Litigation: Personal Injury Trusts – More Food for Thought

An interesting case issued by Lord Uist in the Court of Session this week is the case of James Good v Lanarkshire Health Board. It has provided some clarification and discussion in respect of various heads of claim and when these will actually be recoverable from the defenders in personal injury cases.  In particular, it has provided guidance as to when pursuers will successfully be able to recover the costs of setting up and administering a personal injury trust.

The facts of the case are not particularly relevant, save to say that Mr Good suffered an horrendous injury as a result of negligence on the part of staff at Wishaw General Hospital.  He ended up without a left hip and is confined to a wheelchair with limited mobility.  He is dependent on a care package and assistance from his nephew.  Crucially, however, in terms of mental capacity he is fully functioning.  He is able to make his own decisions and, indeed, still pays his own bills.  He is receiving no means tested benefits.

The pursuer, as part of his claim, asked the court to provide him with an award to cover the cost of setting up a personal injury trust and, thereafter, the cost of administering this on a yearly basis.  A personal injury trust had already been set up for the pursuer by his solicitors and, indeed, an interim payment of damages had been paid into it. 

The defenders, of course, accepted that there were circumstances where the costs of administering a trust would be recoverable from the negligent party and they set out three examples of when they thought this might be appropriate:

1. Where there had been a significant loss of intellectual function;
2. Where there was a material inability to communicate; or
3. Where there was a very substantial physical incapacity.

They argued that none of these elements were present in this particular case.   Mr Good had capacity, he was more than able to communicate with others, he could make his own decisions and there was no suggestion that he was subject to undue influence.

Furthermore, one of the main reasons for setting up a personal injury trust is so that the client’s means tested benefits are protected.  An award of damages, if not protected by the trust, can lead to a cut in benefits or indeed them stopping altogether.  This was accepted in evidence by the pursuer’s expert.  However, Mr Good did not receive any benefits and no evidence was led to suggest that this would change in the future.  Therefore, there was no obvious requirement for the money to be ring-fenced in a trust.

After hearing all of the evidence, Lord Uist, although recognising that the trust could be beneficial to the pursuer, decided that he had to make a decision, based on whether or not in the circumstances of this case, the trust was a reasonable expenses for which the defenders could be found liable.  In coming to his decision, he looked at the lack of means-tested benefits, Mr Good’s capacity and ability to make decisions for himself and that there was no suggestion of any vulnerability or undue influence being exerted upon him.  His Lordship concluded that the cost of setting up and administering a personal injury trust was not a reasonable expense and that the cost of the personal injury trust was disproportionate to the likely size of the award and the simplicity of managing Mr Good’s ongoing affairs.

It is clear that, going forward, the facts of any particular case are going to be important in determining whether the costs of a personal injury trust are recoverable from the defenders.  The fact that they are not always recoverable does not mean that they will not always be appropriate and, indeed, it remains something that should always be discussed in the context of personal injury claims.

Personal injury trusts are potentially very complicated and require specialist advice.  If you wish to discuss these matters further, then please contact our private client team headed up by Charles Ogilvie.