12 Wednesday Mar 2014
On appeal from:  EWCA Civ 397
The respondent was hit by a motorcycle driven by the appellant and suffered a severe head injury. She issued a claim for £50,000 in damages for her injuries. On the day of the trial, the respondent, after legal advice, accepted a settlement of £12,500 plus costs. This settlement was a gross undervalue of her claim, if it was accepted that the appellant’s driving had been negligent. The respondent sought new legal advice and was appointed a litigation friend who claimed the respondent had not have mental capacity at the time she accepted the settlement.
The High Court held that capacity was to be determined by the decisions which the respondent had actually been required to take, rather than those she might have been required to take had the action been different. On this basis she did have capacity. The Court of Appeal ruled that the respondent had to have capacity to conduct the more complicated action which could have been brought and that she did not have that capacity. It was remitted to the High Court who held that her lack of capacity rendered the settlement void.
The appellant appealed to the Supreme Court on both counts, which dismissed the appeals. Regarding the test for capacity, the respondent had to have capacity to conduct the proceedings generally which the claimant has and not that which has been fashioned by her lawyers, and hence the respondent lacked capacity and the settlement consent order must be set aside. Protected parties require protection, not only from themselves but also from their legal advisers. The case was sent for trial.