Does loss of capacity invalidate the retainer?

Catherine Walmsley Costs Lawyer

Catherine Walmsley
Costs Lawyer

The Court of Appeal considers whether the loss of capacity during the course of proceedings invalidates the retainer ….

Blankley v Central Manchester and Manchester Children’s University Hospitals NHS Trust [2015] EWCA Civ 18

This case relates to a Claimant with fluctuating capacity to conduct legal proceedings. The Court of Appeal considered whether the CFA terminated automatically by reason of frustration when the Claimant subsequently lost capacity, so that it did not govern the continued conduct of the proceedings by a receiver/deputy appointed by the Court of Protection on her behalf.
The claim had commenced with the Claimant a patient, acting by her Father as litigation friend. The claim was initially legally aided. The Claimant later regained capacity, and after legal aid was discharged, a CFA was entered into. Several years later further assessments determined that the Claimant was unable to conduct her own affairs and could not provide instructions in relation to her claim, resulting in a deputy being appointed. A new CFA was not entered into with the Deputy.

In February last year, the High Court allowed an appeal against the decision of the Regional Costs Judge, who had held that the CFA had been terminated when the Claimant lost capacity.
The narrow issue before the Court of Appeal was whether the Claimant’s supervening incapacity caused the CFA to be terminated by reason of frustration because the Claimant could not give instructions to the Solicitor and the contract therefore became incapable of performance.

Appeal dismissed.
‘The fact that the supervening incapacity prevented the Claimant from giving instructions personally did not render the contract impossible of performance, it simply gave rise to a short period of delay pending appointment of a receiver/deputy who could continue to conduct the proceedings on the Claimant’s behalf and give instructions to the solicitors for that purpose.’ [para 38]

Our Comments
This is excellent news for Practitioners. However, this Judgment relates to circumstances where a deputy has been appointed and where there was only a short period of delay where instructions could not be obtained, either from the Claimant personally or otherwise. Also, in this matter the risk of a period of incapacity was clearly in the contemplation of the parties at the time the original CFA was entered into. Each case should be considered on its own merits, and there may remain circumstances where it will be advisable to enter into a new CFA.
We are always happy to advise on any retainer issues.