NOW HERE’S AN UNUSUAL APPLICATION: COURT REFUSES DEFENDANTS’ APPLICATION TO APPROVE A SETTLEMENT REACHED WITH A CLAIMANT – WHO HAD CAPACITY

In David Forsyth v Craig Howson & Anor [2025] EWHC 653 (KB)  HHJ Claire Evans (sitting as Judge of the High Court) refused an unusual application by the defendants.  The claimant had capacity to litigate and yet the defendants sought an order from the court approving the  settlement in which the claimant had accepted the defendants’ Part 36 offer.  It was not possible in these circumstances to foist  court approval upon a claimant who had capacity.

“It is not appropriate in my view to foist upon a claimant (whom all the experts agree has litigation capacity) a process designed to protect him when he does not need or want that protection.”

THE CASE

The claimant was injured whilst riding an e-bicycle which collided with the first defendant’s car. He suffered serious injuries including brain injuries and brought an action against the defendants. There had been a trial on liability and the claimant was found to be 25% contributory negligence.  The defendant made an offer of £250,000.  The claimant’s own lawyers advised him not to accept the offer. However the claimant accepted the offer.

THE CLAIMANT’S CAPACITY

There were four medical experts instructed in the case (two for each side) all of them agreed that the claimant had capacity to litigate. There were some doubts about the claimant’s financial capacity.

THE DEFENDANTS’ APPLICATION FOR THE COURT TO EXERCISE ITS INHERENT JURISDICTION TO ACCEPT THE OFFER

Despite the fact that the claimant had litigation capacity and had accepted the offer the defendants applied to court asking it to exercise its inherent jurisdiction to approve the offer. The claimant opposed the application.

THE JUDGMENT

The judge considered the principles relating to the inherent jurisdiction to approve an offer.

APPLYING THOSE PRINCIPLES TO THE FACTS OF THIS CASE

Applying those principles to the facts of the case the judge refused the defendant’s application.

“The application of the principles to this case

27.This case is unlike the other reported cases in that the request for approval is not made nor even supported by the Claimant. Perhaps more fundamentally, it differs from the others in that settlement has been reached against counsel’s advice.

28.The evidence (from two neurologists and two neuropsychiatrists) is clear that the Claimant has litigation capacity. Mr Clarke accepts that if there were no concerns about the Claimant’s financial capacity there would be no basis for seeking approval pursuant to the inherent jurisdiction. [For the avoidance of doubt, he does not suggest that the phrase “most likely retains capacity” would in itself raise concerns such that approval should be sought.]

29.Other than the argument that acceptance of a Part 36 offer is a matter in respect of which the Claimant’s litigation capacity is in doubt because of doubts as to his financial capacity, there is no basis upon which a trial of the issue of litigation capacity might be directed in this case.

30.Plainly the consideration of settlement proposals and the making or acceptance of a Part 36 offer are part of the conduct of proceedings. A party who does not have capacity in relation to those matters does not have litigation capacity and is a protected party. I presume (and have no evidence to the contrary) that the four experts who have all agreed on the issue of litigation capacity have properly carried out their duties to the court in reaching those opinions, having regard to the proper tests to be applied, including a proper understanding of what is or can be involved in conducting the proceedings.

31.It may very well be that if the parties had come together jointly seeking approval of a settlement reached in accordance with legal advice, the Court would have found that there was good reason for invoking the inherent jurisdiction notwithstanding that, as I have already indicated, there would be no basis for a trial of litigation capacity being directed. That, of course, is not the position here. The question as to whether there is a good reason to invoke the inherent jurisdiction is in this particular case a wider one than simply whether there is a doubt over litigation capacity.

32.I will come back to whether it is reasonable to invoke the inherent jurisdiction in this particular case after dealing with the second stage.

33.I do not have (as required by CPR 21.10(3)(h)) a legal opinion on the merits of the settlement. It must follow that I am not in a position to carry out the propriety check which forms the second stage. I do not have before me the material which I would have were I carrying out the approval function under Part 21.

34.Mr Clarke submits that that can be cured in one of two ways. His first suggestion was that I should read a confidential note which he had prepared on a neutral basis on the merits of the settlement (or, once I declined to read material which was not available to the Claimant, that I should permit him at a later date to file an open note on its merits). His valuation of a reasonable settlement figure, he told me, was £216,000 on a final basis, so that on reading the note I could be satisfied that the settlement should be approved.

