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Financial abuse, Court of Protection

I have talked before about how I think Senior Judge Lush has probably the best case load in English justice, and this is another one that doesn’t disappoint.

 

It is probably the most blatant bit of financial abuse I’ve come across, and I hope that those involved will get what is coming to them.

 

Re OL 2015

http://www.bailii.org/ew/cases/EWCOP/2015/41.html

 

OL is 77 and has clearly worked hard all of her life and built up savings. She had a stroke and signed a Lasting Power of Attorney to allow her son YS and her daughter DA to manage her financial affairs on her behalf. There was a third son, who as far as I can see is blameless.  Neither DA nor YS were young people, and they had proper jobs – they were not young and impulsive, nor should they have been in financial dire straits.

 

Despite this, they took the money that they were managing on their mother’s behalf and spent it on themselves.

Let’s put it really starkly

In the six months that DA and YS were ‘looking after’ their mother’s finances, she went from having £730,000 to £7,000.

DA and YS on the other hand, had paid off their mortgage, had a loft conversion, bought a new house (entirely with their mother’s money) in which their mother (who paid all of the money) had a 20% stake and DA (who paid not a penny) had a 40% stake and YS (who also paid not a penny) had a 40% stake.

£730,000 to £7,000 in six months, equates to OL’s financial resources dwindling at a rate of £2,800 per day. OR that at the rate of spending, she had about another three days money left.

Or to put it yet another way (going back to Mostyn J * and the Pizza Express case https://suesspiciousminds.com/2015/06/18/taking-forty-thousand-pounds-in-cash-to-pizza-express/)  if OL had instead of appointing deputies, had gone into Pizza Express and bought meals for fifty people a day, for every day over the last six months, she’d probably be slightly better off now.  Or she could have met with the wife in that case and handed over that forty grand in cash EIGHTEEN TIMES and still been better off)

*second best case-load. And to misquote Bill Hicks “you know, after those first two best caseloads, there’s a real big f***ing drop-off”

 

Senior Judge Lush spells out all of the guidance and law on being a person’s deputy under the Lasting Power of Attorney. If you want to see it, you can find it all in the judgment. A key bit is here

 

Paragraph 7.60 of the Code says:

Fiduciary duty

“A fiduciary duty means attorneys must not take advantage of their position. Nor should they put themselves in a position where their personal interests conflict with their duties. They must also not allow any other influences to affect the way in which they act as an attorney. Decisions should always benefit the donor, and not the attorney. Attorneys must not profit or get any personal benefit from their position, apart from receiving gifts where the Act allows it, whether or not it is at the donor’s expense.”

I think I can condense all of the guidance and law into this simple sentence of my own, however   (apologies for Anglo-Saxon language)

 

“If you are appointed as a deputy to manage someone’s financial affairs, it is NOT YOUR FUCKING MONEY”

 

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Incapacity of the Monarch (but really about Lasting Power of Attorney)

 

A quirky Court of Protection case from Senior Judge Lush, who seems to have the most interesting life – all of the cases are intricate and involving, and often with rich little details. I am quite envious.

Re XZ 2015

http://www.bailii.org/ew/cases/EWCOP/2015/35.html

The nub of it is that XZ, who is in his seventies and is a high net worth individual, instructed solicitors to draw up a Lasting Power of Attorney. He wanted to ensure that if he lost capacity, that his affairs would be managed, but he was also wanting to ensure that if it was a temporary blip that he would recover from, that decisions would not be made in that interregnum period that he might later regret having been made on his behalf.

There were thus some unusual and very carefully crafted clauses (the fact that the Lasting Power of Attorney makes express provision for decisions involving more than $25 million indicates that there are some significant affairs under consideration here)

 

  1. Dominic Lawrance, the solicitor who drafted these provisions, described their purpose as follows:

    “The purpose of these safeguards is to ensure that the attorneys do not act (other than in limited emergency situations) until XZ’s incapacity has:

    (a) been unequivocally confirmed by psychiatric evidence that is subject to review by the Protector; and

    (b) has endured for a minimum period of 60 days.

