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Being a deputy is not a licence to loot

A Court of Protection case has recently tackled the issue of a person with considerable financial means but no capacity to manage her affairs, and the deputies appointed by the Court having made extensive ‘gifts’ from her financial estate and seeking retrospective approval for them.

MJ and JM v The Public Guardian 2013

http://www.bailii.org/ew/cases/EWHC/COP/2013/2966.html

This was the background to the appointment of MJ and JM as deputies

 

9.       GM has vascular dementia, which was first formally diagnosed in 2007.

10.   On 25 August 2010 the court made an order appointing MJ and JM jointly and severally to be her deputies for property and affairs.

11.   The order required the deputies to obtain and maintain security in the sum of £275,000. The premium for the security bond, which is payable from GM’s estate, is £550 a year, and the purpose of the bond is to restore to GM’s estate any loss that may have arisen as a result of the wrongful acts or omissions of her deputies.

12.   Paragraph 2(c) of the order gave the deputies the following authority to make gifts:

“The deputies may jointly and severally (without obtaining any further authority from the court) dispose of money or property of GM by way of gift to any charity to which she made or might have been expected to make gifts and on customary occasions to persons who are related to or connected with her, provided that the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of her estate.”

The case sets out very clearly the parameters in which deputies can operate, particularly with regard to ‘gifts’  and ‘deputyship expenses’

  1. The scope of a deputy’s authority to make gifts
  1. Section 16(2)(b) of the Mental Capacity Act 2005 provides that the court may appoint a deputy to make decisions on behalf of ‘P’, which is the shorthand term used in the Act for the person who lacks capacity or to whom the proceedings relate.
  1. Section 16(3) states that the powers of the court under section 16 are subject to the provisions of the Mental Capacity Act 2005 and, in particular, sections 1 (the principles) and 4 (best interests).
  1. Section 16(4) provides that the court may “confer on a deputy such powers or impose on him such duties, as it thinks necessary or expedient for giving effect to, or otherwise in connection with, an order or appointment made by it under subsection (2).”
  1. Section 18(1)(b) provides that the powers of the court under section 16 extend to making a gift or other disposition of P’s property.
  1. Paragraph 2(c) of the order of 25 August 2010 appointing JM and MJ as GM’s deputies defined the scope of their authority to make gifts in the following terms:

“The deputies may jointly and severally (without obtaining any further authority from the court) dispose of money or property of GM by way of gift to any charity to which she made or might have been expected to make gifts and on customary occasions to persons who are related to or connected with her, provided that the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of her estate.”

  1. Similar wording appears in almost every order appointing a deputy for property and affairs, and the intention of the court is that deputies should have the same powers to make gifts as attorneys acting under an Enduring Power of Attorney (‘EPA’) or a Lasting Power of Attorney (‘LPA’).
  1. It is important that deputies and attorneys should:

(a) realise that they have only a very limited authority to make gifts;

(b) understand why their authority is limited; and

(c) be aware that, in an appropriate case, they may apply to the Court of Protection for more extensive gift-making powers

  1. Deputyship expenses
  1. Section 19(7) of the Mental Capacity Act 2005 provides that:

“The deputy is entitled –

(a) to be reimbursed out of P’s property and affairs for his reasonable expenses in discharging his functions, and

(b) if the court so directs when appointing him, to remuneration out of P’s property for discharging them.”

  1. The Act distinguishes between two kinds of entitlement: the reimbursement of expenses, on the one hand, and remuneration, on the other. A deputy is entitled, as of right, to be reimbursed for the expenditure he incurs in carrying out his functions, though a ‘reasonableness test’ arises as to the amount he can actually recover.
  1. The Office of the Public Guardian publishes a booklet called A guide for Deputies appointed by the Court of Protection (OPG510), which is available in both hard copy and on the OPG website. Page 22 of this guide states as follows:

“Will I be reimbursed for my expenses?

The Act allows you to be reimbursed for reasonable expenses incurred when acting as a Deputy. Examples of expenses include telephone calls, travel and postage.

Expenses are not payment for your time spent while acting as a Deputy – this is called remuneration and can only be claimed if the Court order specifically states it. If you wish to receive remuneration you should ask the Court to consider this in your initial application.

 

The expenses you are entitled to claim and what is considered reasonable will vary according to the circumstances of each case. It depends on what you are required to do and also the value of the estate of the person who lacks capacity.

