Approval of Protected Party Settlements and Ability to Withdraw Not Incompatible With Human Rights

Parties are still feeling the effects of the change in discount rate back in March. In the case of Revill v Damiani [2017] EWHC 2630 (QB) the court permitted the Defendant to resile from a settlement agreement reached in a protected party claim. Whilst it may be unusual for parties to seek to void such an agreement, this case demonstrates that where a Court is yet to approve a settlement in a child or protected party claim, neither party is bound to abide by it.

The claim arose out of a road traffic accident which occurred in April 2015. The Claimant suffered a severe traumatic brain injury resulting in a lack of capacity. The Claimant therefore became a protected party under CPR 21. His claim included future losses such as for care and treatment.

At a joint settlement meeting in February 2017 a compromise was made based on the then discount rate of 2.5%. As any change in discount rate would substantially affect the quantum of the claim, counsel would find it difficult to approve the settlement figure. Therefore the parties agreed that if the discount rate was reduced then the future losses would be recalculated.

When the discount rate changed the settlement figure increased significantly. The Defendant sought to resile from the agreement before the court had approved it. It was common ground that pursuant to CPR 21.10 the settlement was not valid until it had been approved by the court.

The Claimant sought a declaration that CPR 21.20 was incompatible with Article 6 (right to a fair hearing) and Article 14 (enjoyment of the rights without discrimination) of the ECHR. It was agreed that the two articles were engaged and that the Claimant was being treated differently to other litigants by virtue of his status as a protected party as he required approval of the court to secure a valid settlement. This difference in treatment was only reasonable if it pursued a legitimate aim. It was agreed that the difference in treatment pursued the legitimate aim of protecting parties without capacity.

The dispute the court had to resolve was whether the requirement of court approval of a settlement was a proportionate means of achieving that aim. The court held that it was. The scheme was intended to protect incapacitated parties from inadequate compromises and so it ensured that they were not bound by agreements until approved. The scheme was well established so all parties knew where they stood. Allowing both parties to withdraw from a settlement agreement prior to approval maintained a fair balance. The scheme also enabled active case management of cases so that administration of justice and protection of rights could be ensured.

The full judgment can be accessed here: http://www.bailii.org/ew/cases/EWHC/QB/2017/2630.html

Should you wish to discuss this or any other matter, please get in touch with the clerks – James or Jess.