    This has been designed to prevent:

    (a) the attorneys taking hasty actions with which XZ might disagree if his lack of capacity were to prove temporary; and

    (b) the attorneys acting when there remained genuine scope for doubt as to whether XZ indeed lacked capacity.”

  2. At the hearing on 7 May 2015, Mr Lawrance added that these provisions were:

    “… the product of XZ’s specific instructions. He is generally loath to confer discretions and powers on other people. He likes to be ‘in the driving seat’ and was only willing to sign the LPA if these safeguards were in place.”

 

 

When the LPA was lodged with the Public Guardian’s office, the Public Guardian refused to register it, meaning that it would have no effect. The Public Guardian took the view that these restrictions meant that it was not a properly formed LPA.  That then led to the Court being invited to decide it.

 

And here is where the bit about incapacity of the monarch comes in.  I had not previously encountered this bit of legislation, and I like it.

XZ’s counsel, David Rees, compared these provisions with those in the Regency Act 1937. Both include a requirement that a third party, who is not medically qualified, should agree with the medical evidence before the powers conferred on the delegate become exercisable. Section 2 of the Regency Act prescribes the following procedure in the event of the total incapacity of the Sovereign:

“If the following persons or any three or more of them, that is to say, the wife or husband of the Sovereign, the Lord Chancellor, the Speaker of the House of Commons, the Lord Chief Justice of England, and the Master of the Rolls, declare in writing that they are satisfied by evidence which shall include the evidence of physicians that the Sovereign is by reason of infirmity of mind or body incapable for the time being of performing the royal functions or that they are satisfied by evidence that the Sovereign is for some definite cause not available for the performance of those functions, then, until it is declared in like manner that His Majesty has so far recovered His health as to warrant His resumption of the royal functions or has become available for the performance thereof, as the case may be, those functions shall be performed in the name and on behalf of the Sovereign by a Regent.”

 

It is always nice to be able to say “My client asked for these clauses to be in place, because he wanted similar protection to that provided to the Queen”  –  I don’t imagine the chance to say it arises that often, but if you can deploy it, why not?

So, if the Queen (or any future Monarch) lost their capacity to make decisions, the procedure would mean that on advice of physicians, three or more of the following would need to make a declaration of incapacity – currently Prince Philip, Michael Gove (!), John Bercow (!), the Right Honourable Sir John Thomas, the Right Honourable Lord Dyson. And if three or more of them do that, then the Queen’s functions would be removed from her and given to a Regent.  And she’d only get the powers and functions back if three or more of them agreed.

Ladies and gentlemen, that’s a statutory recipe for a coup in Great Britain. If you wanted to have a coup, that’s your legal route map.

[I’m a bit scared that Michael Gove is one third of the way to being able to seize all power from the Queen, if he can just talk two of the others into becoming ultimate rulers of the UK by his side.  At least it isn’t Grayling I suppose. Given that the Lord Chancellor  could sack the Master of the Rolls and Lord Chief Justice and appoint his own people…I should stop thinking about this]

I am scratching my head as to whether the Mental Capacity Act 2005 with its presumption of capacity disintegrates the Regency Act. The Regency Act is not in the list of repeals. But the Mental Capacity Act 2005 is said to cover people, and there’s no clause that says “people other than a reigning monarch”

 

So I already like the case for raising that bit of constitutional intrigue.

Senior Judge Lush had this to say in relation to why the judgment was published

I can’t imagine that the general public would have the slightest interest in this judgment, but its publication may be of interest to professionals who specialise in this area of the law and draft LPAs on a regular basis, and also to people who are considering making an LPA themselves, and for this reason I shall permit its publication.

 

That rather dampens my spirits, the Judge telling me that the general public won’t be interested, but it interested me.   [And yes, I should get out more]

So, what’s the decision?

