Lucy Robinson, associate at Stewarts Law, London, acted on behalf of the claimant in this case, which is an important step forward from the case of Sowden v Lodge.
On 25 February 2002 Maria Freeman, then aged 34, was injured in a road traffic accident as she travelled home from work. The defendant (D) drove his vehicle into the rear of C's vehicle at high speed, causing her vehicle to veer off the motorway, down an embankment and into a tree. D denied liability and proceedings were issued. D alleged that he suffered a hypoglycaemic attack or similar attack related to his diabetes which led him to lose consciousness and that this arose without any negligence on his part. Shortly before the exchange of expert liability evidence D admitted liability in full.
Freeman sustained a spinal cord injury and head injuries. She was discharged from the spinal Injuries Centre at Stoke Mandeville Hospital in August 2003. Fortunately, she made a good recovery from her head injuries and was left with only some mild concentration and memory problems. She is now a C5/6 tetraplegic with limited upper body movement.
Prior to the accident, Freeman lived with her husband and their 17-month-old son in a three bedroom, two-storey house in Hemel Hempstead. On discharge from Stoke Mandeville Hospital, she was unable to return to the marital home as it was unsuitable for her housing needs. As liability was denied up until August 2004, she had only received modest, ex-gratia interim payments. As a result, she did not have the funds to purchase suitable accommodation or fund the cost of a private care regime. Eventually, the local authority, Hertfordshire County Council (HCC), identified a three bedroom flat which had been partially adapted for a wheelchair user. Freeman was discharged to that property. Prior to her discharge from hospital, she was assessed by Hertfordshire Local Primary Care Trust (PCT) continuing care panel and provided with a joint care package in her home. HCC funded the home care package with a contribution of £40 per week from the PCT (the PCT contribution was later withdrawn). Freeman decided to receive the funding for her care by direct payments.
Freeman was advised by her social worker that her entitlement to funding for her care was means tested and if she had capital of more than £20,000 her funding would cease. As she received some modest ex-gratia interim payments exceeding £20,000, she entered into a personal injury trust in order to retain her entitlement to state funding.
After receiving the admission of liability, her main aim was to secure a large interim payment to fund the purchase a suitable property and improve her care arrangements. D was firmly against disrupting the existing care regime funded by HCC and, at the time, the PCT. They wished to use their in-house medical relationship manager to work with her case manager in investigating further availability of funding from the PCT/local authority. They also asked for a copy of Freeman's trust document, stating that as her damages would be ring-fenced provided that they were paid into the trust, C would remain entitled to state funding for her care. Both these requests were refused. Following the decision in Sowden v Lodge [2005], D repeatedly referred to this case when contending that her care claim should be reduced to reflect the continued availability of funding from HCC. D also asked Freeman to sign a form of authority to allow them to obtain information directly from HCC and the PCT. This request was also refused but we co-operated with D and passed any request for information to HCC's legal department. However, few requests were made and as far as we are aware D did not interview a representative from HCC regarding their intentions over future funding.
In reply to our enquiries, HCC advised that it intended to recoup its costs from Freeman under section 57 of the Health and Social Care Act 2001 and Regulation 5 of the Community Care, Services for Carers and Children's Services (Direct Payments) (England) Regulations 2003. However, HCC changed its stance shortly before trial.
At the time of the damages assessment hearing on 29 November 2005, Freeman was receiving direct payments in the sum of £969.54 per week. She had received a substantial interim payment and paid this into her trust.
Following a round table meeting held shortly before trial, the parties agreed general damages, past losses, expenses and interest in the sum of £336,490. Future losses and expenses exclusive of any future care and/or case management were agreed at £2,050,000. D accepted that the level of care which Freeman could purchase using her direct payments fell short of what was required. The care experts agreed that a live-in carer was unsuitable for her and that her care needed to be provided on a shift basis. There were a number of conventional valuation issues relating to the cost of future care and life expectancy which the parties did not reach agreement on prior to trial. Judgment on those issues was handed down on 6 December 2005, but Mr Justice Tomlinson reserved judgment on what was referred to as the 'State funding issue'. In excess of £1 million turned on this issue.
Statutory provisions and guidance applicable in this case
Local Authorities (LA) have the power to make arrangements for providing domiciliary care in a disabled person's home under section 29 of the National Assistance Act 1948. This general power is turned into a duty under section 2 of the Chronically Sick and Disabled Person's Act 1970. The duty upon the LA to assess a disabled person's needs arises from section 47 of the National Health Service and Community Care Act 1990. Once a person's needs have been assessed, the LA can then either provide those care services directly or offer the individual direct payments. The power to make direct payments is derived from section 57 of the Health and Social Care Act 2001. Section 7 of the Local Authority Social Services Act 1970 (LASSA) states that LA should exercise their social service functions, including any discretion, under the general guidance of the Secretary of State.
