EG & Anor v AP & Ors
Senior Judge Hilder has further refined our understanding of the scope of the Court of Protection’s power to make injunctions. This issue has been the subject of recent appellate level consideration in Re G (Court of Protection: Injunction) [2022] EWCA Civ 1312, in which the Court of Appeal confirmed that the Court of Protection (1) has the power to make orders, including injunctions, to give effect to, or otherwise in connection with an order under s.16(2)(a) (i.e. a decision made on behalf of P); and (2), given that its power to make injunctions is founded upon s.47, which cloaks the Court of Protection with the same powers as the High Court ‘in connection’ with its jurisdiction, the Court of Protection is required to apply the test of whether an injunction is “just and convenient.” Baker LJ gave two examples where an injunction might be found to be “just and convenient”:
72. […] suppose that the Court decided under s16(2) that a fund held by A should be transferred to be held by B for P instead. If there is no reason to suppose that A will be obstructive, it may well be enough for the Court to decide that it is in P’s best interests that the funds be transferred from A to B and make an order to that effect in the expectation that A would duly co-operate. If however there is a risk that A will seek to frustrate the order, the Court can undoubtedly add an injunction ordering A to transfer the fund. That would be an example of an ancillary order intended to make the s16(2) order effective. (‘the transfer example’)
73. […] a useful analogy can be found in Broad Idea itself. There Lord Leggatt identified the rationale for the grant of freezing injunctions as the so-called “enforcement principle”, namely the principle that the essential purpose of a freezing order is to facilitate the enforcement of a judgment or order for the payment of a sum of money by preventing assets against which such judgment could potentially be enforced from being dealt with in such a way that insufficient assets are available to meet the judgment. Then, having identified the relevant interest as the claimant’s (usually prospective) right to enforce through the court’s process a judgment or order for the payment of a sum of money, he continued at [89]:
“A freezing injunction protects this right to the extent that it is possible to do so without giving the claimant security for its claim or interfering with the respondent’s right to use its assets for ordinary business purposes. The purpose of the injunction is to prevent the right of enforcement from being rendered ineffective by the dissipation of assets against which the judgment could otherwise be enforced.” (‘the enforcement example’)
Before SJ Hilder, the question – on appeal – was whether the Court of Protection could grant an injunction prohibiting capacitous persons from disposing of assets in which others alleged that P had an interest, but where that interest had not been determined. SJ Hilder concluded that it could not.
The factual matrix and procedural history was somewhat complicated, and SJ Hilder had a number of somewhat pointed observations to make about the procedural history. For present purposes, however, of immediate relevance was that, against the backdrop of a dispute about the proceeds of sale of a house which had previously been owned by the donor of a power of attorney, an application was before the Deputy District Judge for an order under s.22 MCA. In the context of that application, the Deputy District Judge granted a proceeds of sale injunction (a ‘freezing injunction’). Before Senior Judge Hilder, it was common ground that the Court of Protection had no jurisdiction to determine the extent of the donor’s interest in the proceeds of sale.
Senior Judge’s Hilder’s first conclusion as to the Court of Protection’s ability to grant a freezing injunction was linked to the fact that the application had been founded on s.22 MCA:
68. On the application formally before the Court, orders were sought pursuant to section 22 of the Mental Capacity Act, not section 16. That section has no direct equivalent of section 16(5). Instead s22(4) specifies the court’s powers. In my judgment it would stretch the s47 concept of ‘connection with’ the s22 jurisdiction beyond what it can bear to suggest that a freezing injunction is so linked to a determination of validity of lawful authority as to be ancillary to preventing frustration of the validity decision. Both of the powers of s22(4) can be fully implemented irrespective of what happens to disputed assets.
However, Senior Judge Hilder continued, even if the matter could be framed by reference s.16(2), the freezing injunction was a step too far:
69. I accept that the Deputy District Judge was considering - despite no such application having been made and apparently not immediately - granting someone authority to conduct proceedings on behalf of MMP in respect of the property dispute, then at least there is potential for a section 16 order (as provided by section 18(1)(k) of the Act) so section 16(5) would apply. Can it be said that a freezing injunction is ‘necessary or expedient’ for giving effect to, or otherwise ‘in connection with’ the granting of authority to conduct proceedings? Again, in my judgment the answer to that question must be negative. Litigation can be properly conducted irrespective of what happens to disputed assets. A freezing injunction goes materially beyond the conduct of litigation, into its determination. It is not within the realms of effectively conducting litigation to freeze disputed assets, even when the conduct of litigation has reached the point of enforcement; so such an order cannot be ancillary to preventing frustration of such authority. In substance and intent, a freezing injunction is ancillary to a power to determine the dispute, which the Court of Protection does not have.
