The Public Guardian v C

This is an application by the Public Guardian for the court to revoke a Lasting Power of Attorney (‘LPA’) and to direct him to cancel the registration of the LPA.

Miss Buckley was born in 1931 and lives in Kent.

Since July 2011 she has been a resident in a nursing home, at which the fees are £985 a week. She is fully self-funded and is not currently eligible for NHS Continuing Healthcare.

On 7 September 2010 Miss Buckley executed an LPA for property and affairs, in which she:

Miss Buckley’s solicitor witnessed her signature and was the Part B certificate provider.

A month later an application was made to the Office of the Public Guardian (‘the OPG’) to register the LPA, and it was registered on 17 January 2011.

On 20 April 2012 the OPG received a complaint about the way in which the attorney was handling the donor’s finances, and it opened a formal investigation into the matter.

As is standard procedure in investigations of this kind, the OPG sent a Court of Protection General Visitor to see Miss Buckley. The Visitor saw her on 6 August 2012 and concluded that she lacked the capacity to instruct the attorney to account for her dealings under the LPA, and that she also lacked the capacity to revoke the LPA. The Visitor also commented as follows:

“We talked about her niece C (POA). She had a vague recollection of a niece and said she visited her home when she was ill and took everything she wanted and then did not bother with her any more. She said she only visited when she wanted money and indicated this by rubbing her fingers together. The manager was present during this conversation and believed the client’s memory of some matters was quite reliable and that the client appeared to recollect her niece wanting money previously and no longer being bothered with her now. When asked whether she wanted the niece to manage her money she indicated very negatively. When asked if she had wanted her niece to use her money for anything special she said she didn’t trust her and had only ever wanted her money.”

On 22 October 2012 Marion Bowgen, of the Compliance Unit at the OPG, applied to the court for the following interim orders:

The application was accompanied by a witness statement made on 22 October 2012 by Yun Ding, an investigation officer with the OPG, which can be summarised as follows:

On 23 October 2012 I made an order in the terms sought by the OPG, set a timetable for the filing of evidence, and listed the application for hearing on 19 December 2012.

Although his report was unavailable when the OPG made its initial application to the court, on 21 October 2012 a Court of Protection Special Visitor, Dr Andrew Barker, examined Miss Buckley and prepared a report of his findings. He had been asked by the OPG specifically to assess Miss Buckley’s capacity to make the following decisions:

Dr Barker concluded his report as follows:

“Miss Buckley has a history of multiple strokes, leading her to be unable to look after herself, then needing residential and then nursing care. A hospital outpatient clinic letter following admission refers to a diagnosis of dementia. Her cognitive impairment leads her to need a rigid routine, suffer anxiety with sustained concentration, and have significant memory impairment. A general visitor found her to be generally confused, with a short concentration span, appearing disorientated, and could not participate in conversation beyond a very basic level.

My interview with Miss Buckley was time limited due to her increasing anxiety. I was told by Nurse Adams that she tended to get agitated if she had to concentrate very long. She also had some expressive and receptive dysphasia, making communication difficult. She was unable to recognise some simple words, and often unable to express herself fully. She was disorientated in time and place, had poor short and long term memory, impaired concentration and difficulties understanding even mildly complex abstract concepts.

Her documented history and my assessment are in keeping with Miss Buckley suffering with moderately severe vascular dementia. This is of a severity to affect her understanding of information, impair her recall and make her unable to weigh information in the balance, for any significant decision. She was unable to understand the nature and effects of an LPA to a sufficient degree or to choose an attorney, was not aware of her financial dealings and could not recall detail sufficiently well or concentrate long enough to weigh information in the balance to come to decisions about an attorney or to direct or instruct an attorney.”

On 13 December 2012 Yun Ding made a second witness statement, the primary purpose of which was to exhibit Dr Barker’s report and to update the court on the OPG’s investigation as required by the directions order of 23 October. She concluded the statement as follows:

“From the evidence gathered so far, I estimate that Miss Buckley has contributed at least £87,682.53 towards the reptile investment venture described by C. In the absence of any contrary evidence, the Public Guardian maintains that Miss Buckley’s finances may have been used to heavily subsidize what appears to be a reptile breeding business, without any formal guarantee or security or her share of the alleged investment returns. C also appears to have misappropriated £43,317.47 of her aunt’s estate without obtaining consent, contrary to what she had told the police. I have therefore re-referred this matter back to the police to conduct further enquiries.