Local Authority Circular (2002) (LAC) 'Fair Access to Care Services' was issued under section 7 of LASSA. This establishes criteria for LAs to determine eligibility for the provision of care services according to need. The policy guidance document 'Fair access to care services guidance eligibility criteria for adult social care' provides for four bands, namely critical, substantial, moderate and low. According to HCC, Maria Freeman fell into the 'substantial' band.
The provisions relating to charging service users for domiciliary care provided by way of direct payments are contained in regulation 5 (2) of the Community Care, Services for Carers and Children's Services (Direct Payments) (England) Regulations 2003. Guidance on charging for domiciliary care can be found in the 'Fair charging policies for home care and other non-residential social services' (FCP) dated September 2003. This guidance does not provide information as to how the service users' unearned income should be treated. In relation to savings or other capital, the FCP states that LAs may take into account savings and capital belonging to the service user. It then states that where savings are taken into account, the tariff income should be calculated on the same basis as set out in the 'Charges for residential accommodation guidance' (CRAG). Users with savings of more than the upper limit (as set out in CRAG) may be asked to pay a full charge for the service. CRAG states that damages paid into trust will be disregarded in the assessment of means. The FCP does not say whether CRAG should be followed in respect of the treatment of income. If CRAG is to be followed in relation to the treatment of income, it appears to state that income from any capital held in trust as a result of a personal injury claim will be taken fully into account for as long as the capital is disregarded.
The defendant's case on the State funding issue
D argued that their liability for the cost of future care ought to be limited to 'top-up'. D pointed to the fact that the claimant had been in receipt of LA funding since August 2003 and contended that this provided strong, historical and current evidence of HCC's view on its statutory obligations to her. D submitted that as her condition is incapable of material change, there would be no rational basis for HCC to reduce the amount of funding for her care in the future or seek to withdraw it altogether. Further, D stated that as Freeman had a trust, any damages received by her ought to be paid into it and consequently, would be disregarded by HCC in its assessment of her ability to contribute or pay for her past and future care.
D submitted that the claimant would be in breach of her duty to mitigate her loss if she withdrew her application for continued direct payments or failed to pay her damages into her trust.
In the alternative, D contended that documents published by HCC suggested that the maximum weekly charge to the service user is £310 per week. Therefore, even if C's damages were to be brought into account, after paying the maximum charge to HCC, she would retain the balance of £659.54 per week.
D relied on the case of Hodgson v Trapp [1989] and argued that to ignore the prospective benefits which Freeman will receive from HCC would be to undermine the ordinary and conventional principles of compensation.
D also contended that the notion that Freeman should not bear any risk whatsoever is out of keeping with the normal principles of the assessment of damages for future loss.
Further, D submitted that the 'Sowden principles' should apply to domiciliary care and if in this case D's contentions were rejected it would be hard to see how the Sowden principles could ever be applied to section 29 of the National Assistance Act 1948.
D was not prepared to offer an indemnity to provide Freeman with protection against the risk of the HCC reducing or withdrawing funding in the future.
The claimant's case on the 'State funding issue'
Maria Freeman provided her views on State funding in her witness statement and when giving evidence at trial. She stated that she would not apply for LA funding if she recovered compensation for care in full from D. She set out her reasons for not wishing to be reliant on State funding: she did not see why she should take the risk that the payments could diminish in the years to come; she did not want to have any further dealings with the LA; she wanted the flexibility that a full payment from D would provide; and she did not believe it to be right that the insurers who set premiums for profit should be able to thrust part of their liability on the State. She informed the court that she would co-operate with any proper mechanism to prevent double recovery, for example, by giving an undertaking not to apply for State funding for her care in the future (subject to a provision permitting her to do so in the event she had no realistic alternative). She also informed the court that in the event that it determined that there should be no deduction for damages on account of State funding, she would dismantle her trust and receive her damages personally and therefore without any of the protections which D contended she would derive if her damages were paid into her trust.
The claimant put forward a periodical payments analogy. It was submitted that D proposed an annual reduction equivalent to the provision of a periodical payment by the LA in excess of £50,000 per annum. Freeman submitted that there would be no enforceable agreement or order that HCC should make such payments, or an assessment of the security of the payments as required under s 2(3) of the Damages Act 1996, there could be variation of the sum payable without the court's involvement and a variation in the payments might arise as a result of a change in political considerations.
Freeman contended that there was no certainty that the current statutory regime requiring LAs to support service users in need of care would remain in place. Future assessments are likely to take place and at that stage, the LA could take into account the availability of their resources which are unlikely to remain constant, and her resources, which would change considerably once she received her damages. Provisions relating to recoupment and means testing of care provided under section 29 are merely contained in guidance provided by LAs and not primary or secondary legislation. Whether LAs can take personal injury damages held in trust and income into account is entirely at their discretion and contained in ministerial guidance which is likely to be overturned at some point in the future (Tinsley v Sarkar [2005] and Godbold v Mahmood [2005]) referred.
