Cross-border management of Personal Injury damages awards – is there a place for a dual management framework?
The process of obtaining a damages award post injury can be a lengthy one, spanning years, and sometimes decades, depending on the nature of the injury sustained. It is a sad reality that a relatively high proportion of damages claims brought in the High Court of England and Wales are brought by or on behalf of foreign nationals, severely injured whilst on holiday or working in the UK, to the extent that they no longer have capacity to manage their finances.
Where an individual loses mental capacity to manage their property and affairs following an injury, the question of who helps support the management of that individual’s compensation into the future and whether funds should be moved back to their native country post injury, can become a matter of fierce debate. That was certainly the case in the matter of Potter Rees Dolan Trust Corporation Limited as Deputy for ML vs WL and ML by his litigation friend the OS  EWCOP19 which is discussed further below.
Where an individual is deemed to lack capacity in England and Wales, a property and affairs Deputy can be appointed by the Court of Protection to manage matters on their behalf. In cases where a significant compensation payment is received, the Deputy is often a professional, preferably with experience in managing damages awards, ensuring that funds are applied in a sustainable manner to meet the individual’s needs for the duration of their lifetime.
The scope of the jurisdiction of the Court of Protection is set out in Schedule 3 of the Mental Capacity Act 2005 (MCA 2005). It is generally accepted that the Court of Protection has jurisdiction over an individual’s property in England and Wales even if that individual is habitually resident in another country. This jurisdiction does not however extend to welfare matters of a foreign national habitually resident outside of the UK.
A Deputy has a duty to investigate and manage all assets belonging to an incapacitated person, whether those assets are in the UK or abroad. It is important to be aware of cross-jurisdictional issues that might arise, when trying to access or take over the management of assets, that might be privy to a separate regime for management, within a different legal jurisdiction.
Specific Court of Protection authority may have to be sought to help determine what structure for management will be in an individual’s best interests. Specialist international advisors may have to be retained, in order to support wider best interest determinations on these matters, by providing a comparative financial management structure and in order to evidence fund protection and accountability – that is already well established by the MCA 2005. Balancing competing protective measures and ensuring these are adequate, should be a primary consideration of cross-jurisdictional asset management for vulnerable individuals.
The case of Potter Rees Dolan Trust Corporation Limited vs ML and WL concerned the management of a substantial damages award in England and Wales, for a person habitually resident in Poland. P had suffered a brain injury following a bike accident whilst living in the UK. A property and affairs Deputy was appointed by the Court of Protection to manage P’s damages award. However, post settlement, P’s mother sought to have the compensation fund transferred to Poland due to P’s physical location in Poland and what was described in those proceedings, as a lack of P’s connection to England and Wales.
P’s mother was appointed as a Guardian by the Polish Court and sought to take over the fund. It was noted that this proposed takeover was positioned aggressively and with unnecessary hostility by the Polish Guardian’s initial legal representative who was subsequently replaced by a UK law firm.
It was agreed within the proceedings, that the Polish Court’s appointment of a Guardian would qualify as a “protective measure” within the meaning of Schedule 3 of the MCA which seeks to incorporate the Hague Convention on the International Protection of Adults and give mutual recognition to protective measures implemented by other convention countries. It was also agreed that there could be some ‘positive factors’ to suggesting that Poland be the appropriate forum for management of the award.
However, several factors inputted into the decision to withdraw the application for recognition of the Polish Court’s protective measures and an agreement was reached to maintain a dual management system of collaboration between the Court of Protection in the UK and the Polish Guardian at least for a period of 3 years, at which point the Deputy and Polish Guardian would review whether it was in P’s best interest to transfer management from England to Poland.
It is striking that the Court of Protection clearly did not feel comfortable in releasing a multi-million-pound fund to the Polish Guardian for management, in the absence of a demonstrable best-interests process within the Polish Court system, that could be deemed comparable to that found within the Mental Capacity Act 2005 and the Court of Protection in England and Wales.
The hostility of the litigating parties made what should have been a simple issue to resolve, unduly complex. There was also a concern that P and the family suffered a relationship breakdown with their UK Deputy. Those factors appeared to be balanced against the fact that the Court of Protection and the Mental Capacity Act 2005 have established one of the most advanced frameworks of accountability, for those manging funds for incapacitated persons, with the best interests of the incapacitated person being at the forefront of decision making.
The parties agreed a practical resolution to the complex legal issues. One, was to replace the UK Deputy with another UK Deputy, but one who could speak fluent Polish and aid communication, most importantly with the incapacitated client, but also this will bring a culturally sensitive interface to the family.
The second was to implement a framework for cross-reporting between the newly appointed Polish speaking UK Deputy and the Polish Guardian, steering the parties towards a collaborative approach for future management.
It seems that initial fund investment will be placed within the UK, but the Judgment has set out a longer-term mechanism to slowly support the migration of the funds to Poland, should certain criteria be met. This should permit the Court of Protection and OPG to exercise their stringent supervisory functions over the UK Deputy’s decision making, in what are often the most critical years post settlement when key decisions, such as investments and property purchases are made.
The Court has however recognised that a collaborative approach with the involvement of the Polish Guardian has its place, and that maintaining a duality of support, for the long-term best interests of the individual, will hopefully provide the most secure outcome for the successful future management of P’s fund.
Cross-border management in the future
It is interesting to note that on the 31 May 2023, the European Commission, announced that it would introduce new rules within the EU with a view to simplifying cross-border protection for vulnerable adults. The primary aim would be to minimise the legal difficulties that arise when supporting individuals who lack capacity and to promote cross-border co-operation. It will however be some years before this will be introduced but it is an initiative welcomed by many and it will be interesting to see whether the UK and the rest of the global community follow suit.
This article was featured in the Law Society Gazette. Kindly see the feature here in Friday 7th July’s edition.
* 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.*