  1. XZ acknowledges that his LPA will be less effective because of these provisions but, nevertheless, he wishes them to remain as an integral part of the registered instrument for his own reassurance and peace of mind. Some people may think that this is unwise, but it is his will and preference and it should be treated with respect. The Public Guardian has no right to make a paternalistic judgment on his behalf and decide that it would be in his best interests for these provisions to be severed.
  2. I agree with Mr Rees’s submission that:

    With respect to the Public Guardian, it is no part of his statutory duties to police the practicality or utility of individual aspects of an LPA. In the context of section 23 and Schedule 1, paragraph 11 of the MCA 2005 the phrase “ineffective as part of a lasting power of attorney” clearly means “not capable of taking effect, according to its legal terms as part of an LPA.” Examples of provisions which would be ineffective as part of a power of attorney would include:

    (a) a provision which purported to permit the attorney to make gifts which go beyond the statutory restrictions found at section 12 MCA 2005.

    (b) a provision which purported to go beyond what a person can do by an attorney (such as make a will or vote).

    (c) a provision which purported to permit the attorney to consent to a marriage on behalf of the donor (see MCA section 27(1)(a).

    Neither the court nor the Public Guardian are concerned with whether a restriction that does not contravene the terms of the MCA 2005 may pose practical difficulties in its operation.”

  3. The Public Guardian’s function under paragraph 11 of Schedule 1 to the Act is limited to considering whether the conditions and restrictions are (a) ineffective as part of an LPA or (b) would prevent the instrument from operating as a valid LPA.
  4. If he concludes that they cannot be given legal effect, then he is under a duty to apply to the court for a determination of the point under section 23(1). Otherwise he has a duty to register the power.
  5. Neither Miss Chandoo’s witness statement nor Miss Davidson’s submissions have identified any specific provision in the Mental Capacity Act 2005, or the LPA, EPA and PG Regulations, or the common law of agency that has been infringed by the provisions in XZ’s LPA.
  6. For these reasons, and pursuant to section 23(1) of the Act, I declare that XZ’s LPA does not contain any provisions which: (a) would be ineffective as part of an LPA; or

    (b) would prevent the instrument from operating as a valid power of attorney.

  7. I also order the Public Guardian to register the LPA.

Seeking costs against the Public Guardian in a financial safeguarding case

 

The Public Guardian and CT and EY 2014

 

http://www.bailii.org/ew/cases/EWCOP/2014/51.html

 

As District Judge Lush observed, this is the first reported case where a costs order has been sought against the Public Guardian.

 

By way of quick background, CT is 85 and had a stroke a year ago, which later led to a diagnosis of dementia. There has been a considerable family schism, and CT is close to his daughter EY but not close to much of the rest of his family.

 

A month after his stroke, he entered into a Lasting Power of Attorney arrangement, appointing EY as his sole attorney.

 

In July 2014, the Public Guardian, having received a referral that EY was misusing the Lasting Power of Attorney, conducted an investigation and made an application to the Court of Protection under s48 of the Mental Capacity Act 2005 for declarations about whether CT had capacity and if not what directions / declarations should be made about his affairs.

 

  1. The application was accompanied by a witness statement made by David Richards, an investigations officer with the OPG, who said that:

 

 

(a) in September 2013 CT’s son and daughter-in-law had raised concerns with the OPG.

 

(b) on 13 June 2013 CT had severed the joint tenancy of the matrimonial home and the adjoining property, which he and his wife also own.

 

(c) CT had ceased paying the utility bills on the matrimonial home; had stopped transferring housekeeping money to his wife, and had closed their joint bank account.

 

(d) in September 2013 CT applied to the Land Registry to register the matrimonial home in his sole name.

 

(e) on 30 September 2013 a Court of Protection General Visitor, Emma Farrar, saw him at Grays Court Community Hospital. She thought that CT possibly could suspend or revoke the LPA, but that he would require considerable support in doing so.

 

(f) Havering Social Services had raised a safeguarding alert.

 

(g) the OPG asked EY for an account of her dealings.

 

(h) EY replied her father still had capacity and that the OPG’s enquiries were an invasion of his privacy.

