IMPORTANT NOTICE
This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the incapacitated person and members of their family must be strictly preserved. All persons, including representatives of the media must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.
MENTAL CAPACITY ACT 2005
IN THE MATTER OF OB
First Avenue House
42-49 High Holborn
London WC1V 6NP
Before :
SENIOR JUDGE LUSH
Between :
THE PUBLIC GUARDIAN | Applicant |
- and - | |
AW (1) - and - DH (2) | Respondents |
James Morrey for the Public Guardian
Justin Holmes (instructed by Morrisons for the AW
DH did not appear and was not represented
Hearing date: 8 August 2014
JUDGMENT
Senior Judge Lush:
This is an application by the Public Guardian to revoke and cancel the registration of a Lasting Power of Attorney (‘LPA’).
The background
OB was born in 1916 and was formerly a nurse. She married in 1944. Her husband, who worked for London Transport, died in 1987.
She has two daughters, both of whom live in Surrey:
AW, who was born in 1950, and was also formerly a nurse. She is a divorcée and has no children; and
DH, who was born in 1954, and has two children.
Until February 2007 OB lived in her own home and since then she has resided with her daughter, AW.
On 15 September 2008 OB executed an LPA for property affairs, in which she appointed her two daughters jointly and severally to be her attorneys.
Nicholas Pinks of Elgee Pinks, Solicitors, Westerham, Kent, drew up the LPA, witnessed her signature and acted as the Part B certificate provider.
The LPA was registered by the Office of the Public Guardian (‘OPG’) on 4 March 2011.
In February 2013 DH contacted the OPG to express her concerns that long standing ‘pocket money’ payments to OB’s grandchildren had been stopped and that there had been excessive expenditure from OB’s accounts.
The Public Guardian opened an investigation on 7 March 2013 and commissioned a Court of Protection General Visitor to visit OB. The Visitor, Patti Simonson, saw OB at home on 29 March 2013, and concluded her report of the visit as follows:
“The donor appears to lack the capacity to manage her affairs. She appears unaware that she arranged an LPA. She believes that her lawyer is dealing with her financial affairs. She is pleased to be living with AW, one of her attorneys, and cared for by her. Although aware that she is contributing towards household expenses and stating that she was happy with some of her money being used for adaptation work she stated that her lawyer was the one to approve. She says that she cannot be bothered with money.”
The application
On 18 September 2013, Alan Eccles, the Public Guardian, applied to the court for the following orders:
That AW account fully for all expenditure from all accounts held on behalf of OB since registration of the LPA on 4 March 2011. AW is also requested to confirm whether expenditure on her property was paid for from OB’s funds and, if so, provide specification and costing of the work and how it was in the interests of OB.
That AW provide a copy of OB’s will, should she have one.
That the court considers whether the repayment plan suggested by DH for the repayment of the £4,000 loan to OB’s granddaughter is acceptable.
Should AW fail to provide a satisfactory account and explanation for all expenditure from OB’s funds of how it was in the best interests of OB, the court is asked to consider the revocation of the LPA and inviting a panel deputy to apply to be appointed to manage the financial affairs of OB.”
The application was accompanied by a witness statement made on 19 August 2013 by Marie Gibbs, an investigations officer with the OPG, who said:
AW had taken the lead in the management of OB’s finances.
OB’s property was sold on 15 June 2010 for £390,000 gross and £376,200 net.
OB had shown DH a plan detailing £80,000 worth of adaptations to AW’s property. However, DH believed that AW had spent as much as £199, 000 on the adaptations.
On 18 April 2013 AW telephoned the OPG to express her anger about the investigation. She felt her sister was trying to protect her own inheritance.
DH had stopped visiting her mother in September 2012 because of the abuse she received from AW.
Surrey County Council is willing to become the deputy for property, if necessary.
There were several interlocutory orders and eventually the matter was set down for an attended hearing on Friday, 8 August 2014.
Marie Gibbs’ witness statement
In anticipation of the final hearing, Marie Gibbs made a witness statement, in which she said:
“The Public Guardian still has grave concerns as to the cost of renovations made to [AW’s house] (‘the property’). There have been significant modifications to the property, which, according to AW, have mostly been paid for from OB’s funds. This along with payment for OB’s care, a total of £250,000 has been spent from OB’s capital.
It is the Public Guardian’s position that, whilst the care for OB has never been in question, the use of £250,000 of OB’s capital appears to be excessive in relation to the value of the property. Having compared similar properties in the same area, the average price for the property is between £250,000 and £363,000. There has been no declaration of trust to show OB’s beneficial interest in the property.
In her will dated July 2013 OB has left equal shares of her property and residuary estate to be divided between both of her daughters, AW and DH.
