Duties of solicitors in money claims on behalf of children
This guidance is issued to solicitors taking instructions from a child’s legal representative or guardian in relation to a money claim on behalf of the child.
The claim may be made under any rule of law. The money, for example, may be due to a child under a contract, a lease, or a trust: under the laws relating to intestate succession to a relative’s estate, or under a will; by way of damages for delicutal liability or breach of contract; by virtue of a claim for unjustified enrichment; or under an obligation of accounting to the child.
Taking Instructions from the Child’s Legal Representative
The concept of parental guardianship ceased to exist with the coming into force of the Children (Scotland) Act 1995 (“the Act”).
A child’s mother exercises parental responsibilities and rights in respect of her children by virtue of her relationship to them. A father has parental responsibilities and rights only if he is, or has been married, to the child’s mother, has entered into a parental responsibilities and rights agreement with the mother under section 4 of the Act, or has had parental responsibilities and rights conferred on him by order of the court.
Other persons, such as grandparents or step-parents, may have had parental responsibilities and rights conferred on them by order of court, or through an adoption order.
In rare cases, a parent may have been deprived of his or her parental responsibilities and rights by order of the court.
It is both a parental responsibility and a parental right.
“to act as the child’s legal representative”.
It is this responsibility / right which allows a parent or other person to administer a child’s property, raise and defend actions on behalf of the child, and compromise court proceedings raised on the child’s behalf.
Some persons may have been granted the limited parental responsibility / right to act as the child’s legal representative for the purpose of certain specified court proceedings.
Before taking instructions from a parent or other person to make a financial claim on behalf of a child, a solicitor:
· Must ensure that that person has parental responsibilities and rights for the child, or the specific parental responsibility / right to act as the child’s legal representative in relation to a particular claim. It should be particularly borne in mind that fathers do not have parental responsibilities and rights unless through marriage to the child’s mother, agreement with her under section 4 of the Act, or order of court.
Taking Instructions from Guardians and Persons with Residence Orders
A guardian is now a person appointed by a parent with parental responsibilities and rights for the child (or another guardian of the child) to act as the child’s guardian after her death, or appointed to that office by order of the court.
Guardians have all the parental responsibilities and rights that parents with parental responsibilities and rights have, and thus may act as the child’s legal representative.
Persons in whose favour a residence order for a child has been granted have the right to act as the child’s legal representative while the residence order remains in force.
Legal Capacity
A child has legal capacity to raise a court action, or make a financial claim, and to instruct a solicitor for those purposes, if he or she:
“has a general understanding of what it means to do so”.
The child is presumed to have such an understanding if he or she has attained the age of twelve; the presumption may be rebutted if for any reason it is evident that child does not have such an understanding. A solicitor may exceptionally be satisfied a child under twelve has legal capacity to raise proceedings. There is no presumption that a child under that age does not have capacity.
A person who attains the age of sixteen has complete legal capacity in relation to his or her affairs and is regarded in law as an adult.
Accordingly, a solicitor
-May take instructions from a person entitled to act as a child’s legal representative, or the child him or herself if satisfied the child has capacity to give instruction. The solicitor may only take instructions from the minor him or herself when the minor has attained the age of sixteen.
-If there is any question that the child is under a mental or physical incapacity such that the child does not have a general understanding of what it means to instruct the solicitor, then the solicitor may only take instruction from those having the right to act as the child’s legal representative.
-Where the minor attains the age of sixteen, and remains under mental or physical incapacity, the solicitor must treat the minor as an incapacity adult under the Adults with Incapacity (Scotland) Act 2000, and act accordingly under that Act. Proceedings under that Act are beyond the scope of this guidance note.
Duties in Relation to Administration of Child’s Property or Money
Section 5(1) of the Age of Legal Capacity (Scotland) Act 1991 (“the 1991 Act”) “in relation to any rule of law” provides that guardians of persons under the age of sixteen have in relation to the child and his estate:
“the powers and duties which…a tutor had in relation to his pupil [at common law]”.
The 1991 Act repealed the Tutors and Curators Acts 1672 and 1969, which had required tutors, on entering office, to lodge an inventory of the child’s estate with the court, upon pain of removal from office. Tutors were liable to the child, in attaining majority for any wrongful dealings with the child’s property, and had to find caution on entering office.
The law has now been reformulated in the Children (Scotland) Act 1995 (“the Act”).
Section 10 of the Act requires a person acting as a child’s legal representative administering a child’s property:
“to act as a reasonable and prudent person would act on his own behalf”.
He or she is fully entitled to do whatever the child, if of full legal capacity, could do in relation to the child’s property, subject:
1. to any limitations imposed by an order of the court; and
2. to a liability account to the child for his or her intromissons with the child’s property.
He or she is not liable in respect of funds properly used in discharge of his or her responsibility to safeguard and promote the child’s health, development and welfare.
