The Court of Appeal has ruled that loss of mental capacity does not automatically terminate a client’s Conditional Fee Agreement (CFA). Overturning an initial 2011 Regional Costs ruling, the case sets a precedent for claimants who lose mental capacity and who have previously entered into a CFA.
The Claimant’s initial appeal within the High Court and opposition to the Defendant’s appeal to the Court of Appeal was led by Mark Walmsley, Managing Director of Propus Law (Agents on behalf of Linder Myers LLP, Solicitors for the Claimant).
Delivering judgment in Blankley v Central Manchester and Manchester Children’s University Hospitals NHS Trust  EWCA Civ 18, Lord Justice Richards said that a solicitors’ retainer is not frustrated simply because a claimant suffers a loss of mental capacity and cannot give instructions personally.
The case arose after Diann Blankley suffered cardio-respiratory arrest and anoxic brain damage following an operation in 1999. Acting as her litigation friend, Ms. Blankley’s father instructed Linder Myers Solicitors to pursue a medical negligence claim against Central Manchester and Manchester Children’s University Hospitals NHS Trust.
On regaining mental capacity in 2005, Ms. Blankley entered into a CFA to help fund the claim, which eventually settled in 2010 for £2.6m plus costs. However, in 2007 Ms. Blankley was deemed to have lost capacity to conduct her own affairs again as a result of her injuries.
The Defendant successfully argued before a Regional Costs Judge that Ms Blankley’s further loss of mental capacity automatically and immediately terminated the retainer between herself and her solicitors.
However in 2014, the High Court  EWHC 168 (QB) overturned that decision, stating that: “the possibility that the client will at some point lose mental capacity is plainly a matter which was within the reasonable contemplation of the parties” and that it would be “unjust and unreasonable” to terminate any retainer due to what might be a short period of incapacity. The Defendant appealed against that finding.
Following a hearing in November 2014, the Court of Appeal has now upheld the decision of the High Court.
Lord Justice Richards said: “whilst a solicitor’s retainer is in one sense a personal contract, I very much doubt whether it requires instructions to be given by the client personally even in the general run of cases” and that it must be “commonplace” for clients to give instructions through agents, such as accountants or spouses.
Whilst not having to address the principles within Yonge v Toynbee  1 KB 215, albeit accepting that there was much to be said in favour of a fresh examination or reconsideration of those principles by reason of the comments within Dunhill v Burgin (Nos 1 and 2)  UKSC 18 that the authorities relating to the effect of incapacity in the agency context were “in a state of confusion”, Lord Justice Richards did postulate that “One might at least expect the principle to be qualified so that (i) the solicitor retains authority to act so long as he is unaware of the incapacity and (ii) he retains authority to take steps in consequence of the incapacity………….when he does become aware of it.” He also added “It might also be preferable to talk in terms of “suspension” rather than “termination” of authority, on the basis that the solicitor’s authority is restored if the client regains capacity or a litigation friend is appointed to continue the litigation on the client’s behalf.”
The Defendant’s appeal has now been dismissed.
Commenting on the decision, Mark Walmsley said: “This was a significant ruling that corrected previously held judgments that a solicitor’s retainer is automatically terminated if a client becomes incapacitated during proceedings. This decision is hugely significant for solicitors conducting pre-April 2013 personal injury claims under Conditional Fee Agreements on behalf of clients who may suffer supervening mental incapacity post-April 2013.”