Therefore, the Public Guardian’s position is that the LPA should be revoked and registration cancelled and an independent deputy appointed to manage the financial affairs for OB. The deputy can then instigate whatever actions necessary to restore OB’s financial interests.”
Justin Holmes’s position statement on behalf of AW
Mr Justin Holmes of Radcliffe Chambers, Lincoln’s Inn, represented AW at the hearing on 8 August, and in his position statement he said as follows:
[9] AW refutes [the OPG’s] criticisms. She has acted throughout with OB’s full consent and approval and in OB’s best interests. It is only recently that OB’s failing memory has led to any concern about her mental capacity, and until that time she was able to and did agree to the use of her money to make improvements to AW’s house which would enable them both to live there more safely and comfortably. It should be remembered that OB had made no contribution to the household expenses between 2007 and 2011, and that AW had just had to give up her job. OB wanted to continue to live with AW and to be cared for by her, and yet AW did not have sufficient funds with which to carry out maintenance and improvement to the property which was necessary to enable AW to care for OB there safely and effectively.
[10] The works carried out were as follows:
provision of ground floor sitting area and downstairs lavatory in addition to the existing front room, enabling OB to use the front room as a downstairs bedroom and personal space of her own;
extension of the upstairs bathroom to accommodate an accessible bath and shower for OB’s use;
extension of the kitchen and construction of a utility room (at the time referred to as the ‘bird room’, since an immediate concern had been to find somewhere for AW’s parrots to live which was safer and more hygienic than in the kitchen);
replacement of the stairs to improve access;
replacement of the existing inefficient boiler to make the house warmer (and save on heating expenses), and associated works to replace the water tank;
repairs to the ceiling in AW’s bedroom following a water leak from the old water tank;
re-plastering of walls with defective plaster;
replacement of old and dirty curtains and carpets, which were potential sources of infection for OB;
raising the level of the rear patio to enable OB to go out on to it;
replacing defective patio doors to improve heat retention;
new, and more hygienic kitchen floors and units;
replacement of the existing flat roof with a pitched roof (this was a requirement of the local authority planning department).
[11] Not only was the aim of all these works to improve OB’s safety and comfort, but OB was well aware of them and had agreed to the use of her capital to pay for them. When the improvements were first completed, OB was able to make full use of them, including improvements to the upstairs part of the house. It is only more recently that OB’s access has been restricted to the ground floor.
[12] Moreover, AW took advice from the solicitor, Lorna Claxton of McMillan Williams, who acted on the sale of OB’s property. Ms Claxton correctly advised AW that, if her mother agreed to it, OB’s funds could be used to improve AW’s property.
[13] The schedules produced by AW show that the works cost £183,219 of OB’s money, as well as a significant sum of AW’s money, and not the figure of £250,000 referred to in Ms Gibbs’ third statement.
[14] It is unrealistic for the Public Guardian to suggest that it would have been more sensible for OB to move to somewhere other than AW’s house. First, OB needed AW’s care. Second, she had no liquid resources until her own house sold some four years later in 2010. How could OB have been able to afford somewhere more suitable to live? Where would have been more suitable than AW’s house, given that AW, a trained and capable nurse would be providing OB’s care?
[15] OB could have gone into a nursing home, but she did not want to and the cost would have far exceeded the sum spent by AW on improvements to the property. At £1,000 a week for 7 years, nursing home fees would have been in the region of £350,000.
[16] No evidence has been produced by the Public Guardian to support his claim that the amount paid in respect of the works was disproportionate to the value of the property. The relevant question, in any case, was whether the expenditure of the money on the works was done (a) with OB’s consent whilst she had capacity or (b) bona fide in what the attorney considered to be in her best interest once she had begun to lose it, and not whether the expenditure added value to AW’s property. This was not an investment: the expenditure was designed to achieve a specific aim, which was of increasing OB’s safety and amenity whilst living with AW.
[17] When OB agreed to spend part of her capital improving the property so that she herself could be safely and effectively cared for inside it, she did not consider that she was buying an equitable interest in the property, but merely spending money for her own benefit and (to the extent that she was also benefiting AW) she was enabling AW to care for her, and giving back something in return for the care and attention which she was receiving. The plain fact of the matter is that AW has sacrificed her job, a large part of her pension, her social life, her holidays and her health to look after her mother. It is clear from the Visitor’s report that OB understands that she is cared for by her daughter, that her daughter makes financial decisions on her behalf, and that improvements to her daughter’s house were carried out using her money – a situation with which she appears to be entirely happy.
[18] If and to the extent that the court considers that OB did not have capacity to agree to the expenditure of her funds by AW on improvements to the property, then AW asks that the court ratify those transactions as gifts by OB to AW.
