Re PL (Objection Hearing)

The person to whom these proceedings relate is PL and the parties are:

This is an objection by PL’s daughters to his son’s application to be appointed as his deputy for property and affairs.

PL is 78. He was born in Lewisham; left school at the age of fifteen, and set up his own manufacturing company in Beckenham, which at one stage employed twenty people. He sold the business in 1987, when he was fifty, and spent a few years as a house husband until his wife retired. In 2000, they packed their bags and went to live in Spain on what they intended to be a permanent basis.

While he was in Spain, PL got into the habit of drinking harmful levels of alcohol. His average daily intake was three litres of white wine and several glasses of homemade cherry brandy.

In August 2012 he kept falling over. His daughters flew to Spain to investigate the problem and discovered that he had experienced a series of transient ischaemic attacks or mini-strokes. He and his wife were immediately repatriated to England.

PL was admitted to Darenth Valley Hospital and, on being discharged in September 2012, he went to live with VL and SJ in Lee. PL’s wife, who was already living with them, died of a stroke at the end of October 2012.

With the agreement of VL’s sisters, SJ gave up her job as a private hire driver in order to become PL’s full-time carer. They also agreed that she could be paid £400 a week from PL’s funds for looking after him and that VL and SJ could receive £100 a week for his board and lodging.

On 4 July 2014 VL applied to the Court of Protection to be appointed as his father’s deputy for property and financial affairs. Wellers Law Group in Bromley assisted him in making the application.

In addition to the standard form of assessment of capacity (COP3), completed by PL’s general practitioner, the application was accompanied by a more detailed psychiatric report written on 15 September 2013 by Dr Bastiaan Veugelers, a consultant psychiatrist at The Priory Clinic in Canterbury. This report concluded with the following opinion:

“PL has moderate dementia which may be caused by blood flow problems in the brain as in vascular dementia, past alcohol misuse and possibly an additional component of Alzheimer’s disease, which is dementia caused by abnormal accumulation of proteins in the brain. Additional investigations with brain imaging may allow us to differentiate between these different causes of dementia, but it will be a chronic disorder that will have a tendency to slowly get worse over time, even with treatment, with the potential to further compromise his ability to make decisions.

I think he lacks capacity both to manage his finances and also to sign a lasting power of attorney document. As illustrated above, he fails on elements of understanding, as well as retaining, as well as weighing in the balance various bits of information. There is an added element of being incongruently unconcerned and laid back about the situation, which means that he will be suggestible with a tendency to agree with the person who he is talking to at the time.”

In the form containing supporting information for property and affairs applications (COP1A), VL declared that his father’s assets were as follows:

PL’s income is just short of £31,000 a year and consists of:

On 10 November 2014 PL’s daughters, JD and LA, filed acknowledgments of service in which they objected to their brother’s application and suggested that the court should make:

“A joint order for the three siblings so that both daughters know what the brother is doing in relation to my father’s finances and his welfare or else a third party is made deputy who can keep us informed.”

These acknowledgments of service were accompanied by witness statements, in which the respondents gave more detailed reasons in support of their objections but, in essence, their concerns were about a lack of communication and a lack of transparency.

On 7 January 2015 I made an order setting out a timetable for filing and serving any further evidence and listed the matter for an attended hearing on 4 March 2015.

VL filed and served a witness statement on 10 February, and the two respondents filed witness statements with the court on 23 February, but unfortunately they failed to realise that they were supposed to send a copy to their brother’s solicitors, too.

The hearing took place on Wednesday 4 March 2015 and was attended by:

The friction between VL and his sisters began shortly after their parents returned to England from Spain in August 2012. There had been mutual allegations of financial abuse and the respondents had formally complained about VL and SJ to Kent County Council, who investigated their complaints and dismissed them.

Mr Morrell submitted that there were three options available to the court:

He thought that a joint appointment would be fraught with difficulties and even the most minor decision could become a bone of contention. For example, it is now essential, and clearly in PL’s best interests, that a stair-lift is installed, but any discussion of this will inevitably lead to a disagreement. In his witness statement VL expressed the following opinion on a joint appointment:

“This would be simply unworkable. [My sisters] have already shown that they are not in the slightest bit interested or concerned with my father’s welfare. They are interested in his money. They have already shown no inclination to agree that essential payments be made for his wellbeing and, if they were made joint deputies, I fully expect that they would stand in the way of such essential payment. A good example is the shower. If I had had to obtain their consent before spending my father’s money on this installation, I very much doubt that such consent would be forthcoming. However, the shower is absolutely essential for my father’s health, wellbeing and his own peace of mind. Another good example is the car. My father would simply not be able to attend essential GP and hospital appointments without it.”