 

(i) in January 2014 the OPG commissioned a visit from a Court of Protection Special Visitor (Dr T.G. Tennent, DM, FRCPsych) but EY and her partner, who is employed by Moss & Coleman Solicitors, refused to let him visit CT.

 

(j) Dr Tennent was, nevertheless able to examine CT’s medical records, and in his report, dated 31 March 2103, he came to the conclusion that CT had capacity (a) to make the LPA and (b) to sever the joint tenancies, but that it was “impossible to offer any opinion as to Mr Todd’s current capacity in relation to the queries (c) to (j).”

 

 

There then follows a somewhat complex history, but the substance of it was that the expert who examined CT, Professor Jacoby, was of the view that CT’s capacity fluctuated, but that there were times and had been times when he had had capacity to make his own financial decisions (and thus the LPA wasn’t being used at all at those times)

 

  1. Professor Jacoby prefaced his assessment of CT’s capacity with the following preliminary remarks:

 

 

 

“I shall deal with the separate capacities as set out in my instructions which were taken from the directions order of 20 August 2014. Before doing so I wish to stress that I am relying on CT’s mental state as I observed it on 2 October 2014. However, I believe his mental state fluctuates both as regards his dementia and his episodes of delirium. I should make the following preliminary remarks:

 

 

(a) When he is delirious, in my opinion, he does not have any of the capacities listed below.

 

(b) When he is not delirious, but his dementia is more prominent, his capacities are weaker than when he is at his best.

 

(c) When he is at his best he does retain some capacities as described below.

 

(d) When he is at his best he is able to communicate his decisions, and I shall not comment further on this fourth limb of section 3(1) of the Mental Capacity Act 2005.

 

(e) When at his best I believe that his capacities can be enhanced by assistance in line with the judgment of Gibson LJ in Hoff et al v Atherton [2003] EWCA Civ 1554, in which he stated “it is a general requirement of the law that for a juristic act to be valid, the person performing it should have the mental capacity (with the assistance of such explanation as may have been given [my italics]) to understand the nature and effect of the particular act (see, for example, Re K (Enduring Powers of Attorney) [1988] Ch 310 at p. 313 per Hoffmann J.).” As I understand it, although I may be corrected by the court, giving assistance to persons with marginal capacities in order to enhance them is within the spirit of the Mental Capacity Act 2005.”

 

 

  1. Professor Jacoby concluded his report as follows:

 

 

 

“In my opinion, when CT is at his current best and not in an episode of delirium, he retains the capacity to manage his affairs and to revoke or make an LPA, but that his capacities would be enhanced by disinterested advice. His capacity to litigate is not totally lacking but is, in my opinion, below a sufficient threshold, and he would, therefore, require a litigation friend.”

 

If CT had capacity at the time when he made decisions to sever the tenancy, stop paying money to his estranged wife and so on, then this was not a matter for the Court of Protection. As we know, if a person has capacity, then they can make decisions for themselves that another person might consider foolish or ill-conceived.

 

EY sought that the application be dismissed and sought that the Office of the Public Guardian should pay the costs.

 

  1. On 14 August 2014 EY filed an acknowledgment of service, accompanied by a witness statement, in which she objected to the application and said that:

 

 

 

“The evidence in the attached witness statement shows unequivocally that CT had the capacity to make complex decisions in relation to his finances and property in September 2013. He underwent a further capacity assessment in November 2013 prior to discharge from hospital after nearly six months treatment and he was again assessed as having the capacity to make the very difficult and important decision as to his destination and future place of residence following his discharge. There has been no stroke activity since the incident in May 2013, nor any other event which might cause or signal a material change in his capacity since the last test was carried out some nine months ago. There is therefore no valid reason why he should not be presumed to have capacity at this time.”

 

 

  1. EY proposed that “the application be dismissed and the OPG be ordered to pay the respondents’ costs (including the costs of taking legal advice).”

