The Irwin Mitchell Group has been given the choice by the court whether to compensate a client over a deputyship conflict or face the prospect of litigation.

Ruling in Irwin Mitchell Trust Corporation v PW & Anor, Her Honour Judge Hilder found it was in the best interests of the client to grant retrospective ratification of IMTC’s instruction of IM Asset Management (IMAM).

The judge said this would be granted - but only on the condition that IMTC pays 60% of the client’s potential claim for compensation. Should it choose not to accept the condition of ratification, then the possibility would be left open for the client to pursue her claim in separate proceedings.

The court ruled in 2024 that the instruction of an entity which was then in the same Irwin Mitchell Group amounted to a breach of the self-dealing rule designed to prevent conflict of interests in deputyship cases. IMAM has since been sold, but the terms of the sale are such that the potential conflict will remain until May 2027. There are 260 other people, not including this client, where the IM Group is appointed as property and affairs deputy and has appointed IMAM as investment manager.

The court heard that members of the official solicitor’s team had visited PW and her husband. PW brought a successful damages claim against a healthcare trust after she contracted viral encephalitis leading to cognitive impairment. The claim settled for £1.85 million with periodical payments of £151,000, and IMTC was appointed as PW’s property and affairs deputy.

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PW’s husband acknowledged that Irwin Mitchell had been responsible for securing the award but said these proceedings and their implications had been complicated and difficult to understand. He did not express a decided view about whether a claim should be brought against IMAM for the fees taken since its appointment.

IMTC said this was not a case where there had been any dishonesty, bad faith or surreptitious dealing. It submitted that IMAM worked diligently for PW’s benefit, providing full consideration for the fees that were charged, and argued for retrospective ratification of its appointment without conditions.

In this case IMAM was part of a ‘beauty parade’ panel of advisers and was chosen by a family member of PW: the family member was advised of the connection between IMTC and IMAM.

The court heard that the value of PW’s potential claim on the ‘receipts’ basis – covering all the charges exclusive of VAT levied by IMAM – was £37,647. IMTC argued the ‘ceiling’ of the claim based on the profit from the charges was between £9,000 and £9,500.

The judge adopted the receipts method - although she did not decide how the underlying claim should be quantified - and said it was in PW’s best interests that IMTC pays 60% of this sum into the estate within 28 days of the judgment being handed down. IMTC has 21 days from yesterday to confirm to the court and the parties whether or not it accepts the condition of ratification.

In a statement, the IM Group said: ‘This is another stage in a complex set of considerations. We acknowledge the latest judgment and we are carefully considering our next steps. Our clients’ best interests remain our priority. The judgment notes that it was agreed during the proceedings that our client is satisfied with the work of their current deputy and there are no allegations of any financial loss to our client.

‘This case concerns a historic process which Irwin Mitchell ceased using following updated guidance from the Office of the Public Guardian in 2023.’

Irwin Mitchell is covering the full legal costs of PW in this case to determine the correct path forward.