“Realistically”, said Mr Morrell, “the only choice is between VL and a panel deputy.” He submitted that the factor of magnetic importance in this case was the fact that VL and SJ have looked after PL extremely well for the last two and a half years, and stated that there was no need to incur the costs of a panel deputy, which, according to the calculations in Re DT [2015] EWCOP 10, would exceed £6,000 during the first year alone.

I have decided to appoint VL as the sole deputy to make any decisions that PL is unable to make for himself in relation to his property and affairs.

I intend to confer general authority on VL as deputy to take possession or control of PL’s property and affairs and to exercise the same powers of management and investment as he has as beneficial owner, including the power to sell or let his properties in Beckenham and Spain.

I agree with Mr Morrell that VL has looked after PL satisfactorily for the last two and a half years, and I am prepared to give him the benefit of the doubt, particularly as the exercise of his powers will be hedged about on all sides with statutory protection for PL.

The striking feature of this case was that neither the applicant nor the respondents had any idea about the fiduciary duties and practical responsibilities that a deputy is expected to undertake and the roles of the Court of Protection and the Office of the Public Guardian (‘OPG’) in ensuring his compliance.

As I was describing these obligations to everyone at the start of the hearing, I could see from the expressions on their faces that the respondents were reassured that certain safeguards would be imposed, and the applicant looked slightly taken aback at the extent to which he will become publicly accountable for his actions in managing his father’s property and affairs.

Section 19(9) of the Mental Capacity Act 2005 (‘MCA’) provides that:

“The court may require a deputy –

(a)

to give to the Public Guardian such security as the court thinks fit for the due discharge of his functions, and

(b)

to submit to the Public Guardian such reports at such times or at such intervals as the court may direct.”

In virtually all cases involving lay deputies, the court requires the deputy both to give security and to submit an annual account or report to the OPG, and this case is no exception.

When someone applies to be appointed as a deputy for property and affairs, they are required to complete a deputy’s declaration (COP4), which contains the following undertaking:

“I understand that I may be required to provide security for my actions as a deputy. If I am required to purchase insurance, such as a guarantee bond, I undertake to pay premiums promptly from the funds of the person to whom the application relates.”

If an applicant refused to give this undertaking, it is unlikely that they would be considered suitable for appointment as a deputy in the first place. Having said that, the requirement to give security is no reflection on any applicant’s competence, probity or integrity. It is simply an appropriate, effective and proportionate safeguard.

Article 12.4 of the United Nations Convention on the Rights of Persons with Disabilities, which the United Kingdom ratified on 7 August 2009, requires the state to “ensure that all measures that relate to the exercise of legal capacity provide for appropriate and effective safeguards to prevent abuse in accordance with international human rights law.”

Unfortunately, some deputies take advantage of their position, and family members are the worst offenders. A recent example was the case of Re GM: MJand JM v The Public Guardian [2013] COPLR 290, and its sequel Re Meek [2014] EWCOP 1, in which Mrs Meek’s late husband’s niece and great-niece abused the limited authority conferred upon them by the court to make gifts. His Honour Judge Hodge QC called in the security bond of £275,000 in its entirety.

In the order appointing him as deputy I shall require VL to obtain and maintain security of £550,000. The annual premium of 0.2% of that sum (£1,100) will be payable from PL’s estate to secure his assets to that value. The average duration of a deputyship in the Court of Protection is about three and a half years and an outlay of just a few thousand pounds to safeguard assets of up to £550,000 is not unreasonable.

Alternatively, the court could restrict VL’s powers as deputy and stipulate that he has no authority to sell PL’s business premises in Beckenham or his property in Spain without obtaining a further order from the court. In those circumstances, VL would not need to give security of more than £30,000, in respect of which the premium would be only £60 a year. If he were subsequently to apply for an order to sell either or both of the properties, then the level of security he is required to give would have to be adjusted accordingly.

Having been presented with this choice, VL decided that, on balance, he would prefer an unrestricted deputyship order. In a letter to me dated 6 March 2015, his solicitor said:

“VL has no intention of selling either the Spanish property or the office in Beckenham. With regard to the Spanish property, VL knows that PL’s dearest wish is to go back to Spain, should his health permit it. In the meantime, VL recognises that his father likes nothing more than returning to see his friends in Spain on regular holidays.

The office in Beckenham is PL’s principal source of income and there would be no plan to sell this even if PL moved back to Spain. VL recognises, however, that if his father’s health meant that putting him in a nursing home was unavoidable, it is very likely that the income from the Beckenham office would not be sufficient to pay nursing home fees. In those circumstances, VL may have no alternative but to sell the Spanish property to pay for his father’s fees. Accordingly, I am instructed that, of the two alternatives set out in your email, the level of security which he believes would be appropriate would be alternative (1), i.e. security of £550,000. I agree with you that the costs of that security are reasonable.”

