Bailey v Warren

A court may retrospectively approve a compromise of a claim made by a person who is, or is later proved to have been, a patient, even where the current litigation friend and legal advisers oppose it. Under Civil Procedure Rules 1998 Part 21, approval requires the court’s own assessment of the patient’s interests. That assessment may take account of good faith, litigation risk, the fairness of the compromise and finality. Approval of an existing compromise does not amount to imposing a compromise upon the patient.

The court differed on whether capacity for a pre-action liability compromise should be assessed by that compromise alone or by the contemplated litigation as a whole. That difference did not affect the result because the compromise properly merited approval.

Bailey v Warren concerned a pedestrian who suffered serious brain injury in a road traffic accident. Before proceedings, his solicitors accepted a compromise under which liability was apportioned equally between him and the driver. Judgment was later entered on that basis.

After medical evidence raised concerns about capacity, a litigation friend was appointed. Holland J held that the claimant was a patient when judgment was entered and for the future conduct of the complex quantum claim, but not when he agreed the liability compromise. He approved the agreement and directed that the judgment stand.

The claimant sought permission to appeal, contending that capacity could not be separated between liability and quantum, that he lacked capacity in November 2000, and that the compromise could not be retrospectively approved.

1. Permission to appeal was granted, but the appeal and the respondent’s notice were dismissed. The 50:50 compromise of liability was approved and the judgment founded on it was to stand.

2. The court accepted that capacity under CPR Part 21 is issue-specific. Lady Justice Hallett considered that the relevant transaction was the relatively simple compromise of liability. Lady Justice Arden and Lord Justice Ward considered that, where litigation was contemplated, capacity should be assessed by reference to the conduct of the contemplated proceedings as a whole. The difference did not require a retrial because the court would approve the compromise in any event.

3. Lady Justices Arden and Hallett and Lord Justice Ward agreed that the court could retrospectively approve the compromise. The court was not prevented from doing so because the claimant’s current litigation friend and legal advisers opposed it. Re Birchall [1880] 16 Ch D 41 concerned forcing a litigation friend to make a compromise; here an agreement had already been made and the court was deciding whether to approve it.

4. Lady Justice Arden and Lord Justice Ward held that a compromise of all or part of a patient’s claim, including a pre-action compromise, has no legal effect until approved under CPR 21.10. They applied Dietz v Lennig Chemicals Ltd [1969] 1 AC 170 and Drinkall v Whitwood [2003] EWCA Civ 1547. The ordinary contract rule concerning an unknown lack of capacity did not displace that procedural protection.

5. Approval depended on the court’s independent judgment of the claimant’s interests. It was proper to consider the parties’ good faith, the risks of contributory negligence, the range of possible apportionments, the claimant’s and his family’s original support for the compromise, delay, prejudice to the driver, and finality in litigation. On the available material, the compromise was not such as to warrant reopening the liability issue. Holland J’s observations on apportionment did not bind any later professional-negligence claim against the former advisers.

• Court of Appeal (Civil Division)—permission to appeal was granted, but the appeal and respondent’s notice were dismissed. The compromise and judgment based on a 50:50 liability apportionment were approved: [2006] EWCA Civ 51.
• High Court—Holland J held that the claimant was a patient for the future conduct of the quantum claim and when judgment was entered, but not when liability was compromised in November 2000. He approved the compromise under CPR 21.3(4) and directed that the judgment stand.