Senior Judge Hilder cross-checked her two conclusions against the examples given by Baker LJ in Re G:
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a. The transfer example: the clear assumption of the example is that the funds in question are held “for P” ie there is no dispute about P’s beneficial entitlement; it is merely a question of who holds them for P. So the example tells us nothing directly about whether the Court of Protection can grant freezing injunctions against assets in which P may have an interest.
The s16 decision contemplated is that B should hold P’s funds. The ancillary order contemplated is an injunction to compel the current holder, A, to transfer the funds to the intended holder, B. Clearly the transfer is necessary to the decision, and clearly if A will not make it voluntarily, an order compelling him to make the transfer is ancillary to preventing frustration of the decision. The very clarity of connection between the decision and the injunction in this example reinforces my conclusion that a freezing injunction cannot be considered ancillary to either a determination of validity of LPAs or a decision to authorise conduct of litigation.
b. The enforcement example: to Baker LJ the usefulness of this example was by analogy. He offered it as an illustration of meeting the ‘just and convenient’ test. The principle is that the purpose of a freezing injunction is to facilitate enforcement of an order. The decision to which that principle applies must therefore be that assets in the control of X are payable to Y. So far, this confirms my conclusions because, as all parties agree, the Court of Protection cannot decide the property dispute.
However, Baker LJ went on to note that the principle applied “even though the order (i) may not yet exist but may only be a potential order and (ii) may not be an order of the relevant court at all but may be that of a foreign court.”
Deputy District Judge Chahal clearly had enforcement issues in mind, as evident for example from paragraph 48 of her judgment. So does the enforcement example, and particularly Baker LJ’s note of the extent of it, suggest that she can make an injunction to prevent frustration of an order which the civil court may make?
After anxious reflection I am satisfied that the enforcement example does not import such suggestion. In my judgment, the reason for that lies in section 47 of the Act. The Court of Protection’s recourse to High Court powers is, pursuant to section 47, limited to use “in connection with its [own] jurisdiction.” Baker LJ’s analogy to the enforcement example is useful as an illustration of the principle of preventing frustration of an order but it is not – and on my understanding of the Re G judgment, was never intended to be - an illustration of when the Court of Protection is acting “in connection with its jurisdiction.”
The Court of Protection does not have jurisdiction to determine the property dispute so an injunctive order to prevent frustration of that determination elsewhere cannot reasonably be understood as made “in connection with” Court of Protection jurisdiction.
Senior Judge Hilder noted, further, that she had:
71. […] cross-checked Conclusions 1 and 2 against Baker LJ’s stated intention (at paragraph78) that the judgment in Re G does not “cast doubt on or lead to any significant change in practice” in respect of discretionary injunctions. Throughout my 12+ years sitting in the Court of Protection, the general approach has always been that third party disputes require a different forum, including for interim measures. I am not aware of any instances where freezing injunctions against third parties have been considered or even requested from the Court of Protection, and neither counsel referred me to any such instances. Contrariwise, I am aware that freezing injunctions were obtained against the former deputies in Matrix via parallel proceedings in the High Court. So, it seems to me that my conclusions are in accordance with existing practice, and in accordance with Baker LJ’s stated intentions for the Re G judgment.
Entirely separately, Senior Judge Hilder also had some important points to make about dispute resolution hearings (‘DRHs’), a significant feature of cases on the property and affairs pathway:
59. The purpose of a dispute resolution hearing, as spelled out in paragraph 3.4(3) of Practice Direction 3B, is “to enable the court to determine whether the case can be resolved and avoid unnecessary litigation.” It should be a singular opportunity for the court to “gives its view on the likely outcome of the proceedings” so that the parties can take a realistic view at an early stage of the merits of further litigation.
60. In order to achieve that purpose, the judge conducting the dispute resolution hearing needs to focus on what is in issue before the court, and to ensure that the parties do too. Often, this exercise leads to sensible compromise and proceedings can be brought to an end with a final order made by consent. However, at least at the central registry it is about as often the case that one party or another does not accept judicial insight and no agreement is reached.
61. A dispute resolution hearing may be considered successful if parties reach a position where proceedings can be concluded. It may nonetheless be effective as a dispute resolution hearing even if no concluding agreement is reached, in that the judge will have expressed a view about the likely outcome and the parties had an opportunity to consider their next steps in the light of such insight. It is only generally considered ineffective as a dispute resolution hearing if in fact no such opportunity for judicial explanation arises because, for example, one of the parties or one of the representatives for some reason fails to attend.
