The Supreme Court has given a landmark ruling that a woman should not be bound by an agreement to settle her personal injury claim.

Joanne Dunhill had settled her case for £12,500 after she suffered a severe head injury in a collision in Sheffield with a motorcycle in 1999. The claim was settled in January 2003 without the insurer for the motorcyclist, NIG, admitting liability.

But after Dunhill approached a new claimant firm, Manchester practice Potter Rees, she was able to argue in the High Court she did not have mental capacity at the time of the settlement. Her lawyers argue she is due significantly greater levels of compensation.

The motorcyclist, named as Mr Burgin, appealed to the Supreme Court, but in a judgment issued last week the court dismissed the appeal as Dunhill, now 53, ‘lacked the capacity to commence and conduct proceedings arising out of her claim’.

Accordingly, the Supreme Court said, a litigation friend should have been appointed to protect her position and ensure proper instructions were given for a full investigation and, importantly, to give the court an opportunity to approve any settlement reached.

In this case no settlement should have been approved by the court, the Supreme Court concluded.

In her summary, Lady Hale (pictured) said although there was a need for finality in litigation and it was difficult to re-open cases, the underlying policy was that children and protected parties ‘require and deserve protection, not only from themselves but also from their legal advisers’.

Accordingly, she ruled that the consent order be set aside and the case go for trial.

Burgin’s insurers had claimed that since neither they nor their solicitors were aware of the nature and severity of Dunhill’s mental condition, it would not be fair to set the earlier agreement aside. The decision is now expected to have significant implications for accident claims brought on behalf of those with brain injuries.

Alison Hartley, of Potter Rees, said the Supreme Court ruling will bring comfort to others who find themselves in a similarly disadvantaged position.

‘Vulnerable individuals who lack the mental capacity to conduct claims require and deserve protection not only from their own lack of insight but also from the significantly life limiting consequences of poor legal advice. 

‘This judgment demonstrates the law exists to protect both represented and unrepresented claimants. 

‘In cases of inadequate legal advice, it avoids the clear disadvantages of pursuing separate proceedings against those responsible for giving that poor advice and, in all cases, it ensures that those who caused the damage in the first place are the ones who are made to pay.’