In the light of the above and the content of my COP24 dated 22nd October 2012, the Public Guardian believes that it would not be in Miss Buckley’s best interests for C to continue as her finance and property attorney. Therefore, the Public Guardian would like to request the court to revoke and cancel the registered LPA executed by Miss Buckley under section 22(4)(b) of the Mental Capacity Act 2005. Should the court decide to appoint a deputy in the interests of Miss Buckley, the Public Guardian would like to highlight that the deputy may need to take action against the former attorney in order to restore Miss Buckley’s estate to a more realistic level. The care manager of (a named local authority) has confirmed that the council is willing to consider applying to become Miss Buckley’s property and affairs deputy.”

On 17 December 2012 C made a witness statement, in which she said:

The hearing took place on Wednesday 19 December 2012, and lasted an hour and a half. Marion Bowgen attended on behalf of the OPG accompanied by Alan Eccles, the Public Guardian.

Two days earlier, on 17 December 2012, C’s solicitors had written to the court saying:

“We have been instructed to advise and assist C in this matter. C apologises for missing the deadline for filing her evidence as she did not realise she needed to do so and, unfortunately, she was only able to obtain our assistance on 6 December 2012.

C instructs us that she is unable to attend the hearing on 19 December 2012 due to illness. We are not instructed to represent C at any hearing and cannot go on record as acting for her, but please note our involvement as legal advisors.”

In Re Harcourt (31 July 2012), an anonymised transcript of which can be found on the OPG’s website, I summarised the following areas of the law:

I do not propose to repeat what I said in Re Harcourt here, but I shall use this opportunity to discuss an issue which did not arise in that case, namely the responsibilities of an attorney acting under an LPA when investing the donor’s funds.

There are two common misconceptions when it comes to investments. The first is that attorneys acting under an LPA can do whatever they like with the donors’ funds. And the second is that attorneys can do whatever the donors could - or would - have done personally, if they had the capacity to manage their property and financial affairs.

Managing your own money is one thing. Managing someone else’s money is an entirely different matter.

People who have the capacity to manage their own financial affairs are generally not accountable to anyone and don’t need to keep accounts or records of their income and expenditure. They can do whatever they like with their money, and this includes doing nothing at all. They can stash their cash under the mattress, if they wish and, of course, they are entitled to make unwise decisions.

None of these options are open to an attorney acting for an incapacitated donor, partly because of their fiduciary obligations and partly because an attorney is required to act in the donor’s best interests. The Mental Capacity Act 2005, section 1(5), states that, “an act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests.”

Mr Justice Lewison (as he then was) commented on this point in Re P (Statutory Will) [2009] EWHC 163 (Ch), [2009] COPLR Con Vol 906. At paragraph 42 he said:

“I would add that although the fact that P makes an unwise decision does not on its own give rise to any inference of incapacity (section 1 (4)), once the decision making power shifts to a third party (whether carer, deputy or the court) I cannot see that it would be a proper exercise for a third party decision maker consciously to make an unwise decision merely because P would have done so. A consciously unwise decision will rarely if ever be made in P’s best interests.”

Attorneys hold a fiduciary position, which imposes a number of duties on them. Like trustees and other fiduciaries, they must exercise such care and skill as is reasonable in the circumstances when investing the donor’s assets and this duty of care is even greater where attorneys hold themselves out as having specialist knowledge or experience.

Although it does not expressly apply to attorneys, the Trustee Act 2000, section 4, requires trustees to have regard to what are known as the “standard investment criteria” when exercising any power of investment. There are two standard criteria, namely:

Trustees are also required to review the investments from time to time and consider whether, having regard to the standard investment criteria, they should be varied.

Section 5 of the Trustee Act requires trustees, before exercising any powers of investment or reviewing the investments, to obtain and consider proper advice about the way in which, having regard to the standard investment criteria, their power should be exercised. In this context, “proper advice” means the advice of a person who is reasonably believed by the trustee to be qualified to give it by his ability in and practical experience of financial and other matters relating to the proposed investment. There is an exception to this general rule, and trustees need not obtain such advice if they reasonably conclude that it is unnecessary or inappropriate to do so.

Before the Mental Capacity Act 2005 came into force on 1 October 2007, both the Court of Protection and the antecedents of the Office of the Public Guardian (the Public Trust Office and later the Public Guardianship Office) were actively involved in the investment of patients’ funds. There was a discrete Investments Branch, which issued in-house guidance for staff, Investing for Patients, and much of the discussion that follows has been taken from that guidance.

The court used to set an investment code for every patient. There were four short term (ST) codes and eight long-term (LT) codes, which were devised following consultation with the Lord Chancellor’s Honorary Investment Advisory Committee (‘HIAC’). HIAC, which was rebranded as the Strategic Investment Board in 2001 before finally being abolished in 2008, was a committee of six distinguished financial experts from the City who met with ex officio members from the Lord Chancellor’s Department five times a year to consider issues relating to the investment of patients’ funds including strategy, performance measurement and the setting of appropriate benchmarks.