The OPG expects that you will only claim reasonable and legitimate expenses. If you claim more than £500 in expenses per year the OPG may require you to explain your expenses in detail and frequently.

If your expenses are considered unreasonable you may be asked to repay them, and in extreme cases the OPG may apply to the Court to cancel your appointment.”

So, in this case, what sort of “expenses” had been claimed?

£46,552.24 for ‘cars and computers’

Flick back – acceptable expenses £500 a year, and they went for nearly £50,000, out by several orders of magnitude.

It is no surprise that the Court considered that these were not ‘expenses’ at all, but the deputies making unauthorised gifts to themselves, and thus decided that they were obliged to refund GM’s estate with the money.

Let’s look at the gifts now

MJ personally had received ‘gifts’ from GM’s funds totalling £55,856  – including an £18,000 Rolex watch, a £16,000 ring, perfume, an Alexander McQueen handbag and £20,000 in cash.

JM personally had received ‘gifts’ from GM’s funds totalling £48,396.50, including a £17,000 Omega watch, two rings costing over £11,000, 2 Mulberry handbags and £20,000 in cash.

These were, of course, people who had been appointed by the Court to safely manage the estate of a very vulnerable woman and who had sworn an oath to do so properly.  I don’t think that I can actually find the words to describe how loathsome I consider their conduct to be, and I am amazed that the Judge was able to be as circumspect as she was.

They also made gifts of £62,500 to other friends and family members, all of whom seem to receive a Vivienne Westwood handbag, apart from one man who received a DerbyCounty season ticket.

GM had not been consulted about any of these ‘gifts’, nor had her wishes been explored by MJ and JM in any way.

  1. The Public Guardian’s position is that the deputies have made unauthorised gifts totalling £171,407.50 from GM’s estate to themselves and their immediate family.

The Public Guardian believes that this level of gifting by the deputies is excessive, not in the best interests of GM and is inconsistent with the deputies’ fiduciary duty of care. In addition, the deputies have exceeded the authority given to them to act on GM’s behalf in respect of her property and affairs and have exposed themselves to allegations of self-dealing.

In addition, the Public Guardian also questions if the deputies had the authority to spend a total of £46,553.14 in purchasing a car and computer each and then claim them as ‘deputyship expenses’. It is the Public Guardian’s opinion that the cars and computers are further unauthorised gifts which the deputies had no authority to make to themselves.

The Public Guardian has calculated that almost 44% of GM’s total assets have been disposed of by way of gifts made by the deputies to themselves and their family where they had no authority to do so. Therefore, the Public Guardian cannot recommend to the court that the gifts shown below can be approved retrospectively.

Detail

Amount

 

 

Gifted to immediate family

£67,155.00

Gifted to MJ

£55,856.00

Gifted to JM

£48,396.50

Deputy ‘expenses’

£46,553.14

Total

£217,960.64

Damn. Right

GM has £177,230.96 left in her estate

I don’t usually make comments about the individuals who appear in cases, over and above the judgments, but this particular case is making that rule of mine very hard to stick to. My opinion of these people, and it is merely a personal opinion based on the reading of the judgment, could not be much lower.

  1.  I do not accept that the gifts they made were in GM’s best interests. They are completely out of character with any gifts she made before the onset of dementia. There was no consultation with her before they were made and there was no attempt to permit and encourage her to participate in the decision-making process, or to ascertain her present wishes and feelings.
  1. Nor do I accept the applicants’ argument that they believed that the order appointing them allowed them to make gifts on such an extensive scale. They should have been aware of the law regarding their role and responsibilities. Ignorance is no excuse.
  1. The fact that GM’s remaining assets were in the names of one or other of the applicants, rather than in GM’s name, is a further example of what is, at best, ignorance, and, at worst, stealth.
  1. I realise that MJ and JM are the only visitors that GM receives, but this does not give them a licence to loot, and I was unimpressed by the veiled threat that, if the court were to remove them as deputies, they would find it difficult to continue seeing GM.
  1. If they had made a proper application for the prospective approval of gifts, I would possibly have allowed them to make gifts to themselves and their families to mitigate the incidence of IHT on GM’s death, but only if they had been the residuary beneficiaries under her will.

The applicants were seeking approval of gifts and expenses totalling £277,811.74. The approval of only £73,352 has left them personally liable to GM’s estate in the sum of £204,459.74, which they must pay back.

