Cross-border management of PI awards

It is a sad reality that a high proportion of damages claims brought in the High Court are made by or on behalf of foreign nationals who are severely injured while 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 and whether funds should be moved back to their native country post-injury, can become a matter of fierce debate. That was the case in Potter Rees Dolan Trust Corporation Limited as Deputy for ML vs WL [2023] EWCOP19.

Where an individual is deemed to lack capacity, a property and affairs deputy can be appointed by the Court of Protection to manage matters on their behalf. Where significant compensation is received, the deputy is often a professional, preferably with experience in managing damages awards, ensuring that funds are applied to meet the individual’s needs for the duration of their lifetime.  

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 (schedule 3 to the Mental Capacity Act 2005). This jurisdiction does not however extend to welfare matters of a foreign national habitually resident outside 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.  

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 Ltd concerned the management of damages in England for a person habitually resident in Poland. P suffered a brain injury following an accident while living in the UK. A UK deputy was appointed to manage P’s damages award. Following settlement, P’s mother sought to have the compensation fund transferred to Poland where P had relocated.

P’s mother was appointed as a guardian in Poland and sought to take over the fund. It was noted that this proposed takeover was positioned 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 to the MCA. This seeks to incorporate the Hague Convention on the International Protection of Adults and give mutual recognition to protective measures implemented by other convention countries.

However, several factors affected the decision to withdraw the application for recognition of the Polish court’s protective measures. 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 three 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.

Commentary

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 MCA 2005.

The hostility of the litigating parties made unduly complex what should have been a simple issue to resolve. 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 MCA 2005 have one of the most advanced frameworks of accountability for those managing 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. The first 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, providing 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 Office of the Public Guardian 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 recognised in this judgment 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.

Alexandra Knipe and Emma Tante are partners at Anthony Gold, London