COP Decides Complex P&A Test Case on Public Funding of Care and Reverse Indemnities

39 Essex Chambers’ barristers Victoria Butler-Cole KC and Arianna Kelly appeared for four property and affairs deputies in Re Various Applications in respect of ‘Direct Payments’ [2026] EWCOP 42 (T2), a matter considering seven applications for authority to manage direct payments for people lacking capacity.  This judgment followed on from Lumb v. NHS Humber & North Yorkshire ICB [2024] EWCOP 57 (T2), in which Senior Judge Hilder found that it was outside of the general authority of property and affairs deputies to manage direct payments for people entitled to public funding through NHS Continuing Healthcare.

Following on this judgment, the applicant deputies (Apricity Law, Anthony Gold, Boyes Turner and EMG Solicitors, coordinating through the Professional Deputies’ Forum) made applications in 2025 for authority to manage direct payments on behalf of seven individuals, all of whom had substantial care needs and large personal injury awards. The applicants included both children and adults, and people who were receiving support under the Care Act, via EHCPs or under children’s social care duties. The Official Solicitor was appointed as amicus curiae and the Public Guardian was joined as respondent.

As part of the applications for authority, the applicant deputies argued to the court that:

1. The nature of the authority required to manage direct payments under each of the legislative regimes was property and affairs, rather than welfare; and
2. The authority to manage direct payments was within the ‘general’ authority of property and affairs deputies (such that additional applications for authorisation should not be required).

Senior Judge Hilder confirmed her position from the 2024 Lumb judgment on four key issues, and extended them to the other three legislative regimes – the Care Act 2014, the Children Act 1989 and the Special Education Needs Regulations 2014:

1. Managing DPs in all four statutory frameworks involves a mix of financial and welfare decision-making,
2. The general authority of a property and affairs deputy does not include authority to manage DPs,
3. The Court can provide authority to manage DPs notwithstanding it requires a mix of financial and welfare decision-making, and
4. A trust corporation cannot be authorised to make welfare decisions.

In a detailed judgment, Senior Judge Hilder found that:

• It is only possible to provide welfare authority once P has reached aged 16 years.  Authority to manage DPs cannot therefore be granted where P is under age 16 years;
• Administration of carers’ employment contracts by a property and affairs deputy is within their general authority;
• Negotiating the sufficiency of DPs with the statutory authority is not within the general authority of the deputy under ACC, but may be granted to a deputy who make an application for this authority;
• The presence of a reverse indemnity in a settlement order (and an obligation on P to seek out direct payments to fulfil the terms of that order) does not extend the scope of the deputy authority.  Additional COP authority beyond a deputy’s general authority would therefore be required for a Deputy to manage any obligations to claim DPs required by a reverse indemnity;
• Given practical difficulties arising, it would not be appropriate for an individual director of a TC to be authorised to manage DPs, where the TC is property and affairs deputy and the package of care is a mix of public and private funding.
• Where a Case Manager is appointed by the statutory authority to manage DPs, a deputy has authority to pay the fees of the CM under the general authority;
• A deputy is not to be considered as the ‘last resort’ where the management of DPs are concerned, and may be appointed even if there are others who could potentially manage the DP
• A deputy should seek funding from the statutory authority for the costs of managing DPs before they apply to the Court, but they do not need to wait for a response where that is delayed,
• Where a deputy has been managing DPs without authority and has been paid for so doing from P’s funds, retrospective authority is required.
• Where a former deputy has managed DPs without authority and has charged P for so doing, the current deputy does not need to seek ratification from the Court for those costs but should consider whether an application to recover those costs from the former deputy is appropriate.
• The long-stop date for retrospective authority will usually be 11 October 2024 (Lumb), unless there are case-specific factors otherwise
• The ‘but for’ test applies when determining what costs arise from managing DPs where there is a mixed funded package of care.

The judgment provides practical guidance on how retrospective and prospective authority applications should be made. Detailed commentary on this judgment will follow in the October 2026 39 Essex Chambers Mental Capacity Reports.

Arianna Kelly will be speaking at the PDF conference on 17 September 2026 on the judgment, and the PDF will be hosting a webinar in which Victoria Butler-Cole KC and Arianna Kelly are scheduled to speak on 24 September 2026.