Why do children need to have their compensation settlement approved by the court?

I currently act for an 11-year old boy who sustained significant injuries whilst out shopping with his mother.  The shop owners and their insurers took a sensible approach to the matter and admitted responsibility for the accident, and settlement was agreed before Christmas.  However, all settlements for minors (people under 18) need to be approved by the court, and so it was necessary to make an application for an infant approval hearing before the matter could be settled.

We have been allocated a hearing date in March and the mother of my client questioned why it was necessary to have this extra delay to the end of the claim through having the settlement approved at court.  She was acting as a “litigation friend” throughout the claim, which meant that she had been the representative of her son, providing instructions to me on his behalf for the purpose of his claim.

I thought this was an interesting question.  After all, she was a responsible adult who had made all the important decisions in her son’s life so far; she was happy with the settlement; she had a specialist legal team (both myself and a barrister) to advise her on the sum offered and negotiated between the parties; why did she need court approval for the settlement?

The answer is found in Part 21 of the Civil Procedure Rules.  Although a litigation friend can give instructions to the solicitor acting to accept or reject an offer of settlement on behalf of the injured child, once a sum for settlement has been agreed between the parties, it must be approved by the court. If it is not approved, there can be no final acceptance of the settlement.

The purpose behind this rule is to protect vulnerable parties.  Part 21 also applies to any settlement reached on behalf of a “protected party”, meaning an adult who lacks the mental capacity to conduct legal proceedings.

In practice, at the hearing, a judge is provided with the solicitor or barrister’s written advice as to the value of the claim, as well as all the relevant documents, including medical reports on the injuries, a schedule of the financial losses sustained by the child and sometimes photographs of the injury.  It will then be up to the judge, considering all the evidence, to decide whether the settlement is reasonable or in other words “enough” for the injuries sustained.  A judge will not intervene if they consider the settlement generous to the child, thereby reducing the agreed sum.  However, if the judge considers the settlement too low, they will refuse to approve it. Negotiations with the insurers then continue and in all likelihood a greater sum of money will be agreed, again subject to approval by the court.

Once agreed, the court can order that the compensation be paid in full into the Court Funds Office to be released to the child on their 18^th birthday, or they can make an order for part of the sum to be paid out to the litigation friend for the benefit of the child.  It will depend on the individual circumstances of the case and on what is in the child’s best interests.

Court approval is therefore an important extra safeguard for vulnerable members of our society and Part 21 is designed to ensure that a child’s (or protected party’s) claim is not under-settled.  It also gives the court the opportunity to make sure that the child’s compensation award is appropriately managed and invested until they are 18.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*