Council loses appeal over indemnity costs order in Court of Protection case

A local authority has failed to overturn an indemnity costs order handed down in a long-running case in the Court of Protection.

The case of Manchester City Council v G, E and F [2011] EWCA Civ 939 centred on E, who was born in September 1990 and suffered from tuberous sclerosis. He has associated physical problems and serious learning difficulties that cause significant social and communication problems. His expressive and receptive language skills have been assessed as those of an 18-24-month old child.

E came from a troubled family. He was first placed with F in respite care in 1995 and accommodated with her on a full-time basis under section 20 of the Children Act 1989 in 1999.

In the High Court Mr Justice Baker said it was “beyond argument” that E had been treated and regarded himself as a member of F’s family. However, on 7 April 2009 the council removed E and placed him in a residential establishment called the V Unit.

The principal cause of the removal was a report from E’s school that something E had said about “don’t lock the door” and mention of a wardrobe suggested that he might be sleeping in the wardrobe. There had also been an incident while E and F were on holiday, although there was considerable dispute about what had occurred.

On 11 June 2009 F was told E would not be returning home. On 15 June he was moved to another residential establishment, Z Road. His behaviour became of sufficient concern to administer drugs, including a very strong anti-psychotic drug.

F was not involved in decision-making about E after his removal, and was only permitted to see him five months later. In November 2009 G (E’s sister) filed an application in the Court of Protection.

“Extraordinarily” – in the words of Lord Justice Hooper in the Court of Appeal – Manchester took the position that its conduct in removing E from F in the way that it did was lawful. It only formally abandoned that position on day one of the main hearing.

Mr Justice Baker summarised in his costs judgment his findings in the main judgment (which followed a 7-day hearing):

• E lacked capacity to make a decision as to where he should live;
• The local authority in the area where he lived wrongfully deprived him of his liberty and infringed his rights under Article 5 of the European Convention on Human Rights by placing him on 7 April 2009 at the V Unit without seeking authorisation under the Deprivation of Liberty Safeguards and Schedule A1 of the Mental Capacity Act 2005 or an order of the Court of Protection; and by subsequently placing him at Z Road without seeking an order of the court; and
• The same local authority had infringed his rights under Article 8 of ECHR, when they placed him at the V Unit, by removing him from the care of F without proper authorisation; by further failing to give any or any adequate consideration to his family life with F at the time of the removal or for many months thereafter; failing adequately to involve F in the decision making process about E’s future, and restricting contact between E and F for several months after his removal.

The Court of Appeal cited the strong language used by the judge to describe Manchester’s failings: “blatant errors”, “lamentable”, “deplorable”, “grave” and serious”.

Mr Justice Baker concluded that the case was one in which he should depart from the general rule set out in rule 157 of the Court of Protection rules that there should be no order for costs.

The judge accepted that some form of investigatory process, almost certainly involving court proceedings, would have been required. However, he said the hearing would have been significantly shorter and the issues less complex if Manchester had followed the proper course of action in the case. In particular, the best interests analysis would have been less complicated than it was. G’s role would also have been peripheral.

Mr Justice Baker ordered that Manchester City Council should pay the costs of G, F and E, including pre-litigation costs, up to and including the first day of the hearing before him on 14 January 2010 on an indemnity basis.

The judge also said the local authority should pay one third of the costs of G, F and E from that day up to and including the hearing on 6 May 2010 on a standard basis. Costs were to be subject to a detailed assessment, if not agreed.

Manchester City Council appealed, arguing that the judge should not have departed from rule 157 and there should have been no order apportioning costs. Its counsel said that if that was wrong, then a limited order against the local authority was appropriate.

The Court of Appeal upheld Mr Justice Baker’s ruling. Giving the judgment of the court, Lord Justice Hooper said he agreed with various comments made by the judge, including that:

• a submission that local authorities would be discouraged from making applications if a costs order was made in this case was “a thoroughly bad argument”.  The opposite was in fact the truth
• It was only local authorities who break the law, or who are guilty of misconduct that falls within the meaning of rule 159, that have reason to fear a costs order
• Local authorities who did their job properly and abide by the law had nothing to fear
• The Court of Protection recognised that professional work in this very difficult field often involved very difficult judgments and decisions. “The Court is not going to impose a costs burden on a local authority simply because hindsight demonstrates that it got those judgments wrong.”

Lord Justice Hooper said the judge had “rightly” rejected the argument that a costs order should not be made because the legislation was new and complex (and so large numbers of professionals at the council were uncertain as to the meaning of ‘deprivation of liberty’). The judge was also rightly of the view that Manchester’s actions in the case would have infringed E’s Article 5 and 8 rights under the old law as well as the Mental Capacity Act.

The Court of Appeal backed Mr Justice Baker’s finding that the costs of preparing for the issue of whether E should be permitted to return to F’s care were considerably enhanced by Manchester's actions. “In my view the judge was not only entitled to make that finding but driven to it,” Lord Justice Hooper said.

He added that Mr Justice Baker was entitled to reach the conclusion that Manchester’s conduct amounted to a “significant degree of unreasonableness” so as to give rise to liability for indemnity costs.

Lord Justice Hooper also backed the judge’s approach to costs in relation to the 6 May 2010 hearing.

Commenting on the ruling, Liz Bruce, Manchester City Council's Director of Adult Services, said: "We note the ruling of the court regarding the awarding of costs. As we said at the time of the original ruling, we strive to make good professional judgements and offer the best support to vulnerable adults and families we can, but this case illustrates how difficult a job that can be.

"We had to act after serious concerns were raised about this young man's welfare. It wasn't an easy decision to keep E in the home where he was receiving respite care, but his welfare was our primary consideration. While we stand by our decision to keep E where he was, the court made it clear in its ruling last year that we made serious mistakes in the way we went about it. We regret this and have now put in place measures so that in future similar cases we will follow the correct procedures."

Philip Hoult