35. That, in my judgment, whilst inventive is misconceived. An advice from the other party to the litigation cannot properly address all of the circumstances relevant to the issue of approval, not least as the other party has not been privy to any of the conferences or other privileged material that a claimant’s own counsel would have to consider. In any event, I know from the evidence that the Claimant’s counsel takes the view that nothing less than £275,000 plus provisional damages is a reasonable settlement figure. The Part 36 offer is higher than Mr Clarke’s valuation (which might or might not suggest that his valuation is too low). To approve the settlement in these circumstances would require me to somehow arbitrate between those different opinions as to where the range of likely final awards and reasonable settlement might fall. That cannot be said to be replicating the position of an approval hearing under Part 21.

36. Mr Clarke’s other suggestion was that if I took the view that this was a case where the inherent jurisdiction should be invoked but that I was not in a position to carry out the propriety check, I should hear further submissions as to whether it was possible to give directions which would put me in a position to carry out the propriety check. His submission was that it was unfair that the Claimant should be able effectively to stymie the Court from exercising its inherent jurisdiction, where that exercise was necessary in order to protect the Defendants’ position and give finality to the parties.

37.One of the purposes of approval proceedings is to protect the interest of children and protected parties against themselves and against any lack of skill or experience on the part of their legal advisers which might lead to a settlement for far less than the claim is worth (Dunhill para 33).

38. On behalf of the Defendants Mr Clarke submits, and I accept, that there may be occasions where the Court is persuaded to approve a settlement which is at a lower figure than counsel advises should be accepted. By far the more usual course of events is that there is an advice from counsel for approval purposes which commends the settlement to the Court having had regard to all the relevant considerations (some of which might relate to matters personal to the claimant, such as a desire to have an end to the litigation).

39. Were the Claimant in this case a protected party where the litigation friend sought approval of the settlement with a negative advice from counsel, the starting point of the Court would surely be against approval. Put at the highest one can for the Defendants, there would be a significant risk that it would not be approved.

40. If the Claimant does indeed have litigation capacity, the settlement will never be overturned and approval will never have been necessary. If it transpires in due course that, contrary to all of the evidence in this case, he does not have such capacity then the settlement will be set aside. If the litigation friend wishes then to accept the offer there will be a conventional approval hearing under Part 21. If there are good reasons for the settlement to be approved notwithstanding that counsel does not recommend it, the settlement will be approved. If the settlement is not approved, or if the litigation friend takes counsel’s advice and rejects the offer, that will be the correct outcome having regard to the protective nature of approval proceedings.

41. Whilst I entirely understand the Defendants’ wish for finality, and not to be exposed to any risk that this settlement in due course is unpicked, there are four factors which in my judgment outweigh those concerns.

42.First, this is not a case where a trial of litigation capacity might be directed on the contemporaneous, detailed, unanimous medical evidence. In practical terms, given that evidence, the parties have already secured finality by the acceptance of the Part 36 offer. Even if there remains some lingering doubt as to capacity, there is a clear contrast with Dunhill where there had been no investigation of capacity before the settlement. If there is a risk here of the settlement unravelling it can only be very small.

43. Secondly, the Claimant opposes an inherent jurisdiction approval. It is not appropriate in my view to foist upon a claimant (whom all the experts agree has litigation capacity) a process designed to protect him when he does not need or want that protection.

44. Thirdly, to be able to proceed to consider the question of approval I would have to consider how, if at all, I could be put in the position that I would be if conducting an approval under Part 21. That raises questions about the extent to which a capacitous claimant can or should be compelled to engage in an exercise which generally requires the disclosure of privileged advice. It is by no means obvious how it could be done. Nor is it obvious that it is desirable that it should be done in circumstances where the Defendants wish to protect themselves against the risk of unravelling of what is said by the Claimant’s legal advisers to be an under-settlement of the claim.

45. Fourthly, even if I were to find some way of putting myself in the same position as I would be in a Part 21 approval, there would remain a significant risk that I would decline to approve the settlement given that it was accepted against counsel’s advice.

46. All of those factors strongly indicate to me that this is not a case where the inherent jurisdiction should be invoked. The application is dismissed.