Two of the most important factors when considering the suitability of investments are the donor’s age and life expectancy. Most donors are older people. Their average age is 80 years and 11 months and, in this respect Miss Buckley, who is 81½, is a typical LPA donor.

Short-term investment codes are generally more appropriate where an individual has an anticipated life expectancy of five years or less, and the guidance to court staff suggested that, “without clear medical evidence it would be prudent to consider a life expectancy of less than five years for new patients aged 80 or over.”

There is no need for me to consider long-term investments for the purposes of this decision, but the short-term investment codes in Investing for Patients were as follows:

It has never been possible for attorneys to keep funds on Special Account in the Court Funds Office, but a broadly similar outcome would be achieved from depositing the funds in an interest-bearing account offering instant access (or reasonably instant access) with a reputable bank or building society, or with National Savings and Investments (‘NS&I’), where there is a 100% guarantee from HM Treasury on all deposits.

The last edition of Investing for Patients was drawn up fifteen years ago in 1998 following the decision of the House of Lords in Wells v Wells [1999] 1 AC 345. Circumstances have changed since then and the investment codes need to be revised.

Generally speaking, attorneys acting under an LPA should ensure that any investment products or services they acquire on a donor’s behalf are provided by individuals or firms who are regulated by the Financial Services Authority. One of the advantages of this course of action is that the donor’s investments will be covered by the Financial Services Compensation Scheme (‘FSCS’), in which eligible deposits are protected up to a maximum of £85,000.

Accordingly, taking this and other factors into account, the short-term investment codes recommended in Investing for Patients could possibly be rewritten along the following lines:

Investing for Patients suggested a few other factors that may need to be considered, such as:

The guidance also considered the interests of beneficiaries under the patient’s will or intestacy, which included asking the following questions:

In this respect, Investing for Patients concluded that, “it will probably only be worthwhile to consider in depth the interests of those who will benefit on death if the following conditions all apply:

Until such time as the Office of the Public Guardian issues its own guidance to attorneys and deputies on the investment of funds, I would suggest that, as they have fiduciary obligations that are similar to those of trustees, attorneys should comply with the provisions of the Trustee Act as regards the standard investment criteria and the requirement to obtain and consider proper advice. I would also recommend that attorneys and their financial advisers have regard to the criteria that were historically approved by the court and the antecedents of the OPG in Investing for Patients, albeit with some allowance for updating, as suggested in paragraph 37 above.

There are three further points I must mention relating to the fiduciary nature of the relationship between the donor and the attorney. The first is that attorneys should keep the donor’s money and property separate from their own or anyone else’s: Mental Capacity Act Code of Practice, paragraph 7.68. This applies to investments and, wherever possible, all investments should be made in the donor’s name. If, for any reason, it is not possible to register the investment in the donor’s name, the attorney should execute a declaration of trust or some other formal record acknowledging the donor’s beneficial interest in the asset.

The second point is that, subject to a sensible de minimis exception, where the potential infringement is so minor that it would be disproportionate to make a formal application to the court, an application must be made to the court for an order under section 23 of the Mental Capacity Act 2005 in any of the following cases:

The final point is one that has been made in the past, but needs to be repeated. Attorneys should be aware of the law regarding their role and responsibilities. Ignorance is no excuse. I am not suggesting that attorneys should be able to pass an examination on the provisions of the Mental Capacity Act 2005, but they should at least be familiar with the “information you must read” on the LPA itself and the provisions of the Mental Capacity Act 2005 Code of Practice. Section 42(4)(a) of the Act expressly stipulates that it is the duty of an attorney acting under an LPA to have regard to the code.

Commenting on the conduct of an attorney in Re W(Enduring Power of Attorney) [2000] Ch 343, at page 350 Mr Jules Sher QC said:

“… she ought to have known the law if she was to take on the responsibility of such an important fiduciary position, particularly as one of the few things expressly stated in part of the power itself is the following sentence: “I also understand my limited power to use the donor’s property to benefit persons other than the donor.””

Mr Sher was referring to an Enduring Power of Attorney. The declaration in Part C of Miss Buckley’s Lasting Power of Attorney, which her attorney signed, is far more explicit. It says:

“By signing below, I confirm all of the following:

Understanding of role and responsibilities

I have read the section called ‘Information you must read’ on page 2 of this lasting power of attorney.