 

 

In most financial disputes, the person who loses the case is at risk of being ordered to pay the other side’s legal costs. It is a little different in Court of Protection cases.

 

Firstly, the Court of Protection have a general discretion (subject to other Rules) Section 55(1) MCA 2005 provides that “Subject to Court of Protection Rules, the costs of and incidental to all proceedings in the court are at its discretion.”

 

In terms of those Rules, they are set out in the Court of Protection Rules 2007 – they can be simplified like this:-

 

  • Normally if the proceedings relate to property of a vulnerable person, the costs of the proceedings are paid by that person or his estate
  • That starting point can be departed from if the Court thinks it is justified, and can take into account the conduct of the parties.
  • Conduct can include a wide variety of things, including before proceedings began.

 

 

Property and affairs – the general rule

 

 

  1. Where the proceedings concern P’s property and affairs the general rule is that the costs of the proceedings, or of that part of the proceedings that concerns P’s property and affairs, shall be paid by P or charged to his estate.

 

 

Departing from the general rule

 

 

  1. – (1) The court may depart from rules 156 to 158 if the circumstances so justify, and in deciding whether departure is justified the court will have regard to all the circumstances, including:

 

(a) the conduct of the parties;

(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(c) the role of any public body involved in the proceedings.

 

(2) The conduct of the parties includes:

 

(a) conduct before, as well as during, the proceedings;

(b) whether it was reasonable for a party to raise, pursue or contest a particular issue;

(c) the manner in which a party has made or responded to an application or a particular issue; and

(d) whether a party who has succeeded in his application or response to an application, in whole or in part, exaggerated any matter contained in his application or response.

 

(3) Without prejudice to rules 156 to 158 and the foregoing provisions of this rule, the court may permit a party to recover their fixed costs in accordance with the relevant practice direction.

 

 

 

In this situation, EY argued that the Office of the Public Guardian had really jumped the gun – they had brought a case based on EY misusing the Lasting Power of Attorney, when closer investigation would have shown that the decisions complained of had been made by CT himself. If the Public Guardian had conducted the investigation properly, there would have been no application and thus CT and EY would not have incurred any legal costs.

 

District Judge Lush felt that things were more complicated than that – the assessment of capacity had shown that CT’s capacity fluctuated and thus there had been times when EY was (or ought to have been) exercising the Lasting Power of Attorney.

 

The Judge also felt that EY had been obstructive in the investigation, causing some of these problems as a result of her own actions.

 

  1. EY makes the point that she was not using the LPA because CT still had capacity, but even this is disingenuous. Professor Jacoby states in his report that “He is subject to recurrent episodes of delirium. … When he is delirious, in my opinion, he does not have any of the capacities listed below.” She should have been using the LPA during the recurrent episodes when CT lacked capacity.

 

 

  1. The point is made that CT’s capacity should have been presumed. The precise wording of section 1(2) of the Mental Capacity Act is that “a person is assumed to have capacity unless it is established that he lacks capacity.” The Court of Protection General Visitor believed that CT possibly could suspend or revoke the LPA, but that he would require considerable support in doing so. The reason why the OPG asked a Special Visitor to see CT was so that a specialist could look for objective evidence that would be sufficient, on the balance of probabilities, to establish whether CT had capacity or not and, accordingly, whether the Court of Protection had jurisdiction or not.

 

 

  1. EY would not allow the Court of Protection Special Visitor to examine CT because she mistrusted anything to do with the OPG. The Special Visitor’s report would have been provided to CT free of charge, from public funds, but EY insisted on instructing an independent expert, instead. This resulted in the proceedings being more expensive and protracted than they need have been.

 

 

  1. I have no real concerns about the OPG’s conduct. Any investigation will seem heavy-handed to the person under the spotlight, but the OPG’s conduct was by no means disproportionate and does not even approach the threshold identified by Mr Justice Jonathan Baker in G v E (Costs). The OPG certainly did not act in blatant disregard of the Mental Capacity Act processes or in breach of CT’s rights under the European Convention on Human Rights. Having regard to all the circumstances, it would be unjust to penalise the OPG by way of a costs order.