Safeguarding the Child’s Property
Where a solicitor has taken instructions from a person entitled to act as the child’s representative, or the child’s guardian, and has recovered money which he must transfer to that person for administration on behalf of the child he or she has a professional responsibility:
· To inform the person to whom the money is to be transferred of his or her duties and liabilities under section 10 of the Act; and
· Of that person’s duties to administer the money prudently on behalf of the child, and in discharge of his of her duties to safeguard and promote the child’s health, development and welfare.
The solicitor must in all cases comply with sections 9 or 13 of the Act.
Settlements where no court proceedings (Section 9)
If the solicitor is not acting as executor or trustee then he may apply to the Accountant of Court for a direction as to the administration of the property unless the person to whom the money is to be transferred has been appointed trustee under a trust deed to administer the property. This requirement does not apply if the sum recovered is less than £5,000.
Accordingly, the solicitor may
· Transfer sums less than £5,000 to the legal representative / guardian on informing him or her in writing as to his or her duties and liabilities under section 10 of the Act and of his or her duties to administer the money prudently on behalf of the child, and in discharge of his or her duties to safeguard and promote the child’s health, development and welfare;
· Transfer sums of any amount to the legal representative / guardian acting as trustee under a trust deed set up to administer the child’s property; or
· In cases where the sum recovered is or exceeds £5,000 apply to the Accountant of Court for directions.
In cases where the solicitor is acting as executor or trustee, he must apply to the Accountant of Court for directions if the sum recovered exceeds £20,000 unless the money is to be transferred to the legal representative / guardian acting as trustee under a trust deed set up to administer the child’s property.
Where a solicitor applies to the Accountant of Court for directions, the Accountant of Court may apply to the court for appointment of a judicial factor, or direct that all or part of the money be transferred to himself or to the legal representative / guardian for administration on the child’s behalf. He may direct that the legal representative / guardian does not incur capital expenditure, and / or make an annual report to him, if he directs the transfer of the property to that person.
Solicitors holding funds, or cheques, for legal representatives / guardians may only transfer the funds, or cheque, on taking the measures to safeguard the child’s property set out in this guidance note.
In those cases where they have adiscretion to ask the Accountant of Court for directions, they must consider whether or not to do so and record the reasons for their decision in their file.
Appropriate cases for seeking a direction include those:
· where the legal representative / guardian has indicated he or she has no intention of complying with his or her duties in respect of administering the child’s property.
· where there is a reasonable cause to believe that the legal representative / guardian will not comply with his or her duties, or may indeed dissipate the property, such as where the legal representative / guardian
- is insolvent, or bankrupt
- is financially irresponsible
- has substantial debts of his or her own
- is an alcoholic, or drug addict
- does not have the capacity or understanding to comply with his or her duties
Solicitors may wish to obtain a written undertaking from the legal representative / guardian as to compliance with his or her duties, and, if thought necessary, an indication of how it is intended the money will be invested / applied for the child’s benefit. If these undertakings or assurances are not forthcoming, then the solicitor would have reasonable cause to ask the Accountant of Court for directions.
It is entirely within a solicitor’s discretion (except if acting as executor / trustee where the sum exceeds £20,000 when he or she must do so) to ask the Accountant of Court for directions. If in any doubt, it would be prudent for the solicitor to do so. He or she should not be pressurised or influenced by the legal representative / guardian as to how he or she is to exercise this discretion. The solicitor should bear in mind his or her duty of reasonable care to the child, and that the money concerned is not to the legal representative / guardian’s, but the child’s whose interests are paramount. A solicitor should never hand over money or a cheque without at least considering whether it is appropriate to ask the Accountant of Court for directions, and reminding the legal representative / guardian of his or her duties in regard to administration of the child’s property. A solicitor who does not do these things may find him or herself incurring liability to the child for loss suffered by dissipation of his or her estate by the legal representative / guardian, together with being the subject of a complaint by the child for inadequate professional service and / or professional misconduct. There are cases in which it would clearly be negligent for a solicitor not to ask for directions, for example, where he or she knows the legal representative / guardian is bankrupt, or a drug addict.
Settlements or Awards Where There Have Been Court Proceedings (Section 13)
Where, in any Court proceedings, a sum of money becomes payable to a child under sixteen the Court may but is not obliged to make an Order relating to the payment and management of the funds. Section 13 applies equally to awards made by the Court and to extra judicial settlements.
Accordingly, the Solicitor must always consider whether it is necessary to make application to the Court to consider the most appropriate method for administration of the money for the child. (It is also open to the defenders in Court proceedings also to make such an application)
Under Section 13(2) of the Act, the Court may
- appoint a Judicial Factor
- order the money to be paid to the Sheriff Court (Sheriff Court)
- order the money to be paid to the Accountant of Court
- order the money to be paid to the legal representative/guardian to be invested, applied or otherwise dealt with, under directions of the Court for the benefit of the child
- order the money to be paid direct to the child
In normal course, an application to the Court by the Solicitor is only likely if there is reason to be concerned that funds will be dissipated or not applied in the child's best interests. If the legal representative/guardian wishes to be appointed to administer the funds under the direction of the Court, it will be necessary to satisfy the Court that he or she will do so prudently and broad details will be required as to how the legal representative/guardian intends to discharge his or her responsibilities. The Court may, for example, wish to know the extent to which the legal representative/guardian will seek professional advice in relation to the administration of the funds.