I understand my role and responsibilities under this lasting power of attorney, in particular:

◦

I have a duty to act based on the principle of the Mental Capacity Act 2005 and have regard to the Mental Capacity Act Code of Practice

◦

I can make decisions and act only when this lasting power of attorney has been registered

◦

I must make decisions and act in the best interests of the person who is giving this lasting power of attorney

◦

I can spend money to make gifts but only to charities or on customary occasions and for reasonable amounts

◦

I have a duty to keep accounts and financial records and produce them to the Office of the Public Guardian and/or to the Court of Protection on request.”

Subsections (3) and (4) of section 22 of the Mental Capacity Act provide that the court may revoke an LPA if:

I am satisfied that C has contravened her authority and has acted in a way that is not in Miss Buckley’s best interests.

Even if one were to be generous and believe C and accept at face value her description of the way in which she has applied Miss Buckley’s funds as an ‘investment’, it was a highly unsuitable investment to make and she broke almost every rule in the book in making it.

She did not obtain and consider proper advice from someone who is qualified to give investment advice. One can hardly describe a man who runs a reptile breeding business as someone who is qualified to give investment advice by his ability in and practical experience of financial and other matters relating to investment.

The investment was very high risk. When investing funds on behalf of older people, the perceived wisdom is that the investments should be safe and that very little risk is acceptable as can be seen from the short-term investment tables set out above. Even when investing funds long-term on behalf of a younger person, a hazardous and speculative investment of this kind would have been inappropriate for anyone in a fiduciary position to make.

The attorney invested in her own business, which was in breach of her fiduciary duty. Paragraph 7.60 of the Mental Capacity Act Code of Practice states that:

“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 also must 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.”

The investment was also made in the attorney’s name. This was in breach of the guidance to attorneys given in paragraph 7.68 of the Code of Practice to keep the donor’s money and property separate. The attorneys’ admission in paragraph 16 of her witness statement - “I would like to state that I was not aware that the investment had to be made in her name and was concerned about signing on her behalf – is no excuse.

C’s use of £43,317.47 (according to Yun Ding’s second statement) of Miss Buckley’s capital for her own personal benefit was way beyond the very limited authority to make gifts conferred on attorneys by section 12 of the Mental Capacity Act 2005. The attorney’s comments paragraphs 17 and 18 of her witness statement are no defence:

“I agree that my aunt lacks capacity to manage her own financial affairs and in my view she has become increasingly confused and is unable to understand the information relevant to deciding how to handle her finances or retain that information. … I admit that some of the money was used for my own benefit but only with my aunt’s permission.”

As regards Miss Buckley’s capacity, I am satisfied that she is incapable of revoking the LPA herself. I accept the opinion of the Court of Protection Special Visitor, Dr Andrew Barker, who stated:

“She was unable to understand the nature and effects of an LPA to a sufficient degree or to choose an attorney, was not aware of her financial dealings and could not recall detail sufficiently well or concentrate long enough to weigh information in the balance to come to decisions about an attorney or to direct or instruct an attorney.”

In deciding whether it is in Miss Buckley’s best interests to revoke the LPA on her behalf, I am satisfied that:

It was Miss Buckley’s past wish, when she had capacity, that her niece should be her attorney and manage her property and financial affairs. However, as far as her present wishes and feelings are concerned, the General Visitor reported that:

“When [Miss Buckley was] asked whether she wanted the niece to manage her money she indicated very negatively. When asked if she had wanted her niece to use her money for anything special she said she didn’t trust her and had only ever wanted her money.”

As regards the views of others who are engaged in caring for Miss Buckley or who are interested in her welfare, I have taken into account the views of her friend, Shirley, who visits her once a week and was the only person named by Mrs Buckley to receive notice of the attorney’s application to register the LPA. In an e-mail to Yun Ding dated 17 October 2012, in the context of the attorney’s visit to Miss Buckley in her current nursing home on 16 October 2012, Shirley said:

“I am so worried that (Miss Buckley’s) money will get stolen and that she won’t be able to stay in the nursing home. I have been asked not to get in touch with C both by social services and by the police. I find this very difficult. I must have given two years of my full attention – selling her house for her – setting up the Nationwide to pay the (nursing home) monthly. Finding a decent retirement residence (from which she had to move for health reasons) then I found her the nursing home but it’s nearly £1000 per week. She cannot afford for her money to be taken. She needs every penny.”

Having regard to all the circumstances, therefore, I am satisfied that:

Accordingly, I revoke the LPA under section 22(4)(b) and direct the Public Guardian to cancel the registration of the instrument under paragraph 18 of Schedule 1 to the Mental Capacity Act 2005.