David Forsyth v Craig Howson & Anor

The High Court’s inherent jurisdiction may be used to approve a settlement involving a claimant whose litigation capacity is uncertain, but only where there is good reason to invoke it and the court can conduct an appropriate propriety check equivalent to approval under Part 21.

Those conditions are not met merely because defendants seek finality against the possibility that a settlement may later unravel. Where detailed and unanimous medical evidence supports litigation capacity, the claimant opposes approval, and the settlement was accepted against legal advice, the court should not impose an approval process designed to protect a person who does not require or want that protection.

The claimant suffered serious injuries, including a traumatic brain injury, in a collision with the first defendant’s car. Liability had been determined at 25 per cent of damages. He accepted the defendants’ Part 36 offer of £250,000, despite his counsel and solicitor considering it too low.

The medical evidence was unanimous that he retained capacity to conduct litigation, although there was disagreement about his capacity to manage substantial financial sums. The defendants sought approval of the settlement under the High Court’s inherent jurisdiction, against the claimant’s wishes, to guard against a later finding that he lacked capacity to accept the offer.

1. The application was dismissed. The court declined to approve the settlement under its inherent jurisdiction.
2. The authorities establish a two-stage inquiry. First, the court must be satisfied that there is a good reason to invoke the inherent jurisdiction. Secondly, it must be in a position to carry out an appropriate propriety check equivalent to the protection supplied by approval under Part 21. The latter normally requires material equivalent to that required by CPR 21.10(3), including legal advice on the merits under CPR 21.10(3)(h).
3. Acceptance of settlement proposals and a Part 36 offer forms part of the conduct of proceedings. A person lacking capacity for those decisions would lack litigation capacity and be a protected party. However, the evidence of two neurologists and two neuropsychologists was clear and consistent that the claimant had litigation capacity. Disagreement about his financial capacity did not itself establish doubt about his capacity to conduct the proceedings.
4. The court had no legal opinion on the merits of the settlement and therefore could not perform the required propriety check. A neutral note prepared by the defendants could not replace advice from the claimant’s own legal team, which alone had access to privileged conferences and the full range of relevant considerations.
5. The claimant’s opposition was material. It was inappropriate to impose a protective process on a claimant whom the experts agreed had litigation capacity. The risk of the settlement unraveling was small, and approval would in any event carry a significant risk of refusal because the offer had been accepted against counsel’s advice. If the claimant later proves to have lacked capacity, the settlement can be set aside and any subsequent approval application can proceed conventionally under Part 21.