In the case of Martin, an application for a variable periodical payment order pursuant to the Damages (Variation of Periodical Payments) Order 2005 was made by the Defendant. In this instance, the court was satisfied there was a chance the Claimant might further deteriorate to the point of requiring institutionalisation, reducing her care needs. The court also sought to determine whether a claimant who has capacity but is vulnerable to potential exploitation is entitled to an award in respect of the cost of a personal injury trust (PIT).
Following on from the main assessment of damages hearing  EWHC 3058 (QB), in Part II of his decision in Martin, His Honour Judge Bird had to consider an application by the Defendant for a variable periodical payment order pursuant to the Damages (Variation of Periodical Payments) Order 2005. Following further evidence and submissions, the Court was satisfied that there was a more than fanciful prospect that the Claimant’s condition could deteriorate to the extent that she may have to move from a domiciliary to an institutional care environment, thereby potentially reducing her annual care needs significantly. Accordingly, the Court made a variable periodical payment order.
In addition, the Court was required to consider whether the Claimant should be entitled to an award of costs in respect to the running of a personal injury trust (PIT) in circumstances where she possessed capacity but was deemed vulnerable to exploitation. The Court rejected the Claimant’s submission that the Court’s protective jurisdiction extended to the Claimant, alternatively finding that a bare trust did not provide any safeguards with respect to a claimant who has capacity but the potential to be exploited. Consequently, damages for the costs of running a PIT were disallowed.
Issue 1: The Power to Vary
Having heard evidence from the Claimant’s financial adviser and taken into account the Claimant’s own views, the Court had no difficulty in determining that the Claimant’s future pecuniary loss should take the form of periodical payments. However, the Defendant applied for a variable order on the basis that a serious deterioration in her condition would ironically lead to a decrease in the Claimant’s costs for day-to-day care which had been awarded at the previous hearing. Evidence to substantiate the risk of deterioration was provided by the Claimant’s orthopaedic expert and the jointly instructed neurorehabilitation expert who considered that she would be required to move to a nursing home at some point in the future.
The Claimant’s orthopaedic expert anticipated that the combination of her long-standing psychiatric problems alongside a significant weakness in her left arm, leg and problems with her right hip meant she would require a nursing home during her 60s or 70s’. In a similar vein, the neurorehabilitation expert was of the opinion the Claimant would suffer from significant limb stiffness from the age of 60 at which point it may be necessary to transfer her to institutional care, rendering her home-based care regime defunct.
On the strength of the evidence provided, the judge was satisfied there was more than a fanciful prospect that at some time in the future, the Claimant would suffer a serious deterioration in her condition as a result of the Defendant’s negligence. Consequently, the judge was satisfied the discretionary power to make a variable periodical payments order had arisen and bore the following in mind whilst exercising his discretion:
Having considered these factors, the judge found in the Defendant’s favour exercising his discretion to permit an application to be made in accordance with the terms of the order.
Issue 2: Damages in respect of the cost of a PIT
The judge then turned to consider the incurred costs of the PIT. Previously, at the culmination of the quantum trial, permission had been given for the Claimant to amend her schedule to include the costs of setting up and running a PIT.
The Claimant submitted that there was a reasonable need for an award of damages to cover the costs of the PIT, relying on her vulnerability as justification for such an order. She asserted she was a target for financial exploitation as a consequence of her mental health and receipt of funds and a Trust would “provide the necessary protection, structure and security for the Claimant’s funds” (para 31).
The judge accepted the psychiatric experts’ consensus that as a result of her emotionally unstable personality disorder (EUPD), the Claimant risked “getting into the kind of interpersonal relationship in which she is vulnerable to exploitation by an intimate or dependent”. However, he also found that she had the capacity to both seek and act on advice, particularly from her father (paras 33, 34). Whilst accepting that EUPD is “enduring in nature”, the judge placed great emphasis on the Claimant having an “appropriate physical care regime” as being beneficial for stabilising the claimant’s mental health.
The Evidence of protection afforded by a PIT
Although the judge did not have sight of a proposed trust deed, he benefitted from helpful explanations of how a PIT might be constituted by the Claimant and the Defendant’s instructed experts who specialised in Court of Protection work. The Defendant’s expert asserted that the typical vehicle for a PIT was a bare trust. The trustees involved in this bare trust would have “extremely limited duties” as the Claimant was found to have capacity and therefore, whilst affording some protection by giving the trustee the opportunity to discuss a decision with the beneficiary, in the event the Claimant “requests access to her money her trustees cannot stand in her way” (para 43). The Claimant’s expert also agreed that the most suitable form of trust in these circumstances is a bare trust.
The judge in this matter noted the general approach to an award of damages to cover the cost of taking advice on the investment of damages was summarised in Eagle v Chambers No.2  EWCA Civ 1033, with such awards routinely made where the Claimant lacked capacity. It was also common ground that the PIT sums sought would not cover investment advice. Against this backdrop, the Claimant sought to rely on inferences from established case law concerning the court’s positive duty to protect the vulnerable, specifically in this matter relating to a suicide risk to mandate the award of PIT costs sought, relying upon Rabone v Pennine Healthcare  2 UKSC 2 as authority for this proposition.