Most families will wish to avoid the appointment of a Judicial Factor because of the rigidity that imposes upon administration of the funds. It should be remembered that the cost of a Judicial Factor may form a legitimate head of the claim in the proceedings.
It is only in very unusual cases that money would be paid directly to the child.
Applications to the Court for administration of a child's property under Section 13 of the Act can be made by Motion in the process of the action for damages or payment.
Section 13(2) of the Act does not lay down particular sums which would more appropriately be administered by the legal representative / guardian or the court / judicial factor.
This is a matter for the court to be determined in the light of all the circumstances of the case, the needs of the child, and the circumstances of the legal representatives /parents.
Applications to the court as to administration of a child’s property under section 13 of the Act are made by minute in the process of the action for damages or payment in accordance with the relevant rules of court.
Cases in which Two or More Persons Act as the Child’s Legal Representative
The general rule is that where two or more persons act as a child’s legal representative (including guardians), any one of them may give instructions without consent of the other.
· A solicitor need not therefore enquire if any other person has the right to act as the child’s legal representative / guardian, or to obtain that person’s consent.
However, the general rule is subject to any “decree or deed” making the appointment.
· Accordingly if a person is acting as legal representative by order of the court, or as guardian by virtue of a court order or deed of appointment by a parent, the solicitor must obtain a copy of the decree or deed to ensure there are no restrictions on the powers of the person purporting to give instructions on behalf of the child.
A separation agreement registered in the books of council and session or sheriff court books should be treated as a “decree” of the court and consulted to see if it contains limitations on the rights of married parents, or unmarried parents sharing parental responsibilities and rights by virtue of an agreement under section 4 of the Children (Scotland) Act 1995 (“the Act”), to act as the child’s legal representative.
Those who draft separation agreement should consider whether only one or two persons with parental responsibilities and rights, and the other on that person’s death, should exercise the right to act as the child’s sole legal representative.
If separating parents, or other persons, have a dispute about the administration of a child’s property, then this may be referred to the court for determination under sections 11(1)(d), 14(1) and 14(2) of the Act if the child is habitually resident, or his or her property is situated, in Scotland.
Applications to the Court by the Solicitor
There is no reason why in unusual cases the solicitor him or herself cannot apply to the court for an order for the administration of the child’s under sections 11(1)(d), 14(1) and 14(2) of the Act.
The solicitor need only establish that he or she has an “interest” in making the application.
Applications to the court would be needed if the sum involved is less than £5,000 as in these cases there is no power for the solicitor to apply to the Accountant of Court for a direction as to the application of the funds.
Where the sum involved is or exceeds £5,000 the solicitor should always make an application to the Accountant of Court for a direction if he or she is concerned that the funds will be dissipated or not applied in the child’s best interests. An application to the court would only be necessary if the solicitor’s concerns arose after the transfer of the funds to the legal representative / guardian, or the legal representative / guardian refused authority to have the cheque issued in the solicitor’s name for the transfer to the Accountant of Court, a trustee, or a judicial factor, to be administered for the child’s benefit.
Applications by a solicitor under section 11(1)(d) of the Act are made by ordinary action in the sheriff court, or by family action in the Court of Session, in accordance with the relevant rules of court.
The solicitor should claim his expenses from the defender, or the child’s estate if necessary.
Because of the expenses implications, which are ultimately in the discretion of the court, the solicitor is advised in all but the most urgent cases to seek agreement from the legal representative / guardian or any other interested party, before making an application to the court under section 11(1)(d) of the Act.
The solicitor has no duty to make an application under section 11(1)(d) of the Act. Whether he or she does so depends on all the circumstances. The solicitor will no doubt be guided by his or her conscience and by any perceived need to limit the risk of liability to the solicitor’s firm, and damage to the interests of the child or the child’s property, where the solicitor has paid money to the legal representative / guardian in circumstances where he or she considers, on reflection, that he or she should not have done so.
Confidentiality
The solicitor taking instructions from a child who has capacity to instruct the solicitor owes a duty of confidentiality to the child and must not disclose any information to the child’s legal representative / guardian about the conduct of the claim without the child’s express and informed consent, in writing, to do so.
If the solicitor is taking instructions from the legal representative / guardian, he owes a duty of confidentiality both to that person, and the child. Where the child has legal capacity to instruct a separate solicitor, or attains sixteen years of age, he has the right to have disclosed to his or her new solicitors the contents of the original solicitors file, so far as relating to his claim and the transfer of any funds to the child’s legal representative / guardian, whether or not the legal representative / guardian who gave instructions to the original solicitor consents to this.
MIB and CICA claims
At page 8 of the Guidance Notes, page 8 paragraph 2, line 2 delete the words "The Solicitor has a duty in these cases apply" and substitute therefor "The Solicitor may, in these cases, apply to …….
Edinburgh
November 2003
