State of play: compensation awards and advance decisions

Re AK (Gift Application)

Senior Judge Lush’s judgment is noteworthy in this case because it demonstrates the way in which the court can apply its own pragmatic solution to a finely balanced funding conundrum.

The application concerned AK, a boy then aged 11, who suffered from cerebral palsy because of clinical negligence at birth. He was awarded over £1m as a lump sum with periodic payments of £140,000 a year, increasing at five-yearly increments. The structure of the award reflected the fact that it was unlikely AK would live beyond 15.

At the time of the application, AK had significant surplus income, largely because his mother cared for him at a much lower cost than that envisaged in the compensation award.

The deputy for AK applied for a gift of £150,000 to be made to his parents so that they could contribute towards building a property in Pakistan, suitable to AK’s needs. AK and his family are from Pakistan where they retain the majority of their family and had recently visited for four months.

AK benefits from the climate in Pakistan, in particular curbing respiratory conditions that he has a habit of developing, and it was intended for various reasons that the family would spend several months a year in Pakistan. A lump sum was sought, rather than a more formal assessment of the cost of providing a property, because of cultural reasons.

The official solicitor as respondent on behalf of AK argued that such a gift was inappropriate because there were no guarantees that a lump sum would be used to support AK. It was also argued that before any gift was authorised, the court would require detailed and costed proposals of the work to be done.

The senior judge set out the law relating to gifts, and the best interests checklist at section 4 of the Mental Capacity Act 2005, which was not conclusive in this case. He therefore applied a ‘balance sheet’ approach of advantages and disadvantages, which include: either of AK’s parents predeceasing or becoming incapable of caring for him, in which case his care needs would increase significantly; his parents separating or divorcing and the need to resort to funds for
a property in the UK; political factors in Pakistan deterring the family from travelling there; a deterioration in AK’s condition so he could no longer travel; more extensive and expensive care required from any deterioration; and the possibility that AK might live beyond the expected age of 15, so that his capital should be protected.

The case was distinguished from Re JDS; KGS v JDS[2012] EWHC 302 CoP in which a gift in favour of the parents of a young man with a clinical negligence award was dismissed because the purpose was reducing inheritance on death, which was not the reason for the award.

The point of interest in this case is the way that the court solved a difficult problem using a rather appealing solution, which neither of the parties had put forward. Lush SJ decided that it was indeed in AK’s best interests to allow his parents to have the funds requested, but not as a gift. Instead, he ordered an interest-free loan of £150,000 repayable at a rate of £15,000 a year.

He also authorised the deputy to make annual gifts of £15,000 to AK’s parents to meet those payments, if there was insufficient income. This should have another unseen effect: the judge anticipated that the annual £15,000 gifts would fall within the normal expenditure out of income exemption for AK, and be free of inheritance tax on the facts.

Nottinghamshire Healthcare NHS Trust v RC

Sometimes correctly applying the law creates starkly contrasting results, such as the positive outcome in Re AK, and the likely outcome for the patient in this case. Here, the court considers the balance to be struck between the legal principle that everyone has the right to harm or kill themselves, and the circumstances in which treatment can be imposed on adults without their consent.

At the time of the application, RC was 23. Although he was the son of Jehovah’s Witnesses, he was not brought up as such as he was taken into care at age four. He had been diagnosed with antisocial and emotionally unstable personality disorders, had a repeated history of self-harm, and suffered from thromboses for which he was prescribed the anticoagulant warfarin.

In 2012, RC was sentenced for a serious offence. In August 2013, while in prison, he embraced the Jehovah’s Witness movement.

RC slashed the major artery in his arm and was admitted to a secure psychiatric hospital in February 2014. He continued to try to self-harm and refused consent to blood transfusions on religious grounds.

On 4 April 2014, RC signed an advance decision by which he decided that no transfusions of blood or primary blood components should be administered to him in any circumstances, even if his life was at risk.

In giving his judgment, Mr Justice Mostyn covered a number of points that are useful for the practitioner.

The first is in deciding when an adult lacks capacity and it is in their best interests to have treatment imposed pursuant to the Mental Capacity Act 2005 (MCA). Capacity is to be assumed unless it can be shown otherwise (section 1(2) MCA) and, therefore, the court must apply cautiously the effect of religious beliefs on whether or not the patient could properly weigh up the advantages of treatment.

The judge placed little emphasis on RC’s religious faith and found that, on the evidence, he did have the necessary capacity to refuse treatment, and further that the advance decision was otherwise valid having fully complied with the witnessing requirements under the Act.

The second is over the treatment of an adult detained under section 63 of the Mental Health Act 1983 (MHA). There is a useful comment on the contrast between the way in which a positive decision to impose
non-consensual treatment under that section is susceptible to judicial review, whereas a decision by the appropriate clinician not to impose any treatment has no such judicial scrutiny.

The judge added that in the latter case, where the consequences may prove life-threatening, the NHS trust would be well advised to apply for declaratory relief.

The third is in explaining the way in which the law applies section 63 of the MHA to different conditions, so that it becomes relevant whether the administration of a blood transfusion is treatment of a symptom or manifestation of RC’s mental disorder on the one hand, or treatment of a consequence on the other.

In this case, the judge found on a wider interpretation that the blood transfusion was indeed treatment of a symptom of RC’s disorder (that is the self-laceration) and that section 63 of the MHA applied.

The judge’s conclusion was forceful: “In my judgment, it would be an abuse of power in such circumstances even to think about imposing a blood transfusion on RC having regard to my findings that he presently has capacity [to refuse blood products]. To impose a blood transfusion would be a denial of a most basic freedom.”

Lynsey Colman is an associate at Barlow Robbins

She writes regular case updates for Private Client Adviser