The Court of Appeal has upheld that a client’s conditional fee agreement is maintained even after she lost mental capacity.

Diann Blankley had signed the CFA with north-west firm Linder Myers in a clinical negligence claim against Central Manchester and Manchester Children’s University Hospitals NHS Trust.

Blankley suffered a cardio-respiratory arrest and anoxic brain damage after an operation at St Mary’s Hospital in Manchester in 1999.

The claimant’s father, acting as her litigation friend, had in 2002 initially instructed Linder Myers to pursue a claim of medical negligence.

However, having regained mental capacity in 2005, the claimant entered into a CFA and subsequently became incapacitated again in 2007.

The claim settled in 2010 for £2.6m plus costs, with Linder Myers submitting a bill of costs of £372,000 which it said was recoverable from the defendant.

The NHS trust argued that the loss of mental capacity had the automatic and immediate effect of terminating the solicitor’s retainer and a regional costs judge accepted that contention.

However, that decision was overturned last year by Mr Justice Phillips in the High Court after the judge said it was ‘unjust and unreasonable’ to tear up the retainer. 

Following a hearing in November, Lord Justice Richards said the appeal was dismissed and that the CFA was not frustrated.

Richards said the situation was covered by the express terms of the CFA, which entitled the solicitors to payments of its charges and disbursements.

He added: ‘The defendant’s case that the CFA was frustrated depends on the proposition that the obligation to give instructions was personal to the claimant and could not be discharged by the giving of instructions by a receiver/deputy acting on her behalf.

‘Whilst a solicitor’s retainer is in one sense a personal contract, I very much doubt whether it requires instructions to be given by the client personally even in the general run of cases.’

The case is believed to be the first time that a challenge has been brought in relation to whether a CFA is frustrated if a claimant loses mental capacity after signing an agreement.

Trevor Ward, head of bodily injury at Linder Myers Solicitors, said it was reasonable to expect a risk the client would lose capacity after temporarily regaining it.

He added: ‘Today’s Court of Appeal judgment, following the defendant’s appeal against the same decision last year, has once again provided useful clarification, amongst other things, that the standard CFA documentation is not terminated by such supervening incapacity.

‘This gives comfort to both claimants and their advisers pursuing claims for severely injured victims.’

Sue Nash, chairman of the Association of Costs Lawyers, said it was a ‘common sense’ decision that recognises the practicalities of dealing with a client with a brain injury.

‘It will lead to swifter justice in that there will be no need to enter into a further funding arrangement and it should also avoid further satellite litigation.’