As well as appointing deputies, the court can also revoke their appointment, pursuant to section 16(8) of the MCA, if it is satisfied that a deputy has behaved, or is behaving, or proposes to behave, in a way that contravenes the authority conferred on him by the court or is not in the best interests of the person for whom he is acting.

Whereas the Court of Protection’s role is primarily to appoint and remove deputies, the role of the OPG is set out in section 58(1) of the MCA, which provides that:

“The Public Guardian has the following functions:

(a)

establishing and maintaining a register of lasting powers of attorney,

(b)

establishing and maintaining a register of orders appointing deputies,

(c)

supervising deputies appointed by the court,

(d)

directing a Court of Protection Visitor to visit -

(i)

a donee of a lasting power of attorney,

(ii)

a deputy appointed by the court, or

(iii)

the person granting the power of attorney or for whom the deputy is appointed,

and to make a report to the Public Guardian on such matters as he may direct,

(e)

receiving security which the court requires a deputy to give for the discharge of his functions,

(f)

receiving accounts and other reports from donees of lasting powers of attorney and deputies appointed by the court,

(g)

reporting to the court on such matters relating to proceedings under the Act as the court requires,

(h)

dealing with representations (including complaints) about the way in which a donee of a lasting power of attorney or a deputy appointed by the court is exercising his powers,

(i)

publishing, in any manner the Public Guardian thinks appropriate, any information he thinks appropriate about the discharge of his functions.”

In December 2014 the OPG published a report to Parliament on the Fundamental Review of the Supervision of Court Appointed Deputies by the Public Guardian. At paragraphs 65, 66 and 67, the report stated:

“One of the key findings of the user research was that deputies required more support during the first few months of their deputyship. The new supervision model therefore focuses on providing support to deputies as the standard, with supervision where necessary or appropriate.

A dedicated case manager now contacts a newly appointed deputy to introduce themselves and OPG. At this point, further settling-in contact is arranged. This early intervention is to ensure the deputy understands their role, powers and responsibilities, as well as OPG’s supervisory responsibility and what that will involve in practice. This commences the beginning of a constructive relationship with the deputy. Behavioural insight/’nudge’ theory says early intervention is important in persuading people to comply.

For lay deputies in particular, a targeted visit would be considered. There will then be a follow-up telephone conversation with the deputy after six months to check on progress and to begin the lead-up preparations for the first annual report.”

At paragraphs 79, 80 and 81 the report stated that:

“The requirement for deputies to report to the Public Guardian is one of the key ways in which he discharges his supervision duty. The move away from supervision levels towards supervision by type of deputy has prompted a re-evaluation of the current strategy and mechanisms by which deputies are required to report to the Public Guardian.

It is therefore our intention to maintain more frequent contact with deputies and to require formal submissions on a regular basis. We will do this by means of a new digital tool. This will allow deputies to record transactions as they happen, then to submit them to OPG at year end. The tool is also likely to support other communications mechanisms, such as periodic reminders.

The requirement for deputies to report is the main mechanism by which OPG can gain assurance that a deputy understands their role and is protecting the person lacking capacity, ensuring their needs are met. It gives the OPG a level of confidence, for which a measure can be developed. Over a phased transitional period, all deputies will report on all cases each year. There will be a full review by OPG in the first year and commensurate with judged risk thereafter.”

At the hearing on 4 March VL said that he would be prepared to send his sisters a report on his management of PL’s property and finances, and I shall authorise him to send them a copy of the annual account or report he submits to the OPG. Hopefully, this will allay their concerns about a lack of communication and a lack of transparency.

There is one final point I should mention concerning the terms and conditions upon which VL will be appointed as deputy. In paragraph 7 above, I stated that the family had agreed that, because she had given up her job to care for PL on a full-time basis, SJ should receive an allowance of £400 a week from his funds. To ensure that this payment is treated favourably for the purposes of income tax and national insurance contributions (‘NICs’), this arrangement should be formally recorded as part of the court order.

HM Revenue and Customs publish comprehensive guidance on the employment status of individuals in a document known as the Employment Status Manual (‘ESM’), which provides as follows:

“ESM4016 – Particular occupations: careworkers – payments under Court of Protection order or from trust fund

Payments towards the cost of maintenance of a husband, wife or other close relative or dependant out of the income of a severely incapacitated person, who receives funds under an order of the Court of Protection are regarded as voluntary payments and not as income of the recipients. Therefore, there will be no tax or NICs consequences on such payments made for caring duties. Similarly where payments emanate out of a trust fund set up for this purpose there is unlikely to be an enforceable contract, therefore, there should be no question of tax being assessable as employment income or of a liability for Class 1 NICs.

Caring activity under these circumstances would not amount to gainful employment so there will be no liability for Class 2 NICs. The services provided are unlikely to be regarded as commercial in nature or amount to valuable consideration so there will not be a charge to tax on trade profits or on income not otherwise charged to tax.”