[19] AW’s income derives only from the state pension, and she and OB are dependent on OB’s additional income for their subsistence. This situation results directly from the fact that AW gave up work to care for OB in 2011. AW never received any assistance from her sister, DH, and, until the recent appointment of Greenway Homecare, no agency carers could be found whose standard of work was adequate to cope with OB’s complex medical condition. No criticism has been made of AW in respect of this use of OB’s funds.
[20] If, despite clear evidence that AW has acted in the best interests of OB and can be expected to continue to do so, the court does consider that she should not continue to act as attorney, then AW makes two points:
First, if she is removed, then her sister DH ought also to be removed. The relationship between them is not good, since AW considers that DH could and should have done more to care for OB and at least be able to cover for her to allow her to go out for an evening or for a short holiday. DH has never taken any interest in OB’s financial affairs, and her one involvement has been to borrow £4,000 from OB which she is not presently repaying.
Second, an independent panel deputy should be appointed and not Surrey County Council. AW has had experience of the Council’s involvement in commissioning carers to provide care for OB in 2007/2008, and was unimpressed by the care provided or the efficiency with which the Council dealt with the matter. It is possible that the Council might have future involvement with OB, in which case it might have a conflict of interest, and it is clear from the email from Debbie Glover of the Council to Stacey Webster of the OPG that even the Council thinks that a panel deputy might be more appropriate.
The law relating to the revocation of an LPA
The Public Guardian’s application was for an order under section 22(4) of the Mental Capacity Act 2005 for the revocation and cancellation of the registration of the LPA.
Section 22(4), when read in conjunction with section 22(3), provides that the court may revoke an LPA if:
the donor lacks capacity to revoke the LPA, and
the attorney has behaved, or is behaving, in a way that contravenes his authority or is not in the donor’s best interest, or proposes to behave in such a way.
Decision
I must preface my decision by agreeing with the Public Guardian that “the care for OB has never been in question.”
However, I find myself unable to agree with Mr Holmes’ submission that AW “has acted throughout with OB’s full consent and approval and in OB’s best interests.” By any standards, £183,219 (to use AW’s own figure for the expenditure involved) was a substantial gift for OB to have made, and her capacity to make a gift of this magnitude would have needed to be similar to that described in Re Beaney, deceased [1978] 2 All ER 595, 601. In fact, this transaction was more complicated than that in Beaney, which was a simple one-off gift. In this case, there was a succession of payments over a number of years.
In her witness statement dated 6 February 2014, AW said:
“Following the sale of my mother’s property, my mother agreed to the use of some of her funds towards the modernisation of my property in order to improve the care facilities and standard of living we were both experiencing.”
This broadly tallies with the Visitor’s comments that:
“The donor implied that she had agreed that AW could access her money to contribute towards the household costs and towards house adaptations but no amounts were referenced and the donor did not appear to be interested in these.”
and
“The donor stated that she was happy with her money being used for adaptations but had no idea as to the cost. She said that it would have been her lawyer to approve these.”
Whilst I have no doubt that OB was initially content to contribute a reasonable, quantifiable sum of, say, £80,000 towards the adaptation and refurbishment of AW’s property, and that she had the capacity to approve expenditure at that level, by the time the works had been completed and the expenditure had drifted to £183,219, she no longer had a clue what was going on.
All of these payments were made by AW in her role as OB’s attorney because, as the Visitor noted, OB has no interest in money matters. Many older people go through such a process of disengagement and this is why it is doubly important that decisions made on their behalf should be free from any conflict of interest and undue influence.
In practical terms, it would have been difficult for OB to have pulled the plug and said ‘enough is enough’, because AW is a strong and forceful character. In reply to a question I asked AW about not involving her sister - her co-attorney - in the decision-making process, she stated that it was her intention that she should be the sole attorney, but Mr Pinks, the solicitor to whom she had taken her mother to draw up the LPA had other ideas, and had allowed OB to appoint AW and DH jointly and severally as her attorneys. AW expressed her dissatisfaction with Mr Pinks, which may account for the fact that she chose to instruct another firm of solicitors to act in the sale of OB’s property and yet another firm to represent her in these proceedings.
I have concerns about the circumstances in which OB’s last will was executed on 9 July 2013, some four months after the Court of Protection Visitor met OB and found that “the donor apparently does not know that there is an LPA and does not know what an LPA is and thus discussion about suspending or revoking it was not appropriate.” I believe that this is yet another illustration of the undue influence that AW exerts over her mother.
On 15 September 2008, the day on which she executed the LPA, OB gave Mr Pinks instructions for the preparation of a new will, in which she bequeathed some modest pecuniary legacies to other family members and, as one would expect, left her residuary estate to her two daughters in equal shares. Mr Pinks had forwarded a draft will for her to approve, but for whatever reason, OB never approved or signed it.
