The High Court has issued a straightforward interpretation of the law when it comes to personal injury capital managed by a Court of Protection deputy and an individual's eligibility for social care provision, writes Donna Holmes.
The important case of ZYN, R (On the Application Of) v Walsall Metropolitan Borough Council  EWHC 1918 (Admin) confirms that all personal injury compensation funds are to be treated as ‘disregarded capital’ for assessing eligibility to means tested benefits and social care provision where those funds are managed through a Court of Protection appointed Deputy. This includes where the terms of the Court’s Order enable a Deputy to access funds to benefit P generally without the Deputy having to report back to the Court for further authority or guidance.
This case confirms what Personal Injury and Court of Protection practitioners had long believed in relation to the role of Deputies appointed by the Court of Protection – that a Deputy is subject to the Court of Protection’s ongoing supervision and that the powers exercised by a Deputy are delegated to him by the Court of Protection with the Deputy being, effectively, an Agent of the Court of Protection.
A Deputy is a person appointed by the Court of Protection to best manage the financial affairs of a person lacking the necessary mental capacity to manage their affairs for themselves. The person lacking capacity is known as ‘P’.
So what does this mean?
This case means that personal injury lawyers, Deputies and families caring for P can breathe a sigh of relief in the knowledge that the funds awarded through a personal injury claim to meet P’s care and other needs, over and above those needs provided through state benefits and support, remain protected for the purposes it was intended for – making sure that P has the best possible opportunity for maximising their quality of life.
It also means that Deputies can safely invest funds under their ‘control’ so as to generate the best and most appropriate level of return for P – e.g. through an appropriate investment portfolio in P’s name, acting through their Deputy, and can access funds authorised by the Court without breaching the ‘wrapper’ of protection afforded by statute for personal injury funds administered by the Court of Protection.
There is no need for funds to be held in the Court Funds Special Account simply to ensure that the capital does not lose its protective wrapper against assessment for means tested benefit purposes. This in turn means that funds can work harder for P and hopefully do more to improve their quality of life. With Interest rates generally at historically low rates and interest rates on funds held within Court Funds Office Special Account earning just 0.5% interest per year, this is welcome news.
A case was brought by way of a judicial review by the legal representatives of ZYN, following a decision by Walsall Council that, because ZYN’s Deputy was managing her personal injury damages award, she should meet the costs of social care provided by that council, despite the fact that the law stated that personal injury funds ‘administered on behalf of a person by the High Court or the County Court under Rule 21.11(1) of the Civil Procedure Rules 1998 or by the Court of Protection’ are to be classed as disregarded capital.
Walsall Council contended that the wider powers and discretions afforded to Deputies appointed since the implementation of the Mental Capacity Act 2005 meant that the Court of Protection no longer administered funds for P – rather the Deputy was ‘merely’ an agent of P. The council was particularly concerned about the Deputy’s authority to withdraw the sum of £50,000 each year without needing to go back to the Court for specific guidance on how that amount of money was to be spent for the benefit of P and contended that this meant that those funds in particular had left the ‘control’ of the Court of Protection.
Following detailed analysis of the law and its construction as both a matter of legislative interpretation and use of the English language, the judge (Leggatt J) found that any other interpretation of the Mental Capacity Act 2005 and its implications for P would be irrational. The judge therefore found that
- Deputies are agents of P, but their role is one that administers P’s affairs through the Court of Protection;
- All personal injury funds held by Deputies are disregarded capital in terms of assessing means tested benefits and services – including those funds authorised to be withdrawn each year and spent at the Deputy’s general discretion for the benefit of P; and
- Where possible, legislation and the role of Deputies and the Court of Protection should be considered in a common sense manner, with words being given their usual meaning against an understanding of the world in which the decision is being made – which may of course be different to the world in which legislation itself was initially conceived.