ZYN, R (On the Application Of) v Walsall Metropolitan Borough Council

Factual and Procedural Background

The Plaintiff is severely disabled and requires community care services, part of which are provided by the Defendant local authority ("the Council"). The Plaintiff possesses substantial capital assets derived from a personal injury settlement, valued at approximately £550,000. The Council applies a means-tested charging policy requiring service users with capital above £23,250 to pay the full cost of their care. The dispute concerns whether capital derived from a personal injury settlement, managed by a deputy appointed by the Court of Protection, must be disregarded by the Council when assessing contributions towards care costs.

The Plaintiff’s personal injury settlement was approved by the High Court in 2003 and managed under the Court of Protection’s supervision. The Council has charged the Plaintiff for care costs from 1 April 2011 to 18 October 2012 and intends to resume charging thereafter, subject to policy revisions. The Plaintiff challenges the lawfulness of the Council’s policy for including settlement-derived capital in the means test.

Legal Issues Presented

1. Does paragraph 44 of Schedule 10 to the Income Support Regulations apply to the 'new' Court of Protection established under the Mental Capacity Act 2005?
2. If so, does capital managed by a deputy appointed by the new Court of Protection fall within paragraph 44(1)(a) as capital "administered on behalf of a person by the Court of Protection"?
3. Does all of the Plaintiff’s capital fall within paragraph 44(1)(b) as capital that "can only be disposed of by order or direction of" the Court of Protection?

Arguments of the Parties

Appellant's Arguments (Plaintiff)

• The capital derived from the personal injury settlement is required to be disregarded under the relevant legislation because it is administered by the Court of Protection.
• The term "Court of Protection" in paragraph 44 should be interpreted as including the new Court of Protection established under the 2005 Act.
• The whole of the Plaintiff’s capital falls within paragraph 44(1)(b) since it can only be disposed of by order or direction of the Court of Protection.

Appellee's Arguments (Council)

• The reference to the "Court of Protection" in paragraph 44 pertains only to the old Court of Protection established under the Mental Health Act 1983, not the new Court created by the 2005 Act.
• Capital managed by a deputy under the 2005 Act is not "administered by the court" as the deputy acts on behalf of the person lacking capacity, not the court.
• Capital which the deputy can withdraw without prior court approval (up to £50,000 annually) does not fall within paragraph 44(1)(b) because it can be disposed of without an order or direction of the court.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court undertook a detailed statutory interpretation exercise to determine whether the term "Court of Protection" in paragraph 44 of Schedule 10 to the Income Support Regulations refers to the 'old' Court of Protection under the 1983 Act or the 'new' Court of Protection established by the 2005 Act. The Court rejected the Council's contention that the term is limited to the old Court, preferring an updating interpretation consistent with established principles of statutory construction. This approach aligns with cases recognizing that statutory language can adapt to changing circumstances, including new institutional arrangements.

The Court further found that capital managed by a deputy appointed by the new Court of Protection is "administered on behalf of a person by the Court of Protection" within the meaning of paragraph 44(1)(a). It reasoned that the deputy acts as the court’s agent in managing the property of the person lacking capacity, similar to the role of a receiver under the old regime, and that supervision by the Public Guardian does not alter this fundamental relationship.

Regarding paragraph 44(1)(b), the Court rejected the Council's argument that capital which a deputy may withdraw without prior court approval falls outside the scope of the provision. The Court held that capital remains subject to the Court of Protection’s control until actually spent and that permitting disposal without further order does not exclude the capital from being "disposed of by order or direction of" the court. The Court found the Council’s interpretation led to absurd and arbitrary consequences, inconsistent with rational legislative intent.

Consequently, the Court concluded that the entire capital derived from the Plaintiff’s personal injury settlement falls within paragraph 44 and must be disregarded in the means test applied by the Council.

Holding and Implications

The Court held that the Council’s charging policy, insofar as it takes into account capital derived from the Plaintiff’s personal injury settlement managed by the Court of Protection, is unlawful. The Council is not entitled to charge the Plaintiff for the cost of social care services on the basis of including this capital in the means test.

The direct effect of this decision is that the Plaintiff’s settlement-derived capital must be disregarded when assessing contributions to care costs under the Council’s policy. No broader precedent beyond the interpretation of paragraph 44 and its application to the Court of Protection regime was established.