When he was carrying out his investigations, the Public Guardian wrote to Mr Pinks to enquire about OB’s will, and Mr Pinks replied on 1 May 2013 saying that:
“DH has asked me if I will forward to you a copy of OB’s will. I find on having checked my file that whilst I was instructed by OB to draft the new will on 15th September 2008 and subsequently drafted a will for her, this does not appear to have been signed. I enclose a copy of my attendance note dated 15th September 2008, a copy of the draft will which I prepared for OB (which may have been signed, if so I am unaware) together with a copy of the earlier will of 2004. Given AW’s relationship with her mother it is of course highly possible that she sought advice elsewhere for a will in different form but I am afraid I have no knowledge of this and may be unnecessarily apprehensive.”
In her witness statement dated 6 February 2014, AW stated:
“A copy of my mother’s will of 9 July 2013 is attached and marked as exhibit 28. This is in the same format as the draft will prepared in 2008 by Elgee Pinks LLP marked as exhibit 29, which was prepared but never signed. My mother read and approved the 2013 will when it was signed. I was happy that she understood the nature and effect of the contents of it and that it purported to be in the same terms as her draft will. I was not present when the will was signed.”
I shall say no more about OB’s will, as I suspect it will be the subject of further proceedings. My primary concern here is AW’s conduct under the LPA.
The court can only revoke an LPA if it is satisfied that an attorney has contravened her authority or has not acted in the donor’s best interests. Contravention of an attorney’s authority includes a breach of fiduciary duty, which paragraph 7.60 of the Mental Capacity Act 2005 Code of Practice defines as follows:
“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 not allow any other influences to affect the way in which they act as an 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.”
In a situation, such as this, where there is clearly a conflict between the interests of the donor and the interests of the attorney, an application should have been be made to the Court of Protection for an order under section 23(2)(b) of the Mental Capacity Act 2005, which provides that “the court may … give any consent or authorisation to act which the donee would have to obtain from P if P had capacity to give it.”
The court would have been pleased to consider an application by AW to award her an appropriate allowance for the ‘gratuitous’ care she provides for her mother and, with regard to their respective contributions towards the improvements and adaptations to AW’s house, the court could have considered various options which would have safeguarded both OB’s interests and AW’s interests.
Before the Mental Capacity Act 2005 came into force, several times a week I used to see patients who had been awarded damages for personal injury and their families to discuss matters of this kind. The most sensitive task was to pitch a care allowance (usually for the parents of a brain injured child or young adult) at an appropriate level, having regard to all the circumstances, including the size of the estate and the extent of the care provided. I would discuss the Income Tax and National Insurance implications of such an allowance, which are now contained in HM Revenue & Customs ESM4016 – Particular occupations: care workers’ payments under Court of Protection order or from trust fund. We would also consider the respective contributions of the patient and the family members towards any newly acquired accommodation and ensure that the respective beneficial interests of all contributors were adequately safeguarded by means of a declaration of trust and the entry of a restriction on the proprietorship register at the Land Registry. Something similar should have happened in this case.
Because of the obvious conflict between her own interests and her mother’s, these are certainly not matters upon which AW should have been making decisions unilaterally.
Although the court would have been the most suitable forum to consider matters of this kind after OB had lost capacity, an alternative forum prior to her incapacity would have been an agreement between OB’s and AW’s legal advisers, which was carefully documented.
Indeed, OB seems to have been under the impression that her solicitor was exercising a supervisory function similar to that conferred on the court by section 23 of the Mental Capacity Act. The Court of Protection General Visitor noted that, “although aware that she is contributing towards household expenses and stating that she was happy with some of her money being used for adaptation work she stated that her lawyer was the one to approve.” This suggests that OB did not expect AW to make certain decisions without consulting her solicitor or to have unfettered access to her funds.
I am not prepared to approve the gift retrospectively for the very reason that Mr Holmes criticised the Public Guardian. No evidence has been provided in terms of valuations before and after the improvements were carried out, and there has been no assessment of the extent to which any specific adaptations were exclusively for the benefit of a person with a disability and do not enhance the value of the property as a whole.
In addition, AW failed to act in OB’s best interests by refusing to consult or take into account the views of her sister and co-attorney, DH, as is required of her by section 4(7)(b) and (c) of the Act. AW’s words and actions have resulted in severely restricted contact between OB and DH and her family. One of the surest signs of undue influence is controlling another person’s environment and social interactions by isolating and excluding them from outside supervision and advisers.
Having regard to all the circumstances, therefore, I shall revoke AW’s appointment as attorney because I am satisfied that:
OB lacks capacity to revoke the LPA herself; and
AW has contravened her authority by taking advantage of her position.
As OB appointed AW and DH to act jointly and severally as her attorneys, the revocation of AW’s appointment will leave DH as the sole attorney. I understand that DH is content for a panel deputy to be appointed, and I suggest that she signs a disclaimer (form LPA005) and sends it to the Public Guardian as soon as possible to facilitate that appointment.