can understand and decide the relevant issues.

6. The trial judge had correctly assessed the whole of the evidence. He recognised the claimant's serious memory deficit and impaired executive functioning but was entitled to find that the claimant could recognise significant problems, obtain advice and make the necessary decisions. The claimant had therefore been capable of managing and administering his property and affairs since 1983 at the latest.

7. Where capacity is reasonably suspected, the court should investigate it at the first convenient opportunity and will almost always require medical evidence. The final decision belongs to the court. Kennedy LJ added that CPR rule 21.3(4) permits retrospective regularisation of steps taken without a litigation friend. Good faith and the absence of manifest disadvantage will ordinarily favour regularisation, although each case depends on its facts.

8. Chadwick LJ further observed that it was unnecessary to decide whether RSC Order 80 rules 10 and 12 applied where a claimant had conducted proceedings personally in contravention of rule 2. The assumption that an unapproved compromise must automatically be set aside might therefore be ill-founded.

• Court of Appeal: The claimant's appeals were dismissed unanimously. The preliminary determination that he had possessed the relevant capacity since 1983 at the latest was upheld: [2002] EWCA Civ 1889.

• Queen's Bench Division: Following a lengthy trial of the preliminary issue, Wright J held that the claimant had been capable of managing and administering his property and affairs since 1983 at the latest. No citation is stated in the judgment.

• Master: On 29 March 2000 Master Murray ordered the common preliminary issue to be tried in both actions.