CGT v West Sussex: Key Clarification on Personal Injury Awards and Social Care Funding

A recent judgment from a judicial review case has provided welcome confirmation that personal injury awards are disregarded in full for the purpose of the social care means test. The case has been of particular interest to professional property and affairs deputies who are often managing significant personal injury settlements, as well as those litigators who have secured the successful award for damages.

A key thread of the judgment is that none of this is ‘new law’. HHJ Auerbach made careful reference to a body of cases which had clarified the issue as to the treatment of personal injury damages in the context of claiming statutory funding to meet care needs.

An unusual feature of the case was the presence of an undertaking made in connection with a potential future claim for statutory funding, and how this might result in ‘double recovery’. The judgement again refers to a settled body of case law which confirms that the civil court hearing the damages claim is the proper forum for issues of double recovery to be resolve. The statutory agencies have no remit to make enquiries into double recovery if a claim is made for social care funding.

The facts of the case and relevance to COP practitioners

CGT suffered severe brain injury whilst an infant and pursued a personal injury claim via the Criminal Injuries Compensation Authority (CICA). At the time of settlement, CGT’s deputy (RGT) gave an undertaking to CICA confirming that no claim for social care assistance would be made without first seeking and securing a declaration from the Court of Protection.

RGT died in 2013 and SGT was subsequently appointed as property and affairs deputy for CGT.

In 2017 an approach was made to social services to carry out a needs assessment. Correspondence ensued for some time, with the council asserting that CGT’s personal injury funds should be used to meet his needs. Neither a needs nor financial assessment had been carried out. In 2020, the defendant council agreed to fund CGT’s residential care placement without prejudice, whilst still asserting that CGT’s personal injury funds were required to be used to meet his needs. In 2023 the council made an application to COP requesting the terms of SGT’s deputyship Order be varied to include the previous undertaking given by RGT. The application failed, with costs awarded against the defendant council.

Notwithstanding the outcome of the 2023 COP proceedings, the defendant council went on to write to SGT as deputy, explaining funding for CGT’s placement would be withdrawn and CGT would be liable to repay funding provided since 2020. This letter formed the basis of the judicial review proceedings.

What did the judge conclude, and why?

The grounds for judicial review were

1 The defendant council had misinterpreted the terms of paragraph 15 Sch 2 of the Care and Support (Assessment of Resources) Regulations 2014, and in so doing had acted unlawfully;

2 The defendant council had failed to provide adequate or intelligible reasons for its interpretation of the charging regulations;

3 The defendant council had erroneously attempted to bind SGT to the undertakings previously made by RGT, despite this being dismissed by the COP in the 2023 proceedings

4 The defendant council had failed to carry out a needs or financial assessment as required by the Care Act.

Grounds 1 and 3 were the main focus of the court’s attention.

HHJ Auerbach rejected the council’s position that an award for damages held in trust fall to be disregarded “save in respect of the element of a payment provided for the purpose of funding care needs”. The judge confirmed that where personal injury monies are held in trust (or administered by a Court), the entirety of the damages award must be disregarded. This affirms the position in Firth [2001] P.I.Q.R Q4, Peters [2010] QB 48 and also Crofton [2007] EWCA Civ 71, with HHJ Auerbach agreeing with those authorities, stating at para 6 that “the language of the statute is unambiguous. It does not call, and leaves no room, for any act of interpretation.”

The court acknowledged the distinction made in the legislation between payments into PI trusts and ‘ordinary’ awards of PI damages. As such, regulation 16 of the charging regulations provides that “any amount which would be disregarded under paragraph 12A of Schedule 10 to the Income Support Regulations (personal injury payments) with the exception of any payment or any part of any payment that has been specifically identified by a court to deal with the cost of providing care. Paragraph 12A ISR goes on to clarify that this exception “does not apply to any payment from a trust where the funds of the trust are derived from a payment made in consequence of any personal injury to the claimant.”

This conclusion underlines the importance of establishing a personal injury trust (or appointing a deputy if a claimant lacks capacity), at the earliest opportunity to hold the damages award.

On the issue of double recovery, the Judge confirmed that the correct forum for dealing with double recovery is the court awarding the damages. HHJ Auerbach makes plain at paragraph 82,that “these authorities provide no support for the suggestion that it is the function of a local authority, when in receipt of a claim, to concern itself with the potential issue of double recovery.”

The successful outcome for CGT has wide ranging implications for COP practice, insofar as it provides comfort to property and affairs deputies that any personal injury capital held in trust is safe from the social care means test.

For many however there remains the thorny issue of periodical payments and their correct treatment under the charging rules. Judicial consideration of this issue in the coming months will provide much needed certainty, particularly in cases where full recovery is not achieved, and reliance on some form of statutory funding was envisaged at settlement.

If you would like to discuss any aspect of this article further, please contact a member of our Court of Protection team on 0114 267 5588.

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website. 

Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.