Freeman highlighted that the FCP makes no provision in relation to income. If CRAG is to be followed in relation to the treatment of income, it appears to state that Trust income is taken into account. There was no evidence from HCC at trial as to how they treat income or their views generally on the provision of future funding for care. She distinguished her case from the case of Sowden on the basis that Sowden was a case involving a patient and the provision of accommodation under section 21 of the National Assistance Act. In addition, it was not argued by her that the court should not be prepared to assume that the current provision of funding under section 21 would remain in place. The Sowden case was not determined on the basis that the claimant had a duty to mitigate her loss in accepting LA funding but rather it was found that the private funding of care would not have been reasonable on the facts of that case.
Judgment
Mr Justice Tomlinson concluded that he should not make any deduction from damages to reflect the continued availability of direct payments from HCC. The determinative reason for his finding is that there was no principled and fair basis upon which he could assess the amount of the deduction. It was impossible for the court to estimate what Freeman might receive from HCC for her funding in the future and unnecessary to impose the risk of this funding discontinuing or being reduced.
He highlighted that there would be political and other considerations taken into account when HCC considered their approach in the future to discharge its relevant duty. He stated "Ministerial guidance is essentially ephemeral in nature, subject to change without any form of legislative process". It cannot provide a secure basis for the claimant's future needs. He had no evidence from HCC as to their current policy on the treatment of income generated by capital held in trust or their intentions for the future. He could make no reliable estimate of what Maria Freeman might receive from HCC in the next year, let alone during the course of her life.
Mr Justice Tomlinson recognised that this may lead to double recovery, but found as a matter of fact that this would not occur in this case. He indicated that if a copy of the judgment was sent to HCC they would withdraw funding once satisfied that adequate provision was being made for care. He did not require Freeman to give an undertaking not to apply for State funding. He thought this was impractical and undesirable. In addition, he did not require her to dismantle her trust stating that as he has found that she would not apply for State funding having received her damages in full, it was a matter for her after receiving appropriate advice as to whether to pay her money into a trust.
In relation to D's submission that she would have failed to mitigate her loss if she did not apply for continued LA funding, Mr Justice Tomlinson stated "I recoil from the notion that a failure to avail oneself of State Benefit could in the circumstances be characterised as an unreasonable failure to mitigate loss. I should have thought that such conduct was praiseworthy and moreover calculated to contribute to the sense of wellbeing of the person concerned". In relation to D's submission that the notion that she should not bear any risk is out of keeping with the normal principles of the assessment of damages for future loss, Mr Justice Tomlinson stated that Freeman will bear the risk of care costs increasing at a higher rate than her damages allow for, increased care requirements and poor returns on investments. He continued "I can see absolutely no justification whatsoever for additionally and quite unnecessarily imposing upon her a risk which relates not to the possible deterioration in her own condition or to other matters wholly outside any normal control, but rather as to the availability or source of funds to meet her needs".
In response to D's contention that the Sowden principles should apply to this case, Mr Justice Tomlinson stated that he doubted whether the Court of Appeal intended to set out a new principle in the case of Sowden. However, if there is a principle to be applied, it is to section 21. He noted an important distinction between the recoupment provisions which apply to section 21 and those which apply to section 29. The former are contained in secondary legislation, the latter are discretionary and contained in ministerial guidance. He noted that in Sowden it was not submitted on behalf of the claimant that the statutory regime in place setting out the duty to provide care and accommodation may not remain in place or that the existing funding may not continue in the future. This was taken as read. Mr Justice Tomlinson stated "In those circumstances, as it seems to me, the decision in Sowden has no application to the issues which I have to decide....The starting point in the present case is that it is reasonable for the claimant to be provided with care in her home. Nothing said in Sowden gives the court any assistance as to how they should approach and evaluate the possible continued availability of direct financial assistance from the Local Authority towards the provision of care".
Maria Freeman was awarded in excess of £5.5 million and beat the defendant's part 36 payment into court. When judgment was handed down, D successfully obtained permission to appeal but then decided against proceeding with it.
Practice points
The claimant needs to be carefully advised about the pros and cons of entering into a personal injury trust at the interim payment stage.
We now have a judgment which states that if the claimant decides not to have a trust or rely on State funding, they cannot be criticised for failing to mitigate their loss.
The judge makes a distinction between claimants who are capable of managing their affairs and are receiving care in their home and those lacking capacity and residing in residential care.
The history of State funding and the claimant's attitude to State funding need to be addressed in detail in the claimant's witness statement.
If D raises the issue of State funding it may be necessary to interview an officer of the local authority.
Once the issue is raised by D, responsibility for investigating the issue should not be handed over completely to D. It may not be in the claimant's interests to agree to sign a form of authority allowing D direct access to the LA. The claimant should lead this, but ensure that they act reasonably and comply with D's requests for information from the LA.