Bars on recovery
Having previously accepted that simple “but for” causation was made out, the judge cited McGregor on Damages that “some limits must be placed upon damages”, noting that remoteness is a “portmanteau” covering a spectrum of reasons for denying what is prima facie “full recovery” (paras 61, 62). Consequently, the judge warned that even if the Claimant was to establish a reasonable need to receive damages to cover the costs of the PIT so as to restore her to the position had the tort not occurred; a right to recovery does not automatically follow.
HHJ Bird made no award in respect of the costs of setting up and running a PIT. In coming to this conclusion, he regarded the absence of any reported decision where the court has decided to award costs of managing an award to a claimant of full capacity as “instructive” reflecting the truism that bar children or protected parties the court does not generally adopt a protective role (para 64, 68).
With respect to the Claimant’s reliance upon Rabone, whilst satisfied that her risk of suicide was both real and immediate, it was “plain” to HHJ Bird that “the presence of a real and immediate risk to life [was] not sufficient for the operational duty to arise” (para 72). HHJ’s reasoning for this conclusion was premised on the fact the Claimant had support from her father, which mitigated the risk of suicide, the fact that the nature of the risk was in part due to pre-existing mental health issues and to grant this operational duty past “voluntary psychiatric in-patients” would be to extend the class of persons who might benefit from such an operation too far” (para 72). As such, HHJ Bird concluded the operational duty did not arise.
In the counterfactual condition, HHJ Bird found irrespectively that bearing in mind the extent of the risk, the duty had been discharged for the dual reasoning that a “substantial” award of damages had been made to meet the holistic needs of the Claimant going forward and that on the evidence, HHJ Bird was not persuaded that requiring the Defendant to fund a PIT would address the risk faced by the Claimant in any “meaningful way”(para 74).
Eliot Woolf QC, a barrister in our Clinical Negligence team commented on the case as follows:
This decision was the third in the Claimant’s long-running dispute with the Defendant, having previously won her trial on liability  EWHC 1824 (QB) before establishing a significant award for damages at the assessment hearing before HHJ Bird  EWHC 3058 (QB). At that main assessment hearing, the Claimant had overcome the Defendant’s argument that her care package should be reduced to reflect the possibility of double recovery as a result of continued state funding under s.117 of the Mental Health Act 1983. The judge dismissed the Claimant’s contention and awarded a domiciliary care package in full, together with case management. He acknowledged that whilst there was a possibility she might continue to take advantage of prior funding under s.117, it was not sufficient to make any adjustment to the award. He had also made significant awards for accommodation and ancillary losses.
In the context of those two earlier decisions, I imagine that the outcome of the two issues for consideration in this third hearing was of far lesser significance to the Claimant. Nevertheless, they are of considerable wider interest. There are comparatively few decisions relating specifically to variable PPOs, the most significant being Kotula v EDF Energy  EWHC 1546 (QB) [risk of a syrinx developing] and Farrugia v Burtenshaw  EWHC 1036 [risk of uncontrolled epilepsy]. What made the case of Martin particularly unusual was the fact that the application was made by the Defendant rather than the Claimant. Unsurprisingly, a residential care package had the potential to be much cheaper in the future for the Defendant than the domiciliary package they had been ordered to pay at the earlier hearing. Accordingly, such a mechanism does provide some very limited opportunity for a Defendant to protect its interests in the future should the facts of a case permit, albeit it must be remembered that even if the deterioration triggers an application, the outcome remains open for argument.
It has been some time since there has been a decision considering whether the costs of setting up and running a PIT should be borne by a defendant in circumstances where the claimant has capacity. Historically, this type of argument has not gone well for claimants. In Owen v Brown  EWHC 113, it was disallowed on the basis that the trust would be unlikely to achieve its aim as it could be brought to an end at any time). That line of reasoning was followed in AB v Royal Devon & Exeter Trust  EWHC 1024 and the cost of a Trust was disallowed in A v Powys Local Health Board  EWHC 2996. The absence of previous authority in favour of such a trust clearly weighed heavily on HHJ Bird’s again. For claimants who do have capacity but are vulnerable to exploitation, this is clearly disappointing but not unexpected. In this case, an interesting additional argument was advanced that the Court had a positive duty to protect the vulnerable by reference to Rabone. HHJ Bird rejected the notion that the Court had such a protective role where the Claimant was neither a child nor a protective person; further, that no operational duty arose to take steps to counter the risk that the Claimant might commit suicide. However, even if he was wrong about that, he would have found that a PIT would not provide the level of protection sought in any meaningful way as the trust could be brought to an end at any time. In the absence of a decision from the Court of Appeal to the contrary, it, therefore, appears unlikely that this long line of authority against PITs will be overcome any time soon.
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