Kenneth Johnston v Financial Ombudsman Service

The Court of Appeal dismissed the appellant's second appeal. The central legal issue was whether the appellant lacked capacity to conduct proceedings under the Mental Capacity Act 2005 and therefore was a "protected party" under CPR Part 21, such that steps taken without a litigation friend were of no effect. The court applied the statutory framework in the MCA 2005 (notably ss.1–3) and authorities on capacity (including the approach in A Local Authority v JB) and held that the presumption of capacity had not been rebutted on the balance of probabilities. The court found the medical evidence relied on by the appellant (in particular the certificate and report of Dr Attavar) defective and inconsistent with later, clearer opinion from Dr Rao; there was inadequate analysis to show inability to understand, retain or use and weigh information in relation to the relevant proceedings. Having rejected the incapacity ground, the court refused permission for the further second-appeal grounds (challenge to statutory immunity and alleged failure to make reasonable adjustments) because they had been abandoned at first appeal or lacked a real prospect of success and did not meet the threshold in CPR r.52.7(2).

Background and parties: The appellant, Mr Kenneth Johnston, brought civil claims against the Financial Ombudsman Service (FOS) alleging breaches of the Equality Act 2010 in respect of failure to make reasonable adjustments and other public‑sector equality duties in the course of FOS handling of complaints about his mortgage. The FOS applied to strike out and/or for summary judgment. DDJ Althaus struck out both claims on 15 December 2021 and ordered costs. The appellant appealed; HH Judge Saggerson dismissed the appeal on 8 February 2023. The appellant sought a further appeal to the Court of Appeal, advancing an additional ground that he lacked capacity at the relevant times and therefore was a protected party under CPR Part 21 and should have had a litigation friend.

Nature of the application: The appellant sought to set aside the DDJ's order on the basis that he lacked capacity to conduct proceedings (so that prior steps were ineffective without a litigation friend), and in the alternative sought permission to pursue other grounds challenging statutory immunity and alleged procedural unfairness (failure to make reasonable adjustments/ground rules hearing).

Issues framed:

• Whether the appellant had lacked capacity to conduct the proceedings at material times (so as to be a "protected party" under CPR 21.1 and for steps taken without a litigation friend to be of no effect under CPR 21.3(4));
• Whether the judge below was wrong on the interpretation and scope of statutory immunity under the Financial Services and Markets Act 2000 and related Equality Act exemptions; and
• Whether the absence of a ground‑rules hearing or other reasonable adjustments rendered the strike‑out hearing unfair, amounting to a serious procedural irregularity.

Reasoning and subsidiary findings: The Court of Appeal undertook a careful review of the statutory test for capacity under the MCA 2005 and the relevant authorities (including A Local Authority v JB, Masterman‑Lister, V v R, Cannon v Bar Standards Board and guidance on evidence in Public Guardian v RI). It assessed the medical evidence: a July 2023 report and a September 2023 certificate from Dr Attavar (opining lack of capacity, and asserting incapacity since 2010) and reports/opinion from Dr Rao (September 2023 and March 2024) which concluded the appellant did not lack capacity and required reasonable adjustments only. The court found material deficiencies in Dr Attavar's evidence (lack of proper instruction, incomplete record review, failure to specify which proceedings were covered, inadequate analysis of how impairments caused incapacity, and an implausible assertion of incapacity since 2010). The court preferred Dr Rao's contemporaneous opinions. The presumption of capacity was not displaced on the balance of probabilities and therefore the appellant was not a protected party; accordingly the nullity argument could not succeed. Having so concluded, the court refused permission to pursue the other adjourned grounds because they had been abandoned at the earlier appeal or lacked real prospects and did not engage the permission criteria in CPR r.52.7(2).

Wider context: The court reiterated the fundamental nature of the presumption of capacity and the protection of unimpeded access to justice; it emphasised the requirement for robust, appropriately instructed and evidenced expert proof to displace that presumption and the role of reasonable adjustments where vulnerabilities exist.

The appeal is dismissed. The Court held that the presumption of capacity under the Mental Capacity Act 2005 had not been rebutted on the balance of probabilities: the expert evidence relied upon for incapacity (Dr Attavar) was deficient and inconsistent with later, clearer evidence (Dr Rao) showing the appellant had capacity and required reasonable adjustments only. Because incapacity was not established, the appellant was not a "protected party" under CPR Part 21 and the argument that prior steps were nullities failed. For the remaining grounds, permission to pursue a second appeal was refused because they were either abandoned at first appeal or had no real prospect of success under CPR r.52.7(2).

DDJ Althaus struck out both claims and ordered costs on 15 December 2021. HH Judge Saggerson dismissed the first appeal and ordered costs on 8 February 2023. HH Judge Parfitt granted permission to appeal on 21 March 2022 (stay of costs pending appeal). Lewison LJ granted permission to rely on new capacity evidence and adjourned other permission questions on 26 September 2024. This Court delivered judgment dismissing the appeal on 8 May 2025 ([2025] EWCA Civ 551).