62. Once a judge has engaged in dispute resolution, whether successfully or not, that judge cannot properly engage in substantive decision-making in the case beyond what the parties agree. It would be procedurally unfair to do so because the judge has expressed views without any party having had the opportunity to give their evidence. Accordingly, paragraph 3.4(6) of Practice Direction 3B explicitly provides that if the parties do not reach agreement, the court will give directions for the management of the case and for a final hearing; and paragraph (7) specifies that the final hearing must be before a different judge.
63.In passing, I note that a question has previously arisen as to what the court may do where a dispute resolution hearing has been ineffective as defined above. It is indeed frustrating if an objecting party fails to attend a dispute hearing. An applicant may reasonably ask why the court cannot infer from non-attendance that the objection is abandoned, and go on to make final orders rather than give directions for further hearing. For practical reasons, it may be unsafe to infer abandonment of objection from non-attendance (not least because explanation of a good reason for non-attendance may reach the court only after the hearing). However, there is formal reason too in the wording of Practice Direction 3B. The preliminary words of paragraph 5 (“If the parties reach agreement to settle the case…”) not being made out, the second half of the sentence (“the court will make a final order if it considers it in P’s best interests”) does not apply. In the absence of agreement, paragraph 6 applies. Any change to this approach would require amendment of the Practice Direction, which is not presently under active consideration by the Rules Committee. Meanwhile, any frustration about non-attendance is better dealt with as a costs consideration.
On the facts of the case before her, Senior Judge Hilder noted that:
64. In the matter currently before me, there is nothing in the order made on 21st July 2021 to explain why the dispute resolution hearing was considered “ineffective” as opposed to unsuccessful. It is expressly recorded that the applicant and both the respondents (jointly) were represented by counsel, SB and DG only being joined as parties by order made at conclusion of the hearing. Moreover, the identification of matters which were agreed and not agreed clearly indicates some judicial engagement. In accordance with Practice Direction 3B, the directions should therefore have been simply for case management and final hearing before another judge. Regrettably, in my judgment the Deputy District Judge went procedurally astray in providing for “a further dispute resolution appointment” before herself. There is no provision in the Rules or Practice Direction for multiple dispute resolution hearings, and adopting such a practice would not serve the purposes for which such a hearing was devised, namely early conclusion of unnecessary litigation. The court is not a mediation service. If a dispute resolution hearing is unsuccessful, normal procedure should thereafter apply.
Comment
Given how few cases are reported in relation to property and affairs cases, it is not surprising that DRHs do not feature heavily in reported cases. The observations about their purpose – and their ‘one-shot’ nature – are therefore particularly helpful.
As regards the question of the Court of Protection’s jurisdiction to grant freezing injunctions, it is perhaps important to distinguish carefully between two situations.
The first is that under consideration by Senior Judge Hilder, where (1) it is not yet clear what the nature of the underlying interest to be protected is; and (2) resolution of that question is not for the Court of Protection. At that point, it must be right that the Court of Protection cannot grant a freezing injunction, not least because it would put the court which is actually charged with determining the dispute in a very difficult position because it would effectively had had its jurisdiction usurped. In this regard, Senior Judge Hilder’s observations prompts consideration of the recent decision of Hayden J in D v S [2023] EWCOP 8, and the need for care (discussed here) to navigate the division of labour between the Court of Protection and the Family Court in relation to the question of the pursuit of divorce proceedings on behalf of a person with impaired decision-making capacity.
The second situation is where the nature of P’s interests are clear, and it is a question of protecting them. This might be the ‘transfer example’ given by Baker LJ in Re G (in which the various enforcement mechanisms provided for in Part 70 of the Civil Procedure Rules, imported via COPR r.24.2 may also be in play). We would also suggest that it could be applicable in a situation where there is no dispute as P’s interests in assets, but steps are being taken by a third party to disperse those assets. At that point, the underlying s.16 decision would be a decision on P’s behalf not to agree to those steps, and the freezing injunction would be in support of that decision.
For completeness, and in relation to the observation of Senior Judge Hilder at paragraph 71 in relation to whether freezing injunctions have been sought before the court, we note, finally, that we are aware of at least one (unreported) case where a freezing injunction was granted by the Court of Protection against the assets belonging to a third party so as to seek to compel them to return P to the jurisdiction. A reported example of such a case, decided (because of a historical quirk) under the inherent jurisdiction, is that of Munby LJ in PM v KH & Anor [2010] EWHC 870 (Fam). It may in due course be the case that the question of how the interaction between ss.16 and 47 MCA 205 plays out in such a situation requires further consideration, ideally in a reported case.