 

The Judge was then alive to the fact that GM did not have a will and that an application might be made for a statutory will, and that in doing so, JM and MJ might become the beneficiaries, allowing them to avoid repayment AND gain the remaining funds into the bargain.

  1. I shall not attempt to prejudge the outcome of any statutory will application, but, if an order is made for the execution of a will on GM’s behalf, there is a possibility that MJ and JM could become her residuary beneficiaries, in which case their liability to her estate may become less relevant.
  1. On the other hand, the judge who considers the statutory will application may take the view that, if she had testamentary capacity and was fully aware of what has been going on, GM would be outraged by the applicants’ conduct and would make no provision for them at all.
  1. Alternatively, the judge may find that GM’s intestate heirs have had closer contact with her than the applicants suggest, or that certain charities, such as the Christadelphian Church, the Scottish National Trust or the National Deaf Children’s Society, have a more meritorious claim on her bounty and should receive the lion’s share of her estate.

Applauding

And just for good measure, discharging them as deputies

  1. For the purposes of section 16(8) of the Mental Capacity Act, I am satisfied that the deputies have behaved in a way that contravened the authority conferred on them by the court and was not in GM’s best interests.
  1. I am not persuaded by any of Miss Bretherton’s submissions on their behalf, and I have no hesitation in revoking their appointment as deputies. GM’s finances are in disarray because of their conduct, and it is in her best interests that someone with experience of cases of unjust enrichment and restitution, such as a panel deputy, is appointed to manage her affairs in their place.

One of those cases where just reading it makes you want to take a long shower and despair about the ability of human beings to be craven and opportunistic.   Sadly there is nothing in the judgment about PC Plod being at the back of the Court with some handcuffs – I suppose one could make a case on obtaining by deception (since they would never have had the lawful access to GMs funds as a result of being appointed deputies if the Court had had any inkling that rather than looking after GM, they were simply going to enrich themselves at her expense)

 

Some days, I am afraid that I hope that the medieval world view of what happens after one dies is actually true.

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About suesspiciousminds

Law geek, local authority care hack, fascinated by words and quirky information; deeply committed to cheesecake and beer.

8 responses

  1. And the deputies has led the home to think that she didn’t have any money and so was paying lower fees than she should have been. They also had the nerve to say that if they were removed from office, they wouldn’t be able to face going to visit her in the home – I’m surprised they had the nerve to show their faces there at all. Unbelievable!

    • Yes, that wasn’t their most compelling argument. They were probably hampered in their preparation by the weight of their blingy watches making it harder to turn the pages. Also, huge hello Mrs Amy! How the heck are you?

      • I’m very well thank you Mr P! Miss having you to bounce legal stuff off. I wrote an article for my firm’s website on this very case and couldn’t believe what i was reading! When are you next in Cambridge? We need a catch up! x

      • Amy, don’t be shy, post the link to your article and I’ll pop it up on the site. (And will be in touch about meeting up, would be lovely to see you)

  2. Jerry Lonsdale

    Surely the Charge Sheet against Bonnie and Clyde should be about the size of a roll of wallpaper,

    Without knowing the case personally or knowing the parties involved I do not need a degree in thermodynamics to understand several crimes have most certainly taken place against GM.

    Theft, all 50 shades, Making Dishonest Representations to obtain money for, starters

    There must be an avenue here for GM to bring a private prosecution against the State?

    Unless your called Edgar Venal who would want a 12 grand Rolex,
    I see some horrendous actions caused by man against their fellow man, this surely is down the depths of the lowest of the low, what happened to people having a conscience these days?

    Damn that’s Vile reading, that’s not aimed at Judge or Mr Blog Writing Person though!

  3. Pingback: Being a deputy is not a licence to loot | Child...

  4. I recently tried reporting misconduct by an attorney to the police for investigation, money having been abstracted from bank accounts and taken by the attorney. They just weren’t interested. I’m distinctly concerned that although the law does not permit this, the penalties are simply not there.

    • That is really disappointing to hear – it strikes me that if these cases got before a jury, they would not have much trouble in determining dishonesty on the Ghosh test. Equally, whilst the codes of practice and guidance may seem complex, most ordinary jurors would have no difficulty in distinguishing between an honest investment to benefit the vulnerable person and ‘feathering ones own nest’

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