 

 

 

Bearing in mind the usual rule, the legal costs of all of the proceedings would be met by CT. The Judge, having been invited to look at costs, had to consider whether that approach would be fair and just, given the actions of EY.

 

(This must have caused a bitter taste – having asked for the Public Guardian to pay the costs, EY found herself at risk of having to pay a portion of the costs herself)

 

  1. There is no doubt about it. EY and her partner refused, without reasonable cause, to let the Special Visitor visit CT or even speak to him over the phone. Dr Tennent’s report of 31 March 2014 stated:

 

 

 

“Over the course of these conversations EY referred everything to her partner. Quite politely they told me that CT did not want to see me but would not permit me to speak directly with him. They would not provide me with the name or address of CT’s current general practitioner. As I understood it, they were of the view that although CT had made an LPA he was still capable of managing his own affairs and they were not using the LPA and therefore the OPG should not be involved with his affairs. They told me that they were in correspondence with the Office of the Public Guardian about the matter and that until this had been resolved they did not want me to visit their home.”

 

 

  1. EY’s insinuation that a Court of Protection Special Visitor is neither independent nor impartial is both unwarranted and offensive.

 

 

  1. For me, the most striking feature of Professor Jacoby’s report was the repetition of a theme, which, like Ravel’s Boléro, rises in a continuous crescendo.

 

 

  1. In response to question (2) he said:

 

 

 

“Again, I consider that he would benefit from disinterested advice before making this decision.”

 

 

  1. He deliberately highlighted the word ‘disinterested’ by italicising it.

 

 

  1. In response to question (4), he said:

 

 

 

“Where more complex decisions are required he would, in my opinion, benefit from disinterested advice.”

 

 

  1. In his reply to question (5), Professor Jacoby said:

 

 

 

“I consider that at his best CT does retain the capacity to give instructions to his attorney in relation to his property and affairs, and that he would benefit from disinterested advice for more complex decisions.”

 

 

  1. In his conclusion, which I have set out in paragraph 23, he said:

 

 

 

“… his capacities would be enhanced by disinterested advice.”

 

 

  1. And in response to question (4) again, the professor actually ventured to say that:

 

 

 

“I am not making any comment here about the quality of the advice he now gets from EY because this is beyond my remit and I have no information on it anyway. However, because he is now dependent on her for his day to day care he might be more likely to accept her advice without more careful consideration.”

 

 

  1. I have never before read a report on someone’s capacity that has contained so many references to the need for ‘disinterested advice’. The only interpretation of this can be that Professor Jacoby believed that, although CT still has capacity in certain areas, he is being influenced by his daughter, and her advice is anything but disinterested.

 

 

[

 

The Judge decided that it would be wrong for CT to be ordered to pay EY’s legal costs, and EY would be responsible for her own costs

 

 

Decision

 

 

  1. If I were to apply the general rule for costs in a property and affairs case (rule 156), I would be required to order CT to pay the costs of these proceedings.

 

 

  1. The Public Guardian was seeking no order as to his own costs, whereas EY was seeking an order that her costs should be paid by the Public Guardian.

 

 

  1. For the reasons given above, and having regard to all the circumstances, I consider that a departure from the general rule is justified and I shall order EY to pay her own costs because her conduct, before and during the proceedings, has been aggressive and disingenuous and has resulted in both sides’ costs being far greater than they would otherwise have been.

 

 

  1. The overall effect is that I shall make no order for costs, though, having agreed to commission a report from a single joint expert, the Public Guardian and EY are jointly liable to pay a half of Professor Jacoby’s fee of £2,200 (£1,850 + VAT) for reading the documents, travelling from Oxfordshire to Essex, examining CT, and writing his report.

 

 

 

There is scope for a costs order to be made against the Office of the Public Guardian, if they behaved unreasonably in the course of the litigation, but this was not the case for it.

 

As my old law tutor used to say about Equity – “he who comes to Court must come with clean hands”